Home Daily Commentaries New COVID-19 variant prompts concern

New COVID-19 variant prompts concern

Daily Currency Update

USD - United States Dollar

Currency market sentiment shifted on Friday following reports of a new COVID-19 variant. Some analysts have downgraded their expectations for the US Fed and other central banks to hike interest rates in mid-2022, which could put pressure on the US dollar in the near and medium term depending on how news of the new variant plays out.

Oil prices tumbled after South Africa identified a new coronavirus variant with early comments coming in that it may be more transmissible than Delta. The European Union proposed a travel suspension from the area which contributed to the selloff in oil prices.

The US Dollar Index, which measures the demand for USD against a basket of other major currencies, was down 0.66% trading around 96.14 at the time of writing.

Key Movers

The euro climbed against the US dollar on Friday, rising above 1.30 as investors paid close attention to headlines around the new COVID-19 variant from South Africa. The EU’s proposed travel suspension added to concerns over the global economic recovery.

The pound on the other hand weakened against the dollar, briefly dipping below 1.33 for the first time since December 2020 before recovering back above that level. GBPUSD was sitting around 1.3314 at the time of writing.

The Australian dollar and Canadian dollar took a hammering versus the US dollar on Friday morning on the back of the new COVID-19 variant reports. AUDUSD was down 0.93% at around 0.71212 at the time of writing, while USDCAD was up 0.98%, trading around 1.2770 at the time of writing.

Expected Ranges

  • EUR/USD: 1.1206 - 1.1316 ▲
  • GBP/USD: 1.3286 - 1.3345 ▲
  • AUD/USD: 0.7117 - 0.7191 ▼
  • USD/CAD: 1.2648 - 1.2797 ▲