This weekly forex news update wrap reflects a busy market, with economic data, coronavirus spikes, covid 19 veklury drug, and US politics driving the market. Contrary to the previous week’s update, positive sentiments pushed the greenback back to the red as risk appetite returns.
The Fundamentals
Coronavirus News
The coronavirus disease continued with its deadly mission. More spikes of covid 19 new cases were recorded in Europe, India, and the US. On Friday, the US recorded a record of 83,010 new cases indicated by the coronavirus tracking project.
Spikes in covid 19 new cases influenced traders to engage in risk aversion measures to sell the riskier assets in favor of the safe-haven currencies. As of Sunday 25th October, the world’s confirmed cases stood at 42.7 M while fatalities slightly over 1.15M.
On Thursday, Gilead sciences received a nod from the US government on its drug to fight covid 19. According to Gilead’s sciences press release, the US Food and Drug Administration (FDA) approved Veklury as the first and only effective drug in the fight against the contagious disease. Veklury shortens the recovery period by five days among hospitalized patients.
US Politics
With only less than two weeks to the 3rd November elections, Jitters influenced forex traders over the week, primarily enlisting risk aversion measure. According to The Guardian, National polls indicate that Joe Biden has a substantial lead in the presidential race.
History has proven that the US elections cause worries among investors and directly impact forex markets globally.
Economic Data
Economic updates played a significant role in the performance of the g7 currencies over the week. In a relatively busy week on the financial dairy economies released mixed updates. However, most of the countries had positive results.
Key figures included retail sales, production, manufacturing, inflation, and consumer confidence levels. Besides, monetary sentiments by the Central banks provided directions for the currencies, also.
Crude Oil
Amid covid 19 woes and high inventories, crude oil prices fluctuated over the week and closed down by 2.52%, below $40 per barrel. The performance of crude oil has a direct impact on commodity-related assets.
Economic Review & Performance Of The G7 Currencies
Table: currency performance summary
| Currency pair | 19th October | 25th October | Average price | Percentage change | Remarks |
| usd | 93.429 | 92.765 | 92.962 | 0.976 | drop |
| gbp/usd | 1.2947 | 1.3040 | 1.3031 | 0.9835 | increase |
| eur/usd | 1.1766 | 1.1859 | 1.1825 | 1.2033 | increase |
| usd/chf | 0.9102 | 0.9042 | 0.9067 | 1.1371 | drop |
| usd/jpy | 105.42 | 104.69 | 105.00 | 0.67 | drop |
| usd/cad | 1.3192 | 1.3121 | 1.3143 | 0.5005 | drop |
| aud/usd | 0.7067 | 0.7135 | 0.7096 | 0.7768 | increase |
| nzd/usd | 0.6604 | 0.6692 | 0.6640 | 1.3325 | increase |
USD Back To Red
The dollar reversed its previous week’s gain of 0.67% and dropped 0.98% to close at 92.768. US politics, economic forex news updates, and coronavirus pandemics drove the performance of the dollar.
Traders considered coronavirus pandemics in their analysis, abandoning the greenback in favor of the risk assets. In the final days to the elections, the US continued to record new high coronavirus infection cases.
On Friday, stagnation in the US stimulus package on economic recovery weighed heavily on the American dollar.
However, economic data, though positive, had little impact on the greenback. Initial jobless weekly claims dropped from 842k to 787k while the manufacturing sector improved from 53.2 to 53.3. On a positive note, also, the service sector rose from 54.6 to 56.0.
Even though the economic data was skewed to the positive, US politics and covid 19 spikes watered-down the positive report. On Thursday, the US presidential debate and stimulus package took center stage. The development of Gilead sciences antiviral drugs and early lead by the democrats proved lethal to the dollar.
Pound To Usd
While the greenback lost strength over the week, the pound to usd went up by 0.97% to close at 1.3040. In the previous week, it had dropped by 0.93%. Economic data, Brexit talks, covid 19, and US politics defined this currency pair’s performance.
Inflation figures went upwards to support the sterling pound midweek. However, retail sales and production figures failed to leverage the pound on Friday despite being positive. But it was the private sector that significantly pulled the pound down as its index fell from 54.1 to 53.3.
The Brexit talks forex news update supported the pound with negotiations proceeding on the phone this time around.
Euro To Usd Bullish
In the eurozone, the euro reversed its prior losses and gained 1.21% to close at 1.1860. Previously, it had lost 0.91% to the greenback. Adverse economic reports and spikes in covid 19 affected the performance of the euro.
Consumer confidence dropped from -13.9 to -15.5 while the service sector slid from 48.0 to 46,2. However, the manufacturing sector rose from 53.7 to 54.4, providing some much-needed support for the euro.
Adding more pressure to the euro, continued spikes in new covid 19 cases were recorded across the eurozone. Despite the negative impact of covid 19 and poor economic reports, progress in the Brexit talks supported the euro.
Usd/Chf
Meanwhile, the Swiss franc gained 1.1371% against the greenback to close at 0.9042. There was no significant economic update from Switzerland; hence, its currency’s performance was driven by covid 19 spikes, positive sentiments, US elections, and Brexit talks progress.
Despite the stalled progress in the US stimulus plans, positive sentiments from the Veklury drug supported the swiss franc. Besides, the early lead by the Democrats in the US elections weighed heavily against the dollar.
However, covid 19 spikes across the eurozone were bad forex news updates for the swiss franc.
Usd/Jpy News Update
In the far east, Japan had a relatively busy week on the financial upfront. In the early part of the week, Japan released mixed economic data. The trade surplus increased from 248.6 bn to 675 bn Japanese yens. A drop in imports led to the widening of the trade surplus.
Imports dropped heavily by 17.2% while export fell slightly by 4.9%. However, improved inflation and production figures supported the yen at the end of the week.
Consumer prices and manufacturing figures contracted in Japan, but the production index increased slightly from 47.7 to 48.0. However, the service sector continued on its downward trend, dropping from 46.9 to 46.6.
Despite the poor economic data, traders took advantage of the US’s lack of progress in additional monetary stimulus. Also, spikes in new cases of covid 19 supported the yen.
Over the week, the Japanese yen rallied by 0.65% to close at 104.71. In the prior week, it had increased slightly by 0.21%.
Usd/Cad News Update
Canada had a busy week on the economic diary posting mixed results. Inflation and retail sales figures featured heavily in the Canadian forex news update. While the inflationary pressure increased, the retail sales failed to hit projection. However, the economic data had a muted impact on the Canadian dollar.
As the economic data failed to provide direction for the Lonnie, combined forces of covid 19 spikes and fallen crude oil prices ultimately pressured it downwards, but not to the red zone.
By the end of the week, Lonnie managed to gain a modest 0.49% better than the previous week’s loss of 0.52%.
Aussie Dollar On a Bullish Run
The Aussie had a bullish week to gain 0.82% to the usd to close at 0.7139. As there was no significant economic forex news update from Australia, the performance of the Aussie dollar was uplifted by positive sentiments and the weakening of the American dollar.
However, negative sentiments resulted from the monetary front to weigh down the performance of Lonnie. Plans for additional economic stimulus limited the upswing of the Australian dollar over the week.
Kiwi Dollar – Top Performer
Despite having a quiet week on the economic front, the kiwi dollar emerged overall top performer. Positive financial data released leveraged the NewZealand dollar. Whereas the consumer prices and business confidence index improved, inflation softened.
In the week closing 25th October, the kiwi dollar rallied by 1.35%, closing at 0.6691, hitting a one-month high. However, the RBNZ’s monetary dovish sentiments curtailed the strengthening of the kiwi at the end of the week.
Conclusion
Forex news update indicates that the American dollar performed poorly while the NewZealand dollar emerged as the best performer. The dollar weakened and lost against all other currencies primarily affected by uncertainty in the economic stimulus and covid 19 spikes.
Despite the US posting a positive financial report, it was not sufficient to uplift it. Furthermore, positive sentiments generated by Veklury drug and improved economic outlook boosted investors’ confidence towards riskier assets.
The substantial gains by the commodity-related assets kiwi, Aussie, and Lonnie indicate a risk-on forex market return.
