Weekly Market Analysis Report
From weekly market analysis report we come to know that Many countries continue to emerge from coronavirus shutdown, and the focus now shifts to opening up world economies.
The infections and fatalities from the coronavirus have declined worldwide, and many countries have eased measures on covid 19.
The remaining states have announced plans to soften on the covid 19 lockdown measures.
In this weekly review, we shall focus on G8 currencies and the fundamentals that affected their performance.
Main Events
Covid 19 global pandemic
The covid 19 pandemics is painfully slowing down, and as a result, many countries have opened up their economies.
However, the social distancing rule and the wearing of the mask needs to be adhered. Workers are returning to their places of work, and schools have reopened.
Countries are also implementing economic recovery plans.
Oil prices slowly regaining
The demand for oil is expected to raise as many global economies reopening amid easing of covid 19 lockdown measures.
Over the week, the oil prices recovered to reach a high of $30 per barrel.
Importantly the increase in oil prices has significantly strengthened commodity-based currencies such as the Canadian dollar.
Fight against corona
According to Reuter’s news, an antiviral medicine (remdesivir) consisting of three drugs, quickly reduced symptoms of mild to moderate covid 19 patients.
These results are based on tests carried in Hong Kong.
The Japanese government also officially approved the remdesivir, covid 19 drugs by Gilead sciences.
The japan government approved the drug in the fight against coronavirus as there is no other available.
Japan becomes the 2nd country after the United States of America to fast track authorization of the drug.
Week’s Performance of G8 currencies
The USD gains slightly
The USD gained but failed to close the over100.00 psychological level on the week.
Market Analysis shows that the US dollar index gained points to a high of 100.13 on Wednesday only to lose momentum on Thursday and Friday.
Performance of the dollar affected by covid 19 pandemic and 20.5 million lost jobs slightly lower than the 22million predicted.
In addition, other states continue to open up, thus accelerating economic recovery of the USA.
Table: a summary of the performance of the G8 currencies
| Currency pair | 4th May | 8th May | average | Percentage change | Remarks |
| USD | 99.567 | 99.769 | 99.828 | 0.675% | Increase |
| EUR/USD | 1.0908 | 1.0841 | 1.0844 | 1.3154% | Decrease |
| GBP/USD | 1.2444 | 1.2409 | 1.2399 | 0.7597% | Decrease |
| USD/JPY | 106.75 | 106.67 | 106.49 | -0.26% | Decrease |
| AUD/USD | 0.6427 | 0.6530 | 0.6457 | 1.7292% | Increase |
| USD/CAD | 1.4085 | 1.3938 | 1.4019 | 1.0507% | Decrease |
| USD/CHF | 0.9651 | 0.9708 | 0.9713 | 0.9777% | Increase |
| NZD/USD | 0.6048 | 0.6141 | 0.6079 | 1.1864% | Increase |
EUR/USD sees red
The euro lost steadily to the lower of 1.0795 on Wednesday and appreciated on Thursday and Friday to hit resistance at 1.0875 and closing at 1.0844.
However, it registered an overall loss of 1.3154% over the week. The euro was the most significant loser trading on the red most of the week.
The Euro/dollar currency pair was affected by market sentiments on restrictions easing on some of its member states.
This move boosted hopes on a faster economic recovery than earlier predicted by economists.
Another deterrent was the German court ruling early in the week, which requested justification on European Central Bank (ECB) plans on economic recovery program against the covid 19 viruses.
Immediately after the ruling, the euro dropped by 1.6% against the dollar. The ruling negatively affected investors’ confidence in the Euro currency.
Over the coming week, the euro is expected to gain against the dollar primarily due to the re-opening of economies.
The continued reduction in covid 19 infections and deaths, specifically in Italy and Spain, will boost the euro too.
GBP/USD loss recovery
Between Monday and Thursday, the pound shed almost 2% only to recover on Friday following Boris Johnson’s statement.
Early in the week, the pound was negatively affected by the covid 19 pandemic and the uncertainty of Brexit.
The pair regained lost ground on Friday to hit a high of 1.2450 from a low of 1.266 records on Thursday.
The continued reopening of the risk market favors the sterling pound.
The prime minister fueled optimistic expectations when he announced plans to start easing measures on covid 19 lockdowns gradually.
Notably, the US drop in the unemployment rate had a positive impact on this currency pair.
UK Prime Minister Boris Johnson announced on Sunday plans to start easing the measures gradually against covid 19 over the coming week.
The pair has been fluctuating between 1.2235 and 1.2645 for a long time now.
According to its market analysis It is expected that the pair will most likely trade within this range for several weeks to come.
USD/JPY the dollar bounce back
The USD started the week badly on Monday, dropping to the lowest of 106.15 on wed but managed to bounce back on Thursday and gained more on Friday.to close at 106.67.
The pair managed the highest price over the week following the release of positive news on national employment records.
The United States of America government, on Thursday, posted dropped employments rate contrary to many expectations. The dollar found support at 106.00 and gained against the Japanese yen.
The continued easing on lockdown fueled risk appetite over the week. The Yen was affected on Thursday and Friday as traders moved to the risk appetite markets.
Market analysis and Global news sentiments always tend to undermine the Japanese yen against the dollar.
The dollar also rallied on the announcement that the US-china phase 1 trade deal still on course despite the intended trade war over covid 19 origins.
Other sentiments influencing the yen was the extended state of emergency to May 31st. Besides, Japan was also on holiday most of the week.
USD/CAD loser
Market analysis shows that The USD/CAD currency pair lost 1.2% over the week.
This currency pair opened the week at 1.4085 and fluctuated through the week to close lower at 1.3938
The Canadian dollar gained significantly over the week boosted by employment records of the USA and Canada.
Both the USA and Canada simultaneously released their employment reports last week.
However, the Canadian employment data showed that employment reduced by 1.99 million. This was much matter than the predicted job loss of 4 million.
Furthermore, the commodity-based Canadian dollar appreciated against USD as the oil price continues to improve.
The bad employment data report also predicted a 25% drop in GDP for the 2nd quarter. Besides, covid 19 has dramatically affected the economy of Canada.
AUD/USD season rebound
The AUD/USD currency pair rebounded from the lowest of 0.6378 over 0.6500 to seasons high of 0.6545, facing an essential resistance on Thursday and Friday.
Australian dollar gains were fuelled by
- The easing on coronavirus restrictions measures
- The weakening of the united states of America dollar
- Positive economic data.
- Good Chinese trade data
Moving forward in the coming weeks, should the pair cross over the 0.6545 resistance level, the pair might enter a bullish run as witnessed on early Friday and march 9th.
On the other side, should the pair cross below the support level of 0.6380, the Monday lows, the pair might be headed for a bearish run.
USD/CHF spiral fall again
The USD/CHF currency started the week on an upward trend. However, the trend drastically reversed on Thursday and Friday.
The USD/CHF currency pair continued to lose in two consecutive weeks.
The 0% interest by the US government pushed the dollar down on Friday.
Also, the reopening of other economies worked against the dollar on Thursday and Friday.
Furthermore, there were continued US and China trade talks, which boosted the market mood amid earlier threat of US against china on its role on coronavirus.
NZD/USD risk rebound
The New Zealand dollar recovers from a low of 0.6010 on Thursday to a high of 0.6141 on Friday.
The New Zealand dollar gained leverage on the weakening American dollar and continued recovery on risk markets.
Also, easing of covid 19 lockdown measures boosted the New Zealand dollar.
Over the week, the New Zealand dollar gained the most at nearly 2%. And most important New Zealand released positive economic data which boosted its currency
On a positive side, the New Zealand dollar might jump the 0.6175 resistance level and move on a bullish run.
On the negative side, it hit bearish run should the price fall below 0.6015 support level.
Conclusion
The sustained combat against covid 19 and reopening of risk markets amid other fundamentals predominantly affected the G8 currencies.
The dollar weakened against the risk appetite market as investors become optimistic about the reopening markets. Notably, the strength of the dollar declined as the oil prices increases.
However, the dollar managed to strengthen against the New Zealand dollar, the Australian dollar, and Swiss franc.
The approval of the Gilead sciences coronavirus remdesivir drug affected the G8 currencies.