January 11, 2022
EUR/USD: The euro declined on Monday as the dollar strengthened amid rising bets U.S. inflation will bolster the case for higher interest rates while the European Central Bank’s dovish stance on rising prices weighed on the euro. The dollar had met with selling late last week after a weaker-than-expected headline U.S. job-creation figure squeezed traders out of long dollar positions. But better-than-expected unemployment numbers and U.S. inflation figures this week are expected to show headline CPI at a red-hot 7% on Wednesday, making a good case for interest rates to rise sooner rather than later. Immediate support is seen at 1.13. A breakout below could take the pair towards 1.1250.
USD/CAD: The Canadian dollar weakened against the U.S. dollar on Monday as oil prices fell and the prospect of rising U.S. interest rates weighed on investor sentiment. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to shifts in risk appetite. U.S. crude prices settled 0.9% lower at $78.23 a barrel as the rapid global rise in Omicron coronavirus infections weighed on the demand outlook, overtaking concerns about oil supply from Kazakhstan. Immediate support is seen at 1.2630. A breakout below could take the pair towards 1.2550.
GBP/USD: Sterling strengthened against the dollar on Monday amid expectations that the BoE will raise interest rates and easing fears about the adverse impact of the Omicron variant on the UK economy. Investors have ramped up expectations that the Bank of England will raise interest rates as early as next month after a surprise hike in December. Sterling has strengthened since mid-December as UK government resistance to further COVID-19 restrictions provided a much-needed boost to sentiment. A preliminary estimate of UK gross domestic product for November is due on Tuesday. Immediate resistance can be seen at 1.36. A breakout to the upside break can trigger growth towards 1.3660.