The volatility in the foreign exchange markets was enormous. EUR/USD proved resilient today, remaining above 1.1200 handle even after the US posted a mixed set of economic reports. This precious currency pair eventually found their footing evidenced by their respective bullish move above a key level of resistance. This move came after the US Producer Prices unexpectedly missed expectations, suggesting a potential moderation in inflationary pressures.
Producer Price Index was another big contributor to overall volatility. Further compounding volatility was stronger Retail Sales numbers and another robust labor market report. Despite this positive data, the US Dollar struggled to gain renewed strength, reflecting a broader uncertainty regarding the economic outlook.
Gold prices showed a recovery from several week lows, generally trading around $3,120 per troy ounce. Yet gold has been unable to break above the key $3,200 level, with supply-and-demand dynamics still impacting investor sentiment. The XAU/USD pair is supported from the modest weakness of the US Dollar. It reflects the very conservative mood that has pervaded the rest of the markets.
Across the pond, GBP/USD climbed above the 1.3300 mark. The British Pound proved surprisingly resilient in the wake of UK economic docket bloodbath that could have otherwise weighed on it. The recent advances in GBP/USD are unequivocally backed by the widespread US Dollar weakness. This newfound trend comes on the heels of somewhat muddied results seen across the US economic calendar.
Furthermore, the absence of comments from Federal Reserve Chair Jerome Powell regarding monetary policy has left investors speculating about future interest rate movements. This ambiguity has added to a sense of confusion in the currency markets. Consequently, GBP/USD has shot up without significant opposition.
While traders continue to process these important developments, both EUR/USD and GBP/USD are still very much at the mercy of continuing economic data and global risk appetite. How US economic indicators will interact with international currency dynamics will undoubtedly dictate trading strategies in the days ahead.