The currency markets were all over the map on Thursday, largely dictated by a truly powerful move in the US Dollar. The EUR/USD currency cross shed over two-thirds of one percent from its opening offers. This retreat was propelled by widespread increases in Treasury yields and the ascendance of the Greenback.
The US Dollar on Friday experienced its largest single day increase ever. This followed closely on the heels of a tentative announcement regarding a potential trade agreement between the United States and the United Kingdom. This mixed development gave Dollar bids a larger general market lift, as Dollar bids took notable control across the major currency pairs. As such, the EUR/USD pair found itself under considerable downward pressure, pulling back hard all day long.
At the same time, the AUD/USD cross moved in a tight range sub-0.6400 level. This movement points to greater uncertainty in the market overall as the AUD/USD rate rests close to its low point of last week on Friday. The pair is met with rather confusing signals. Some analysts point to its recent resilience as being due to positive risk tone, supported by the ongoing US-China tariff negotiations and the US-UK trade deal.
Gold had a tough one too, staying on the defensive around $3,300 per troy ounce. The precious metal quickly fell back into the lower end of its daily range, turning negative on the day as it again came under keen selling pressure Thursday. The strength of the USD is pushing hard on gold prices. This is compounded by the Federal Reserve’s recent hawkish pause on interest rates.
“Gold remains on the back foot near $3,300” – source: FXStreet
That makes the USD’s impressive showing all the more likely to be feeling a one-month high, given how pessimistic the market is overall. The Federal Open Market Committee’s (FOMC) recent stance has contributed to this development, with many market participants interpreting their holding pattern as supportive of further dollar strength.
“FOMC’s holding pattern continues” – source: FXStreet