In this week’s review, economic data took backstage with risk appetite returning to the g7 currency fundamental analysis. Other fundamentals also affected the market, and by the end of the week, the American dollar reversed its previous performance.
In a quieter week on the economic calendar, the Swiss franc and Euro ended the week stronger, with the sterling Pound emerging as the week’s poor performer.
The Fundamentals That Drove G7 Currency Analysis
COVID-19 news still affects fundamental analysis
News related to the COVID-19 pandemic continues to influence economic recovery efforts around the world. Controversies surrounding AstraZeneca and the rare link to the blood clot caused major concerns across Eurozone and the UK.
The EU countries struggled to get enough shots amid the controversies surrounding the AstraZanecea vaccine. It has been canceled severally in some countries while some are limiting its usage to people over 60 years.
In response, the EU diversified its vaccine acquisition from AsrtraZenacea to order 1.8billion mRNA COVID vaccines. Meanwhile, the US is doing much better than other g7 countries, with almost 40% of its population have received at least a single dose.
Economic Updates
Economic data has a significant impact on currency fundamental analysis, but it had little effect on the g7 currencies in the week. The week was relatively quiet, characterized by less economic data.
Except for Eurozone and Canada, the g7 members had a quiet week on the economic data. New Zealand and Australia did not have economic statistics to provide direction for their currencies.
The US ten-year bond drove the week
On Friday, the US bond yields strongly rebounded and peaked at 1.68% before sliding affected the g7 currency performance. As witnessed on Friday, an increase in US bonds uplifts the dollar.
Crude Oil Report Prediction
Over the week, crude oil prices dropped by 3.04%. The continuing coronavirus pandemic impacts on global demand weighed on crude oil report prediction. Also, OPEC reduced production until May, weighing against oil prices.
G7 Economic Review and Performance
Table: G7 Performance summary
| currency pair | 5th April | 11th April | average | percentage | remarks |
| USD | 92.595 | 92.160 | 92.329 | 0.958 | drop |
| GBP/USD | 1.3897 | 1.3705 | 1.3767 | 0.8967 | drop |
| EUR/USD | 1.1811 | 1.1898 | 1.1877 | 1.1605 | increase |
| USD/CHF | 0.9364 | 0.0.9252 | 0.9286 | 1.7886 | drop |
| USD/JPY | 110.17 | 109.73 | 109.73 | 0.89 | drop |
| USD/CAD | 1.2521 | 1.2532 | 1.2552 | 0.3261 | increase |
| AUD/USD | 0.7649 | 0.7621 | 0.7637 | 0.2038 | increase |
| NZD/USD | 0.7055 | 0.7035 | 0.7040 | 0.0711 | drop |
The USD takes a U-turn
The greenback faced a first weekly loss in 4-weeks. In the week ending 11th April, the dollar index fell by 0.92%, closing at 92.163. Previously it had strengthened by 0.28%.
The US had a quieter week on the economic calendar, leaving the dollar’s performance to FED remarks and COVID-19 news. The impressive US employment figures released in the previous week were the primary catalyst for the dollar weakness in the weak.
According to Investing.com, the greenback started the week well, but a dovish FED pushed the dollar to the reds. On the economic data front, service sector PMI, weekly jobless, and factory orders profoundly drove dollar performance.
On a positive note, ISM Non-Manufacturing PMI improved from 55.3 to 63.7. However, factory orders and jobless claims disappointed. In February, factory orders dropped by 0.8%, slightly reversing a 2.7% growth from January. On the other hand, initial jobless claims rose from 728K to 744K, a sharp contrast to an earlier projection of a drop to 680K.
Other financial data had a muted impact, though, on the fundamental currency analysis.
Monetary policy sentiments also affected the dollar’s performance, as the FOMC conference minutes reaffirmed FED Chair Powell’s position on low rates for longer. Later in the week, Jerome Powell also delivered a speech drumming monetary policy support.
GBP USD Outlook
It was also a quiet week on the monetary data front in the UK. The sterling Pound ended the week down by 0.90% at 1.3707, reversing the previous week’s 0.31% gain. On the economic calendar, composite PMI and completed service numbers for March affected Gbp usd Outlook.
Both the private and service sectors improved in March, providing the much-needed pound support. But composite PMI figures had a muted on the gbp usd currency fundamental analysis.
More support for the Pound came from the UK’s government plans to ease coronavirus containment measures, thanks to the COVID-19 vaccination rollout’s impressive progress.
COVID-19 news uplifted the sterling pound. While the vaccine rollout picked up across the UK, the infection rate declined. Besides, the UK plans to ease restriction measures, but concerns remain over the travel ban.
Chf Currency Analysis
Amid the upsurge in COVID-19 pandemic, lockdown measures, and delayed coronavirus vaccine rollout, the Swiss franc emerged as the week’s top performer. Chf currency analysis shows that the Swiss Franc rallied by 1.7832% to close at 0.9253 against the American dollar.
The general weakness of the dollar and positive economic updates from Switzerland supported the swiss franc significantly. FEDs dovish sentiments uplifted the Swiss franc, but the spike in the US ten-year bond yields worked against it.
Eurusd Weekly Analysis
However, in the Eurozone, it was another busy week on the economic diary. Supported primarily by positive financial data, the Euro reversed its previous 0.30% loss to improve by 1.19%, closing at 1.1899.
On the economic update, Service sector PMI for much improved across the Eurozone, except in Italy. Also, better than the prem 52.5 forecast, the composite PMI increased to 53.2 from 48.8.
Despite the containment measures across several eurozone states, the private sector grew. In Germany, industrial production, trade data, and factory orders were in action.
Domestic demand uplifted industrial orders but industrial production and trade data disappointed. Germany’s industrial production reduced by 1.6%, while trade surplus narrowed from €22.2billion to €19.1billion.
Monetary policy also affected eurusd weekly analysis. The ECB meeting minutes highlighted downside risks to the economy near term while painting increased optimism in the near future.
While echoing Lagarde’s sentiments from the press conference, ECB minutes unveiled plans to increase bond purchase very soon.
American To Canadian Dollar Weekly Analysis
Another busier week in Canada saw the Lonnie reverse 0.01% drop in the previous week to increase by 0.38% to close at 1.2530. On the economic data front, employment figures, trade data, and Ivey PMI numbers affected Lonnie’s currency fundamental analysis.
The economic updates were mixed, with Ivey PMI rising to 72.9 from 60.0 and trade surplus reducing to C$1.04bn from C$1.21bn.
Winding up the week, employment figures significantly influenced the American to Canadian dollar exchange rate. Following a 259K previous increase, the employment figures surged massively by 303.1K. The surge lowered the unemployment rate from 8.2% to 7.5%.
Despite Canada’s struggle with the coronavirus pandemic, the 303.1K job surge significantly uplifted the Lonnie currency fundamental analysis on Friday. Canada’s housing sector continued on the uptrend, supporting the loonie as well.
But still, the coronavirus third wave infections and hospitalization in Canada pressured Lonnie.
Meanwhile, in the Asia Pacific,
The bulls took control of the Aussie, the kiwi dollar, and the Japanese yen.
Currency Forecast aud to usd
In Australia, it was a tranquil week. Without economic data to drive currency forecast aud to usd performance, RBA took center stage. As expected, the RBA left its monetary policy unchanged until wage growth improves substantially and inflation hits the 2% – 3% target range.
However, the board does not expect the conditions to materialize until 2024. Finally, the Aussie closed the week stronger by 0.17% to 0.7623.
New Zealand Currency to us Weekly Analysis
Similar to Aussie, there was no economic data to drive New Zealand currency to us currency fundamental analysis. The kiwi dollar ended the week slightly stronger by 0.01%, closing at 0.7033 to the greenback.
The spiking US bond yield and the general strengthening of the dollar weighed heavily on the kiwi.
Usd To Yen
In a relatively quiet week, the Japanese yen rallied strongly against the American dollar. It gained 0.92% to close at 109.67, reversing the 0.96% drop in the previous week. On the economic front, finalized service PMI figures improved from 46.3 to 48.3, profoundly affected usd to yen exchange rate.
On the positive side, optimism improved, hitting a high level since 2013. More support for the yen came from Household spending, which improved by 2.4%, reversing a 7.3% drop in the previous month.
Conclusion
Risk appetite returned over the week but on a low level. However, there was no significant demand for the risky assets and the Japanese yen. This implies the forex market might take a while before it aligns itself with the recent risk appetite.
As the g7 countries struggle under coronavirus infections and lockdown measures, COVID-19 and the US ten-year bond yields will continue to affect g7 currency fundamental analysis and economic performance.
Must Read: Currency Trend Analysis From 29th Mar To 4th April 2021
