In the forex news this week, economic data and Coronavirus fears contributed to the dollar’s fourth consecutive weekly gain. Looming lockdown measures across Europe and the US positive economic data drove the dollar’s demand.
On a week of high forex market jitters, safe-haven currencies impressed. With strong inflation figures and improving employment records from the UK, the British pound took the top spot.
On the losing end, the euro and the Aussie dollar battled it for the lowest rankings, but finally, the euro tumbled away as the week’s worst performer.
Which Fundamentals Drove Forex market this week?
Forex market fears mainly drove g7 currencies performance in the week, uplifting the safe-haven assets. The following fundamentals impacted the market;
Coronavirus Worries Fuel Jitters
Despite improved vaccination rates across the G7 nations, the disease has spiked rapidly among unvaccinated individuals.
Across Europe, infections are at an alarming rate causing the UN sleepless nights. The UN reports indicate insufficient vaccine coverage, the winter season, and the highly transmissible delta variant led to the increase.
Financial traders fear the Increased infections will slow down global economies, causing risk aversion as traders jump to the safe-haven currencies.
Some European countries like Austria implemented full lockdown measures, and Germany is on its verge. On top of the lockdown measures, Austria made it mandatory for every citizen to be vaccinated by 1st February 2022.
Economic Activities
Continued inflation worries and their effect on the world economic activities contributed to the impressive performance of the haven currencies.
The latest forex news this week indicates the G7 nations posted surging inflation rates and better economic data. However, traders fear the coronavirus resurgence will undermine global economic activities.
In the past weeks, the g7 nations registered transitory inflation which created volatility in the financial market.
COVID 19 Fears Underpins USoil prediction
In the most significant weekly loss since mid-August, crude oil prices dropped by three percent, closing below $78 per barrel. Coronavirus resurgence and strong dollar predominantly undermined USoil prediction in the week.
G7 Performance and Overall Economic Condition Review
Table: g7 nations performance summary
| Currency pair | 13th November 2021 | 19th November 2021 | Average price | Percentage change | Remarks |
| USD | 95.100 | 96.028 | 95.743 | 0.946 | increase |
| GBPUSD | 1.3423 | 1.3452 | 1.3458 | 0.2908 | increase |
| EURUSD | 1.1367 | 1.1288 | 1.1332 | 1.4148 | drop |
| USDCHF | 0.9215 | 0.9281 | 0.9274 | 0.7381 | increase |
| USDJPY | 114.12 | 113.98 | 114.25 | 0.11 | drop |
| USDCAD | 1.2511 | 1.2638 | 1.2588 | 0.7654 | increase |
| AUDUSD | 0.7333 | 0.7234 | 0.7285 | 1.3366 | drop |
| NZDUSD | 0.7047 | 0.7010 | 0.7016 | 0.5250 | drop |
Market Jitters Boost Performance of US Dollar
Yet, again the American dollar registered another weekly win, raising by nearly one percent to 95.122 following a 0.85 percent rally in the previous week.
Traders reacted to coronavirus fears across Europe and impressive economic data to boost the performance of the US dollar.
Early in the week, retail sales records increased amid inflationary pickup. Retail sales surged 1.7 percent in October after a 0.5 percent improvement in the previous month.
Later in the week, manufacturing and weekly jobless claims uplifted the dollar. The manufacturing index jumped to 39.0 from 23.8, with weekly jobless claims reducing marginally to 268 thousand from 269 thousand.
According to forex news this week, coronavirus infection is still a threat in the US, with weekly cases hitting 600 thousand in the week.
Economic Data Boost GBP Outlook
The British pound surged by 0.2908 percent to 1.3451 following 10-year high inflation reading and improved employment data. Previously it had weakened by 0.65 percent.
The UK posted positive economic data, which supported the gbp outlook. According to forex news, employment data rose by 247 thousand, pushing the unemployment rate down to 4.3 from 4.5 percent.
In addition, the claimant count went down further, and wage pay went up by 5.8 percent.
Annual inflation figures rose to 4.2 from 3.1 percent, with the production prices index surging by 1.4 percent, triggering BoE to postpone the rate hike. The 4.2 percent inflation rate hike is the highest in the last ten months.
Retail sales spiked by nearly one percent, while the housing sector improved by 1.8 percent.
Meanwhile, the UK’s economic index improved by 0.1 percent to 81.2, while consumer sentiments recovered after three months.
COVID 19 and Dovish ECB Drove US Dollar Vs Euro News
For the week, the euro lost 1.4148 percent to 1.1290 – the worst performance in five months. Previously the euro rallied by 1.05 percent.
Forex news this week indicates dovish comments from ECB comments on the need to counter the rising inflation.
Surging coronavirus infections added to the euro’s pains, with Germany recording up to 60 thousand infections daily.
Early in the week, positive economic data supported the euro. Exports and imports improved, pushing Eurozone’s trade surplus to €7.3bn from €3.5bn.
According to US dollar vs euro news, third-quarter GDP second estimates expanded by 2.2 percent, with the yearly economy improving by 3.7 percent.
Despite intense inflationary pressure, the data failed to support the euro on Wednesday. Instead, the annual inflation rate spiked to 4.1 from 3.4 percent, according to preliminary estimates.
ECB President Largade’s comments weighed on the euro. The president reiterated that the current high inflation figures are transitory.
Coronavirus outbreaks and the threat of restrictions across Europe also caused the euro to slump significantly on Friday.
Market fears Boost Dollar to Swiss Franc Exchange Rate
At the close of the third week of November dollar to swiss franc currency pair gained 0.7381 to close at 0.9281.
The pair advanced on risk-off market sentiments driven by coronavirus resurgence across Europe but failing US bond yields capped dollars advances.
Also, the strengthening greenback weighed heavily on the Swiss franc. Swiss posted negative trade data which could not support its currency. Trade imports declined further by 1.4 percent after a previous 2.3 percent reduction.
Central bank divergence undermined the Swiss franc. While the Swiss maintained a dovish monetary policy, the US looks forward to a rate hike.
Declining Global Oil Prices and COVID 19 Fears Strenghten Dollar USD vs Cad
In the third week of November, the Canadian dollar lost 0.7654 percent to the dollar closing the week at 1.2640. Previously, it had weakened by 0.75 percent.
Canada posted mixed economic data, which could not uplift its currency against the strengthening dollar. While consumer prices rose by 0.7 percent, the annual inflation rate increased to 3.8 from 3.7 percent.
But retail sales went down from 2.1 to 0.6 percent. Crude oil bearish run over the week also affected the dollar usd vs cad exchange rate. Oil prices tumbled on fears of lockdown measures, weakening the Canadian dollar.
Forex News this Week from the Asia-Pacific Region
The three g7 nation Asia-Pacific currencies could not stand against the American dollar.
Currency Predictions AUD to USD
In another bearish week, the Australian dollar reduced by 1.32 percent to 0.7235 against the greenback. Coronavirus news, economic updates, and policymakers sentiments weighed heavily on currency predictions aud to usd.
In the third quarter, wages increased by 0.6 percent, beating a projected 0.5 percent. And monthly wages improved by 0.4 percent, with yearly dues going up by 2.2 percent.
Policymakers tried to intervene against another weekly fall but failed, and Reserve Bank of Australia Governor Lowe indicated a rate hike could happen probably in 2024.
Nzd USD Exchange Rate
Forex news this week indicates nzd usd exchange rate dropped by 0.57 percent to 0.7004.
Mixed economic data and coronavirus worries weighed heavily on the New Zealand dollar.
The third-quarter production price index rose by 1.6 percent, following a three percent previous gain.
Usd Jpy Fx
The Japanese yen lost 0.11 percent to 113,99 against the American dollar, having weakened previously by 0.42 percent to 113.99.
Japan’s poor economic data failed to support usd jpy fx as coronavirus cases spike in Tokyo and containment measures hampers economic activities.
The third-quarter economy slumped by 0.8 percent and annually by three percent. Trade data failed to uplift the yen.
According to Investing.com, Japan’s trade deficit shrunk to 67.4bn from ¥6241bn. Annual exports shot by 9.4 percent following a previous 13.0% increase.
The Week Ahead
In the coming week, we expect the following fundamentals to drive the performance of the g7 currencies;
- Joe Biden is expected to pick the new FED chair. Will it be Lael Benard or Jerome Powell?
- Coronavirus surges and their effects across Europe
- Thanksgiving holiday in the US on Thursday could slow down the forex market
- Economic updates
- Inflationary pressure
In the week, coronavirus fears and transitory inflation rates favored the safe-haven currencies and pushed the greenback to the top. Forex news this week shows the American dollar gained against all the g7 currencies, except the British pound.
As we approach the holiday season, will the dollar continue rallying?
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