As the new week started, some big moves were setting up in the currency and commodity markets. This change was driven by a combination of rebounding dollar weakness and strong economic data across the sectors. The GBP/USD currency pair exploded upwards. Global development and leadership are putting downward impulses on the Greenback while investors shift their attention back to the 1.3500 level as the pair blasts higher.
This spike in GBP/USD is partially due to the weakening of the U.S. dollar, spurred on by the U.S. economic conditions suggesting impending recession. As market participants digest upcoming reports, including Germany’s Full Year GDP Growth, Industrial Production, and Balance of Trade figures due on January 15, traders positioned themselves accordingly. These reports are expected to shed some positive light on Eurozone economic prospects, adding fuel to the currency fire.
In yet a third interesting development, silver prices broke through the $85.00 ceiling/per ounce. Its recent progress in this regard would represent a momentous step for the storied precious metal. This sudden boom is indicative of an increasingly heightened investor focus on commodities, as they turn to safe-haven assets amid new economic uncertainties.
In the meantime, the USD/JPY currency pair continued to add to its recent gains, breaking through the 158.00 barrier. This increase was propelled by a general positive turn in market risk sentiment. This change indicates a greater demand for riskier assets and a divergence from traditional safe havens, such as the dollar.
At the same time, West Texas Intermediate (WTI) crude oil prices were trading high and healthy at the beginning of the week. WTI prices shot up in response to concerns over the prospect of new supply disruptions in Iran. As a result, this has sent shock waves throughout the world oil markets. The increased geopolitical tensions off of Iranian oil production have raised the stakes for traders to keep a sued ear to the ground.
During this period, the Australian dollar showed remarkable resilience. That sent the AUD/USD pair roaring back above the important 0.6700 level, erasing some of their poor performance of late. This recovery is actually a bigger reflection of what’s been happening with most commodity currencies as demand for notoriously volatile commodities continues to be strong.
Gold prices were on a terrific run, gaining for a third-straight day on Monday. The precious metal skyrocketed to historic peak of over $4,630 per troy ounce. This increase was predominately driven by increased investor demand seeking safety amid volatile market conditions.