In this weekly trading forecast, Coronavirus pandemics and global risk sentiments dominated forex trading news while economic updates took backstage.
Most of the g7 currencies recovered; it was back to the reds for the American dollar. Here is what happened to the g7 fx currencies.
Weekly Trading Fundamentals
Several fundamentals combined forces to affect the performance of the g7 currencies in the week ending 20th September.
Coronavirus
Coronavirus threats continued to ravage many economies and undermined economic recovery efforts. Many countries recorded daily new spikes of the infectious virus and some reverted tighter lockdown measures.
Great Britain, NewZealand and Australia reverted lockdown measures to counteract resurgence of the disease. On positive news, third phase tests for AstraZeneca’s covid 19 vaccine in Britain resumed, fueling hopes for victory over the virus.
Economic Update
The g7 countries posted mixed economic updates in a busy week on the economic upfront. Fewer countries had improved economies, while others recorded poor data. The improvement of its economy primarily supports the performance of a country’s currency.
Early in the week, China posted improved economic data to support commodity-related currencies. Over the week, also, oil prices rallied significantly by almost 9% due to reduced inventories and adverse weather conditions affecting production in the US.
Negative Sentiments In Weekly Trading
On Friday global mood turned negative driven by low optimism on the US economic recovery plans. Besides, other countries like the UK and NewZealand announced plans for new tighter lockdown measures.
And to make matters worse, the American technology sector continues to spiral downwards. All these factors combined forces to upturn the weekly trading prediction.
Weekly Trading Review Of The G7 Currencies
Table: weekly trading summary of the g7 currencies.
| Currency pair | 14th Sept | 20th Sept | Average | Percentage Change | Remarks |
| USD | 92.912 | 92.926 | 93.030 | 0.394 | drop |
| EUR/USD | 1.1868 | 1.1837 | 1.1842 | 0.0675 | drop |
| GBP/USD | 1.2844 | 1.2915 | 1.2916 | 0.9536 | increase |
| USD/CHF | 0.9083 | 0.9116 | 0.9091 | 0.3302 | increase |
| USD/JPY | 105.72 | 104.55 | 105.07 | 1.50 | drop |
| USD/CAD | 1.3174 | 1.3204 | 1.3180 | 0.2277 | drop |
| AUD/USD | 0.7288 | 0.7289 | 0.7299 | 0.0824 | increase |
| NZD/USD | 0.6698 | 0.6759 | 0.6733 | 1.4256 | increase |
USD Trading
After trading in the green zone for two consecutive weeks, usd trading slid back to its previous weekly trading zone in the reds. By the end of the week, usd trading shed 0.44% to close at 92.926. In the previous week, it had risen by 0.66%.
On the economic upfront, the US had a busy week with financial data being mixed. Retail sales, industrial production disappointed, and the manufacturing sector was on the upswing to support the usd trading.
However, on Wednesday, usd trading received a blow from the FOMC monetary policy decision. More damage came from interest rate and economic projections that pointed to a gloomy future.
Despite an early projection of the significant drop in the weekly jobless claims, figures declined dismally from 893k to 860k. Towards the close of the week, positive consumer sentiment figures uplifted usd trading. Drop in the equity market of the US negatively affected the greenback.
GBP/USD
The sterling pound was treated to another round of busy week on the economic calendar. However, economic sentiments played a significant role in this weekly trading. In the first half of the week employment and inflation pressured the pound
The unemployment figures went up from 3.9% to 4.1% threatening the pound. Inflation Figures dropped from 1.0% to 0.2%, while the consumer prices reversed by 0.4%. According to investing.com, the sterling pound had a bullish run Monday to Thursday.
However, it lost the bullish momentum on Friday attributed to change in global risk sentiments to negative. More damage to the pound came from the Bank of England sentiments and the monetary policy utterances. A friendly monetary policy approach and negative interest rates pressured the pound heavily.
Retail sales figures failed to impress on Friday as it increased at a lower rate, pointing to a slowed economic recovery pace. In the political arena, the pound received much-needed support on the resistance against Boris Johnson’s Internal Market Bill, even though the bill sailed through the House of Commons.
On the fight against coronavirus pandemic, England considered the introduction of tighter lockdown new measures as daily spikes of the virus exceeded 4k. In the week ending 20th September, the pound strengthened by 0.95% to close at 1.2917 against the greenback. In the previous week prior, it had tumbled heavily by 3.64%.
EUR/USD
The Eurozone, also, had a busy week on the economic calendar with eur usd news dominated economic data skewed to the positive. Industrial production went up by 4.1%, and the trade surplus increased to 27.9 billion euros in the Eurozone.
Wage growth for the eurozone and inflation figures also improved but did not impact Eur usd news. Despite posting good economic updates, traders avoided the euro possibly on Brexit talks stalemate. According to eur usd news, the euro dropped by 0.05% closing at 1.1840, reversing its previous week’s gain of 0.07%.
USD/CHF
On the economic upfront, Switzerland had a busy and full calendar. Performance of usd chf was driven by economic data, risk sentiments and Brexit deal. The Swiss franc lost strength on Wednesday due to Brexit stalemate.
Further damage to the swiss franc came on Friday due to negative sentiments fueled by a drop in the US stock market and covid 19 lockdown new measures. Switzerland recorded a trade surplus supporting its currency. In this weekly trading, it shed 0.3302 % against the dollar to close at 0.9116.
CAD/USD
Compared to other g7 countries, Canada had a relatively quiet week economically, leaving usd cad news to inflation and sales figures. Inflationary figures increased while consumer prices dropped to add pressure on usd cad news.
Besides, retail sales figures disappointed, as it fell by 0.4%. Despite oil prices increasing, it was not enough to uplift the Loonie. The poor economic data, counter currency flow and negative global risk sentiments weighed heavily on usd cad news.
The Loonie weakened by 0.19% closing at 1.3204 having fallen by 0.90% in the previous week.
AUD/USD
Despite another quiet week in Australia on the economic front, economic updates, covid 19 and risk sentiments featured heavily on the aud usd news. Economic data provided much-needed support to the Australian dollar.
Employment figures rose by 36.2k fueling hopes of a quick economic recovery driven by consumption. In this weekly trading wrap, the aud usd news was driven by covid 19 pandemics and negative global risk sentiments.
According to aud usd news, the Australian dollar fluctuated but managed to strengthen by 0.07% to close at 0.7289.
The Bull Of The Week
Despite having a quiet week on the economic calendar, the NewZealand dollar managed to emerge as the top gainer. Nzd usd rallied by 1.4256% to close at 0.6759. Traders considered key economic data such as consumer sentiment figures and GDP figures to drive the nzd usd currency pair upwards.
On the wrong foot, Consumer sentiment took a nosedive in the 3rd quarter and its economy contracted by 12.2%. The impact of coronavirus restrictions also continued to weigh heavily against the kiwi, and possibly for another week. NewZealand’s consumer confidence level reached the lowest point ever since 2008.
Against all the odds, the kiwi managed to recover its earlier losses supported strongly by the Central Bank projections. In addition, the weakness of the American dollar contributed to the strengthening of the kiwi dollar. China posted an improved economy, boosting the kiwi dollar. An increase in global dairy prices by 3.6% provided much-needed leverage for nzd usd.
In The Far East
Japan experienced another round of busy weeks on the economic calendar. Key economic data included trade and inflation figures that were skewed to the negative. Despite import and export trades sliding, the trade surplus widened. The woes of the coronavirus pandemic also pulled the yen downwards.
Inflation figures provide some support as it went down 0.4%. Central hinted Japan’s economy was in bad shape but left the monetary policy unchanged. Despite the weak economic report from japan and covid 19 impacts, traders sought the yen in response to negative risk sentiments.
The Japanese Yen increased by 1.50% to close at 104.57 against the American Dollar. In the previous week, it had strengthened by 0.08%. From the start of the week to the end, it was a bearish run for the USD/JPY currency pair.
Conclusion
Weekly trading of the g7 currencies was primarily affected by negative global sentiments on Friday. The American dollar dropped and lost against nearly all the g7 currencies with the exception of the Euro and Swiss franc.