In the second week of June, economic data and monetary policy dominated currency market analysis forecast. Despite a quiet week on the economic calendar, positive sentiments towards the economic outlook significantly drove the forex market.
While the US dollar and Swiss franc emerged as the week’s top performers, New Zealand and Canadian dollar closed at the bottom.
The Fundamentals that drove Forex Market Analysis Forecast
Global Treasury Yields Tumbled
Globally, Treasury yields tumbled, dragging down riskier assets. On the other hand, the Yen, Swiss and American dollar strengthened. For instance, the US 10-treasury yield dropped below the 1.5% level.
Economic Updates
The week was relatively quiet on the economic diary, with the few financial data released over the week providing directions for the g7 currencies.
Notably, the US posted higher CPI figures than predicted, the highest in 12 years. As a result, the safe-haven currencies led by the usd had a field day on Thursday.
Coronavirus News
Thanks to vaccinations and the easing of containment measures, social and business activities rebounded across the g7 nations. In India, the coronavirus infection is declining, but there is an uptick in Thailand and Rusia.
Worryingly, African, American, and European medical experts complained about new coronavirus variants that could evade vaccines.
Crude Oil Price Forecast
Over the week, oil prices improved and, for the first time in 3 years, hit over $70 per barrel in the US. Progress in global economic recovery, reduced oil inventories, and declining COVID-19 infections uplifted the Crude oil price forecast.
G7 Leaders Meeting
On Friday, the g7 leaders endorsed a global minimum corporate tax of 15% minimum. They also pledged to help the developing countries gain coronavirus vaccines under the COVAX initiative.
Other issues addressed in the summit include tackling climate change, expand International Development Funds to developing countries, and China’s human rights abuses.
G7 Fundamental Analysis and Economic Review
Table; G7 performance summary.
| Currency pair | 7th June | 13th June | Average | percentage change | remarks |
| USD | 89.946 | 90.550 | 90.154 | 0.463 | increase |
| GBP USD | 1.4178 | 1.4116 | 1.4141 | 0.2640 | drop |
| EUR USD | 1.2189 | 1.2110 | 1.2154 | 0.4850 | drop |
| USD CHF | 0.8974 | 0.8982 | 0.8967 | 0.1057 | increase |
| USD JPY | 109.24 | 109.72 | 109.50 | 0.21 | increase |
| USD CAD | 1.2079 | 1.2157 | 1.2117 | 0.6499 | increase |
| AUD USD | 0.7753 | 0.7708 | 0.7731 | 0.3748 | drop |
| NZD USD | 0.7230 | 0.7140 | 0.7186 | 1.1926 | drop |
USD Strong Rebound
During the week, the dollar rose by 0.46% to 90.5550 but could not break the 90.90 resistance level. Previously, it had increased by 0.12%, closing at 90.136. Market expectations and economic updates ahead of the FOMC policy meeting next week influenced the dollar’s currency market analysis forecast.
Earlier in the week, positive economic data boosted the dollar. JOLT’s job opening spiked from 8.288m to 9.286m, and the trade deficit narrowed from $75.0 billion to $68.9 billion. The weekly jobless claims and inflation data affected the forex market on Thursday.
Against a 3.4% projection backdrop, the annual inflation rate rose from 3.0% to 3.8%. In addition, consumer prices continued to impress, increasing by 0.7% after a prior 0.9% increase.
Positive initial jobless claim data also supported the dollar. Claims dipped to 376K, slightly below the expected 370K mark. Consumer sentiment ended the week on a high note as the Consumer Sentiment Index rose from 82.9 to 86.4, beating the 84.0 economic projection.
On Thursday, the consumer Prices index soared by 5.0%, coming in ahead of predictions.
British Pound Vs USD Forecast
In a relatively quiet week in the UK, the pound fell by 0.35% to 1.4107. In the week before, it had dropped by 0.22% to 1.4147. ln the week, GDP, trade data, manufacturing, and industrial productions determined gbp currency market analysis forecast.
However, traders had to wait until Friday for the data to be released. The UK economy continues to leverage the pound. It rose by 2.3% after a 2.1% previous increase. In addition, trade data also supported the pound as the deficit narrowed from £11.71bn to £10.96bn, while the non-EU deficit shrank from £6.55bn to £5.55bn.
However, while the GDP and trade data figures impressed, production figures disappointed the British pound vs usd forecast. First, manufacturing production dropped by 0.3% against a predicted 1.5% rise. Second, industrial production fell by 1.3% against a projected 1.2% increase.
EURUSD Weekly Outlook
In the week, the euro weakened by 0.48%, closing at 1.2108 against the dollar. In the previous week, it had fallen by 0.21% to 1.2167. The eurozone had a busy first half of the week where the German economy significantly affected the eurusd weekly outlook.
After a previous week’s substantial gains, German factory orders dropped 0.20%, and industrial production reduced by 1.00%. Furthermore, Germany’s trade surplus increased modestly, falling short of forecasts.
Negative economic sentiments from the eurozone and Germany also pressured the euro. However, the sentiments did not taint the currency market analysis forecast ahead of the ECB’s policy announcement and press release on Thursday.
Eurozone’s 1st quarter GDP provided additional support to the euro. The eurozone economy shrank by 0.3%, better than the 0.6% projected contraction. European Central Bank announcements and press conferences on Thursday dominated the 2nd half of the week.
The ECB raised the Eurozone GDP forecast from 4.0% to 4.6% for 2021 and 4.1% to 4.7% for 2022. However, the bank maintained interest rates unchanged at 0%. Besides, the US strong CPI figures on Thursday ensured the euro had no chance against the dollar.
Swiss Currency to USD
Last week, the Swiss franc could hold its own against a strengthening dollar. Finally, it lost 0.1057% to the dollar closing at 0.8982. A few economic data uplifted the swiss currency to usd exchange rate. Switzerland’s unemployment rate fell from 3.3% to 3.1%. Additionally, consumer prices rose 0.3%.
CAD Forecast
Despite a relatively quiet week, the Loonie rallied most days but lost significant ground on Friday. It decreased by 0.061% to 1.2158 against the greenback, while it had declined by 0.07% the week before.
Trade data, crude oil prices, and BoC monetary policy sentiments primarily drove cad forecast. A robust trade data and a rise in crude oil prices propelled the Canadian dollar higher at the beginning of the week.
Canadian trade balance improved dramatically from a C$1.35billion deficit to a C$0.59billion surplus. As well, an increase in crude oil prices improved Lonnie’s fortunes. However, on Wednesday, the Bank of Canada made a monetary policy that curtailed the strong rally.
As expected, the Bank of Canada maintained the current monetary policy at 0.25% and reiterated its commitment to fiscal policy support until a sustainable 2% inflation target is reached.
Meanwhile. the bears took charge of the Japanese yen, Kiwi dollar, and Australian dollar’s currency market analysis forecast in the Asia-Pacific region.
AUD Currency Forecast
The Australian dollar decreased by 0.40% to 0.7708 against the greenback in the week ending 13th June. It was quiet on the economic diary in Australia, leaving aud currency forecast to negatively skewed business and consumer data.
The Westpac Consumer Sentiment Index dropped further by 5.2% following a 4.8% previous drop. Business Confidence also disappointed, slipping from 23 to 20 points but the decline had a slight impact on the Aussie dollar.
Coronavirus pandemics still haunts the Australian dollar performance, especially a 2-week lockdown measure reintroduced in Melbourne. In addition, market optimism and improved demand for goods provided more support for the Aussie currency market analysis forecast.
However, on Friday, the American dollar rallied strongly, reversing the substantial gains made by the Australian dollar relegating the Aussie to the red zone.
New Zealand Currency to USD
The kiwi dollar fell by 1.16% to 0.7130 against the greenback during the second week of June. Business PMI numbers and Electronic card retail sales primarily drove the New Zealand currency to usd exchange rate.
While the Business PMI improved modestly from 58.4 to 58.6, electronic card retail sales increased again by 1.7% after a previous gain of 4.4%.
USD Vs YEN Forecast
In contrast to other g7 economies, Japan had a busy week on its economic calendar. For the week, the Japanese Yen depreciated 0.13% versus the dollar, closing at 109.66. In the previous week, the Yen had rallied by 0.30%.
Japanese economic activity contracted by 1.0% in the first quarter, beating a previous prediction of 1.3%. However, at the end of the week, manufacturing sector figures declined but had a minimal impact on the usd vs Yen forecast.
The manufacturing index dropped from 1.6 to -1.4.
Conclusion
Risk on sentiments dominated the g7 currency market analysis forecast for most of the week. However, the US dollar made a significant rebound on Friday and ended in the green territory.
As the world economy and public health continue to improve, traders expect risk-on sentiments to drive the forex market in the coming weeks.
Related: International Currency Trends From 31st May to 6th June 2021
