Amid the global coronavirus pandemic, Impressive US economic data dominated the latest currency news causing upheavals in the forex market. The American dollar staged a comeback, forcing the g7 counter currencies to retreat.
In the performance chart, the Canadian dollar emerged as the best performer, while the Japanese yen settled at the bottom.
Which Fundamentals drove the currency news?
Among other factors, economic updates, the coronavirus news, and crude oil prices primarily drove the forex market.
Economic Updates
Notably, the US posted robust economic data on Friday that caused sharp changes in g7 currencies. Meanwhile, the Eurozone’s economy declined, and the risky assets economies posted sparse economic data.
The spiking cases of the pandemic continue to weigh on economic recovery efforts despite the ongoing vaccination rollout.
Coronavirus News
Amid a massive drive to inoculate adults above 18 years, India grapples with the coronavirus pandemic. It recorded over 300K new cases daily in 10 days. And on 1st May, it recorded over 400k new cases in a single day!
Overwhelmed, India sought international help to save its crumbling health system. And g7 economies have sent aid and offered technical support. Globally at least 1.15 billion people have been vaccinated, equivalent to 7.5% of the global population.
In the g7 economies, COVID-19 new cases, hospitalization, and deaths have decreased thanks to the sustained immunization rollout and restriction measures. With the reduction of coronavirus new cases, life is slowly resuming normality as many nations eased restriction measures.
The optimism impacted the latest currency news, resulting in a risk-on mood. However, despite the fall in coronavirus infections, WHO says it is still an enormous threat.
Trading USOil
Oil prices increased over the week, rising by 2.85%. Renewed demand for oil picked up as many economies eased restriction measures pushing trading usoil prices upwards. Also, a weaker dollar and improved US economic data added more support.
Fundamental analysis and economic review of g7 currencies
Table: g7 performance summary
| Currency pair | 26th April | 2nd May | Average | Percentage change | Remarks |
| USD | 90.805 | 91.287 | 90.830 | 0.493 | increase |
| GBP USD | 1.3895 | 1.3822 | 1.3890 | 0.3748 | drop |
| EUR USD | 1.2079 | 1.2028 | 1.2080 | 0.5827 | drop |
| USD CHF | 0.9146 | 0.9129 | 0.9121 | 0.0602 | drop |
| USD JPY | 108.21 | 109.29 | 108.82 | 1.27 | increase |
| USD CAD | 1.2397 | 1.2279 | 1.2325 | 1.5671 | drop |
| AUD USD | 0.7797 | 0.7718 | 0.7762 | 0.3422 | drop |
| NZD USD | 0.7229 | 0.7167 | 0.7213 | 0.2922 | drop |
USD – Back on Foot
The greenback overturned previous weekly losses and gained 0.46% to close at 91.28. Previously it had fallen by 0.76%. According to the latest currency news, the US economy increased by 6.4% in Q1.
The robust performance could be partly attributed to the good economic data, but ultimately the consumer spending delivered the growth. Americans had lots of cash to spend – many households received considerably larger checks in Q1, which boosted the personal savings to surge a record 21.1%, from 13% in Q4.
The latest currency news shows Americans have saved about $2.2 trillion in excess savings, which suffices to fuel consumer-led economic growth. In addition to spiked consumer spending, the rapid vaccination rollout adds to optimism on economic growth prospects this year.
According to CDC, about 40% of adult Americans were fully vaccinated by 1st May, and over 55% received two doses. Additionally, the daily infection rate has dropped to below 60k, and hospitalizations and deaths have fallen as well.
The improved public health boosted consumer confidence resulting in the easing of restriction measures. The FOMC acknowledged the robust economic growth and expected substantial further progress in employment and inflation numbers.
On Wednesday, President Joe Biden addressed the congress for the first time. In the meeting, he unveiled a $1.8 trillion American Family Plan (AFP). AFP calls for tax cuts to stimulate consumer spending. It also targets to improve childcare, health, education, family care, and insurance.
The ISM manufacturing index improved to 64.7 9 – the highest since 1983 – production, consumer spending, and new orders surged. Also, the ISM services rebounded, rising to 63.7 because of the increased vaccination and a return to life normalcy.
And at the close of the week, employment data came into action. Employers added 916K new jobs causing the unemployment rate to drop from 6.2% to 6.0%. What’s more, initial claims for unemployment benefits fell from 566 to 553, the lowest level since the global outbreak.
GBP USD Latest News
As per gbp usd latest news, the United Kingdom had a quiet week on the financial diary leaving the performance of the gbp to positive sentiments. The latest currency news shows the pound fell by 0.39% to 1.3822 against the US dollar. In the week before, the pound had strengthened by 0.70%.
As the UK slowly emerge from coronavirus restrictions, its retail sales figures improved to support the pound. However, coronavirus news weighed heavily against the pound as WHO warns that the UK is susceptible to the Indian variant.
EUR USD Trend Analysis
The euro fell by 0.64 percent to 1.2020 in the past week, reversing a previous rise of 1.00%.
Eurozone GDP shrank by 0.6% in the first quarter. The biggest Eurozone member states contributed a significant amount to the recession. Germany dropped 1.7%, Italy 0.4%, and Spain 0.5%, while France saw a paltry 0.4% increase.
Coronavirus third wave infections significantly led to the downfall of the Eurozone’s GDP and ultimately the poor performance of the euro, with inflation increasing to 0.8%.
Swiss Franc to USD
In the week, the Swiss franc gained the upper hand over the American dollar by 0.0602%.
According to the Swiss KOF economic barometer, its economy jumped to 134.2 in April. Also, retail sales turnover rose by 21.5% thanks to declining coronavirus new cases.
On Friday, Swiss National Bank chair Thomas Jordan issued new monetary policies that affected the Swiss franc to usd exchange rate. He said it is essential to maintain negative interest rates and intervene in the currency market.
USDCAD Analysis
Canada posted good economic data again with a 0.4% expansion in its GDP.
Retail sales increased by 4.8%, and the service sector improved by 0.6%, while industrial output dropped by 1.2%. Employment figures increased by 303,100, with a significant rise in full-time work. The manufacturing sector also improved, rising to 72.9.
However, COVID-19 spikes and restriction measures primarily affected usdcad analysis. Despite a strengthened USD, the Canadian dollar grew by 1.51%, closing at 1.2288. In the week before, it had risen by 0.22z%.
The central bank of Canada hinted it could start increasing rates next year and reduce its bond-buying program. More pressure on Lonnie came from the poor performance of the crude oil prices, one of Canada’s primary exports.
Meanwhile, it was a bearish week for the kiwi dollar, Aussie dollar, and Japanese yen in the Asia-Pacific region. According to Investing.com, these currencies dropped significantly on Friday because of the greenback’s strong rally.
Aud vs US Currency
The latest currency news shows the Aussie fell by 0.39% to 0.776 against the greenback. Sparse economic data drove aud vs us currency exchange in a relatively quiet week. First, inflation rose dismally by 1.1%, the lowest ever. And the consumer price index expanded by 0.6%.
However, private sector credit improved slightly by 0.4%, with both personal and business credits increasing.
US to New Zealand Currency
New Zealand also had a quiet week in the economic calendar, with its currency closing the week down by 0.51% to 0.7162 against the American dollar. Business confidence figures and trade data significantly drove the US to New Zealand currency performance in the week.
Earlier in the week, the narrowing trade surplus weakened the kiwi dollar. Due to increased imports, New Zealand’s trade surplus reduced to NZ$1,690m from NZ$2,380m.
However, positive business confidence figures provided support at the end of the week, but not enough to lift it out of the red. The business confidence index improved from a prelim -8.4 to -2.0.
USD JPY Latest News
Usd jpy latest news denotes Japan had a bustling week on the financial diary. Retail sales figures continue to improve, rising by 5.2%, much better than a previous 1.5% increase.
Industrial production reversed a previous drop of 1.5% and increased by 2.2%. Deflationary pressure went up, with consumer prices dropping by 0.2%. Previously it had fallen by 0.1%.
In the end, the yen reversed a previous 0.85% strong rally and dropped 1.33%.
Conclusion
The g7 currencies reacted differently to the fundamentals in the latest currency news. Overall, the risk-on mood took control over the forex market, with the Canadian dollar emerging as the week’s top performer. Yen and euro performed poorly.
Coronavirus vaccination rollout in combination with economic updates and improved business sentiments caused traders leaning risk on.
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