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USD sees steady demand

Tuesday 7 December, 2021

Daily Currency Update

USD - United States Dollar

Steady demand for the US dollar weighed on the pound and the euro on Tuesday even as investors picked up commodity-based currencies amid waning concerns over the Omicron variant. The US Dollar Index sat around 96.43 at the time of writing. There is little economic data of note, however new incoming reports over Russia-Ukraine tensions could affect risk sentiment over the next day or two. President Biden held talks with Russian President Putin over the apparent build up of troops being seen on Ukraine’s eastern border.

Key Movers

Mixed data from the monthly German ZEW Economic Sentiment survey added pressure to the euro on Tuesday. The number improved to 29.9 in December for Germany and to 26.8 for the EU, but the opinion of the current situation fell -7.4 vs. expectations of -5. The Eurozone’s powerhouse has been hit by a fourth wave of COVID-19 cases which led to fresh calls for restrictions to be reinstated. This is likely why we are due to see a fall from the previous month's reading. EURUSD was down 0.35% trading around 1.2467 at the time of writing. The pound also struggled against the dollar but edged higher against the euro on Tuesday. The Health Secretary Sajid Javid told parliament yesterday that the Omicron variant is now spreading amongst the community in the UK and that the restrictions on travel will only slow the spread and not stop it. Some experts expect Omicron to be the dominant variant in the UK by early next year. Its ability to evade the current batch of vaccines is still unknown however none of the cases reported so far in the UK have required hospital treatment. GBPUSD was trading around 1.3227 while GBPEUR was sitting around 1.1762. The Australian dollar and Canadian dollar both rallied on Tuesday as the market mood improved over concerns from the new COVID-19 variant. AUDUSD was up 0.88% at around 0.71098 while USDCAD was down 0.69% at around 1.2666.

Expected Ranges

  • EUR/USD: 1.1232 - 1.1297 ▼
  • GBP/USD: 1.3219 - 1.3288 ▼
  • AUD/USD: 0.7041 - 0.7119 ▲
  • USD/CAD: 1.2638 - 1.278 ▼