It is shaping up to be a risk-on run to start the new week, as risk sentiment in general is faring better.
Equities are higher and Treasury yields are surging as well, helping with the mood. This in turn is keeping the likes of the aussie and loonie in particular buoyed as we get things going on the day.
AUD/USD is up 0.3% to 0.7020 levels, just off a high of 0.7040 earlier. This comes amid a steady defense around 0.7000 as seen in previous episodes but with risk sentiment still rather fragile, it is hard to call for a straightforward bounce from here. Adding to that is the dollar's resilience considering the Fed is stepping up the pace of tightening policy.
Meanwhile, USD/CAD is lurking just below 1.2800 as oil prices are also performing admirably on the day. WTI crude is up 2.7% to just above $68 as Saudi Arabia bolsters the demand outlook by hiking selling prices in Asia.
Going back to USD/CAD, buyers have work to do in order to clear some resistance above the 1.2800 mark and that closer to 1.2900. That said, the pair is on a run of seven consecutive weekly gains so there might be some scope for a light retracement - providing that risk sentiment plays ball that is.
Elsewhere, while the kiwi is holding up so far today, NZD/USD is still flirting with a key technical break lower as price sits just below its 200-week moving average @ 0.6753. That will be the key line in the sand in trading this week with further support only seen closer to the 0.6700 level next.
Looking at overall risk sentiment, while this may yet still be just a light breather after the tumultuous episode last week, there is room for some light optimism. So far, even though omicron may be highly transmissible, scant data is showing that the severity threat is rather mild - at least to those who have been vaccinated.
However, the risks of hospitalisations surging and renewed restrictions are still growing considering that there are millions still not vaccinated yet in major parts across the globe. Adding to China's (and some Asian countries) zero-COVID policy, one can hardly find fault with anyone feeling a little uneasy about the economic outlook for now.
While markets may choose to see the glass half-full so far today, things can easily switch back to the glass being half-empty. So, just be wary of that in the sessions ahead.