Welcome to this week’s forex market update news! G7 currencies fluctuate along with market sentiments. But risk aversion dominated, boosting safe-haven currencies.
The safe-haven currencies benefited from various concerns. First, inflation and poor earnings had investors on edge. Second, China and the UK posted poor economic data. Geopolitical tensions further aggravated the situation.
The Japanese yen ranked first, followed by the Swiss franc and US dollar. The Kiwi dollar was the week’s worst performer, followed by the Australian dollar.
Fundamentals in This Week’s Forex Market Update News
Inflationary Pressure, Global Headache
Inflation rates spiked worldwide, with some nations posting new highs. An indication that consumer prices have now become a global issue. Additionally, rising inflation pushed up bond yields, making safe-haven currencies more attractive.
Inflations spooked the forex market, sending investors to the safe-haven currencies. Traders also feared the central bank would soon tighten monetary policies to curb inflation.
Is the Global Economy Slowing Down?
Recent economic updates indicate the world economy could be slowing down in the coming months. China and the UK posted poor economic data. Reports indicate unemployment surged and retail sales declined to new highs.
Also, Tech giants and financial institutions posted poor economic data. Boy, oh boy! Netflix posted dwindling earnings, way below expectations, causing the stock market to plunge. Poor financial updates upscaled the negative sentiments, dragging down the risk assets.
Russia-Ukraine Conflicts
Worries about Russia-Ukraine conflicts only added to the grim situation. On Friday, diplomatic talks between Russia and the West failed. Meanwhile, Russia continued to marshal thousands of troops along the Ukraine border.
Despite the heavy military deployment, the Russian government continues to deny plans to attack its neighbor. Russia insists its demands, including blocking Ukraine from joining NATO, must be met.
In response, the US and its allies warned Russia of dire consequences if it dared to attack Ukraine.
Current Oil Price Forecast
The current oil price forecast registered a fifth straight weekly gain!
An explosion on Wednesday knocked out the Iraq-Turkey oil pipeline, sending global oil prices to a record of $87.10 per barrel, the highest level in seven years. The oil rally supported the Canadian dollar, minimizing its losses.
Positive Developments In The Omicron Variant
The only positive news in the forex market update news came from the omicron variant front. Covid cases are declining globally, promising economic relief and reducing hospitalization.
Several G7 countries have begun to live again without restrictions.
G7 Economic and Fundamental Analysis
Table: g7 currencies performance summary
| Currency pair | 15th Jan 2022 | 21st Jan 2022 | Average price | Percentage change | Remarks |
| USD | 95.161 | 95.636 | 95.549 | 0.499 | increase |
| GBPUSD | 1.3645 | 1.3554 | 1.3599 | 0.8703 | decline |
| EURUSD | 1.1407 | 1.1340 | 1.1345 | 0.6483 | decline |
| USDCHF | 0.9138 | 0.9112 | 0.9148 | 0.2954 | decline |
| USDJPY | 114.60 | 113.68 | 114.26 | 114.26 | decline |
| USDCAD | 1.2519 | 1.2581 | 1.2525 | 0.2231 | increase |
| AUDUSD | 0.7210 | 0.7183 | 0.7202 | 0.3192 | decline |
| NZDUSD | 0.6797 | 0.6720 | 0.6765 | 1.1329 | decline |
US Dollar News Forecast
The greenback is back to the green! The dollar rose 0.49 percent to 95.636. Previously, it had lost 0.58 percent. Earlier in the week, economic data supported the dollar. The labor data weighed on the dollar as jobless claims rose to 286 thousand from 231 thousand.
On a positive note, the manufacturing index jumped to 23.2 from 15.4. The housing sector also played a significant role in the US dollar news forecast. Despite inflation surges and supply constraints, home construction soared by 9.1 percent.
New home sales surged 1.4 percent, and existing homes for sale dropped 4.6 percent. Another factor that supported the dollar’s strong performance is the Fed’s monetary policy. Next week, the FOMC is set to have a meeting, and there is a high chance it will lead to a rate hike.
Forex Market Analysis GBP USD
In a relatively busy week, the sterling pound depreciated by 0.89 percent to 1.353. At the start of the week, upbeat economic data supported the pound with 184 thousand new jobs created. Unemployment shrunk to 4.1 percent, and claimant numbers declined by over 43 thousand.
Mid-week, inflation data came into focus. The UK’s inflation increased to 5.4 percent from 5.1 percent. With the inflationary pressure and interest rate concerns, consumer confidence tumbled to -19 from -15.
On Friday, negative retail sales figures weighed on the forex market analysis GBP USD. Reports indicate retail sales declined by 3.7 percent against a 0.6 percent growth forecast.
Local politics also impact the pound
PM Boris Johson’s political life hangs in the balance as opposition MPs call for his resignation. With his party’s and the public’s support declining, it appears that the PM is on his way out.
In the latest forex market update news, Boris is confident he will overcome the scandals despite the mounting pressure.
EUR USD Direction
The euro was also hit! Following a 0.44 percent rise the previous week, it lost 0.59 percent this week. Earlier in the week, German and Eurozone economic sentiments boosted the euro. Germany’s index rose to 51.7 from 29.9, and the Eurozone’s index rose to 49.4 from 26.8.
However, inflation data weighed on the eur usd direction throughout the week. According to the European Central Bank, eurozone inflation increased from 4.9 percent to 5 percent. Forex market update news shows German production prices also rose by 24 percent.
CHF News Forex
The Swiss franc appreciated by 0.2954 percent to 0.9112. Previously, the Swiss gained 0.5333 percent. Switzerland had limited economic data. But it still thrived over the week, supported by the risk sentiments.
CHF news forex shows Switzerland’s production prices decreased by 0.1 percent to 105.1.
USD To CAD Future Trend
Over the week, the Canadian dollar decreased by 0.23 percent, falling to 1.2581 against the US dollar. This follows a 0.72 percent rise the previous week.
Canadian inflation and retail sales drove usd to cad future trend on the economic front. As expected, Canada’s inflation sped up from 3.6 percent to four percent. This is the tremendous inflation rate in three decades.
New home prices increased by 0.2 percent in the housing sector, but new home construction decreased by 22 percent, the most significant decline ever. On Friday, retail sales pressured Lonnie. Sales fell short of the 1.2 percent projection, increasing by 0.7 percent.
Asia Pacific Forex Market Update News
In the Asia Pacific this week, bears took control of risk assets. On the other hand, the Japanese yen thrived in the week’s risky environment to emerge as the week’s best performer.
Aud Currency Rate
In the week, the Australian Dollar declined by 0.31 percent to 0.7185. Consumer sentiment and employment numbers impacted the aud currency rate on the economic front. Consumer confidence declined as employment numbers surged.
The unemployment rate in Australia fell to 4.2 percent from 4.6 percent, its lowest level in four years.
New Zealand Dollar Currency Rate
The Kiwi dollar suffered heavily during a relatively busy week, sliding 1.28 percent to 0.6717. New Zealand’s recent economic updates surpassed projections by a wide margin.
Firstly, the inflation rate reached 4.9 percent, against a projection of 4.1 percent. Second, the labor market uplifted the New Zealand dollar currency rate further. Unemployment fell to 3.4 percent, significantly below the estimated 4.5 percent.
More economic data further escalates the Kiwi’s woes. Business confidence went down again after poor numbers previously. Electronic card retail sales also made things worse for the Kiwi. Retail card sales nosedived from 9.5 percent to 0.4 percent.
However, the private sector was the only source of positive data. Despite shooting up to 53.7 from 50.6, the private sector still couldn’t turn around the New Zealand dollar exchange rate.
Based on the inflationary pressure, experts believe the central bank would deliver a higher rate hike than usual, at 25bps. What’s more, two-year inflation rose to 2.96 percent from 2.26 percent, the highest in a decade.
JPY USD Exchange Rate News
The Japanese Yen topped this week’s performance, gaining 0.45 percent to 113.680 against the American dollar. Before that, the Yen had risen 1.19 percent to 114.190.
Negative market sentiments significantly contributed to the Yen’s scintillating performance. In addition, economic data and monetary policies boosted the jpy usd exchange rate news.
Trade and inflation figures impacted the Yen’s performance on the economic front. The trade deficit narrowed from 955.6 billion yen to 582.4 billion yen. However, the inflation rate remained unchanged at 0.5 percent, falling short of expectations.
Week Ahead
- Geopolitics tensions; Russia-Ukraine conflicts are bound to escalate after negotiations fail. Watch out also for headlines on Boris Johnson’s political future.
- Next week, we expect massive releases that will shape the performance of the G7 currencies. The top three to release their earnings include Tesla, Microsoft, and Apple.
- Possibility of a rate hike as central banks meets in the week.
Final Thought
This week’s forex market update news shows the dollar gained against all G7 currencies except the Yen and Swiss franc. Will the dollar continue to rally in the coming week? For this and more exciting updates, don’t miss our next article!
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