- Risk appetite dampened as attention moves to President-elect Biden’s inauguration.
- Covid developments and economic data could drag on the Canadian Dollar ahead of the Bank of Canada’s rate decision.
- A Double Bottom reversal pattern could mean more USD/CAD upside short-term.
Asian Session Recap
Risk sentiment dampened in Asia-Pacific trade as investors look towards President-elect Joe Biden’s inauguration on January 20. Australia’s ASX 200 declined 0.78% and Japan’s Nikkei 225 fell 0.97%, as local covid cases hit record highs
China’s CSI 300 index rallied1.13% after upbeat Chinese Q4 GDP and industrial production figures. In FX markets, the safe haven- USD and JPY largely outperformed.
Looking ahead, a speech from European Central Bank President Christine Lagarde headlines the economic docket alongside Italian inflation data for December.
Deteriorating Covid Situation Weighs on CAD
Surging covid cases in Canada could weigh on the local currency in the near term. Ontario – Canada’s most populous province entered lockdown on January 12.
However, the restrictions have not yet resulted in the infection rate falling.
The covid resurgence has negatively impacted Canada’s economic recovery. The Bank of Canada could look to ease its monetary policy further at its January 20 meeting and weigh on the Canadian Dollar near term.