US politics, economic data, and coronavirus pandemics dominated this week’s foreign currency trading. Two mega pharmaceuticals giants fueled optimism in the war against the deadly virus.
Stay on for an in-depth analysis of g7 currencies fundamental analysis and economic review.
The Fundamentals
While several factors affected the forex market, coronavirus resurgence and covid 19 vaccines significantly drove it. Here are the fundamentals in this week’s wrap.
COVID 19 Pandemics
On Sunday, 22nd November 2020, global confirmed coronavirus cases hit 58.6 m, fatalities 1.39 m, and recoveries 40.6. On Saturday, the US reached 12m confirmed cases, and as such, many states reintroduced restriction measures to curb the rapid spread of the disease.
As some countries in Europe come out of lockdown measures, Germany and Italy extended by another month. The surge in coronavirus undermines the riskier assets in favour of the safe-haven currencies.
Coronavirus Vaccine
Progress towards the covid 19 vaccines ignited demand for the riskier but profitable assets. The good news saw the American dollar weaken against riskier assets but strengthen against the safe-haven currencies.
Two pharmaceutical giants, Moderna Incorporation and Pfizer Incorporation, released positive phase 3 clinical trials that generated positive sentiments. The results indicate that Moderna’s vaccines have 94.5%, and Pfizer’s vaccineshave a 95% efficacy rate. The excellent news caused positive sentiments from Monday and vibrated over the week.
And to end the week with a bang, Pfizer and BioNTech submitted an Emergency Use Approval(EUA) request to the US’s Food and Drugs Administration (FDA) on Friday. These positive sentiments sealed the downfall of the safe-haven currencies.
US Politics
Turmoil in US politics continues as Trump refuses to concede defeat. Trump’s refusal kept the greenback under pressure. Trump refused to recognize the new president-elect Joe Biden and has launched lawsuits and campaigns in an attempt to overturn the election results.
Economic Data
On a positive note, most economies improved, indicated by various countries’ positive financial reports. China also recorded impressive economic growth that supported commodity-related assets.
Crude Oil
Riding on the positive vibes progress towards covid 19 vaccines., the crude oil prices grew by 5.03% to close at $42.15 per barrel. Despite the coronavirus pandemics, Crude oil prices have rallied for the last three weeks straight.
The rise in the oil prices supported commodity-related foreign currency trading.
Fundamental Analysis & Economic Review Of G7 Foreign Currency Trading
Table: Performance summary of the g7 currencies
| Currency pair | 16th Nov | 22nd Nov | Average | Percentage Change | Remarks |
| USD | 92.630 | 92.395 | 92.404 | 0.383 | drop |
| GBP/USD | 1.3191 | 1.3282 | 1.3249 | 0.7280 | gain |
| EUR/USD | 1.1853 | 1.1857 | 1.1858 | 0.1775 | gain |
| USD/CHF | 0.9127 | 0.9109 | 0.9113 | 0.1863 | drop |
| USD/JPY | 104.56 | 103.85 | 104.03 | 0.74 | drop |
| USD/CAD | 1.3072 | 1.3096 | 1.3084 | 0.2665 | gain |
| AUD/USD | 0.7318 | 0.7302 | 0.7302 | 0.4678 | drop |
| NZD/USD | 0.6902 | 0.6927 | 0.6911 | 1.2127 | gain |
USD Currency Trading
The American dollar lost its previous week’s gain to close in the red. It fell by 0.39% to 92.392. Previously the dollar increased by 0.53%, closing at 92.721.
Coronavirus related news affected the dollar in two ways. While the continued spikes in the virus tested riskier markets, advancement on the deadly virus vaccine degraded the dollar.
Positive sentiments from Moderna incorporation and Pfizer Incorporation downplayed usd currency trading demand. Economic updates mostly skewed to the negative were in action over the week. Industrial production improved slightly but was weighed down by retail sales and consumer spending.
The US administration failed to deliver on a coronavirus stimulus package in the first half of the week. In the second half of the week, weekly jobless claims and industrial manufacturing figures also frustrated usd.
The manufacturing index dropped from 32.3 to 26.5, and initial jobless claims increased from 711K to 742K over the week. Overall, the economic data had a slight dent in the usd fx currency trading.
GBP Currency
Inflationary pressure increased from 0.5% to 0.7% in the UK, and retail sales improved by 1.2% to support gbp foreign currency trading. While the inflationary and retail sales figures helped the sterling pound, other data pulled it southwards. Consumer prices remained unchanged, and the industrial trend orders index dropped from -34 to -40.
On to the international trade relations upfront, the Brexit talks were suspended. The suspense came as the negotiators self-isolated because one member tested positive for the coronavirus. On Friday, European Commission President Ursula Von der Leyen announced a possible extension and highlighted the progress made by the negotiators.
Coronavirus pandemics also drove the performance of the sterling pound. Many states in the Eurozone recorded increased new covid 19 spikes. Due to the severity of the disease Germany and Italy extended restriction measures by another month.
On the other hand, however, progress towards the coronavirus vaccines’ positive sentiments uplifted the pound. In the week ending 22nd November, the gbp currency strengthened by 0.65% to 1.3275 following a marginal increase of 0.26% in the previous week.
Currency Euro To Dollar
The Eurozone had a quiet week on the economic calendar, leaving the performance of currency euro to dollar, to Brexit talks, COVID 19 pandemics, and coronavirus vaccines.
Inflation remained steady at 0.2%, and ECB president Lagarde assured additional monetary support, but the Euro remained unchanged. The consumer confidence index dropped from -15.5 to -17.6 due to coronavirus resurgence and restriction measures.
Covid 19 spikes across the Eurozone and reintroduction of stricter control measures were damaging to the Euro. Advancement towards the covid 19 drugs supported the Euro.
By the close of the week, the Euro increased dismally by 0.19% to 1.1857, reversing the previous week’s loss of 0.34%.
USD/CHF
The Swiss franc performance was primarily driven by ECB sentiments, coronavirus pandemics, covid 19 vaccines, and economic updates.
Negative economic data, explicitly falling consumer and producer prices, worked against the Swiss franc. Continued spikes in the covid 19 new cases also weighed heavily on it. More damage came from reintroduced lockdown measures in Europe and America.
The worries of Brexit talks made things worse for the Swiss franc. However, the Swiss franc took advantage of the weakening dollar to rebound and close the week on positive territories. Coronavirus spikes and no Brexit talks
Uncertainty favoured the Swiss franc. By the end of the week, the Swiss franc closed at 0.9113 gaining 0.1863% to the dollar.
USD/CAD
In the week ending 22nd November, the Canadian dollar reversed the previous week’s loss of 0.67% and grew by 0.32% to 1.3095. Positive economic data and progress in the fight against the infectious virus significantly uplifted Lonnie.
Continued spikes in covid 19 globally worked against the Canadian dollar. The reintroduction of lockdown measures added more pressure to Lonnie. Manufacturing, wholesale, inflation, and retail figures increased though slightly to support the Lonnie.
But ultimately, progress in the covid 19 vaccines significantly boosted Canadian dollar foreign currency trading. The Aussie dollar received more boost from increased crude oil prices and China’s improved economy.
AUD/USD
In a busy week on the financial diary, the Aussie dollar increased by 0.44% to 0.7302, primarily driven by economic data and covid 19 pandemics.
Employment rate and retail sales figures impressed, but wage growth disappointed. The retail sales increased by 1.6%, and employment records added 178.8K new entrants.
On the monetary policy, the Reserve Bank of Australia declined to offer more economic support and left interest rates unchanged.
While coronavirus spikes proved unfavourable to the Aussie, progress towards the covid 19 vaccines leveraged it.
Nz Dollar
Despite an economically quiet week, the kiwi dollar rallied by 1.23% to close the week stronger at 0.6929. Positive economic data in new Zealand supported its foreign currency trading.
Furthermore, progress towards the coronavirus vaccines, Brexit talks and China’s improved economy catapulted the kiwi dollar. However, covid 19 spikes across Europe and the US were close enough to pressure the nz dollar downwards.
Besides, the reintroduction of stringent lockdown measures weighed heavily on it.
JPY News
According to jpy news, the 3rd quarter GDP improved by 5% but was insufficient to reverse the previous contraction of 8.2% recorded in the 2nd quarter. Trade data also disappointed as imports tumbled by 13.3% and exports shrunk slightly.
However, despite the support of covid 19 pandemics in Japan, progress towards the covid 19 vaccines downplayed the yen.
In the end, the yen grew by 0.74% to 103.86 to the greenback. Previously it had weakened by 1.24%.
Conclusion
Despite the progress towards covid 19, coronavirus pandemics weighed heavily on global recovery efforts and foreign currency trading. The balance between covid 19 spikes and ongoing progress in the vaccines will dominate the forex market in the coming weeks.