It’s great to have you once again at the weekly forex news updates after some unavoidable circumstances! For the first week of November, haven currencies outperformed the high-yielding currencies. The Japanese yen took the top spot while the Australian dollar nestled at the bottom. Recent forex news indicates risk aversion vibes, possibly on supply chain issues, and increasing inflation rate leveraged the haven currencies.
Economic updates and dovish monetary policies leveraged the US dollar to hit a more-than-a-year high on Friday.
The Japanese yen took the top spot while the Australian dollar nestled at the bottom.
The fundamentals
Coronavirus Epidemic
Since the previous week, the pandemic’s infection rate in the G7 nations has increased steadily by double digits, especially across Europe.
The US registered reduced infections, and from next week, it will open its borders for vaccinated citizens and visitors.
Supply Chain Issues
Supply chain issues continue to stifle economic growth globally as computer Microchip shortage undermines manufacturing and vehicle productions.
Despite the manufacturing challenges, the service sector improved.
Dovish Central Banks Borrowing Rates
Investors were forced to reset monetary policy expectations after the majority of g7’s central banks shelved plans for early rate hikes.
The Bank of England’s decision on Thursday to maintain its lowest rates was the market’s biggest shocker of the week. Following the decision, the sterling pound tumbled 1.6% on the day, the highest in 18 months, and fell further on Friday.
The Reserve bank of Australia also retained a dovish rate despite inflationary pressure.
And in the US, FOMC implemented a $15 billion monthly reduction of its $120 billion monthly property purchases. Yet, despite the reduction, Fed chair Jerome Powell maintained a dovish stance.
On Wednesday, European Bank president Christine Lagarde said the EU would not likely raise interest rates soon, not even before October 2022. The announcement pushed the euro down from midweek to the end of the week.
“ECB “very unlikely” to raise rates in 2022, Lagarde says”
Oil Price Outlook
After making gains early in the week, crude oil made losses from midweek to close lower by 2.75 to 81.27 per barrel.
America’s increased oil production undermined the oil price outlook. Besides, OPEC refused to increase production.
G7 Currencies Overall Economic Condition Review
| Currency pair | 30th October 2021 | 5th November 2021 | Average price | Percentage change | Remarks |
| USD | 93.879 | 94.317 | 94.094 | 0.208 | Increase |
| GBPUSD | 1.3672 | 1.3494 | 1.3592 | 1.4389 | Drop |
| EURUSD | 1.1606 | 1.1566 | 1.1582 | 0.0432 | Drop |
| USDCHF | 0.9177 | 0.9121 | 0.9119 | 0.3823 | Drop |
| USDJPY | 113.98 | 113.40 | 113.81 | 0.53 | Drop |
| USDCAD | 1.2367 | 1.2454 | 1.2415 | 0.5409 | Increase |
| AUDUSD | 0.7524 | 0.7401 | 0.7439 | 1.5955 | Drop |
| NZDUSD | 0.7181 | 0.7115 | 0.7133 | 0.6840 | Drop |
US Currency Market News
The greenback closed the week in the green for a second consecutive weekly gain, gunning 0.10% to close at 94.219.
In the last week of October, the dollar gained 0.53, closing at 94.135.
Traders relied heavily on the Fed’s monetary policy and economic data to deliver the dollar’s strong performance. Dollars impressive performance came despite Fed chair J Powell maintaining a dovish interest rate.
Early in the week, positive economic data dominated the US currency market news.
October’s manufacturing index dropped to 60.8 from 61.1, and the non-manufacturing index surged to 66.7 from 61.9. ADP reported that nonfarm jobs in October jumped by 531K after a 523 increase in September.
Mid-week, weekly jobless claims supported the dollar. In the week. The claims dropped to 269K from 283K. Nonfarm data was the week’s market prime mover, with NFP surging by 531K, well above the 450K expected by economists.
In the week prior, NFP jobs had risen by 312K. The improved jobs reduced the unemployment rate to 4.6% from 4.8%.
Besides, the positive economic data FEDs monetary policy spurred the market at the end of the week. As expected FED chair reduced monthly assets purchases while downplaying any interest rate hike soon, insisting inflation spike as transitionary.
The US dollar increased the highest on Friday after recent forex news showed the United States created more jobs than anticipated. The report also alludes that the US is pushing towards full employment and may push fed reserves to hike interest rates.
As COVID 19 infection declined over the summer, NFP recorded 531K new jobs in October. Economists had predicted the jobs to increase by 450K.
Following the job report, the dollar surged to 94.634, the highest since 25th September 2020.
Pound to Dollar Forecast this Week
England had a relatively quiet week with few economic updates, which saw the pound lose 1.34% to close at 1.3498 against the dollar. Previously it had fallen by 0.53%, closing at 1.3682.
At the start of the week, the private production index provided direction for the currency pair.
But it was the Bank of England monetary policy on Thursday significantly impacted pound to dollar forecast this week.
According to recent forex news, the bank committee voted to maintain a low-interest rate of 0.1%, sending the pound to its lowest in the last month.
Euro vs Dollar forecast
For the first week of November, the euro rallied 0.8% to close at 1.1567, reversing a previous 0.73% loss. COVID 19 and economic updates primarily drove the euro vs dollar forecast in the week.
Despite the long-term availability of COVID 19 vaccines, the region recorded a 55% surge in the disease infection, forcing authorities to impose striker measures.
Daily averages now stand at 6.2K, up from 4.2K in the previous week. While 2milion booster shots have been administered in the EU, infections continue to spike.
At the beginning of the week, negative German retail sales and the region’s production index pressured the euro. As a result, German retail sales shed off 2.5%, reversing a previous 1.2% spike.
Italy’s and France’s positive production indices supported the euro mid-week. However, Eurozone’s production index dropped to 58.3 from 58,5.
Mid-week, regions service index and German factory orders came into focus, delivering mixed results. Factory orders rose 1.3%, slightly reversing the previous 8.8% loss. However, the mixed results weakened the region’s composite to 54.2 from 56.2.
Closing the week, economic data coupled with a positive US economic update further weakened the euro. Industrial production dropped 1.1% following a previous 4% loss. Also, retail sales dropped 0.3% after a 1.0% previous loss.
FX USD CHF
In the 1st week of November, the Swiss franc gained 0.3823 against the dollar to close at 0.9121. Mixed economic updates largely drove fx USD CHF performance.
The procurement index dropped to 65.4 from 68.1, and retail sales jumped 2.5%, with monthly CPI increasing to 0.3%.
Cad Currency News
Driven by economic data and COVID 19, the Canadian dollar fell 0,56%, close at 1,2457. Previously the Canadian dollar had lost 1.17% to the greenback.
Canada posted though few positive economic data. Trade surplus spiked to C$1.86 billion from C$1.51 billion. And despite a negative growth projection in cad currency news, the unemployment rate dropped to 6.7% from 6.9%.
Amid the positive economic data, poor crude oil prices throughout the week weighed on the Canadian dollar.
Recent Forex News from Asia-Pacific Region
While it was a bullish week for the Japanese yen, the Australian and New Zealand dollars were on a bearish run.
Aud vs USD News
According to aud vs USD news, the Australian dollar lost 1.57% to close at 0,7400. Recent forex news indicates economic data, and monetary policy primarily drove the performance of the Aussie dollar.
Australia posted negative economic data, with the AIG manufacturing index dropping to 50.4 from 51.2 last month. Similarly, the trade surplus dropped to A$2.243 billion from A$15.077 billion.
On a positive note, while economic data pressured the Aussie dollar, the Reserve Bank of Australia (RBA) provided some relief.
The RBA adopted a dovish approach towards the country’s economy and hinted interest rate could be implemented before 2024 but was not enough to salvage it against the greenback.
Nz Dollar to US Dollar Trend
Recent forex news shows the New Zealand dollar closed the week 0.75% lower to 0.7115, driven primarily by economic reports.
During the week, building consents and labor figures dominated the NZ dollar to US dollar trend. After rising by 3.8% in August, building consents shrank by 1.9% in September.
Significantly, the employment rate rose 2% in the Q3, lowering the unemployment rate to 3.4% from 4.0%.
Despite upbeat financial stability, the kiwi dollar failed to rise against the US dollar.
Japanese Yen Currency Forecast
Supported by economic data and improving economic conditions, the yen rose 0.47%, closing at 113.410 against the dollar. Previously the yen had lost 0,40%.
In the week, Japan posted positive economic data, uplifting the Japanese yen currency forecast.
First, Japan’s service index spiked to 50.7 from 47.8, with household budgets accounting for the significant improvement.
Then monthly spending surged 5.0%, reversing 4.0% last decline.
Week Ahead
The following fundamentals are expected to drive next week’s performance.
- the US inflation
- Low-level economic updates
- Coronavirus
- Central banks monetary policies
- Supply chain constraints
- Brexit
Last week was highly hyped, from reserve banks’ decisions to the nonfarm payroll numbers. As the global economy grows despite the microchip shortage, the dollar registered a new high after one year.
Will the dollar momentum continue, or will there be a new surprise?
As the dust settles on the recent forex news, don’t miss out on our next analysis!
Here is the Next Forex Analysis: