While the safe-haven currencies topped in the week, it was a terrible week for the greenback and the riskier assets. Swiss franc and Japanese yen responded positively to the negative sentiments in the world currency market news, with the Swiss emerging as the week’s top performer.
Meanwhile, risk aversion measures pushed the kiwi dollar to the bottom, followed closely by the Australian and American dollars. Developments in the world currency market news led to overall negative financial sentiments in the week.
Which fundamentals drove the g7 currencies’ performance?
The Woes in Cryptocurrency
Cryptocurrencies were the central focus in world financial market news. In a massive panic selloff, the bitcoins dropped 34% driving forex traders to engage in risk aversion measures.
Elon Musk‘s tweets baring use of bitcoins in the purchase of electric cars led to the initial shock. Then China banned its institutions from trading with cryptocurrencies. Jerome Powell sided with China’s position on cryptocurrencies, further leading to its downfall.
Coronavirus News
The coronavirus pandemic still affects various countries, particularly in India, currently experiencing second wave outbreaks. India’s total coronavirus confirmed cases surged past 25 million.
India is among the world’s leading vaccine manufacturers, and it halted all COVID-19 vaccine exports to prioritize domestic health needs. Globally, 10.8% (165 billion) of the population have been vaccinated against COVID-19, translating to 291 million daily doses.
The US leads the vaccination race with 286 million doses at an average of 1.83 million daily jabs.
Economic Updates
While the global economic recovery continues to rise, individual G7 states posted mixed results. For example, UK, Japan, and the Eurozone’s economies contracted. China’s economic growth slowed, affecting the performance of commodity-linked assets.
Crude Oil
Oil prices closed the week lower on fear of Asian coronavirus variant and US inflationary pressure rate hike. Furthermore, the resumption of the Iranian oil supply on Thursday further lowered the oil prices.
G7 Fundamental Analysis and Economic Review
Table: g7 performance summary
| Currency pair | 17th May | 23rd May | Average | Percentage change | Remarks |
| USD | 90.142 | 90.005 | 89.973 | 80.347 | drop |
| GBPUSD | 1.4134 | 1.4147 | 1.4154 | 0.3618 | increase |
| EURUSD | 1.2151 | 1.2179 | 1.2190 | 0.3213 | increase |
| USDCHF | 0.9032 | 0.8976 | 0.8999 | 0.3884 | drop |
| USDJPY | 109.19 | 108.94 | 108.99 | 0.37 | drop |
| USDCAD | 1.2066 | 1.2066 | 1.2077 | 0.2975 | increase |
| AUDUSD | 0.7763 | 0.7731 | 0.7757 | 0.5275 | drop |
| NZDUSD | 0.7200 | 0.7170 | 0,7197 | 1.1580 | drop |
USD Back to the Red
In the week, the dollar dropped by 0.34% to reverse a previous gain of 0.08%. Economic data and FOMC sentiments primarily drove the dollar’s performance. Despite a massive market demand, housing construction dropped by 9.5% because of a shortage of building materials and skilled labor.
Housing demand has soared since the pandemic, mainly due to increased household space need and low mortgage rates. Due to supply material constraints, the durable goods spending index dropped from 64.7 to 60.7.
On Friday, personal income and spending dominated world currency market news. Riding off the back of the US stimulus package, personal income increased by 1.3%, with personal spending rising by 0.4%.
Manufacturing PMI remained steady at 62.8 while the service sector rose to 55.1, the highest since 2018. In addition, weekly jobless claims improved, dropping to 444K better than an earlier projection of 452K.
Mid-week, the FOMC meeting caused jitters in the world currency market news. According to the 27-28th April FOMC meeting minutes released on Wednesday, the Federal Reserve may review the market if the rapid economic recovery progress continues to rise rapidly.
In the meeting, the officials agreed it might be necessary to discuss plans to adjust the pace of asset purchases. Despite this, the officials maintained the current interest rate near zero and announced they would continue with the massive bond purchases.
GBP Performance
The sterling pound rose by 0.38% in the week, closing at 1.4150, after a previous 0.81% rise. Economic data mainly supported the pound. World currency market news shows that the UK property prices continue to increase, with house prices rising by 9.7%.
In the Labour market, the jobless rate continues to drop, hitting 4.8% in the week. According to Yael Selfin, KPMG UK Chief economist, “Because of relaxation of the coronavirus lockdown measures and increased economic activity, businesses hired more workforce to meet demand.”
The inflationary pressure rate in the UK doubles as consumer prices rise. Besides, PMI manufacturing improved from 60.9. to 66.1 while the service sector rose to 61.8 from 61.0.
The business consumer index rose from -15 to its pre-epidemic level of -9 as the UK improved on vaccination programs and the country emerged from COVID restriction measures. The unemployment rate improved from 4.9% to 4.8%, with employment numbers increasing by 84K.
Also, favorable to the pound, weekly claimant counts reduced by 15.1K in April after declining by 19.4% previously.
Forex EURUSD News
The euro reversed a previous 0.21% drop and improved by 0.34%. Coronavirus news and economic data mainly drove the euro’s performance in the week. Early in the week, economic data provided forex eurusd news with directions.
Euro’s global trade surplus improved by 8.9%, narrowing from 17.7 to 15.8 million euros. GDP shrank by 0.6%, and the unemployment rate reduced by 0.3%, while the annual inflation rate increased by 1.6%.
Later in the week, PMI figures were in action. French service sector PMI rose from 56.6, and manufacturing PMI improved from 58.9 to 59.2. Germany service PMI increased from 50.3 to 56.6 while manufacturing PMI dropped from 66.2 to 64.0.
For the Eurozone, the service PMI improved impressively from 50.5 to 55.1, while the manufacturing PMI slid from 62.9 to 62.8.
Dollar to CHF
Switzerland released scant economic updates, leaving the dollar’s performance to chf exchange rate to risk-off sentiments and general weakness of the dollar. The Swiss producer and import monthly price index increased by 0.7%.
On Friday, the US posted reduced treasury yields which favored the Swiss franc. Notably, cryptocurrency volatility uplifted the Swiss franc. By the close of the week, the Swiss franc gained 0.3884 to emerge as the week’s top performer.
CAD Performance
In the previous week, the Canadian dollar had increased by 0.24% and continued on the upward trend rising by 0.31%. Throughout the week, positive economic data supported the Canadian dollar.
Contrary to expectations, Canadian inflationary pressure upticks but not as firmly as the US inflation rate. Consumer sentiment in Canada soared by 45% to a record level, fueled by the reopening of the US economies and progress in COVID-19 progress.
Canada’s annual inflation rose to 3.4% from 2.2%, the highest in decades. According to world currency market news, Canada’s labor market added 335.3K new jobs in April. Despite higher construction costs, Canada’s new home prices increased by 1.9%.
However, Canada’s retail prices plunged by 5.1% because of restriction measures reintroduced in some parts to fight COVID-19 third wave resurgence.
Meanwhile, in the Asia-Pacific…
While the bulls firmly took control of the Japanese yen, the bears ensured New Zealand and Australian currencies took the bottom spots.
Australian Dollar to USD
Driven mainly by mixed economic data, the Australian dollar weakened by 0.50% to close at 0.7732 against the American dollar. While consumer sentiments took a hit in May, wages improved by 0.6% in the first quarter.
However, the Australian labor market took a sharp U-turn affecting the Australian dollar to usd exchange rate. It lost over 30K jobs in April, quite far from 17.5K new jobs projected by economists.
Australia Manufacturing PMI inched higher to 59.9 In May. Retail sales for April increased by 1.1%, Supporting Australia’s strong economic recovery path. RBA monetary policy weighed heavily on the Australian dollar. However, in a meeting, the board maintained the current rates until after 2024.
USD to Kiwi Dollar
Driven mainly by economic data, the kiwi dollar effortlessly clung to the bottom spot, shedding 1.05% to the American dollar. New Zealand’s performance service index (PSI) improved to 61.2 in April.
Global dairy product prices slumped by 0.2%, uplifting usd to kiwi dollar exchange rate. In the first quarter, wholesale inflationary figures increased but did not uplift the kiwi dollar. Similarly, Producer price input jumped by 2.1%.
JPY Forex News
COVID-19 resurgence and the resulting restriction measures led to Japan’s economic contraction. Its GDP shrank 5.1% According to jpy forex news, Household consumption declined by 5.6%, and business capital spending dropped by 5.5%.
According to jpy forex news, Japan approved Moderna and AstraZeneca vaccine usage.
However, until recently, Japan has been using the Pfizer vaccine. Japan’s vaccination rate cast a shadow of doubt over its ability to handle the upcoming Olympics well. Because of the COVID-19 ravages, the price index in Japan fell by 0.1%.
Conclusion
World currency market news had a mixed impact on the g7 currencies. The American dollar weakened and lost against the riskier assets but could not withstand the majors and safe-haven currencies.
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