As expected changes happened in US politics and there is a new tenant for the Whitehouse. But how did the forex market react? To answer the question and have a look at the latest Fx news stay with me in yet another weekly wrap.
The Fundamentals In The Latest Fx News
As the much-awaited US elections came and went here are the fundamentals that drove the Forex market over the busy week.
Positive Sentiments
The expected and ultimate win by Joe Biden in the US presidential elections vibrated positively throughout the week. However, Republicans took the senate seats eliminating fears of changes in government policies.
The possibility of additional stimulus packages also added to positive vibes in line with Biden’s win. In the week ending 8th Nov, the US economic data did not disappoint, either as positively skewed data boosted the positive moods.
Due to the positive sentiments investors preferred the profitable but riskier assets over the safe-haven currencies.
Economic Reports
In the busy week ending 8th November, the g7 countries released their financial reports, mostly skewed to the positive. The performance of a country’s economic report directly impacts its currency.
Crude Oil Prices
In the week, crude oil prices improved by 3.77 closing at 37.14 boosted by positive sentiments amidst the coronavirus pandemic. Movement of the oil prices directly impacts the commodity related assets in the g7 fx currencies.
The Coronavirus Global Pandemic
Confirmed cases of coronavirus reached slightly over 50m with fatalities clocking 1.2m by the close of the week. The US, Europe, and Asia Continued to record increased cases with record new daily highs.
Notably, the US recorded 100k new cases daily and 1k covid 19 related deaths every day. To curb the infectious virus countries reverted stricker lockdown measures.
Economic Review and Fundamental analysis of the G7 currencies.
Table: performance summary of the g7 currencies.
| Currency | 2nd Nov | 8th Nov | Average | Percentage change | Remarks |
| USD | 94.145 | 92.225 | 93.171 | 2.165 | decline |
| GBP/USD | 1.2912 | 1.3156 | 1.3051 | 1.6614 | increase |
| EUR/USD | 1.1640 | 1.1872 | 1.1753 | 1.9318 | increase |
| USD/CHF | 0.9187 | 0.9005 | 0.9095 | 1.7672 | decline |
| USD/JPY | 104.71 | 103.33 | 104.09 | 1.25 | decline |
| USD/CAD | 1.3215 | 1.3055 | 1.3117 | 1.9674 | decline |
| AUD/USD | 0.7053 | 0.7255 | 0.7185 | 3.3295 | increase |
| NZD/USD | 0.6631 | 0.6772 | 0.6698 | 2.3579 | increase |
USD Currency Back To Red
Bears took advantage of the global positive moods and the greenback took refuge in the red. In a sharp turnaround from the previous week’s gain of 1.37% the usd spot Index dropped by 1.92% to 92.229.
Forex traders factored in the U.S Presidential Election in their fundamental analysis that favored riskier assets over the dollar. The Fed’s dovish monetary policy in the latest Fx news also nailed the downfall of the usd. While suggesting further monetary stimulus it left the rates unchanged at 0.25%
The US government released financial reports, though mixed, had a slight impact on the latest forex market because of the elections. While the service sector drooped, the manufacturing sector picked up.
Forex news suggests a slowed labor market recovery as nonfarm employment records fell short of earlier projection by 365k. Furthermore, the weekly jobless claims added to the disappointment, with claims dropping marginally to 751k from a previous week’s 758k.
However, at the week’s end, unemployment, and nonfarm payroll numbers improved. The nonfarm payrolls increased by 638k and the unemployment rate dropped from 7.9% to 6.9%.
The continued spikes in the coronavirus infections across America pressued the usd downwards.
GBP/USD
While elections were undergoing in the US the UK had a relatively quiet week on the economic diary. The bulls took control of the gbp to uplift it by 1.61% to 1.3156. In the week prior, the gbp had slumped by 0.71% to 1.2947.
In addition to the positive vibes, economic data, covid 19, Brexit deal and monetary policies drove performance of the pound. According to the forex market news, the manufacturing sector improved but the services sector disappointed. As expected, the construction sector dropped from 56.8 to 53.1.
On the monetary policy news updates, the BoE maintained interest rates steady but cranked up QE by £130bn to hit £875bn. This move supported the pound on Thursday.
The weakening of the American dollar and optimism on a Brexit deal by next week also uplifted the sterling pound in the week. However, coronavirus spikes and lockdown measures in many places slowed the upward strength of the gbp.
Euro To Dollar fx News
As the Americans were busier with their elections Europe had a full and busy economic calendar in the week. Covid 19, Brexit, positive global sentiments and the latest Fx news in financial update drove performance of eur usd in the week.
The eurozone registered improved manufacturing activities but the service sector continues to disappoint. Despite the continuing covid 19 pandemics, Eurozone’s private sector revived thanks to the improved manufacturing sector. Industrial production also increased but fell short of predictions.
While the Eurozone’s financial statistics were positive, ultimately the U.S Presidential Election uplifted the euro to dollar market rate. As much as the bulls uplifted the eur usd currency pair, a negative force pulled it down. The continued spikes in new coronavirus cases and new lockdown restrictions weighed heavily on the euro.
According to financial News, the EUR reversed the previous week’s loss of 1.80%. It turned around and grew by 1.95% to close at 1.1874.
USD/CAD
As the elections ended, the canadian dollar did not hesitate to take advantage of the global positive moods. Despite a low tone on the economic diary in Canada, the Loonie rose by 2.03% to close the week at 1.3050. In the week before, the Loonie had tumbled by 1.49% to close at 1.3321.
On the latest Fx news Loonie had a mixed bag. It took a beating from a widening trade deficit and disappointing employment figures. Though not sufficient, an improved manufacturing index tried to support the loonie.
In their analysis, traders interpreted the U.S Presidential Election and a rebound in crude oil prices to support the Loonie. Coronavirus pandemics weighed strongly on the upswing of the cad usd.
Aussie Dollar To USD Top Gainer
In the week ending 8th November, the bulls really loved the Aussie uplifting it by 3.27% to 0.7258. In a busy week on the economic diary, the aussie dollar to usd investors reacted to economic data, monetary policies and the US elections.
On the economic front, trade data and manufacturing figures skewed to the positive supported the Aussie but retail sales figures were negative. The RBA also featured in the week’s latest fx news. On its monetary policy statement, the bank adjusted upwards inflation, growth and employment forecasts.
However, to support employment and inflation it reduced rates. But the major catapult for the aussie dollar came off the global positive sentiments driven by the US presidential elections.
Bullish Kiwi Dollar
Despite few and negatively skewed financial data in NewZealand, the kiwi dollar also closed in the green. The Americans presidential elections outweighed the negative economic data to uplift the kiwi currency by 2.40% to close at 0.6774.
The fx market news indicates the unemployment rate increased from 4% to 5.3% due to a 0.8% drop in employment. However, as expected inflation continued on an upward trend. Economists predict the inflation rate to continue on the increasing trend in the fourth quarter boosting the strength of the NewZealand dollar.
Quite Week For The Japanese Yen
Japan had a mixed economic data, but the yen managed to rally by 1.25% to 103.35. In the preceding week, it had risen dismally by 0.05%. The private sector and household spending increased but the manufacturing and services sector declined, however.
Like the rest of the g7 currencies the yen received a boost from the US presidential elections. However, the coronavirus pandemic weighed heavily on the japanese yen.
CHF Currency
The swiss franc started the week on the wrong foot possibly due to pandemic fears, slowed economy, lockdown restrictions in the Uk. However, it rebounded on friday and closed in safer green territory.
Improved consumer sentiments and stable consumer prices as the only economic data did not help the chf currency in any way. The positive sentiments from the US elections in the week suppressed the chf currency.
On Thursday, traders speculated a Biden victory could lessen regulatory risk and introduce huge stimulus programs in the US. The apparent trong rebound witnessed on Friday was more likely on profit taking as there was no major catalyst on that day.
Conclusion
The latest Fx news indicates that the US elections primarily hummerd the USD while uplifting the riskier assets. In the end the US elections sunken its currency but supported the riskier g7 fx currencies.
With the US elections now over, what next for the forex enthusiasts?
