In a bullish week, positive global sentiments primarily leveraged riskier assets. Traders also factored in economic data, coronavirus spikes, and other fundamentals in their analysis. Here’s what happened to the g7 currencies in this week’s forex market trading.
The Fundamentals
Several fundamentals drove the performance of the g7 currencies, but positive sentiments pushed other factors to the backstage.
Riskier Assets Leaned On Positive Global Sentiments
Positive news on the covid 19 vaccines vibrated throughout the week, reaching all corners of the world. Pfizer incorporation and BioNTech said that they are just waiting for FDA approval to start delivering vaccines. As traders focused more on the positive sentiments, it delivered an upswing for the riskier assets.
On Monday, British pharmaceutical giant AstraZeneca reinforced the war against covid 19. It announced that its vaccine has a 70% efficacy protection against the virus. AstraZeneca joined Pfizer-BioNTech and Moderna vaccines -both with 95 % efficacy – multiplying optimism to bring an end to the covid 19 global pandemics.
Adding to the positive sentiments, Regeneron’s REGN-COV2 therapy received FDA’s emergency authorization use for outpatient treatment against the coronavirus disease. REGN-COV 2 ID-19 was successfully administered to Trump when he contracted the disease in October.
End Of Geopolitical Uncertainty
Early in the week, Trump gave the nod to the president-elect Joe Biden’s transition to the White house. The move eased global geopolitical tension, but the incumbent president has not conceded defeat.
Economic Data
While the coronavirus vaccines’ good news took center stage, economic recovery expectations impacted forex market trading, too. Due to coronavirus pandemics, most countries posted negative economic data detrimental to their currencies.
However, China posted increased monthly profits of 28.6%, the highest since 2017. The improved performance of China’s economy directly uplifted commodity-related assets to be the week’s top performers.
Coronavirus Pandemics
Despite the continued global rise in the coronavirus, its impact was pushed to the backstage by the positive global sentiments. On Sunday the 28th Nov, global confirmed cases hit 62.7m, fatalities 1.5m, and recoveries 43m.
The US, Europe, and Asia are largely affected by the virus disease, with the US accounting for a large proportion. Some countries eased the lockdown measures while others extended.
Oil Prices
Oil prices rallied strongly supported by global positive sentiments and OPEC’s cut in the oil productions. Signal to the end in the US political uncertainty as Biden’s transition starts also boosted oil prices. By the end of the week, the oil prices increased by 7.18% to $45.53 per barrel.
Weekly Fundamental Analysis & Performance of the G7 fx currencies
Table: G7 performance summary
| Currency pair | 23rd Nov | 29th Nov | Average | Percentage change | Remarks |
| USD | 92.494 | 91.801 | 92.089 | 0.643 | drop |
| GBP/USD | 1.3323 | 1.3326 | 1.3346 | 0.27 | increase |
| EUR/USD | 1.1840 | 1.1965 | 1.1914 | 0.89 | increase |
| USD/CHF | 0.9125 | 0.9041 | 0.9084 | 0.7465 | drop |
| USD/JPY | 104.54 | 104.10 | 104.35 | 0.24 | drop |
| USD/CAD | 1.3077 | 1.2990 | 1.3015 | 0.8094 | drop |
| AUD/USD | 0.7285 | 0.7386 | 0.7351 | 1.1504 | increase |
| NZD/USD | 0.6921 | 0.7023 | 0.6986 | 1.3859 | increase |
USD In The Red Again
Global positive sentiments, coronavirus spikes, and economic data drove the dollar’s performance to end in another week in the red. It dropped by 0.65% to close the week at 91.70, following a 0.39% loss in the previous week.
Hopes in the fight against the coronavirus weighed heavily against the dollar. Pfizer and BioNTech incorporations are awaiting approval from the FDA on their applications to start the vaccines’ roll-out. Covid 19 new cases continued to rise in the US, and according to Aljazeera news, hospitalization due to the virus hit 90k on Friday in the US.
The US economic data failed to impress. However, the private and manufacturing sectors were positive, but the consumer confidence index dropped 101.4 to 96.1, as predicted. Poor market conditions and coronavirus spikes impacted negatively on consumer sentiments.
The weekly jobless claims increased slightly from 742k to 778k, pointing to a stalled labor market. On the other hand, consumer spending went on a downswing, and inflationary softened from 1.6% to 1.4%.
What Happened To Currency GBP to USD?
Economic data, Brexit talks, and covid 19 news drove the performance of the currency gbp to usd. In the week ending 29th Nov, the sterling increased by 0.27% to 1.3311, having risen by 0.65% in the previous week.
The UK’s economic data was mixed, with the manufacturing sector increasing, while the service sector went southwards. Attributed to the covid 19 resurgence and lockdown measures, the manufacturing sector slid from 52.3 to 45.8.
Due to the lockdown measures, the UK’s economy slumped. On the international relation front, the Brexit deal difficulty was negative to the pound. On a positive note, the progress towards covid 19 vaccines supported the sterling pound.
Reacting to the positive sentiments, the UK government asked its health sector to prepare for the vaccine in December. On Tuesday, Boris Johnson ended the UK’s lockdown measures but introduced strict regional rules.
EUR/USD
In this week’s forex market trading, the euro gained 0.89% to close at 1.1963. In the previous week, the euro had increased by 0.19%.
Lockdown measures in the Eurozone hit the economic sector hard. The service sector dropped from 46.9 to 41.3 and the manufacturing sector badly hit. In line with earlier projections, the IFO business index slid from 92.5 to 90.7, and consumer sentiments slumped from -3.2 to -6.7.
Towards the end of the week, Consumer spending and inflation affected the performance of the euro. Consumer spending increased by 3.7%, while consumer prices rose by 0.2%.
The continued spikes in covid 19 new cases and lockdown measures in the eurozone also weighed heavily on the euro. However, positive sentiments outweighed the negative economic updates and coronavirus spikes to support the euro usd currency pair.
USD/CHF
There were no economic updates from Switzerland, leaving the Swiss franc forex market trading primarily to the global positive sentiments. The Swiss franc was badly hit by positive global sentiments, lockdown measures in Europe, and continued spikes in covid 19 new cases.
Difficulty in the no Brexit deal also made things worse for the chf usd currency pair. By the close of the week, the Swiss franc shed off 0.7465% to close at 0.9041.
A Glimpse At CAD News
Canada had a quiet week on the financial upfront leaving the performance of its currency primarily to crude oil prices and covid 19 news update. Even without economic statistics to provide direction for the Lonnie, it rose by 0.81% to 1.2989.
In the week before, it had improved by 0.32%. According to cad news, global positive sentiments uplifted crude oil prices, thereby supporting the Lonnie. But the progress toward coronavirus vaccines greatly leveraged it.
AUD To Dollars On A Bullish Run
In the last week of November, the Aud to dollars exchange rate improved by 1.16% to close at 0.7387. A negative economic report from Australia was negative to the Australian dollar. Spike in coronavirus new cases and lockdown measures also weighed heavily on the aud forex market trading.
In the third quarter, Australian construction work and capital expenditure dropped by 2.6 % and 3%, respectively. Despite the negative economic outlook and covid 19 spikes, the hopes of a covid 19 drugs roll out before the end of the year significantly uplifted aud usd exchange rate.
NZD/USD Top Performer
Positive economic data and covid 19 news supported the New Zealand dollar to emerge as the week’s top performer. In a busier week on the economic diary, the kiwi dollar rallied strongly by 1.41% to close at 0.7027. In a sharp u-turn, the retail sales sector reversed a 14.6 % previous loss and surged by 28%.
As a result, the kiwi dollar reached the highest against the American dollar in two years. The annual trade surplus widened to nz$ 190m, a record high in 28 years. Export trade increased while imports reduced significantly due to covid 19 containment measures.
Furthermore, the Central Bank of New Zealand announced that its economy relatively withstood the coronavirus pandemics because of the stimulus aids and containment measures. China also posted an improved economy, which bolstered the kiwi dollar.
JPY to Dollar Performance
It was a relatively quiet week in Japan’s economic upfront, leaving covid 19 news updates to provide direction for the jpy to dollar exchange rate. Attributed to coronavirus pandemics, consumer prices dropped by 0.7%, the highest in 8 years.
Inflation pressure also went down as expected. Continued spikes in coronavirus new cases and containment measures introduced in japan affected the jpy/usd currency pair’s performance in the forex market trading.
However, progress towards covid 19 vaccines lowered demand for the Japanese yen. And by the close of the week, it dropped by 0.22% to 104.09. Previously, the yen had rallied by 0.74% to the dollar.
Conclusion
The progress in covid 19 vaccines by three pharmaceutical companies downplayed other fundamentals in the Forex market trading. As a result, the safe-haven dollar lost against the g7 currencies leading to a surge in the riskier assets.
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