Yet, another big win for the safe-haven currencies as the increasing delta variant cases delivered the support. With concerns about Covid-19 escalating, price swing dominated the fx market update at the start of the week. But by the end of the week, the price had slowed down.
While the US dollar was mostly steady versus other currencies, the Canadian dollar rose as the risk environment improved. It’s likely that the rise in oil prices also contributed to its gains.
The Fundamentals That Affected Forex Market Performance In The Week
Coronavirus News
While an escalating delta variant continues to spike concerns among health experts worldwide, the beta variant is still a huge threat. The Beta coronavirus variant first identified in South Africa continues to wreak havoc throughout Europe, Japan, and the USA.
In the week, the US recorded an average of 43.7K daily new cases of coronavirus infections fueled by the delta variant. All the 50 states of the US. on weekly tracking delta variant new cases spiked by 65%.
Coronavirus infections are rising across the g7 Nations. But despite the surge, death tolls and hospitalization across the g7 countries remain relatively low, mostly due to vaccines protections.
However, the situation in India is still worse.
Forex Market Sentiments
Because of the continuing spike in delta coronavirus variant, market sentiments picked up from the previous week’s negative sentiments. As a result, the negative sentiments boosted the safe-haven currencies, particularly the US dollar, on Monday and Tuesday while weighing on the comdolls.
But as the market sentiments slowly turned positive from the second half of the week, the bulls eventually took charge of the comdolls to emerge overall winners. In addition to the market sentiments, improved oil prices boosted the Canadian dollar to be the week’s top performer.
Crude Oil Outlook
Oil prices rebounded on Friday and for the week following a poor start and poor performance in the last three weeks. The oil demand improved following OPEC’s plans to tighten its supply until the end of the year.
The surging cases and impacts of delta variant weighed on crude oil outlook at the start of the week. The crude oil Brent index gained 0.7% for the week after losing in the past three weeks, while WTI gained 0.4% after declining for two weeks.
Economical Updates
Except for Switzerland, all other g7 nations posted positively skewed economic data, which added to the positive market sentiments as the week progressed. However, the countries posted few economic data that could not match the impact of the delta coronavirus variant.
FX Market Fundamental Analysis and G7 Economic performance
Table: G7 economic performance summary
| Currency Pair | 19th July 2021 | 25th July 2021 | Average Price | Percentage Change | Remarks |
| USD | 92.900 | 92.928 | 92.879 | 0.260 | increase |
| GBPUSD | 1.3787 | 1.3745 | 1.3703 | 0.1960 | drop |
| EURUSD | 1.1798 | 1.1771 | 1.1782 | 0.2880 | drop |
| USDJPY | 109.54 | 110.54 | 110.05 | 0.42 | increase |
| USDCHF | 0.9179 | 0.9190 | 0.9190 | 0.0435 | increase |
| USDCAD | 1.2748 | 1.2561 | 1.2620 | 0.3965 | drop |
| AUDUSD | 0.7401 | 0.7364 | 0.7354 | 0.5134 | drop |
| NZDUSD | 0.7012 | 0.6971 | 0.6953 | 0.5280 | drop |
US Market News: Dollar Crawls Higher
The Us dollar improved for the second week in a row. In the week, it rose by 0.24% to close at 92.912, having risen by 0.60% in the previous week. Over the week the dollar crawled higher but with weak momentum.
Negative sentiments early in the week fueled by delta variants concerns and mixed economic updates in the US market news impacted the dollar’s performance. Economic data was not available until the second half of the week for the fx market update.
This week’s jobless claims figures disappointed. The week’s claims increased from 368K to 419K, contrary to economist forecasts of a drop to 340K. On Friday, the PMI index dropped from 64.6 to 59.8, with the manufacturing index shooting from 62.1 to 63.1.
Due to this, the composite PMI dropped from 63.7 to 59.7, with the essential services PMI having a significant impact.
European Majors
Dollar Sterling Trend
With no major economic news to affect the dollar sterling trend, the sterling pound ended the week down in value by 0.14% against the dollar. The pound had previously lost 0.96%. As the week ended, industrial orders dropped from 19 to 17 compared to economists’ forecast decline to 18.
On Friday, private sector and retail sales significantly affected the fx market update. Retail sales increased by 0.5%, partially reversing a previous 1.30% fall. The private sector number dropped from 62.4 to 57.8, and the manufacturing index fell from 63.9 to 60.4, pushing the composite index from 62.2 to 57.7.
Euro Dollar Outlook
In a relatively quiet week in the eurozone, the euro fell by 0.30% to 1.1771. Previously, it had fallen by 0.59%. While consumer confidence dropped from -3.3 to -4.4, the manufacturing index declined from 63.4 to 62.6.
But service sector supported the euro dollar outlook as it improved from 58.3 to 60.4. The ECB also featured in the fx market update. As expected, the ECB did not change the rates.
Meanwhile, European Central Bank President Largade reassured the market again. His sentiments added pressure to the euro.
Swiss Franc Prediction
Switzerland lacked major news or catalysts to drive swiss franc prediction in the week. In general, Switzerland’s price action was influenced by broad risk sentiment.
For the week, the Swiss franc lost 0.0435 to close at 0.9197 against the dollar.
Canadian Currency Outlook
Canada also had a quiet week on the economic calendar. But still, it managed to rise by 0.39% to 1.2564 following a 1.33% last drop. On Friday, retail sales data was the only economic statistic on the fx market update from Canada. Sales decreased 2.1% in the week following a 5.7% drop the week prior.
But, the resurgent price of crude oil on Friday provided the Canadian currency outlook with much-needed support. It had fallen to a low of 1.27 levels earlier in the week before the improved oil prices boosted it.
Canadian closed the week as the strongest performer of the week.
Asia Pacific FX Market Report
According to fx market update, the bear firmly took control of the Asia Pacific g7 currencies.
Aud vs Usd Analysis
For the week, the Aussie dollar weakened by 0.47% to 0.7366. RBA meeting and retail sales data largely impacted aud vs usd analysis. The RBA minutes had a relatively muted effect, but retail sales figures weighed on the aud performance.
The sales dropped by 1.8%, worse than the 0.7% decline predicted by economists. It is thought that the drop stems from a surge in delta coronavirus variants and containment measures taken to combat it.
Generally, the coronavirus pandemic and economic recovery efforts concerns weighed heavily on the Aussie. Australia recorded increased cases of the delta coronavirus variant and extended lock down measures in some states, particularly Victoria.
Nzd To Usd Forecast
The Kiwi Dollar was down by 0.36% to 0.6974 against the US Dollar as of the end of the week.
Without major statistics to affect the nzd to usd forecast, coronavirus pandemic played a key role in a particularly quiet week. NewZealand’s credit card spending grew by 6.3%, following a previous 27.2% spike.
Global dairy prices fell by 2.9%, pulling the kiwi dollar down with it.
Usd To Jpy Prediction
Again, it was yet a relatively busy week in Japan that saw its currency weaken by 0.44% reversing a 0.06% rally in the previous week. Earlier in the week, inflation data took center stage in usd to jpy prediction ahead of trade data fx market report on Wednesday.
Japan’s annual inflation rate rose from -0.1% to 0.2% in June, with the core annual inflation rate increasing from 0.1% to 0.2%. Despite the modest increase, the yen was barely affected. These figures suggest that BoJ will likely not change its monetary policy outlook.
Trade data released on Wednesday was very positive, with Japan’s trade balance moving from a ¥189.4billion deficit to a ¥383.2billion surplus. Yearly, exports surged by 48.6% in June, following a 49.6% increase in May.
Conclusion
Thanks to the continuing surge in delta coronavirus pandemic, risk aversion sentiments gripped the forex market in the earlier stages of the week. But according to the fx market update, as the week progressed, the sentiments changed to positive.
So, safe-haven currencies gained in the first half of the week, and the risk assets regained their losses in the second half of the week. While the market forces supported the American dollar, the Canadian dollar also closed in the positive territories, buoyed by the improved global oil prices.
Moving forward, the continuing surge in delta coronavirus variant would impact the financial markets and the global economic recovery efforts.
Related:
Forex News That Move The Market From 26th July To 1st Aug, 2021
