Foreign exchange markets are in the throes of some very significant volatility with the EURUSD cross this morning trading down in the 1.1170s. For traders, there’s little more recent than the weekly highs above 1.1200. They are once again watching closely US economic data, with the potential to turn market conditions within the next few days.
After suffering an energy shock, the EUR/USD pair has remained surprisingly resilient in recent trading sessions, thanks to these important market dynamics. As things stand, it trades near the 1.1170 level, a bit lower than its recent peaks. The volatility in this currency pair is indicative of the larger economic landscape and a sign of monetary policy action to come from global central banks.
At the same time in the commodity markets, WTI crude oil prices are closing in on $64.00 per bbl mark. This increase in oil prices comes at the same time that the US is reporting an unexpected increase in US crude oil supplies. Market analysts are trying to make sense of these trends, as they could affect inflation rates and overall U.S. consumer spending behavior.
As the week progresses, traders are eagerly anticipating a range of economic indicators from the US that could shed light on the health of the economy. Perhaps the most notable among these is Retail Sales, which reveals much about Americans’ spending habits. This is one of the most important drivers of economic growth. We better savor this news. The Producer Prices Index and the Philly Fed Manufacturing Index are released tomorrow. These reports should help give an even clearer picture of what inflationary pressures and manufacturing activity look like.
Beyond these reports, landmark key data points are on the near horizon. Watch for the Industrial and Manufacturing Production numbers, Business Inventories, and the NAHB Housing Market Index. Each of these three indicators is important to gauging economic recovery and could specifically help shape Federal Reserve policy efforts.
That’s because the labor market is the markets’ other big fixation at the moment, with Initial Jobless Claims data coming out Thursday. This measure is a key indicator of wage growth and the strength of the current labor market and economic recovery from recent crises.
Gold prices are currently floating at around $3,170 per ounce troy. This jump is indicative of the persistent flight-to-safety demand for safe-haven assets as volatility remains high. Typically, investors flock to gold in times of turmoil, driving up its price — an important market sentiment signal, often called a canary in the coal mine.
The USD/JPY currency pair continues to trade in the vicinity of the 145.60 figure. At the same time, the Dollar Index (DXY) remains buoyant above the 101.00 level. This strength in the dollar is important because of its negative impact on international trade and capital flows. Further proof of continued volatile British pound trading with shifting economic outlooks is GBP/USD now down to 1.3250.
Traders and investors have a big week ahead of data releases that they will want to closely watch. These reports are sure to have a significant impact on overall market sentiment as well as currency valuations. These frequent reports will deliver timely data-filled analyses of key sectors of the economy, informing major market players to help them make better decisions.