Markets Close on Extreme Volatility with Dollar, Yen and Gold Transfixed
A tumble in capital markets and rise in the Dollar to close this past week has set traders' fear and speculation alight. Is a seismic market move underway or is this nervous energy after a long bout of quiet?
The Dollar – like most other markets’ benchmarks – has caught a glimpse of volatility after the seasonal transition, but still trades in a broader range. Participation and conviction are still absolute necessities to reviving a trend - whether for the Greenback or investor sentiment, bullish or bearish.
ECB President Mario Draghi made clear at the press conference on Thursday that a number of steps will be taken to determine if it’s necessary to tweak the QE program. Newsflash: it’s already necessary. Mark your calendar for a rate cut by December.
The British Pound matched its highest levels since the UK Referendum on the heels of strong industry survey data, but a late-week US Dollar recovery meant the GBP/USD finished lower for the first week in three. Further GBP volatility seems likely ahead of key economic data releases and a potentially significant Bank of England interest rate announcement due in the days ahead.
The key developments coming out of the U.S. economy may drive USD/JPY higher next week as Federal Reserve officials talk up bets for a 2016 rate-hike, while the Bank of Japan (BoJ) remains under pressure to further embark on its easing cycle as the central bank prepares its ‘comprehensive assessment’ of the economy.
The Australian Dollar may suffer deeper losses as swirling Fed rate hike speculation undermines the relative appeal of the yield-sensitive currency.
The week ended on a sour note for high-yielding currencies like Emerging Markets & the New Zealand Dollar. Mid-Week, the New Zealand Dollar got a nice bump thanks to stronger China Data. The Chinese data was enough to push NZDUSD to a 2016 high of 0.7488. However, the end of the week led to a
The volatility in Yuan rates elevated this week: the USD/CNH broke the support of 6.6832 that was held last week and found new support around 6.6650. In terms of the upper band, the pair rose towards the psychological level of 6.7000 once again on Friday.
Gold prices softer this week with the precious metal off 0.17% to trade at 1318 ahead of the New York close on Friday. Heading into the holiday weekend the near-term risk remains for further losses before making a more significant low in early September trade.
What are the Traits of Successful Traders? See what our studies have found to be the most common pitfalls of retail FXtraders.
Sign up for a free trial of DailyFX-Plus to have access to Trading Q&A's, educational webinars, updated speculative positioning measures, trading signals and much more!
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.