In last week’s foreign exchange news, prices remained relatively steady until the Non-Farm Payrolls report stirred the forex market on Friday. Traders relied heavily on global risk sentiment as the primary driver of performance, with the safe-haven currencies performing better than the riskier currencies.
The global risk sentiment is also evident as the Canadian dollar performs better than the New Zealand dollar and the Australian dollar but weaker than most major currencies.
The US dollar kept the top spot at the end of last week, as a string of positive US economic updates lent support to the greenback amid concerns that the COVID 19 delta variant could spread globally.
The Fundamentals in the Foreign Exchange
NFP Report
Forex market sentiments turned positive on Friday after the US labor market report, with both the payroll numbers and unemployment rate spiking.
The NFP report ignited a risk-on sentiment that reversed the dollar substantial week gain on Friday while softening FED’s stance to hasten the interest rate hike/tapering timeline.
Coronavirus Concerns
Despite the novel coronavirus infection rate declining globally, WHO raised concerns that the new variant, delta plus, could soon lead to an upsurge in recent cases.
WHO pointed out that a tiny percentage of the global population, predominantly in third world countries, have received the protection jab. Vaccine hesitancy, poor distribution, and a lack of enough doses contributed to the low rate.
And across the G7 countries, travel restrictions are already in place, with some planning for another round of restriction measures.
Oil Stock Predictions
As the coronavirus delta variant continues to cause jitters globally, oil stock predictions were hit hard early in the week, with the demand for the product tumbling.
However, oil prices received a significant boost towards the end of the week after the US reported reduced inventory, rekindled optimism that OPEC could raise production levels.
Minimum Global Corporate Tax
On Thursday, 130 Nations signed a deal to impose at least 15% corporate tax on multinational corporations but, Estonia, Hungary, and the EU refused to sign. The 130 countries control over 90% of the global GDP would see their revenue increase by $150bn. The signed deal awaits finalization on 28th October and implementation in 2023.
Economic Update
In the week ending 4th July, g7 nations had a relatively quiet week on the economic calendar, with all countries posting improved financial data. However, delta variant concerns overshadowed the impact of the economic data.
G7 Economic Review and Fundamental Analysis
Table; G7 performance summary
| Currency pair | 28th June 2021 | 4th July 2021 | Average prices | Percentage change | Remarks |
| usd | 91.876 | 92.413 | 92.271 | 0.620 | increase |
| gbp/usd | 1.3883 | 1.3821 | 1.3837 | 0.4035 | drop |
| eur/Usd | 1.1924 | 1.1861 | 1.1875 | 0.5992 | drop |
| usd/jpy | 110.62 | 111.11 | 110.98 | 0.30 | increase |
| usd/chf | 0.9193 | 0.9215 | 0.9220 | 0.4414 | increase |
| usd/cad | 1.2335 | 1.2319 | 1.2377 | 0.2033 | increase |
| Aud/ usd | 0.7567 | 0.7523 | 0.7515 | 0.8371 | drop |
| Nzd /usd | 0.7024 | 0.7026 | 0.6999 | 0.6505 | drop |
USD
Even though the US dollar dropped on Friday, it was able to stay the top currency through the weekend because investors were concerned about the spiking coronavirus infections due to the delta variant.
Ahead of Friday’s Non-Farm Payroll updates, economic data supported the greenback. In the week, the dollar gained 0.41%closing at 92.226. it had dropped by the same percentage in the previous week.
Early in the week, consumers’ confidence index impressed, jumping to 127.3, the highest in 16 months. Midweek, ADP’s June figures show another sharp increase in hiring as the private sector added 692k jobs to its payroll, following an even more significant increase of 886k jobs in May.
On Thursday, manufacturing data and weekly jobless claims took center stage in the foreign exchange news. Both data disappointed with the claims dropping from 415k to 365k, and the manufacturing index fell slightly from 61.2 to 60.6.
While the data supported the dollar, non-farm payroll data on Friday caused significant changes in the forex market. Non-farm payroll spiked by 662K after a previous 516K increase. Despite the payroll gains, the unemployment rate moved from 5.8% to 5.9%.
The figures came short of economist predictions. Economists had projected non-farm payrolls to hit 570k and the unemployment rate to decline to 5.7%. Meanwhile, the participation rate remained unchanged at 61.6% against a predicted shift to 61.7%.
USD GBP Forecast
In another relatively quiet week on the economic calendar in the UK, manufacturing data and GDP impacted usd gbp forecast.
Sterling Pound ended the week trading at 1.3824 against the dollar, losing 0.40%. Before that, the Pound had strengthened by 0.5%. It was a negative quarter, as the economy in the UK contracted more than expected.
Quarterly, the preliminary estimate of 1.5% contraction revised down to 1.6%. From a prelim of 64.2 Manufacturing index was revised down from 65.6 to 63.9 in June.
In addition to the economic updates, the rapidly spreading Coronavirus Delta variant added to the downward pressure on the Pound.
European Majors
Euro Dollar Forex Forecast
Meanwhile, the Eurozone foreign exchange news had another busy week, with the euro declining by 0.59% to 1.1865. Previously, the euro had grown by 0.61. Early in the week, economic sentiment dominated Eurozone news.
Eurozone inflation and unemployment figures uplifted euro dollar forex forecast. While the inflationary pressure softened across the eurozone to 1.9% from 2.0%, the unemployment rate dropped from 8.1% to 7.9%.
The manufacturing sector, on the other hand, outperformed the euro’s expectations. From a prem 63.1, the manufacturing index shot from 63.1 to 63.4, a record-high.
CHF Currency Forecast
in the week Swiiss franc lost 0.4414 to close at 0.9215 against the US dollar. Despite its volatile price action, the Swiss franc ended the week on a solid note with economic update and coronavirus new primarily driving chf currency forecast.
Swiss KOF economic barometer dropped from 143.75 to 133.37, with PMI jumping to 66.0. While retail sales spiked by 2.8%, CPI increased slightly by 0.1%.
USD to CAD Trend
Trade data, GDP, and RMPI, were the main drivers in usd to cad trend for the week that witnessed the Loonie drop by 0.24% to 1.2322. Before that, the Loonie had gained 1.39%.
The economic data positively skewed to the Lonnie, with Canada’s GDP contracting less than predicted. Canada’s economy shrank by 0.3% against a projected 0.8%, having grown by 1.3% previously.
The RPMI impressed, spiking by 3.2% following a 1.0% gain in the previous month. However, foreign exchange news indicates Canada’s trade balance declined from a surplus of C$0.59bn to a deficit of C$1.39bn deficit against a projected deficit of C$0.30bn.
Oil prices spiked over the week to hit $75 per barrel, the highest since 2018, pushing the Canadian dollar up.
Asia Pacific Currencies
foreign exchange news from the Asia Pacific region shows that the bears were firmly in control of the Aussie, the kiwi, and the Japanese yen.
AUD USD Currency News
in the week, the Australian dollar weakened by 0.84% to 0.7526, settling at the bottom spot.
It was yet another quiet week with few economic data for the aud usd currency news. Manufacturing, Private sector, and trade data mainly drove the performance of the Aussie.
Even though the economic data were positively skewed, they could not match the strength of the American dollar. In May, private sector credit grew by 0.4%, after a 0.3% previous gain. Also, on the rise, the manufacturing sector index jumped 61.8 to 63.2.
However, a more critical foreign exchange news was the widening trade balance, which went to A$9.681bn from A$8.028bn in May. Exports increased by 6%, contributing to the widening.
NZD Currency Forecast
It was also a relatively quiet week, with the kiwi dollar dropping by 0.66% against the American dollar closing at 0.7026.
Monday and Tuesday were quiet, with Business confidence driving nzd currency forecast mid-week. The business confidence dropped to -0.6%.
An unexpected drop of 2.8% in building consents had a muted impact on the nzd currency forecast.
USD JPY Oulook
Meanwhile, it was a busy week in Japan that witnessed the Japanese Yen losing by 0.27% to 111.05 against the American Dollar after a previous week’s drop of 0.49%. Early in the week, retail sales performed better than predicted.
The yearly sales figures improved by 8.2% against a projected 7.9% increase. In contrast, midweek production dropped by 5.9% after increasing by 2.9% a week earlier.
Towards the end of the week, usd jpy outlook shifted to the Q2 Tanken survey figures, with the CAPEX index increasing by 9.6% against a forecasted 5.2%.
The Manufacturing Outlook Index spiked from 4 to 13, with the nonmanufacturing index jumping to +1 from -1.
Conclusion
The g7 foreign exchange news was relatively quiet over the week except for the highly anticipated US jobs updates on Friday that significantly drove the market.
The g7 economies posted positive economic data, but the delta variant virus concern weighed down the good results.
Despite the improved global economic recovery, the fast-spreading and deadly coronavirus delta virus variant will continue to weigh heavily on the forex market.
Related:
International Currency Market News From 5th to 11th July 2021