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Oil drops again

Wednesday 11 August, 2021

Daily Currency Update

CAD - Canadian DollarDemand for the Canadian dollar against the US dollar picked up modestly after data showed consumer prices increases slowed in July. USDCAD was trading around 1.2519 at the time of writing. Gains for the currency were capped by dropping oil prices. Oil dropped suddenly after the US called on the OPEC+ alliance to revive production more quickly. The US Consumer Price Index went up 0.5% last month after increasing 0.9% in June. In the 12 months through July, the CPI advanced 5.4%. The drop in the month-to-month inflation rate was the largest in 15 months.

Key Movers

It has been a very quiet week on the data front for the pound. It remained on the front foot versus the euro, predominantly driven by confidence in the UK economy and the ongoing successful vaccination program. Forecasts from economists have now pushed forward the likelihood of an interest rate rise from the Bank of England into 2022, which has also helped buoy the currency. GBPUSD was up 0.09%, trading at 1.3852 at the time of writing. Economic sentiment declined in Germany for the third straight month, which did not help demand for the euro. German ZEW released on Tuesday posted a significant decline to 40.4, down from the previous 63.3, suggesting that confidence in the German economy remains weak. There are concerns about the impact of the COVID-19 Delta variant and whether further lockdowns may be required. EURUSD was up 0.11% today, trading around 1.7317 at the time of writing. Last month saw the strongest US CPI figure in 13 years, which has been part of the reason the market speculates that interest rates in the US could be increased. The Jackson Hole Symposium will take place at the end of August, where all the US Federal Reserve members will be meeting. Market expectation is that the meeting will discuss how the central bank could start tapering its bond-buying program, which could be positive for the US dollar. The Fed is also expected to bring forward when it will start increasing interest rates again.

Expected Ranges

  • EUR/CAD: 1.467 - 1.4694 ▲
  • GBP/CAD: 1.7307 - 1.7376 ▲
  • AUD/CAD: 0.9182 - 0.923 ▲
  • USD/CAD: 1.2495 - 1.2546 ▲