USD/CAD missed a chance to decisively break below 1.2500, with Friday’s sentiment jitters coming to the support of the pair. On Monday, all eyes will be on the Bank of Canada Business Outlook Survey for 4Q. Economists at ING do not expect the data to fuel the loonie, but USD/CAD is expected to move below the 1.2600 area.

BoC Business Outlook survey in focus

“Today’s survey may not fully mirror the worsening demand outlook as data was mostly collected before the Omicron crisis become severe. This means the survey’s  explanatory power may be somewhat limited, but there are still a few points to keep an eye on, such as inflation expectations, hiring intentions and CAPEX investment figures.”

“With CAD not currently embedding much economic fallout due to Omicron, we don’t see much room for CAD to benefit from the BoC survey today. Still, external factors – above all, oil prices – are proving supportive to the currency and we expect any rebound in USD/CAD to stall around the 1.2600 region this week.”