The arrival of the first confirmations of the availability of Covid-19 vaccines in the coming weeks boosted indices on Monday and Tuesday, until investors realized that the road to eradicating the coronavirus is still long and winding. What have been the impacts on the foreign exchange market? Overall, they have been weak, although some big movements are to be reported on the side of  emerging currencies.

(Zonebourse.com)

The explosion of volatility recorded on cyclical stocks and value at the beginning of the week will have had little impact on the foreign exchange market, at least nothing that seems to herald a fundamental trend. However, some interesting movements should be noted:

* EUR/CHF: the single currency recovered more than 1% on the Swiss franc over the week, such a rapid development that had not been observed since June.

* EUR/GBP: the pound sterling strengthened slightly against the euro, despite the stasis on the negotiations between Brussels and London. Brexit no longer interests many people: only one occurrence out of the 50 articles on the main webpage of the Financial Times on Friday 13 November in the morning, while a new cut-off date is supposed to fall on 15 November.

* USD/JPY: perhaps the most significant background development. The outcome of the US election pushed the dollar up against the yen, a development that is not unrelated to the good performance of the Tokyo Stock Exchange this week.

Five currency pairs

Five currency pairs  over a week (Source Zonebourse)

* USD/TRY: this is a major movement. The Turkish lira has rebounded vigorously by 10% this week against the greenback, after the great upheaval decided by President Erdogan at the head of the Turkish central bank. It must be said that it had plunged to historic lows last week (8.5793). "The strong recovery in the lira has been driven by investor optimism that the CBoT's monetary policy may soon take a more orthodox direction," said MUFG's Lee Hardman, with the arrival of former finance minister Naci Agbal. This is undoubtedly one of the last names deemed credible by the international community in the entourage of power. Currency traders believe that the central bank will raise rates. A meeting is scheduled for 19 November.

* USD/RUB: Zero-sum game for both currencies this week, despite busy news. The sharp decline in the ruble on Monday was offset over the next four sessions, despite busy news: vaccine announcements in the United States and Russia, the US presidential election and the Kremlin whistling the end of hostilities between Armenia and Azerbaijan.

Elsewhere on the FOREX planet , "profit-taking has interrupted the rise of the Mexican peso (MXN) and the Brazilian real (BRL)," says the SG Cross Asset Research team, which notes that "the Colombian peso (COP) has played the cheerleaders for inflows into Latin America thanks to oil in gaining 2.1% on the dollar". The following table, produced by SG, shows the week-on-week changes in the USD against several other currencies.

USD vs other currencies

Finally, here is a cross-tabulation of eight important pairs:

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