What happened most recently in the foreign exchange market was both unprecedented and ridiculous. GBP/USD and gold prices spike on stronger-than-expected US economic data. The GBP/USD currency cross recovered most of its losses, rising to 1.3560 after hitting lows around 1.3520. The overall rebound is a reflection of the impact by stronger US data surprises. Together, these releases eroded a bit of the earlier retreat.
Predictably the GBP/USD has jumped on more positive economic data coming out of the US. This movement in particular captures the effect of durable goods orders. Following the data release, the currency pair revisited the 1.3560 zone, indicating a renewed confidence in the British pound against the US dollar.
Against that backdrop, gold prices are encountering stiff headwinds on their path back up towards the $3,300 neighborhood. The strategic treasure is in no way back on even footing yet, however, refuse inside of making an attempt to retake this important benchmark for every ounce troy. The market’s rekindled risk-on sentiment has forged significant headwinds for gold. Investors are more than willing to jump back into the deep end in search of higher yields. To make matters worse, a stronger US dollar puts significant downward pressure on gold prices, weighing down on its recovery efforts.
At the same time, the EUR/USD cross was showing strength of its own by reversing off of recent lows. The pair climbed up to the 1.1360 area as a reaction to the upbeat US macro releases, thus regaining some upside force and triggering higher momentum. This latest track illustrates why economic factors are the key to moving currencies in all directions.
As these dramatic advances play out, market participants will be laser focused on the action in both currency pairs as well as gold prices. The evolving relationship between fresh economic indicators and shifting investor mood continues to be key in guiding both trading tactics and market trends.