Dollar Gains amid Signs of Slowdown in Global Economy
Economic News
USD – Dollar Hits 31-Month High vs. Yen
The US dollar hit a 31-month high against the Japanese yen on Friday, amid speculations that the Bank of Japan will take steps this week to increase inflation. The USD/JPY gained more than 30 pips during Asian trading to eventually peak at 90.18. The pair saw a slight downward correction later in the day to reach as low as 89.68, before finishing out the week at 90.05. A slowdown in economic growth in China led to dollar gains against the AUD. The AUD/USD fell close to 70 pips during the first half of the day, eventually reaching as low as 1.0484, before closing out the week at 1.0507.
Today, dollar traders will want to note that a bank holiday in the US means that no American economic indicators will be released. Later in the week, the main pieces of US news are likely to be the Existing Home Sales and New Home Sales figures, scheduled to be respectively released tomorrow and Friday. Analysts expect both indicators to come in slightly higher than last month, which if true, may help the dollar extend its recent bullish trend in the coming days.
EUR – Euro Reverses Bullish Trend
The euro reversed its recent bullish trend on Friday, as fears of a slowdown in the global economy led to risk aversion in the marketplace. The EUR/CHF, which hit a 20-month high at 1.2567 during early morning trading, fell some 180 pips to trade as low as 1.2389 before bouncing back to 1.2440 when markets closed for the week. Against the US dollar, the common currency fell some 115 pips during the European session, eventually reaching as low as 1.3278, before staging a reversal to finish out the week at 1.3313.
This week, a number of potentially significant euro-zone economic indicators are scheduled to be released. Eurogroup meetings today, the German ZEW Economic Sentiment figure tomorrow, German and French manufacturing and services data on Thursday, and finally the German Ifo Business Climate figure on Friday all have the potential to impact euro pairs. If any of the news indicates a further economic slowdown in the EU, the euro may take losses against its safe-haven currency rivals.
The price of gold took moderate losses during afternoon trading on Friday, as a strengthened US dollar resulted in the precious metal becoming more expensive for international buyers. Prices fell from a high of $1694.93 an ounce during the mid-day session, to $1683.80 by the time markets closed for the weekend.
This week, gold traders will want to pay attention to several potentially significant euro-zone economic indicators and their impact on risk taking among investors. If the euro extends its downward trend in the coming days against the US dollar, gold prices may take additional losses.
Crude Oil – Crude Oil Remains Within Reach of 4-Month High
Crude oil prices saw relatively little significant movement throughout the day on Friday, despite signs of a possible slowdown in the global economy, including disappointing British and US economic indicators. The commodity fluctuated between $94.90 and $95.64 a barrel, not far from a recent four-month high of $96.01. Crude finished last week at $95.30.
This week, both euro-zone and US economic indicators have the potential to impact crude oil prices. If any of the European news comes in above expectations, risk taking could boost the price of oil. Furthermore, better than forecasted US housing data may be seen as a sign that American demand for oil is increasing, which could keep oil bullish.
Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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