Two trades to watch: FTSE, USD/CAD

FTSE tumbles in risk off as Omicron vaccine doubts rise. USD/CAD rises to 2-month peak as oil drops, ahead of busy economic calendar.

Downtrend 3

FTSE tumbles in risk off as Omicron vaccine doubts rise

The FTSE along with other European indices are heading for a deeply negative start on Tuesday following comments by Moderna’s chief executive Stephane Bancel that new vaccines could be needed for Omicron. The highly mutated strain could struggle to cope with the new variant and large-scale manufacturing of variant specific vaccines would take months.

The downbeat outlook sparked fears of further lockdowns and restrictions, prompting risk off trade

Today’s rout comes following several volatile sessions as the markets wait for more information and data on Omicron, which could take weeks.

Learn more about the FTSE

Where next for the FTSE?

The FTSE is falling heading into the European session. The price is testing support at 7040 the 200 sma. The RSI is supportive of further downside whilst is remains out of oversold territory.

Should the prive manage to break below the 200 sma and 7000 the key psychological level, 6950 the October low and 6823 the September low could offer some support.

Should the 200 sma hold buyers could look towards 7100 round number and 7170 yesterday’s high. It would take a move above here to negate the current bearish trend.

FTSE chart

USD/CAD rises to 2-month peak as oil drops, ahead of busy economic calendar

USD/CAD is pushing higher paring loses from the previous session and testing 2-month highs

The loonie is tracing oil prices lower. Oil prices are trading 3% lower at the time of writing amid concerns over the effectiveness of current COVID vaccines on the new highly mutated Omicron variant.

Fears are rising of more COVID lockdowns and mobility restrictions denting global growth and hitting oil demand. Falling oil prices are likely to keep the loonies under pressure.

Separately Canada GDP MoM is expected to show a 0.1% increase, down from 0.4% in the previous month.

Offering some support to the pair is the weaker USD, which trades lower versus a basket of currencies after Fed Chair Powell said the Omicron poses downside risks to the US economy, raising doubts over the Fed’s ability to raise interest rates.

US consumer confidence and a speech by Fed Powell are due later.

Learn more about the Canadian dollar

Where next for USD/CAD?

USD/CAD is extending its run-up from the late October low of 1.2285, re-testing the 2-month high at 1.28. The 20 sma has crossed above the 50 sma in bullish sign and the RSI suggests further gains could be on the cards until it tips into overbought territory.

A break above 1.28 could open the door to 1.2890 the September high.

Failure to break above 1.28 could see the pair test 1.2775 the September 30 high with a break through here opening the door to 1.2643 Friday’s low.


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