The currency markets are in massive convulsion. The GBP/USD currency pair has receded to the 1.3400 level after having been as high as a multi-year peak around 1.3450. This rally came right before some of the most important economic data releases from the U.S. recently, especially related to the jobs numbers. At the same time, gold prices have fallen back under $3,300 as risk sentiment among investors has improved greatly.
On April 25, GBP/USD hit 1.3450, an important recent historic high. However, as traders awaited key US economic reports, the currency pair retreated back down towards the 1.3400 level. Analysts know that today’s US jobs data is on people’s minds as it leads to big shifts in strategy. Each one of these transitions is prompting the historic British pound to plummet with US dollar.
At the same time, gold prices have been under significant near-term downward pressure, retreating toward the $3,300 level. Gold was able to post a small advance on Monday. As investor sentiment turned, it had a tough time holding onto upward momentum. Flickr photo by Jason Lawrence appearing signs of easing tensions in US-China trade relations. Consequently, investors are starting to move out of traditional safe haven assets such as gold. This shift is a bullish sign for confidence in riskier assets, which tends to dampen demand for precious metals.
The EUR/USD currency pair has historically been under pressure during this time. It has failed to test the 1.1400 level from topside, suffering losses against a slow USD revival. The euro has had a hard time finding its footing and trades in the red just below this important line in the sand. According to analysts, it’s general market sentiment that’s driving this currency pair. Secondly, they underscore the importance of US economic data in these trend reversals.
Nothing has impacted market forces pervasively since the original release as the ongoing sea change developments in US-China trade relations. Easing tensions between the two economic powers have contributed to a more positive outlook among investors, prompting them to seek opportunities in riskier assets rather than traditional safe havens. This change underscores the multinational interdependence of global markets, including how deeply geopolitics can bring to bear swings in global trading behavior.
As traders and analysts await crucial macroeconomic data releases from the US, particularly focusing on employment figures, the markets remain on edge. This Friday’s jobs data will be an important indicator of the health of the US economy. Together, this intelligence would influence currency valuations and help set the tone of investor sentiment.