Awful NonFarm Payroll forex movement news pushed the US dollar to new lows. On the other hand, positive sentiments and an upsurge in commodity prices pushed traders toward the riskier assets.
Overall, Australian and Newzealand dollars performed exemplary while the American dollar took a hasty retreat.
But first, let’s look at the key drivers in the forex movement news over the week.
The Fundamentals
Economic updates, coronavirus news, commodity prices, and crude oil drove the forex market towards risk-on sentiments.
Economic Updates
Increased orders and improved international pushed trade Global economic growth to an 11-year high. The US and UK, which forced the global financial index to 56.3, led the powerful performance.
Except for Japan and the US, which posted mixed economic data, the rest of the g7 countries released positive financial data. The robust economic updates in the forex movement news uplifted the risky assets.
Coronavirus News
While the coronavirus infection rate declines globally, India still struggles under it. Sadly, forex movement news shows the country suffered over 4k deaths from the pandemic in a day and records over 400K new cases daily.
On a positive note, sustained vaccination rollout in the g7 countries resulted in reduced infection rates and positive global sentiments. This has paved the way for opened borders, air travel, and reduction in restriction measures.
Commodity Prices
As coronavirus infections fall and countries open up, Commodity prices went up due to increased demand. Energy, crops, and metals heightened by 70%, pushing the commodity spot index to a new high level since 2011.
In addition, China and the US economies – fueled by infrastructure, automobile, and electronics – are growing faster, leading to increased demand.
US Oil News Forex
According to the US oil news forex, improved public health and easing of lockdown measures supported crude oil prices. Also, reduced crude oil inventories in the US delivered the upsurge in the prices.
Fundamental Analysis and Economic Review of the G7 Currencies
| Currency pair | 3rd May | 9th May | average | Percentage change | Remarks |
| USD | 90.927 | 90.216 | 90.929 | 1.155 | drop |
| GBPUSD | 1.3909 | 1.3972 | 1.3911 | 1.1438 | increase |
| EURUSD | 1.2061 | 1.2170 | 1.2079 | 1.2689 | increase |
| USDCHF | 0.9109 | 0.9004 | 0.9076 | 1,4125 | drop |
| USDJPY | 109.06 | 108.57 | 108.97 | 0.64 | decrease |
| USDCAD | 1.2276 | 1.2113 | 1.2207 | 1.4322 | decrease |
| AUDUSD | 0.7761 | 0.7859 | 0.7782 | 1.8533 | increase |
| NZDUSD | 0.7198 | 0.7273 | 0.7212 | 1,5782 | increase |
Back To The Red – USD
The American dollar took a hasty retreat in the week and devalued by 1.15% after a 0.48% rally in the previous week. Although the US economy grew faster than others, limited raw materials and labor constrained it.
Supply chain shortages – particularly microchips and processors – affected automobile production and forced many factories to be idle.
April’s job report disappointed the dollar. First, contrary to a prediction of 1 million, only 266K were reported pushing the unemployment rate to 6.1%. Second, finding and keeping workers is an enormous challenge.
Third, the drop in jobs echoes Powell’s sentiments that economic recovery is still far. Since the COVID-19 pandemic, weekly jobless claims dipped below 500K with fewer job cuts. The ISM manufacturing index dropped to 60.7 from 64.7 while the production index dropped by 5.6 points, the sharpest decline within the subsector.
While backlogged orders rose to 68.2 (an all-time high), new orders slumped to 64.3 from 68.0. Direct checks from the coronavirus stimulus uplifted Consumer price index CPI, consumer spending, and retail sales in April.
Residential investments rose by 1.7% but were slowed by a shortage of construction materials leading to soaring building costs. Moreover, the coronavirus pandemic sparked the need for more houses and space pushing up timber prices by 60%.
Furthermore, the decline in Canadian timber imports also led to its price skyrocketing.
GBP/USD: Bulls In Charge
It was a relatively busier week in the UK, which saw the pound increase by 1.17% to close at 1.3984. Previously it had dropped by 0.39%. Amid raw material shortages and supply chain disruptions, positive economic data and central bank sentiments primarily uplifted the sterling pound.
The UK manufacturing index increased to 60.9 from 58.9. Spike, in both production and new orders, pushed the index upwards. The easing of lockdown restrictions, rising backlog of orders, and improved demand contributed to the robust growth.
The construction sector also contributed to the impressive performance of the sterling pound. In the week, the sector’s index dropped slightly from 6.7 to 6.6 thanks to the reopening of the UK’s economies, improved business confidence, and skyrocketing demand.
The Bank of England (BoE) was also in action. It slowed down the asset purchase pace and stated the economy is growing much faster than expected. In a meeting on Thursday, BoE maintained interest rates at 0.10% and a bond acquisition target of £895 billion, which would reduce gradually over the year.
The BoE projects the UK’s economy to grow by 7.25%, up from an earlier projection of 5.0%.
EUR/USD: Improved Performance
Eurozone also had a busy week on the financial diary, which witnessed the euro climb by 1.21%, reversing a previous loss of 64%. ECB vice president Guindos announced it would phase out emergency stimulus packages under two conditions in the week.
When the coronavirus vaccination rate reaches a critical level, and two, the economy picks up quickly. Across the Eurozone, manufacturing, retail sales, private sector figures improved to uplift the euro.
The manufacturing index rose to 62.9, retail sales improved by 2.7%, with the private sector hedging upwards to 53.8. Germany’s retail sales grew by 7.7%, up from a previous increase of 2.7%. In addition, Germany’s manufacturing sector continues to expand amid supply chain interruptions.
CHF To US Dollars
In Switzerland, it was also quiet on the economic calendar. Swiss consumer sentiments rose to the pre-pandemic level, and the consumer price index increased by 0.2%. Moreover, signaling an improving labor market, the unemployment rate dropped from 3.4% to 3.3%.
Forex movement news shows usd to chf exchange rate dropped to 0.9004, the lowest since 2017.
USD/CAD
By the close of the week, the Canadian dollar strengthened by 1.26% to close at 1.2100 against the USD. Previously it had crawled upwards by 1.51%. However, economic data disappointed Lonnie. First, the employment sector lost 207K jobs against an earlier prediction of 175K, pushing the unemployment rate to 8.1% from 7.5%.
Second, the easing of restrainment measures and a coronavirus surge in the largest provinces contributed to the increased unemployment rate. Then, the Ivey PMI index dropped from 72.9 to 60.0, adding more pressure to it.
Despite the disappointing economic data, the loonie still stood up supported by the following factors;
- Risk on appetite
- Weaker USD
- Rising commodity prices, particularly lumber and metals
- BoC’s optimistic economic outlook
Meanwhile, in the Asia-Pacific, the New Zealand dollar led commodity-related currencies to emerge on top. The Japanese yen also gained against the US dollar.
AUD/USD: Top Performer
Australia had a relatively quiet week on the economic calendar. And by the close of the week, the Aussie riled by 1.66 to close at 0.7844. Forex movement news shows the Aussie dollar was troubled by increasing sour trade tension with China, which sparked off in 2018.
The Australian dollar dipped sharply on Thursday when China suspended an indefinitely economic dialogue with Australia. Australia released strong economic data, which uplifted the Aussie. The manufacturing figures continue to increase, hitting new records over the week.
Additionally, the Employment rate increased by 4.7% while the service sector index improved to 61.0. On Tuesday, the Central Bank Of Australia held a meeting and kept interest rates unchanged at 0.1% as expected. RBA forecast its economy to expand by 4.75% based on the low-interest rates and fiscal support.
NZD/USD: Bullish Run
It was a relatively quiet week in the economic diary in New Zealand, and by the end of the week, the kiwi dollar increased by 1.62%. Positive economic data supported the kiwi.
But, first, housing prices continued to soar, and in response, the government proclaimed it would introduce stringent lending rates. To support the kiwi dollar also, the business confidence index moved upwards from -2.0 to +7.0.
Other economic statistics were favorable to the kiwi dollar – export, investments, employment, capacity utilization, and profit expectations increased. In addition to the positive economic data, New Zealand’s world commodity price index rose by 2.3% to record highs.
USD Vs JPY Forecast
Japan had a relatively quiet week leaving usd vs jpy forecast to positive global sentiments and coronavirus news. As a result, the yen reversed its previous fall of 1.33% and strengthened by 0.65%.
The ongoing immunization program worldwide pushed service PMI to 49.5 from 48.3. COVID-19 new cases in Japan continue to increase at an alarming rate, and the country plans to extend the state of emergency in Tokyo and other major urban cities.
This move put the much-awaited 23rd July Olympics in serious doubt. The state of emergency measures reduced Japan’s service sector activities.
Conclusion
Positive forex movement news emanating from the improving global economy and vaccination rollout across the globe pushed traders to the risky but profitable assets. However, improved commodity prices and horrible Nonfarm Payroll figures on Friday sealed the dollar’s fate.
Moving forward, the improving global economy and coronavirus news will drive the g7 forex market.
Related: Latest Currency News From 26th April To 2nd May, 2021