Another economic week full of surprises in the forex market ending 6th Sept,2020. The dollar strengthened and reversed its weekly losses. Financial data updates dominated forex news reports, favouring the greenback against the g7 fx currencies.
Fundamentals That Affected The Performance Of G7 Currencies
Positive Forex News Reports
The much-awaited 3rd phase clinical trial of the Oxford coronavirus vaccine kicked off on Wednesday in the US. However, the results of the tests are expected much later on after the US elections.
China-US Tensions
On Friday, the China-US trade tensions flare-ups ignited again. According to the Global Times forex news reports, China may progressively dispose of its holding of the American notes and bonds if tensions between the two nations escalate.
With trade and diplomatic relations between them worsening over covid 19 global pandemic, business, and technology, China may sell the debts in retaliation to the US.
Economic Updates
All the countries posted economic updates affecting performance of its currencies. Besides, global economic affects commodity related assets such as nzd, aud and cad.
Economic Data G7 Currencies Performance Review
Table: g7 performance summary
| Currency pair | 31stAugust | 6th Sept | Average | Percentage change | remarks |
| USD | 92.131 | 92.808 | 92.569 | 0.464 | increase |
| EUR/USD | 1.1936 | 1.1838 | 1.1877 | 0.5461 | drop |
| GBP/USD | 1.3369 | 1.3276 | 1.3332 | 0.5469 | drop |
| USD/JPY | 105.89 | 106.25 | 106.09 | 0.86 | increase |
| USD/CHF | 0.9035 | 0.9133 | 0.9092 | 1.0511 | increase |
| USD/CAD | 1.3045 | 1.3054 | 1.3066 | 0.3283 | increase |
| AUD/USD | 0.7375 | 0.7282 | 0.7328 | 1.1404 | drop |
| NZD/USD | 0.6732 | 0.6716 | 0.6735 | 0.2966 | drop |
USD Back
America’s forex news reports were dominated by economic data that salvaged the greenback from another weekly slide. Positive economic data and friendly business sentiments in the US provided much support to the greenback.
According to forex news reports, the manufacturing production index rose from 54.2 to 56, while non-manufacturing production dropped from 58.1 to 56.9. The weekly jobless claims figures also provided support to the dollar as it eased down to below 1 million.
Nonfarm payroll did not disappoint either. An increase of 1.37 million was very instrumental in support of the dollar. The drop in the unemployment rate from 10.2 to 8.6 % also provided much-needed support for the greenback.
However, despite the impressive data report, the Central Bankers sentiments ultimately pushed the dollar on the upswing. According to Richard Clarida, Feds vice-chair, the US government will not raise interest tariffs despite a drop in the unemployment rates.
More support for the usd came on Friday when America posted good economic data amid increased jobs and reduced unemployment rate from 10.2 to 8.4%. Over the week, the dollar went upwards by 0.38% to close at 92.719 to reverse the previous week’s loss of 0.94%.
GBP/USD
Great Britain had a quiet economic week leaving the sterling pound’s performance to negatively skewed financial data. Besides, Brexit uncertainty and Bank of England (BOE) forex news reports affected the sterling pound negatively.
On Monday, the UK threatened to walk out of the Brexit talks due to the EU’s non-compromising stance. On the economic front, the production index dropped while the construction sector showed modest growth.
Central bank painted a gloomy economic outlook as it predicted a considerable drop. All these factors weighed heavily on the pound. Further damages came from negative sentiments towards the Brexit talks.
Over the week, the pound fell by 0.55%, closing at 1.3279, downplaying the previous week’s strong rally of 2.0%. According to the forex news reports, the pound rallied strongly on Monday and Tuesday and went bearish closing in the red.
EUR/USD
On the eur usd forex news, Europe had a busy week driven by economic data, business sentiments, and monetary policy, leading to the euro’s downswing.
The Eurozone reported increased inflation and reduced production figures, according to eur usd forex news.
However, some relief for the euro came from reduced unemployment figures in the Eurozone. Retail sales numbers were also disappointing as it went downswing. Adding to the disappointment was the service sector that made matters worse for the euro.
The discouraging figures of the service sector and retail sales smashed hopes on an economic recovery driven by the service and consumer spending. Eurozone inflation up to – 0.2%, reported on Tuesday, contributed significantly to the downslide of the euro.
Another disappointment came from a 7.9% drop in employment figures. More pressure came from unemployment, coronavirus impacts and travel restrictions. Despite the gloomy economic eur usd forex news, a significant blow to the euro came from the central bank’s sentiments, causing a massive drop on Tuesday.
By the end of the week, the euro had dropped by 0.55% to close at 1.1838, marginally reversing the previous week’s gain of 0.90%. Similarly, the major European indexes experienced a bearish week.
JPY/USD
Japan was relatively busy, with economic data on the upswing but not enough to push the Yen to the Green Zone. Industrial production went upwards by 8% while the retail sales recorded a modest 1% increase. The service sector did not disappoint either and went upwards.
On the downside, however, capital spending for the second quarter dropped by 11.3%. The consumer confidence index also fell, further weakening the Yen.
While the economic data were skewed to the positive, it was the dollar’s strength that ultimately pushed the Japanese yen downside. By the close of the week, it has fallen against the dollar by 0.83%, closing at 106.24, reversing the previous week’s gain of 0.41%
USD/CHF
The Swiss franc had a rough week on a busy economic calendar driven by negative financial data and risk sentiments. According to chf forex news, counter currency flow also played a significant role in the Swiss franc’s performance.
Data from chf forex news indicates that the Swiss franc dropped significantly on Tuesday, fuelled by the euro’s weakness and positive economic outlook of the US.
On Thursday, negative global sentiments chf forex news to provide some support for the Swiss franc but not enough to pull it out of the reds. However, on Friday, the US posted a positive economic update that sealed the Swiss franc’s fate.
USD/CAD
Canada had a busier economic calendar over the week that reflected mixed economic results. According to cad forex news, significant support for the Canadian dollar came from favorable financial data business sentiments.
Cad forex news shows that the trade deficit gap widened while the employment rate slowed down from 10.9 to 10.2%. Despite the reduced employment rate, employment figures went up by 245.8 K. production index fell from 68.5 to 67.8.
The manufacturing sector posted impressive statistics. Oil prices dropped, pulling with the commodity-related commodity. Despite the mixed economic data report, Lonnie managed to increase by 0.28% to close at 1.3099, having risen by 0.59% in the previous week.
Over the week, a significant gain for the Canadian dollar was recorded on Friday, captured on cad forex news accounted for a 0.50% gain.
AUD/USD Bearish Run
On the aud usd forex news, Australia had a busy week primarily driven by economic data and monetary policy. Aud usd forex news suggests that the Aussie started the week positively, but a continuous update of negative financial data pushed it down to emerge as the week’s top loser.
According to aud usd forex news trading, the private sector recorded a mild decline while production figures were positive. The Reserve Bank of Australia’s monetary policy increased funding facility and kept interest rates unchanged. However, these forex news reports had little impact on the Aussie.
Nevertheless, economic data played a significant role in the second half of the week. The second quarter of Australia’s GDP reduced by 7%, and trade data painted a gloomy outlook.
However, retail sales figures provided some leverage for the Australian dollar as it increased by 3.2%. According to forex news reports, the Australian dollar fell by 1.13% to be the week’s biggest loser.
NZD/USD Bearish Week
New Zealand’s forex news reports were dominated by negatively skewed economic data skewed. The NewZealand dollar was negatively affected by a drop in commodity prices and a weakening global economic outlook.
NewZealand’s construction sector dropped by 4.5%, and the business confidence level went southwards from -31.8 to -42.4. Positive economic data from China and the US provided some support for the kiwi dollar though not enough to lift it out of the red zone.
In the end, the kiwi dropped by 0.33% to close at 0.6716.
Conclusion
The USD soared over all other fx currencies in the week. Forex news reports conclude that the dollar rallied strongly, supported by positive economic updates in the US especially in the drop in the unemployment rate and an increase in non farm payroll.