The foreign exchange market experienced heavy volatility. Traders were closely reacting to the latest economic data and the high-stakes game of chicken between the U.S. Our full report documents these dramatic shifts in pounds and euros as well. It only tracks the movement of the U.S. Dollar (USD), Euro (EUR), British Pound (GBP), Japanese Yen (JPY), Canadian Dollar (CAD), Australian Dollar (AUD), New Zealand Dollar (NZD), and Swiss Franc (CHF).
The USD ended the day -0.21% lower, affecting all major and emerging market currency pairs. On the other hand, the EUR strengthened a bit 0.21%, and the GBP & JPY climbed 0.18% and 0.17%. The CAD finished down a negligible 0.02%, with the AUD and NZD up 0.31% and 0.52% respectively.
Currency Movements and Economic Indicators
Today’s data showed that the GBP/USD pair rose sharply, breaking back above the 1.3500 handle. This bullish movement represents a great development for GBP/USD. It’s a good sign that investor immunity has taken hold, even amid rocky economic conditions.
Moreover, the EUR/USD currency pair climbed above the 1.1420 mark, indicating an appreciating Euro versus the US dollar. The rise in each of the above pairs is indicative of a larger trend of currency rebound as traders adjust to changing market forces.
The NZD was no slouch either, and was the day’s biggest gainer at one point, up as much as 0.61% to a high of 0.6046. Yet, even with the prominent strength of the NZD’s resilience evident, it proved that when against its fellow major peers, setting fresh two-day peaks.
Impact of Economic Data on Currency Performance
In the wake of better-than-expected quarter GDP data, the Japanese Yen surged. As a result, the USD/JPY pair posted a small loss. Japan’s collective confidence is reflected in nearly every economic indicator, and confidence is key to investor confidence. The Yen’s newfound safety has caused demand for the currency to skyrocket.
Market analysts noted that the encouraging GDP figures are an unmistakable sign of an improving economy. This recovery is sure to affect upcoming monetary policy decisions made by the Bank of Japan. Japan’s Yen has stolen the headlines with its remarkable strength against all other major currencies. What analysts point out, though, is its newfound status as a safe-haven asset during uncertain times.
In the commodity-linked currencies space, the Australian Dollar appreciated by 0.41% to 0.6515. The AUD is soaring due to high commodity prices. The current global quest for Australian resources is further strengthening this long term bullish trend against USD.
Broader Market Sentiment and Future Considerations
With traders set to scrutinize every development in U.S.-China trade talks, currency markets will likely be choppy. Ongoing negotiations between these two economic powerhouses have significant implications for global trade dynamics, which in turn affect currency valuations.
Aside from geopolitical developments, the most important factor moving economic sentiment will be the large slate of important reports arriving in the next few weeks. Futures traders watch these signals like hawks, hoping to spot a signal of a shift in monetary policy. Climate, especially for the world’s largest economies.