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Delta variant curbs demand for oil

Thursday 12 August, 2021

Daily Currency Update

CAD - Canadian DollarThe Canadian dollar edged lower against USD as concern about the spread of COVID-19’s Delta variant weighed on oil prices, a major Canadian export. USDCAD was up 0.03%, trading at 1.25061 at the time of writing. The International Energy Agency cut its 2021 growth forecast for oil demand as the resurgence of a more transmissible Delta variant put a dent in the global recovery. The energy watchdog cut its estimates to 100,000 barrels a day for 2021 but increased its forecast to 200,000 barrels a day for 2022.

Key Movers

The UK’s second quarter GDP figures came in at a strong 4.8%. On the other hand, industrial production and manufacturing production posted weaker than expected results, as did UK construction output. This has provided a mixed bag for sterling, which has generally strengthened overnight, especially against the euro, but the move has been relatively underwhelming. GBPUSD was down 0.20%, trading at 1.3838 at the time of writing. June Industrial Production in the eurozone was down 0.3%, missing market expectations. EURUSD was down 0.09% at the time of writing.The US dollar modestly strengthened against a basket of currencies after data showed that US producers hiked their prices again in July. US jobless claims also dipped for a third straight week. Analysts suggest that these producer prices could feed into higher costs in retail stores, where annual consumer price inflation remained at a 13-year high of 5.4% in July. This pours water on the argument that inflation is a concern in the US, and that the Federal Reserve needs to move to tighten their monetary policy to counteract the impact of inflation. This uncertainty could cause some volatility for the US dollar in the coming weeks.

Expected Ranges

  • EUR/CAD: 1.4671 - 1.4697 ▲
  • GBP/CAD: 1.7305 - 1.7365 ▼
  • AUD/CAD: 0.9181 - 0.9229 ▼
  • USD/CAD: 1.2492 - 1.2521 ▲