Tuesday was a day of great volatility in the financial markets with the biggest gains coming from the US Dollar. The currency gained virtually across the board, starting with the positive JOLTS Job Openings data. It came in at 7.391 million, far exceeding the forecasted number of 7.1 million for April. The upbeat employment gauge provided a fillip to the Greenback’s strength. Traders greeted the announcement enthusiastically, betting that it would provide a boost to economic growth and labor market stability.
In the currency exchange market, the EUR/USD pair hovered over daily troughs near 1.1370, reflecting weakness in the Euro against the strong US Dollar. The market moved right away. The effect on the Euro was immediate and profound on the release of this data, restoring confidence in the beleaguered American economy.
Even so, the Australian Dollar (AUD) struggled under duress and sagged lower. With the release of the minutes from last week’s Reserve Bank of Australia (RBA) meeting, market sentiment quickly turned on the defensive. The board members’ infighting led to a much-publicised vote on a proposed radical 50 bps interest rate cut. Ultimately, they decided to err on the side of caution with a safer 25 bps cut. This decision was intended to help maintain monetary policy clarity at a time of uncertainty in global trade. Consequently, the AUD/USD dropped back to 0.6460 after running high earlier in the week.
Gold prices dropped below $1500, a clear signal of market fears. They fell to daily lows just under $3,330 after making a multi-week high above $3,400 on Monday. The precious metal’s slide was a testament to the risk-off nature of today’s market where currency valuations and hard economic data are in disarray.
Aside from these hawkish evolutions, the GBP/USD pair would stay pressured just south of 1.3500, a victim of the stronger Dollar’s performance. The market has been consistently hungry for fresh economic signs. On-Farm Payroll (NFP) data from the US is on Friday, while Australia’s GDP data will be released on Wednesday.
US factory orders disappointed, printing -2.6% m/m earlier today. The strong JOLTS print was a big factor in turbocharging the Greenback’s comeback. Market participants remain vigilant, monitoring these economic reports closely as they shape expectations for future monetary policy and economic growth.