Once again, the US dollar topped the forex big impact news this week. Inflation data in the USA boosted speculation of a rate hike coming soon, boosting the dollar.
However, the speculation also fuelled risk aversion measures as traders feared the high prices could slow down economic activities.
Risk aversion measures pushed the New Zealand dollar to be the week’s top loser, followed closely by the Australian dollar.
Fundamentals Driving Forex Impact News
Inflation
Global inflation conditions primarily impacted forex trading this week. For instance, the US yearly CPI surged 6.2 percent, the highest in 31 years.
In addition, recent forex big news indicates prices rose at a record high rate in the G7 nations and worldwide. Currency traders feared central banks might soon hike lending rates to curb the spiraling global market prices.
Notably, the US hinted the hike might come earlier than expected, possibly by June next year.
COVID 19
The coronavirus pandemics are still causing chaos in the G7 nations and the world at large. In the US infection rate is no longer declining but may spike in winter.
But the situation is getting worse across Europe, with infection rates in Germany and France skyrocketing. In the UK, booster jabs pushed infection rates down.
Countries have ies reintroduced measures targeting non-vaccinated individuals.
us crude oil forecast
Weakened by the strengthening dollar, crude oil closed the week in the reds for a third consecutive week.
Speculations that the US administration may try to cool rising prices by releasing more oil from its strategic reserve weighed heavily on the US crude oil forecast.
Oil prices closed the week lower at 80.79 per barrel.
G7 Performance and Overall Economic Condition Review
Table: g7 performance summary
| Currency pair | 6th Nov 2021 | 12th Nov 2021 | Average price | Percentage change | Remarks |
| USD | 94.317 | 95.128 | 94.576 | 0.834 | increase |
| GBPUSD | 1.3494 | 1.3413 | 1.3466 | 0.6297 | drop |
| EURUSD | 1.1566 | 1.1450 | 1.1520 | 0.8830 | drop |
| USDCHF | 0.9121 | 0.9213 | 0.9160 | 0.8754 | increase |
| USDJPY | 113.40 | 113.89 | 113.55 | 0.42 | increase |
| USDCAD | 1.2454 | 1.2542 | 1.2490 | 0.6985 | increase |
| AUDUSD | 0.7401 | 0.7332 | 0.7358 | 0.9055 | drop |
| NZDUSD | 0.7115 | 0.7044 | 0.7088 | 1.03 | drop |
US Dollar Market
The greenback surged by nearly 1 percent to 95.122 in the second week of November, following a 0.10 percent gain in the previous week.
This is the third week in a row for the dollar to close in the green territory.
Inflation data drove the US dollar market in the first half of this week, casting doubt on the FED’s transitory position.
Core wholesale inflation was steady at 6.8 percent in October, while the PPI rose 0.4 percent.
Similarly, the yearly wholesale inflation level remained steady at 8.6 percent.
Mid-week, consumer price inflation (CPI) data for October uplifted the dollar. The annual inflation rate jumped from 4.0 to 4.6 percent.
The weekly jobless claims received little attention on Wednesday, as forex traders focused on the inflationary forex big impact news.
The jobless claims dropped by four thousand. But the dollar’s earlier gains were halted by consumer sentiment data at the end of the week.
Contrary to economists’ projection of a 72.4 percent raise, the consumer sentiments dropped to 66.8 from 71.7 percent.
GBP to USD This Week
The exchange rate for gbp to usd this week fell by 0.62 percent to close at 1.3414. Previously the pound had fallen by almost 1.5 percent.
The UK had a busy economic calendar with GDP, manufacturing, and industrial production supporting the pound.
According to preliminary figures, UK GDP grew by 1.3 percent in the third quarter, down from 5.5 percent in the second quarter. Yearly, the GDP grew by 6.5 percent, much lower than the over 20 percent growth in the second quarter.
Despite that, the UK economy in September expanded by 0.6 percent, slightly better than 0.4 percent in August. Weaker-than-expected industrial and manufacturing production results weighed heavily on the sterling pound on Thursday.
Production in the industrial sector dropped by 0.4 percent, and manufacturing activity declined by 0.1 percent.
Other economic data in the forex big impact news had a minor impact. This includes retail sales, trade data, and house price data.
Euro Dollar Movement
The euro dropped slightly by over one percent this week to 1.1445. Before that, the euro had gained almost one percent to 1.1567.
In the early part of the week, economic data impacted euro dollar movements. In addition, Germany’s trade data and the ZEW Economic Sentiment for the Eurozone were in focus.
However, even though Germany’s trade surplus increased marginally, traders were more optimistic about economic activity in the Eurozone and Germany.
Forex big impact news shows the economic sentiments index for Germany spiked to 31.7 from 22.3 and rose to 25.9 from 21.0 in the Eurozone.
On Friday, poor industrial production data in the Eurozone weakened the eurusd exchange rate.
For September, industrial production figures shrank further by 0.2 percent, following a near 2 percent decline in August.
At the end of the week, October finalized inflation figures for the Eurozone, further weakened eurusd currency.
Additionally, the Coronavirus pandemics left a heavy mark on the euro. The latest forex big impact news indicates that some G7 nations plan to reintroduce lockdown measures as the region becomes the epicenter of the disease once again.
But as the disease continues to surge across Europe, some EU member states like Austria have introduced strict lockdowns on unvaccinated citizens.
The resurgence of the disease generated negative sentiments forcing traders to run away from the risk assets to the safety of haven currencies.
Dollar vs Swiss Franc
The Swiss franc lost 0.8754 percent, down to 0.9160 against the dollar due to risk aversion measures.
As predicted, the Swiss employment rate slows down to 2.7 from 2,8 percent. And the production prices for October dropped by 0.6 percent to 104.7.
However, dollar vs Swiss franc prediction received a major boost from market uncertainties due to the resurgence of COVID 19 across Europe.
Canadian Dollar Update
In the second week of November, the loonie weakened by 0.75 percent to 1.2550 following a previous 0.56 percentage drop to 1,2457.
According to the Canadian dollar update, Canada had no major economic updates to provide its currency with direction.
Canada registered a 4.4 percent inflation in September and is projected to hit 5 percent in December.
However, the Central Bank of Canada Governor assured the market, indicating the current rates are transitory and would be kept under control soon.
Forex Big Impact News In The Asia-Pacific Region
It was a bearish week for the Japanese yen, Kiwi dollar, and Australian dollar.
US Currency to AUD
The Australian dollar closed the week down by 0.92 percent to 0,7332.
Positive sentiments both in the consumer and business sectors impacted us currency to aud exchange rate.
While the consumer sentiment index surged by 0.6 percent, business confidence jumped to 21 from 10.
Due to the increased consumer confidence after lifting of lockdown measures in some provinces, new Homes sales rose 11 percent.
On the downside, Australia lost over 46 thousand jobs pushing the unemployment rate from 4.6 to 5.2 percent. Also, the participation rate rose slightly to 64.7 percent, adding to the unemployment numbers.
NZ vs US Dollar Forecast
The New Zealand dollar closed the week at 0.7044, down slightly over one percent from the week before.
On the economic front, New Zealand had a mixed bag. Electronic card retail sales increased by ten percent following the lifting of the lockdown measures at the start of the week.
But business confidence level slumped further by 18.1 percent. The business index for October increased from 51.6 to 54.3 at the end of the week, providing some support to the nz vs us dollar forecast.
USD vs Japanese Yen
The Japanese yen lost 0.42 percent to 113.89 against the American dollar. Previously the yen had gained 0.47 percent to 113.410.
In October, Japan’s lending indicators declined from 101.3 percent to 99.7 percent. And for the first time in three months, inflation outpaced wage increments as the wages slipped by 0.2 percent.
Meanwhile, Japan’s annual inflation hits four decades high due to
- Increased fuel prices
- The production price index (PPI) surged by eight percent in October
Due to decreased car exports, the current account surplus dropped 31 percent. With Japan’s economic sentiment hitting 55.5, eight-year high machine tools orders spiked from 71.9 to 81.5 percent.
On a positive note, the Bank Of Japan Governor expects a rebound early next year. But the Governor was quick to warn that supply chain issues and offshore recession could impact usd vs Japanese yen rates.
The Governor reassured the markets by indicating that he would maintain a friendly policy to stimulate household spending and improve output.
Week Ahead
Analysts predict the following fundamentals to impact forex news in the coming week;
- Global inflation
- Low-level economic updates
- COVID 19 resurgence and impending lockdown measures
- Central banks monetary policies
- Supply chain constraints
This week was mostly driven by global inflation numbers and coronavirus worries. With the market sentiments turning negative, traders jumped to the safety of the American dollar.
As bulls ride on the stronger dollar, don’t miss out on next week’s forex big impact news!
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