The way out from the UK’s experiment of lifting most lockdown measures is far from certain.
Michael Moran The US Dollar settled to end the week with modest gains versus most currencies. Trading was volatile in roller coaster fashion. A favoured gauge of the Greenback’s value relative to a basket of 6 major currencies, the Dollar Index (USD/DXY) closed the week at 92.90 from 92.57 a week ago.
Risk appetite went from risk-on to risk-off, to risk-on again dominated by the spread of the Delta variant, central bank talk, and thinned volume trading conditions. Traders and investors gauged how it would affect the appreciating US Dollar. At the close of New York on Friday, Wall Street stocks managed modest gains.
Bonds had a volatile trading week, which affected FX. The yield on the US 10-year treasury bond settled higher, at 1.28%. The benchmark note climbed from a 5-month low at 1.19% on Wednesday. Last Friday, the US 10-year rate was at 1.29%. A month ago, the yield was 1.47%. Learn how the bond market and interest rates can affect currency prices.
The Euro slid following the European Central Bank’s policy meeting and rate announcement on Thursday. The ECB pledged to keep rates at record lows and avoided any taper talk. On Friday afternoon, the EUR/USD pair was trading at 1.1772 from 1.1812 a week ago.
The Greenback finished higher against most Asian and Emerging Market currencies. The week ahead sees the US Federal Reserve’s Monetary Policy Meeting, Rate Announcement and Press Conference.
The pound’s struggles continued last week hitting a 5 MONTH LOW against the US dollar. Sterling has been weighed down by the soaring covid daily count in recent weeks and warnings about possible new variants of the virus.
GBP/USD – The British Pound also had a choppy trading week amid UK coronavirus concerns. Sterling finished at 1.3766 on Friday from 1.3765 a week ago. While there was little net change, the GBP/USD pair saw a low at 1.3572 (Wednesday) and a high at 1.3862 (last Friday). An unexpected rise in UK Retail Sales released on Friday buoyed the Pound. Markets will look to coronavirus and Brexit developments this week.
AUD/USD – another loser against the Greenback was the Australian Dollar. The Aussie hit a November 2020 low on Thursday at 0.7287. The AUD/USD pair settled at 0.7365 on Friday. A week ago, the Aussie Battler was trading at 0.7425. Economic data released on Friday saw Australia’s Manufacturing PMI slow to 56.8 from 58.6 while Services slumped to 44.2 from 56.8. The poor report cast a pall on the Aussie even as Sydney saw new record Delta variant cases.
USD/JPY – Against the Japanese Yen, the Dollar finished the week higher mirroring the moves in the benchmark US 10-year yield. The Dollar settled at 110.54 Yen from 110.07 last Friday. The USD/JPY had a volatile week, trading a range between 109.06 and 110.59. Public holidays in Tokyo on Thursday and Friday saw thinner volume markets which resulted in choppy trade.
EUR/USD – Despite some heavy selling pressure, the Euro held a weekly low at 1.1754, settling at 1.1769 at the close on Friday. A week ago, EUR/USD finished at 1.1805. The overall firmer US Dollar and a dovish outcome from the ECB pressurised the shared currency. However speculative shorts on the bid provided strong support for the Euro.
NZD/USD – The Kiwi edged lower against the US Dollar to 0.6975 Friday close from 0.7002 a week ago. Broad based US Dollar strength provided a headwind for NZD/USD. The Kiwi had a choppy week, trading between a low of 0.6881 (Wednesday) and 0.7004 (Tuesday).
USD/CAD – Against the trend, the Greenback finished modestly lower against the Canadian Dollar, settling at 1.2565 on Friday. A week ago, the USD/CAD pair was at 1.2615. Like the other major currency pairs, the USD/CAD had a volatile week. Overall range for USD/CAD was between 1.2525 and 1.2807.
USD/SGD – the US Dollar ended the week at 1.3600 against the Singapore Dollar. Last week, the USD/SGD pair was at 1.3572. The USD/SGD pair saw a choppy week, trading between 1.3565 (low) and 1.3696.
USD/PHP – this currency pair which normally trades in a narrow range, saw some volatile moves during the week. The Greenback rocketed from it’s 50.30 close last Friday to 51.32 on Wednesday. The USD/PHP pair then plunged to 50.12 on Thursday evening before settling at 50.35 this weekend. Which smacks to this writer of intervention from the BSP (Philippine Central Bank). More of smoothing out the market than anything else.
USD/THB – Against the Thai Baht, the Dollar was more subdued in its trade. The USD/THB pair finished at 32.95 on Friday from 32.68 a week ago. The overall range for USD/THB was between 32.57 low (Wednesday) and 32.96 high (Friday). Thailand is also experiencing a “steep upward curve” in new Covid infections of the Delta variant according to the country’s Department of Disease Control.
EUR/JPY – The Euro gained ground against the Yen despite the ECB’s pledge to keep interest rates at record lows at the conclusion of their meeting on Thursday. On Friday at the close of New York trade, the EUR/JPY was at 130.12 against its 129.70 close a week ago. The mild recovery in risk appetite favoured the Euro. The overall range for EUR/JPY was 128.59 low (Wednesday) and 130.30 high (Friday).
EUR/GBP – also had a volatile trading week with both currencies lively against the US Dollar. The Euro closed at 0.8563 Sterling on Friday from 0.8545 a week ago. While the net change is small, the overall weekly range for EUR/GBP was 0.8511 (last Friday) and 0.8670 (Wednesday).
AUD/JPY – The Australian Dollar eased moderately against the Japanese Yen, finishing at 81.42 on Friday from 81.50 a week ago. Like the other currency pairs, the Aussie Battler had a roller coaster week against the Japanese Yen. AUD/JPY hit a high at 81.94 (last Friday) and saw a low at 80.01 (Monday). Risk appetite was the main driver of this cross-currency pair. Expect more of the same.
AUD/NZD – Against the Kiwi, the Aussie finished its trading session at 1.0557 on Friday. A week ago, the AUD/NZD pair closed at 1.0562. While there was little net-change between the week’s closings, the overall trading range was wide in choppy conditions. AUD/NZD hit a peak at 1.0660 (last Friday) and a low at 1.0546 (Monday).
GBP/AUD – another mover and shaker last week. Sterling ended on Friday at 1.8665 Australian Dollars from 1.8612 a week ago. The weekly high/low for this cross-currency pair occurred in one trading day (Tuesday) between 1.8694 and 1.8470. Amazing.
GBP/JPY – Sterling closed the week at 151.95 Yen. Like the rest of the FX market, this currency pair also had a volatile roller coaster week. GBP/JPY hit a peak at 152.61 (last Friday) and a low at 148.46 (Wednesday).
AUD/CAD – the Aussie lost ground against the Canadian Loonie during the week, finishing at 0.9255. A week ago, the AUD/CAD pair settled at 0.9270. Australia’s struggle with rising infections of the Delta variant saw lockdowns in Sydney and Melbourne, the two largest cities affecting approximately 10 million people. Weekly high for AUD/CAD was at 0.9372 (Tuesday) while weekly low traded was at 0.9216 (Thursday).
SGD/JPY – The absence of Tokyo markets on Thursday and Friday saw volatile conditions in this currency pair. The Singapore Dollar closed at 81.30 on Friday against it’s 81.10 finish a week ago. Like other cross currency pairs, SGD/JPY was little changed in a week. However, SGD/JPY hit some extreme levels. Weekly high traded was at 81.47 (Friday) and the weekly low hit was at 79.84 (Wednesday).
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