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US dollar demand up after rocky week

Daily Currency Update

USD - United States DollarThe US dollar was on track for a second week of gains after a rocky week in the global currency markets. The US dollar was up 0.16%, trading at 92.97 at the time of writing. US jobless claims rose to 419,000 which was higher than the expected 350,000. US manufacturing PMI beat expectations and rose to 63.1 in July from 62.1 in June. This showed that business activity in the manufacturing industry continued to expand. The market’s next focus is the US Federal Reserve policy meeting next week. In the previous June meeting, the Fed had raised concerns about COVID-19 infections disrupting economic recovery. COVID-19 infection numbers have continued to climb with an acceleration in cases in Missouri and Florida, an area of particular concern.

Key Movers

Yesterday’s main event turned out to be a bit of a non-event as the European Central Bank left interest rates unchanged and made no amendments to the pandemic emergency purchase program. The message issued from ECB chief Christine Lagarde was one of caution and continuing willingness to act should the economic outlook deteriorate, and also that they expect eurozone inflation to push higher over the next few months before starting to retreat towards the end of the year. EURUSD was down 0.07%, trading at 1.1762 at the time of writing.Demand for sterling dropped slightly after a survey showed that UK growth slowed sharply in July. The IHS Markit/CIPS flash composite dropped to 57.7 in July from 62.2 in June. Some analysts point to the rising Delta variant cases in the UK as a factor. But there was extra support for the pound from upbeat retail numbers. Markets expected a drop of 0.2% but data showed retail sales grew 0.5%, showing that consumers continued to spend significantly since coming out of winter lockdown. GBPUSD was trading around 1.3757 at the time of writing. The Canadian dollar was pressured earlier in the week as oil prices fell to its lowest level in almost two months on concerns over a halt in the global economic recovery. Oil prices recovered slightly from Monday’s slide which may have helped support the Canadian dollar. The Canadian dollar edged slightly lower against the US dollar, but was on track to end slightly higher week-over-week. USDCAD was up 0.16% at 1.2580 at the time of writing.

Expected Ranges

  • EUR/USD: 1.1755 - 1.1784 ▼
  • GBP/USD: 1.3721 - 1.3778 ▼
  • AUD/USD: 0.7358 - 0.7389 ▼
  • USD/CAD: 1.2556 - 1.2599 ▲