Confusing trading week for the currencies

The past trading week was somewhat confusing, with many currencies moving in surprising directions.

For example, the Japanese yen and the Swiss franc are regarded as safe currencies and naturally move in the same direction. But this week, the Japanese yen finished trading as the strongest currency on the Forex market, while the Swiss franc was the weakest one. The US dollar was not an exception, moving unpredictably after the FOMC monetary policy statement.

The Federal Open Market Committee held a monetary policy conference this week and released a relatively dovish announcement after the gathering. But instead of collapsing, the dollar was broadly stronger. Market analysts theorized that it is because traders were expecting an even more dovish statement, possibly even a hint at additional monetary easing. Instead, the FOMC indicated that it is planning to keep the current policy until at least 2023. Yet the dollar’s rally was relatively short-lived, and the currency retreated by the week’s end.

The Great Britain pound responded poorly to signs that the Bank of England acknowledges fulfilling negative interest rates. But the sterling returned later on positive macroeconomic data and hopes for a Brexit deal, ending the week relatively strong.

The Bank of Japan kept its extremely accommodative monetary policy

But the yen did not especially care about that. Alternatively, the currency rallied as the political uncertainty around replacing the previous Prime Minister Shinzo Abe cleared. The new Prime Minister Yoshihide Suga indicated that he is going to maintain the so-called Abenomics policy.

The Canadian dollar was also acting unusually, not following the rally of crude oil prices, even though the currency and the commodity typically move in tandem. Alternatively, it looks like the Canadian dollar reacted more to opposing domestic macro reports, which dragged the currency down.

EUR/USD ended the week nearly flat at 1.1841. GBP/USD recovered from 1.2781 to 1.2922, approaching the weekly high of 1.3007. USD/CAD bound up from 1.3181 to 1.3202. USD/JPY decreased from 106.10 to 104.56, while USD/CHF edged up from 0.9088 to 0.9112.