USD index points lower as investors move their money to other currencies

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar             1.2750-1.2850

Euro                     1.4450-1.4550

Sterling                1.7000-1.7100

The US Dollar index is weaker this morning as traders moved into safe haven currencies like the Swiss Franc and Japanese Yen amid fresh concerns about the omicron version of the virus which have again pushed stock markets around the world lower. It remains to be seen just how dangerous this new version is but Moderna executives said overnight that the current vaccines may not be that effective against it and a new version could be ready in the Spring. It testimony to the US Congress, Fed chair Powell said that they will have to wait and see how much damage omicron does to the economy before changing any course on its stimulus program or interest rate hikes planned for next year.

The Canadian Dollar recovered a little during the early London session but that was after USD.CAD traded briefly above the 1.2800 (0.7813) level overnight for the first time since September. The Loonie and other commodity currencies were hit hard on another drop in the oil price which fell to trade at $67.50 a barrel and currently trades at $67.80 as I write. The US has reiterated that they will continue to release supply from their strategic reserve so given the current virus situation I don't see the oil price staging a quick recovery.

Up today we get the Canadian GDP report for the 3rd Quarter and the market is expecting a growth level of 3% after a decline of 1.1% last quarter. I get a sense that unless the number is really bad the market will ignore it and focus totally on virus developments. North American stock markets are all pointing lower on their opening so I expect another choppy day on the currency markets.