For several trading sessions now, traders have been very cautious with their movements in the foreign exchange markets. They are all anxiously watching for key economic indicators from the United States. The GBP/USD exchange rate has fallen to below 1.3400 now, as markets give a clear indication of fear going into the big US. EUR/USD is trading just under the 1.1400 level. Thus investors are still soaking up conflicting data points from around the world, keeping the currency trading in a narrow daily band.
Analysts are highlighting the importance of the upcoming US GDP data. As the focus of the market continues to shift, this data will start to determine the direction of currency pairs. Traders have been anxiously watching the release of US jobs data and PCE inflation data. They’re eager to see how these newly reopened reports can affect the course of Federal Reserve policy going forward.
Gold prices recently fell below the $3,300 mark. All this leaves the market an increasingly tough sell, particularly just as US-China trade war fears start to recede, boosting demand for safe-haven products. The entire market environment has shifted. Expectations of thawing trade tempers between the two trade giants are making investors reconsider how much risk they are willing to take.
Germany’s economic performance has captured attention, with the country’s GDP contracting at an annual rate of 0.2% in the first quarter. Such a contraction is in keeping with prior projections, reflecting what is expected to be a slowing economy in Europe’s largest market.
The GBP/USD pair’s potential for further upside appears capped as traders remain cautious ahead of the crucial US data releases. In a recent analysis, FXStreet noted,
“GBP/USD trades with caution below 1.3400 ahead of key US data.”
the EUR/USD stays in its range bound move so far in the European morning hovering just under 1.1400. FXStreet commented on this trend, stating,
“EUR/USD stays in daily range below 1.1400 ahead of US GDP data.”
The markets are looking towards the first US macroeconomic indicators that will start coming out next week. These findings will dramatically change the face of currency trading. FX investors are most keen to see if these data releases will cause a frenzy of volatility for a major currency pair, or continue to drive an established trend.