As the dust settles down following the US elections, covid 19 spikes, economic concerns, and the continued fight against the coronavirus pandemics primarily drove the forex market. While coronavirus spikes continue to weigh down global economic recovery efforts, Pfizer vaccines rekindled optimism on the war against the vice. For the weekly fundamental analysis and international currency news of the g7 fx currencies, stay on.
The fundamentals
Covid 19 pandemics, coronavirus vaccine, economic data, and crude oil prices are the fundamentals that drove the forex market.
Covid 19 Pandemics
The coronavirus pandemics continued to spiral from bad to worse across Europe and the US through the week. Globally, confirmed cases hit 54m with fatalities slightly above 1.3m as of on Sunday 15th Nov. Second wave resurgence resulted in lockdown and restriction measures to curb the Virus’s rampant spread.
With the global economy still in muddy water, the ever-rising infections pose more risks to recovery efforts and human life. However, lockdown and restriction measures introduced in some European states bore fruits as the infection curve flattened in the week, but not in all countries.
Coronavirus Vaccines
On Monday, Pfizer BioNtech announced that its vaccine is over 90% effective against the coronavirus infection. Dr. A. Bourla, Pfizer’s chairman and CEO, summarised the clinical results as a significant advancement for humanity and science in the war against the infectious virus.
The announcement resulted in skyrocketing of the US stock market. It also generated an appetite for riskier assets in the financial market as investors anticipated a quicker economic recovery.
This positive sentiment lingered on to influence international currency news throughout the week. As a result, the usd gained against the safe-haven currencies but lost against the riskier markets.
Economic Data
With Canada’s exception, all other g7 countries released economic data that impacted international currency news. Key statistics included production, manufacturing, GDP, employment records, and consumer sentiments. However, coronavirus spikes and the Pfizer vaccine downplayed economic data effects on the g7 currencies.
Crude Oil Prices
Crude oil prices picked from the early part of the week boosted by positive sentiments emanating from the Pfizer vaccine. In the week, crude oil prices increased by 8.05% to close at $40.13 per barrel.
The positive sentiments stirred hopes for rebound demand for crude oil. Changes in oil prices directly affect the performance of commodity-related currencies.
Fundamental Analysis & Economic Review Of G7 Currencies
Table: G7 currencies performance summary.
| Currency pair | 9th Nov | 15th Nov | Average | Percentage change | Remarks |
| USD | 92.715 | 92.750 | 92.836 | 0.569 | increase |
| GBP/USD | 1.3163 | 1.3191 | 1.3172 | 0.2280 | increase |
| EUR/USD | 1.1813 | 1.1843 | 1.1832 | 0.3369 | increase |
| CHF/USD | 0.9133 | 0.9128 | 0.9126 | 1.3437 | increase |
| USD/JPY | 105.36 | 105.16 | 104.62 | 1.25 | drop |
| USD/CAD | 1.3007 | 1.3141 | 1.3074 | 0.5821 | increase |
| AUD/USD | 0.7285 | 0.7271 | 0.7269 | 0.1792 | drop |
| NZD/USD | 0.6871 | 0.6845 | 0.6842 | 1.0632 | drop |
USD Currency Slight Recovery
The American dollar partially recovered from the previous week’s loss of 1.92%. In the week ending 15th, the Dollar Spot Index grew by 0.57% to close at 92.755. Riding on the covid 19 vaccine positive sentiments, the dollar rallied strongly between Monday and Wednesday but declined from Thursday.
On Monday, Pfizer announced that it made solid progress towards a COVID-19 vaccine generating positive sentiments. However, continued spikes in new coronavirus cases weighed heavily on market risk sentiment. The expected economic impact of more coronavirus containment measures uplifted the Greenback.
Coronavirus spikes, economic updates, and covid 19 drugs predominantly affected the performance of the usd currency. Earlier in the week, poor economic data pressured the dollar as the labor market posted a drop in job openings. However, from Thursday, upbeat economic reports supported it.
Inflationationary pressure and weekly jobless claims reduced, but the consumer prices remained unchanged. Initial jobless claims dropped from 757K to 709K, and the consumer sentiment indicator also fell from 81.8 to 77.0. The resurgence of coronavirus and economic uncertainty significantly weighed on the dollar.
GBP/USD
In the week ending 15th November 2020, the sterling pound rose by 0.26%, closing at 1.3189 following a previous week’s rally of 1.6%. Economic updates, covid 19 spikes, Pfizer vaccine, and Brexit talks primarily drove the sterling pound’s performance.
Retail sales increased by 5.2%, below the earlier projection of 6.1%. Employment figures tumbled by 164K following the previous 153K drop. As such, the unemployment rate increased from 4.5 to 4.8%. On the positive, the claimant count dropped by 28.9K following a previous 40.2 tumble.
Although the UK’s GDP expanded by 15.5%, it was not enough to recover a 19.8% contraction in the 2nd quarter. On a positive note, the manufacturing production and industrial production rose by 0.2% and 0.5%.
Apart from the economic and covid 19 impacts, lack of progress in the Brexit talks also weighed on the sterling pound. However, it was covid 19 spikes and Pfizer drug that significantly affected the g7 fx currencies’ performance.
Euro Currency Weekly Review
Economic data, covid 19 update, positive sentiments, and Brexit talks drove the eur usd currency pair’s performance. In the week, the euro currency reversed its previous week’s gain and dropped by 0.34% to close at 1.1834. In the previous week, it had strengthened by 1.95%.
Continued spikes in the resurging covid 19 cases and poor economic data weighed heavily on the euro. In the second half of the week, the ECB’s updates added to the euro’s downfall.
Attributed to the coronavirus lockdown measures, the Eurozone’s economic sentiments dropped from 52.3 to 32.8. Adding to the euro’s disappointments, the industrial figures dropped by 0.4%.
At the close of the 3rd quarter, GDP failed to provide any support. The economy expanded by 12.6 %, failing to hit the 12.7% mark projected by economists. However, inflation figures had a muted impact on the euro to usd exchange rate. On the monetary upfront, European Central Bank President Largade promised more support for the economic recovery efforts.
USD/CAD Weekly Review
Canada had a quiet week on the economic international currency news, leaving Lonnie’s direction in the hands of crude oil prices and market risk sentiments. In a heavy turnaround from a previous week’s strong rally, the Lonnie dropped by 0.67% to close at 1.3137.
Previously it had rallied by 2.03%. Concerns over economic recovery efforts amidst the coronavirus resurgence weighed heavily against the Lonnie. Crude oil prices increased, and positive sentiments from the Pfizer vaccine supported the Lonnie significantly.
Aussie Dollar Trend
The Australian dollar closed the week positively, increasing by 0.17% to close at 0.7270. Mixed economic updates, covid 19 pandemics, and Pfizer vaccine significantly influenced international currency news affecting the Aussie dollar trend.
According to the Central Bank of Australia, Business Confidence improved from -4 to +5.
Consumer confidence also improved by 2.5 %, but way below the earlier projection of a 3.8% increase. However, riding off the back of a dwindling coronavirus infection Australia opened its borders to Tourists.
New Zealand Dollar Weekly Review
The New Zealand dollar rose by 1.05% to close at 0.6845 by the close of the week. Impressively, retail sales records increased by 8.8% following a previous increase of 5.4%.
However, the production manufacturing index dropped from 54.0 to 51.7, negatively affecting the New Zealand kiwi’s performance. While economic data update dominated nzd to usd international currency news, the RBNZ policy took center stage mid-week.
As expected, the Bank maintained interest rates at 0.25%. However, stakeholders raised concerns that failure to provide additional support will further worsen the already bad labor market.
Yen Currency Weekly Review
In the week ending 15th November, the yen currency dropped by 1.24% to 104.65, reversing the previous week’s rally of 1.25 %. Usd jpy currency pair performance was primarily driven by covid 19 pandemics and Pfizer vaccine developments.
Economic data had little impact on the yen. Continued spikes in resurging covid 19 cases downgraded the yen in favor of the dollar.
CHF/USD
The Swiss franc started the week on the wrong foot due to positive sentiments, covid 19 pandemics, poor economic update, and dovish comments from ECB. By the end of the week, the Swiss franc dropped by 1.3437% to 0.9133.
However, global sentiments turned negative on Friday to rescue the swiss franc from more losses. The unemployment rate remained constant at 3.2%. Import and production prices remained stable.
Coronavirus spikes and containment measures across Europe and America pulled down the Swiss franc.
Conclusion
The riskier assets gained in the second week of November boosted by international currency news on the hopes of Pfizer’s covid 19 vaccines. Investors hoped to profit on the profitable riskier assets if the coronavirus threat comes to an end.
The global economic rebound will favor the riskier markets. Moving forward, two opposing fundamentals – Covid 19 spikes versus the Pfizer vaccine – will significantly drive the performance of the g7 currencies.
