Markets are getting ready for the new trading year

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

US Dollar             1.2800-1.2900

Euro                     1.4475-1.4575

Sterling                1.7150-1.7250

The US Dollar index is very much range bound as markets are generally quiet this time of year. Heading into the new trading year it will be the same factors affecting the strength of the US Dollar, when will the Federal Reserve first increase interest rates and how much will Omicron affect the global economy? On the geo-political risk front the possibility of a Russian invasion into Ukraine and the global response to that invasion will be on traders’ mind to start the year and then the US relationship with China as always will be front and centre. Either way it will be an interesting year for the financial markets.

USD.CAD has settled into its new trading range and the oil price continues to move about as the virus threatens to reduce demand for oil in the new year. I still favour a weaker Canadian Dollar and it will not surprise me to see USD.CAD hit 1.3000 (0.7692) at some point in January. Barring any surprises, the Loonie should remain range bound for the rest of the week.