Currency Markets Vulnerable to Kneejerk Volatility Amid Data Lull
- US Dollar pullback continues as news lull makes way for consolidation
- New Zealand Dollar on the defensive as RBNZ rate decision approaches
- What will drive longer-term FX market trends? See our forecasts here
A lull in top-tier economic news flow left FX markets in consolidation mode in Asian trade. The US Dollar continued to edge lower as prices digested Friday’s surge in the wake of July’s upbeat labor-market data. The New Zealand Dollar continued to inch lower in what appears to be continued pre-positioning for the upcoming RBNZ monetary policy announcement.
The data docket remains lackluster through the remainder of the trading day, with only a small helping of second-tier US releases left to round out the day. A strong lead from sentiment trends is likewise absent. Share prices are treading water across most European bourses and S&P 500 futures point to more of the same once Wall Street comes online.
On balance, this seems likely allow for a bit more follow-through on current market dynamics. This may translate into some further weakness for the greenback and its Kiwi cousin. With that said, it ought to be kept in mind that vacuum on the scheduled event risk front leaves ample room for stray headlines that might have otherwise passed with little fanfare to drive seesaw volatility. A cautious approach seems prudent.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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