The second week of July, ending on 19th, was very busy and full of positive sentiments.
Riskier markets’ currency forecast got much-needed support from coronavirus fight progress and economic outlook.
Despite hopes on coronavirus treatment, infections spiked to new highs in the week.
Fundamentals That Affected Currency Forecast
Positive Sentiments
Positive sentiments from the coronavirus treatment hopes and US equities predominantly affected all the forex biggest movers.
On Wednesday, global positive moods were a result of positive forex news from Moderna’s Covid-19 vaccine trials in early-stage human trials.
According to the England Journal of Medicine, the coronavirus vaccine manufactured by Moderna produced a strong immune reaction that protects against the virus.
Further global sentiments arose from US equities resulting from strong trading results.
The positive sentiments supported the riskier markets, in line with the currency forecast.
Negative Sentiments
Despite the hopes of Covid-19 vaccines, the new spikes of the viral infections continue to hamper many states’ economic recoveries.
The US is hard hit and records the highest cases daily.
Looking at the coronavirus statistics, as on Sunday, confirmed cases stood at 14.5 million with America accounting for a quarter of it.
The total number of infections increased by 1.6 million in the 2nd week of July — higher than the previous week’s increase of 1.4 million.
Negative forex news from the coronavirus fears and its resurgence also affected all the forex biggest movers.
Geopolitical Trade Wars
Another fundamental that affected the current forecast is Geopolitical trade tensions.
These tensions have put the US on one corner against other Nations such as France and China on the other side.
On 10th July, France decided to tax the Silicon Valley Technological giants from the US, igniting a long-running dispute over digital taxes.
In retaliation, America announced plans to impose a 25% tax on Beauty and Luxury products from France.
On Thursday, the US administration contemplated imposing a blanket travel ban on China’s communist party members, including their close relatives.
This action would probably prompt retaliatory measures against America by the Beijing administration.
These trade wars would further escalate the tensions between these two economically strong nations and affect currency trading predictions.
Oil Prices
Oil prices also came into play to affect currency forecasts for commodity-related markets.
Earlier in the week, oil prices dropped but gradually bounced back to find strong resistance at $41 per barrel.
Currency Forecast for the G7 Weekly Wrap
Summary of G7 currency forecast
|
Currency pair |
13th July |
19th July |
Average price |
Percentage change |
remarks |
|
USD |
96.407 |
95.889 |
96.172 |
0.750% |
drop |
|
EUR/USD |
1.1342 |
1.1428 |
1.1398 |
1.1327% |
gain |
|
GBP/USD |
1.2554 |
1.2564 |
1.2561 |
0.4635% |
gain |
|
USD/JPY |
107.28 |
107.13 |
107.15 |
0.09% |
drop |
|
USD/CHF |
0.9415 |
0.9392 |
0.9415 |
0.1913% |
drop |
|
USD/CAD |
1.3610 |
1.3583 |
1.3578 |
0.1140% |
drop |
|
AUD/USD |
0.6940 |
0.6990 |
0.6980 |
0.5828% |
gain |
|
NZD/USD |
1.5290 |
1.5271 |
1.5268 |
0.3488% |
gain |
USD
It was another bad week for the American dollar forecast primarily driven by coronavirus news, improving economic data and federal sentiments.
According to investing.com, the dollar forecast suffered yet another loss to trade in the reds for the 4th week consecutively to fall by 0.73%.
In the previous week, it had dropped by 0.53%, according to the dollar report.
Both industrial production and retail sales in the US improved in June, negatively affecting the dollar.
Also, as consumer sentiments deteriorated in July, consequently, the American dollar went downwards.
The dollar report further indicates that the US posted over 1 million job losses for the 17th straight week.
The job losses were more than expected as the US continues to struggle with Covid-19 economic effects.
GBP/USD
The United Kingdom had a busy economic calendar to be among the forex biggest movers.
At the beginning of the week, its currency forecast was driven primarily by manufacturing productions and GDP results for May.
Manufacturing production improved while the UK economy increased to boost the sterling pound.
The UK’s GDP shrank to affect it, however negatively.
Negative sentiments emanating from Brexit talks weighed heavily on the sterling pound at the week.
According to the currency forecast report, the pound dropped by 0.43% at the close of the week, contrary to the previous week’s gain of 1.11%.
EUR/USD
Europe had a relatively busy economic week according to the currency trading forecast.
It relied heavily on improved financial updates and hopes on recovery funds to leverage the euro.
The improved economic report reflected by increased industrial production and trade figures supported the euro.
The European Central Bank’s monetary policy decision was the main driver for the euro currency trading predictions.
On Thursday, It did not change its earlier policies on rates and stimulus programs.
The ECB also assured the markets of its continued support.
Forex news of progress towards coronavirus treatment generated positive sentiments supporting the euro against the dollar.
However, spikes of coronavirus infections in the US undermined the greenback pushing the euro upwards.
Furthermore, on Friday, the euro received additional support from the EU member states meeting.
The meeting was convened to deliberate the EU recovery funds.
Over the week, the euro rallied by 1.13% to close at 1.1428.
This was a better improvement compared to the previous week’s gain of 0.46%.
JPY/USD
The Japanese yen dropped by 0.08% to close the week at 107.02, a dramatic turn to the previous week’s increase of 0.54%.
According to the forex currency forecast performance of the Japanese yen was battled by coronavirus news, global risk sentiments, and economic outlook released by the Bank of Japan.
On Monday, the yen started badly due to positive global sentiments vibrating from coronavirus news vaccines hopes in the fight against Covid-19 over the weekend.
Also, news headlines of President Trump wearing a mask in public added more positive sentiments.
On Tuesday, Japan approved a 2.2 billion yen stimulus package to support the flood-hit regions putting pressure on the yen downwards.
Also, more pressure came from the improved equities of the US stock market.
Additionally, more pressure came as japan’s industrial production dropped to its lowest in 11 years as coronavirus global pandemic pushes demand down.
The Covid-19 pandemic dealt a significant blow to the export-dependent economies.
Mid of the week, the japan governor’s bank, Harushiko Kuroda, painted an uncertain economic outlook of Japan as the country’s economy slowly recovers.
He further promised additional monetary easing steps when needed to boost the now fragile economy.
Over the week, Japan recorded up to 600 new spikes in coronavirus infections, indicating that it was facing a virus’s resurgence.
This prompted the government of japan to escalate alert levels for the coronavirus infections to the highest level — meaning spreading infections.
Contrary to currency trading speculations, the US-China trade wars, and weak US employment report, risk aversion mood failed to lift the yen.
CHF/USD
Comments from the Swiss National Bank on maintaining expansive monetary policy downgraded the Swiss Franc.
On Tuesday, forex traders interpreted the comments and factored in possible future currency interventions by the Swiss National Bank.
Positive global risk sentiments prior to the start of the week negatively affected the CHF/USD currency forex forecast.
Over the weekend, President Trump finally wore a mask publicly.
Besides, hopes on coronavirus vaccines by Pfizer and BioNTech companies getting FDA’s fast track status boosted the American dollar.
On Thursday, CHF/USD currency pair bottomed and bounced back in reaction to negative sentiments spiked by geopolitical trade wars and weak economic data from the US.
On Friday, it continued its recovery, possibly in hopes of the EU recovery fund agreement this weekend as there were no direct catalysts.
CAD/USD
For the loonie, positive economic data was vital for its performance to increase by 0.09%, having fallen by 0.33% the previous week. It closed at 1.3580 against the dollar.
The Bank of Canada (BoC) monetary policy was the main driver affecting currency trading predictions of CAD/USD fx pairs.
On Wednesday, the BoC announced that there would be no interest rates increase for now until inflation objectives are realized.
It stated its commitment to provide more support whenever needed.
However, the BoC portrayed uncertainties in Canada’s economic outlook damaging the image of the loonie.
AUD/USD
By the close of the second week of July ending on 19th, the Australian dollar rose by 0.66% to close at 0.6996.
According to the Australian dollar forex forecast report, its performance was driven by business and consumer confidence.
The business confidence showed much improvement, while consumer confidence rose slightly.
Also, positive forex sentiments towards a Covid-19 vaccine led to the upside trend.
Weak results of employment records weighed heavily against the Aussie but not significant enough to negatively affect the Australian dollar forex forecast.
NZD/USD
It was a relatively economically quiet week for the kiwi, driven mainly by inflation figures and production.
The inflation rate eased from 2.5% to 1.5%, while the consumer index fell by 0.50 %.
However, on Friday, the manufacturing sector’s positive data released supported the New Zealand dollar to achieve 0.34% gain over the dollar.
And contrary to currency trading predictions, a positive GDP report, released in the middle of the week, from China failed to boost the kiwi.
Conclusion
The greenback lost its value against all the other g7 forex currencies.
The hopes on coronavirus treatment vaccines generated positive sentiments that pressured the safe-haven currencies downwards.
New high spikes of Covid-19 in the US indicates its frustration in the fight against the virus.
Contrary to the current forecast, the virus’s negative sentiments failed to uplift the dollar — the dollar is losing its safety status in the harsh conditions.
