US dollar demand up after rocky week

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.