In focus is a busy third week of August, ending 23rd, with forex prediction primarily driven by Economic data and Geopolitical tensions. The dollar wavered over the week to safely land in the green territories.
Coronavirus pandemic continues to affect the performance of g7 fx currencies as demand for risk appetite markets drops. An in-depth g7 currency performance weekly wrap awaits you in this article.
Fundamentals Affecting The Performance Of G7 Currencies
This week’s performance of the g7 currencies was primarily driven by coronavirus pandemic, economic data, and geopolitical tensions.
Coronavirus Pandemic
The coronavirus continues to increase and undermines economic recovery efforts around the world. Confirmed cases, as on Sunday the 23rd, stand at 23.3 million, recoveries were 15m, while fatalities were nearly reaching 1 million.
Many countries have managed to stabilize the infections from covid 19, but Europe suffers under the impact of the respiratory disease cases.
According to WHO, the spread of the covid 19 is being fuelled by young persons, unaware that they are infected. The majority of these young adults are not even aware of the danger they pose to vulnerable people.
Geopolitical Tensions
Geopolitical tensions between the US and China continued to escalate over the week. The Washington administration issued a warning to higher learning institutions to dispose of Chinese shares in their funding.
Such a move would further increase the long-standing bitter relationship between these economically giant nations. Tensions between them emanate from trade, coronavirus pandemic, and the US Presidential elections.
Economic Data
The g7 countries released economic data, depending on the results, affected the performance of its currencies. Financial data from china also affect commodity-related currencies such as the NewZealand dollar and the Australian dollar.
Economic data, such as employment records, inflations, trade, retail sales, production, and paint the economic outlook of a country, were the key drivers.
G7 Forex Prediction Performance Review
Summary of the performance of g7 currency forex prediction.
| Currency pair | 17th Aug 2020 | 23rd Aug 2020 | Average | Percentage change | remarks |
| USD | 92.847 | 93.240 | 92.801 | 0.167 | increase |
| GBP/USD | 1.3102 | 1.3087 | 1.3147 | 0.0229 | increase |
| EUR/USD | 1.1869 | 1.1795 | 1.1858 | 0.3885 | drop |
| USD/JPY | 105.99 | 105.78 | 105.82 | 0.75 | drop |
| USD/CHF | 0.9064 | 0.9115 | 0.9088 | 0.2750 | increase |
| USD/CAD | 0.3214 | 0.3175 | 0.3190 | 0.6860 | drop |
| AUD/USD | 0.7214 | 0.7161 | 0.7197 | 0.1395 | drop |
| NZD/USD | 0.6557 | 0.6539 | 0.6557 | 0.0153 | drop |
USD Fluctuating Week
For the American dollar prediction, the greenback fluctuated, finding support at 92.2 levels before bouncing back to 93 levels to trade in the green. Forex prediction indicates that it increased by 0.16% to close at 93.247, ending its weekly series of losses.
Notably, the significant gain on Friday, resulting in a 0.44% increase in American dollar prediction. The American dollar prediction shows that the greenback declined on Monday and Tuesday, recovered on Wednesday. It then dropped on Thursday only to bounce back strongly on Friday.
Economic data front for the greenback included weekly jobless claims and manufacturing figures. The manufacturing index increased to a 19-month high of 53.6 from 50.9, while the service sector hit a 17-month high of 54.8 from 50.0.
America’s weekly jobless claims return to higher fingers, over 1 million contrary to an earlier projection of less figure. Previously it had dropped to below I million. The 0.44% gain realized on Friday resulted from the US private sector and negative economic update in the Eurozone.
Negative Brexit talks updates also weighed heavily against the euro to uplift the dollar. According to investing.com, the dollar fell in most days of the week but reverted on Friday. The rebound of the dollar significantly reversed the earlier gains of bullish currency pairs on Friday.
Despite a stabilization in coronavirus infections in the US, the second wave outbreak has ultimately tarnished the status of the greenback as a safe-haven currency.
GBP/USD
On the economic calendar, the gbp usd forecast poll experienced a busy week majorly driven by inflationary, retail sales, private sector, and service sector figures.
According to forex prediction, the sterling pound’s exchange rate forecast rose dismally by 0.03% to close at 1.3090, having gained 0.26% in the previous week.
Mid-week, the pound’s forex prediction received much support from increased inflationary figures. Friday was very busy only for the pound to suffer a significant blow and declined by 0.94% reversing its earlier week’s bullish currency pairs trend.
The sharp decline on Friday attributed to profit-taking by investors and the US posted better than predicted economic data. The gbp usd forecast poll significantly boosted by retail sales and private sectors that were positive.
Besides, the service and manufacturing sector were on the upswing too to add more support.
The Brexit talks between Britain and the EU ended in dreadlock once again but had no significant influence on the gbp usd forecast poll.
EUR/USD
forex prediction for the euro moved down due to continued increase in coronavirus new spikes across Europe. Most countries complained of increasing infections, some up to between 50% – 70 %. More damage came on lockdown speculation and discouraging European economic data.
On Thursday, the ECB’s monetary policy meeting outcome painted a grim picture for Europe”s economic outlook. The negative sentiment negatively pressured the euro. The euro’s decline was accelerated due to increased demand for the dollar, while the EU economic data performed poorly than predicted.
The Eurozone released poor economic data with the manufacturing index dropping from expected 54.9 to 50.1. On the side, the private and service sectors also went on the downswing.
The drop in the Eurozone’s economy reflects the coronavirus’s ravages across various industries, particularly in the private sector. However, the decline in the consumer confidence index and inflation figures had no impact on the eur usd forex prediction.
Over the week, the euro fell by 0.38% to close at 1.1797, a sharp contrast to the previous week’s increase of 0.47%.
USD/JPY – Bearish
Japan had a busy economic calendar with crucial statistics on GDP, trade, and the private sector. All the statistics were skewed to the negative. Its economy shrunk by 7.8% in the second quarter, having fallen by 0.6% in the first quarter.
In trade, both export and import were severely hit. The only consolation was the minimal decline in the manufacturing sector. On the other hand, the service sector was significantly reduced.
Despite the challenges, the Japanese yen managed to regain from the previous week’s drop of 0.64%. It fought hard and managed to rise by 0.75%, closing at 105.80.
This week’s forex prediction indicates that usd jpy traded in the green on Wednesday with other days trading in the red.
USD/CHF
Coronavirus new spikes and lockdown speculation mainly drove the USD/CHF among the bullish currency pairs. USD/CHF currency pair this week’s performance ended a ten consecutive weekly loss.
Since Switzerland had no primary economic drive, the Swiss franc exchange rate forecast was driven by the euro. In addition, the strengthening of the greenback weighed heavily against the Swiss franc.
Both the import and export trades of Switzerland were on the upswing, providing much-needed support for the Swiss franc. The USD/CHF currency pair opened the week at 0,9064 and closed higher at 0,9115 to register a 0.2750% gain.
USD/CAD
A choppy week for the loonie but still ended on the green, leaving USD/CAD currency pair in the reds for a sixth consecutive week. Bulls were leaning on gains in oil prices. Furthermore, useful economic data of Canada provided additional support for the loonie towards the end of the week.
Economic data released were mixed. In comparison, retail sales increased by 23.7% , causing inflation figures declined. Consumer confidence index improved to uplift the Lonnie out of the reds.
More support for the Canadian dollar came from improved oil prices. Despite the mixed economic data, Lonnie managed to rise by 0.67% to close at 1.3177, slightly lower than the previous week’s increase by 0.88%.
The Canadian dollar lost ground on geopolitical tensions and the US economic stimulus worries. Another beating came from counterpart currency flow as Brexit talks hit a stalemate and the weakening sterling pound.
AUD/USD
The Aussie faced a tough week. After a good start, the Aussie went southwards, driven by negative global sentiments and weak economic growth. In the third week of August ending 23rd, the Australian dollar fell by 0.14% to close at0.7161.
On the economic front, Australia posted impressive retail sales figures that increased by 3.3%. However, spikes of covid 19 weighed on the Aussie, causing a 0.43% drop to leave the Australian dollar in the red territory.
Another factor is the geopolitical tension between the US and China, creating risk aversion moves. On Friday, risk aversion measures reacting to Brexit updates and bad business sentiments from Europe.
NZD/USD
The NewZealand dollar started the week poorly, then bounced back before reverting down on negative rates speculations. Economic data and geopolitical tensions drove forex prediction for the NewZealand dollar.
The tension between the US and China weighed heavily against the kiwi. On the economic front, inflation figures worked powerfully against the kiwi. Furthermore, the Reserve Bank of NewZealand sentiments on negative interest rates undermined it.
In the third week of August, the NewZealand dollar exchange rate forecast against the greenback fell by 0.02% to close at 0,6541.
Conclusion
The USD/CHF, CAD/USD, and GBP/USD Bullish currency pairs managed to close in the green while others found refuge in the negative territories.
Except for the Japanese yen, the American dollar gained over all the other currencies. Crucial support for the greenback came from improved economic data in the US and the stabilizing covid 19 infections in America.
Investors are keenly watching if the dollar will continue strengthening or if this week’s gains depicted by forex prediction are short-lived. A rebound of the dollar would affect the current Bullish currency pairs.
