Global tension, worsening pandemic conditions, and weak economic updates were the currency current events driver of the week. As a result, negative global sentiments led forex traders towards the safe-haven currencies.
Risk aversion was the dominant force of the week, pushing the greenback to top the charts. The Aussie and New Zealand dollars were the most brutal hit on the losing trend, as their respective nations reverted to strict coronavirus lockdowns.
Fundamentals
Afghanistan -Taliban Rule
On Sunday, the Taliban overran the Afghan government leading to a humanitarian crisis and political upheavals. This happened as the US and NATO forces pulled away ahead of the 31st August 2021 planned withdrawal deadline.
Unexpectedly, the Taliban took over the country quickly and easily, defeating well-trained and armed Afghanistan Military forces. Resulting, the G7 nations desperately tried to airlift tens of thousands of its citizens and Afghans that worked for the US.
Many Afghans and foreigners flocked to the Kabul Airport, causing massive chaos as they sought the only means to flee from the country.
Coronavirus – Delta Variant
The pandemic is still here with us, and it continues to escalate at an alarming rate. Apart from the global sentiments generated by the Afghanistan-Taliban rule, the spiking coronavirus delta variant weighed heavily on the g7 ‘s currency current events.
Meanwhile, 5 US states struggle to cope with the upward surge of delta variants above the daily averages. While other G7 nations continue to experience surging coronavirus cases, NewZealand confirmed the first cases in six months and immediately went on lockdown.
Economic Updates
Few new developments occurred in the policy and economic spheres. Instead, G7 nations and China posted weak economic data pointing to a slowed global economy. On Monday, China posted disappointing data, and the US released similar results on Tuesday.
Perhaps this is why traders focused this week on global risk sentiment.
Oil Price Forecast 2021
As projected by economists, the oil price forecast 2021 continues to tumble with the surge in COVID 19 delta variant. With the pandemic, countries have implemented travel restrictions and lockdowns that have reduced the oil demand.
Global crude oil prices shed over 7% for the week due to the negative sentiments and the strengthening dollar.
G7 Performance and Economic Review
Table: performance summary
| Currency pair | 14th August | 20th August | Average price | Percentage change | Remarks |
| USD | 92.619 | 93.508 | 93.201 | 1.077 | Increase |
| GBPUSD | 1.3850 | 1.3621 | 1.3721 | 1.7457 | Drop |
| EURUSD | 1.1777 | 1.1696 | 1.1713 | 0.8057 | Drop |
| USDCHF | 0.9120 | 0.9171 | 0.9158 | 0.1857 | Increase |
| USDJPY | 109.23 | 109.80 | 109.61 | 0.21 | Increase |
| USDCAD | 1.2572 | 1.2821 | 1.2701 | 2.4614 | Increase |
| AUDUSD | 0.7337 | 0.7134 | 0.7219 | 3.1890 | Drop |
| NZDUSD | 0.7017 | 0.6825 | 0.6899 | 3.0126 | Drop |
Dollar Forex News
According to the dollar forex news, the greenback rallied by 1.06%, closing at 93.496. By comparison, it had fallen 0.30% the week before. Early in the week, economic data influenced the dollar’s currency current events.
Stats from the economic report included jobless claims and retail sales. Retail sales declined by 1.1%, offsetting a 0.7% previous growth. Analysts had predicted a 0.3% drop. Similarly, sales for Core retail contracted by 0.4% against a projected 0.1% rise.
In contrast, the labor market figures once again showed a positive trend. First-time jobless claims dropped from 377k to 348k against a 363K drop predicted by economists.
A good set of minutes from the FOMC meeting on Wednesday contributed to the dollar’s rise. Members of the FOMC also discussed a near-term move that pushed the greenback higher.
USD to GBP Prediction
The sterling pound continued with its downward trend, losing 1.75% against the US dollar. In the week before, it had lost 0.04%. Economic data and coronavirus profoundly affected usd to gbp prediction in the week.
Several economic indicators were released Thursday, including inflation, employment, and retail sales. In July, the number of claimants fell by 7.8k. In June, the number of applicants dropped by 114K.
However, wage growth and the employment rate increased sharply in June. While unemployment dropped to 4.7% from 4.8%, average wages, including bonuses, rose 8.8%. Previously the wages had increased by 7.4%.
Last week, retail sales failed to support the sterling pound, falling 2.5% against expectations of an increase of 0.2%. Previously, the retail market experienced a 0.5% increase while the core retail market declined by 2.4%.
EURUSD News
In a quiet week, EUR/USD slipped by 0.84% to 1.1698 after rising by 0.30% In the week prior.
Employment, GDP, and finalized inflation figures were in focus in the eurusd news. At the beginning of the week, the Eurozone Q2 economy rose by 2.0%, reversing a 0.3% contraction during the previous quarter.
Similarly, employment rebounded by 0.5% in the second quarter, returning to growth after declining by 0.2% last quarter. As predicted, the annual inflation rate in the Eurozone went up to 2.2% from 1.9%.
Similarly, as projected, its core annual inflation rate dropped to 0.7% from 0.9%.
Swiss Franc Exchange Rate Forecast
There were no significant economic updates from Switzerland except trade exports that support the Swiss franc exchange rate forecast. Also, the strengthening dollar, the surge in coronavirus cases, and damaging global sentiments weighed heavily on the Swiss franc.
The Swiss franc lost 0.1857 % against the American dollar to close at 0.9171.
Canada Forex News
Canada’s Loonie slipped by 2.45% to close at 1.282, reversing a previous 0.31% gain. This week, the top Canada forex news stories were retail sales, employment, and inflation data.
While the annual inflation rate spiked to 3.7% from 2.7%, monthly consumer prices surged by 0.6%. Midweek Employment data uplifted the Loonie as ADP noted a 221.3k jump in the new workforce after a 294.2k drop in the previous month.
However, retail sales data supported the Loonie. Canada recorded a 4.7% spike in sales, better than the 4.6% economists projection. Previously the sales had declined by 2.0%. Contrary to a 4.4% increase projection, core retail sales improved by 4.2%, reversing a previous 2.1% reduction.
The economic data were favorable to the Loonie, but reducing crude oil prices and negative sentiments weighed heavily.
Asia-Pacific Currency Performance
Against the strengthening dollar, Japanese yen, Kiwi, and Australian dollars ended the week poorly, with the letter suffering heavily.
Aud News Currency
In a bearish week, the Australian dollar shed 3.25 % to close at 0.7132, making it the worst performer. On Monday, employment statistics weighed on the Aussie’s currency current events.
Amidst a 5% predicted rise in the unemployment rate, Australia’s Ministry of Labour unemployment rate indicated a 4.6% drop from 4.9%. Even though the data were favorable to the aud news currency, it could not withstand the strengthening greenback and the ravages of the coronavirus.
While employment records need 2200 new members, full-time employment reduced by 4200, previously full-time positions had increased by over 51k. Earlier in the week, RBA monetary policy weighed on the Aussie dollar.
In addition, a surge in coronavirus weighed heavily on the Australian dollar.
New Zealand Dollar vs US Dollar
Without significant economic data to support New Zealand’s currency current events, it shrank 2.94% in the week. The RBNZ’s monetary policy decision impacted New Zealand dollar vs US dollar performance.
While the market expected a hawkish rate increase, it was dashed as the country embarked on another lockdown. The RBNZ put a pause on hiking the cash rate because of the lockdown.
Even though the government held a hawkish press conference and the economy remained upbeat, the Kiwi failed to recover.
Jacinda Ardern put New Zealand under lockdown Tuesday following the first new Coronavirus case in six months of reporting in Auckland, the country’s largest city.
US Dollar To Japanese Yen
Japan had a quiet week that saw its currency reverse a previous 0.60% gain to post a 0.17% loss over the week. At the beginning of the week, Q2 GDP data impacted the yen’s currency current events.
Its monthly economy grew by 0.31%, and quarterly it recovered from a 1.0% contraction. Against a forecast of 0.70%, the economy grew 1.3% on an annualized basis. Mid-week, trade data influenced the US dollar to Japanese yen exchange rate.
Beating predictions, its trade surplus widened to ¥441.9 billion from ¥384.0 billion. Exports increased 37.0%, resulting in the trade surplus. In contrast, however, the machinery sector was disappointed as orders fell by 1.5% after surging by 7.8%.
Japan noted increased cases of the delta coronavirus variant forcing the government to extend the state of emergency.
Conclusion
The American dollar performed better than the other g7 currencies, in line with expectations in heightened negative sentiments. Geopolitical tensions, coronavirus concerns, and weak economic developments dominated this week’s currency current events.
Will the dollar continue on its winning streak? Only time will tell!
