USD weakness a flash in the pan

The main theme in the FX space was US dollar weakness as traders reacted to the violent moves in the bond market.

Source: Bloomberg

While the greenback lost significant ground to most of the major currencies, the move wasn’t quite as pronounced in GBP/USD. The pair managed to come off lows in the $1.5900 region and traded as high as $1.6070 before dropping back below $1.6000.

On the economic front, traders focused on UK jobs data, which showed some signs of strain and essentially confirmed a sense the recovery is stalling. The subdued performance in the sterling came despite calls from the Bank of England’s Martin Weale for a rate hike in anticipation of future increases in wage growth. This was quite interesting, considering wage growth remains flat.

The main theme today will be whether the USD can recover after the choppy performance yesterday. The $1.6000 level seems to be acting as a barrier in the near term and could encourage some short-term selling. Out of the US today, we have unemployment claims, industrial production and the Philly Fed manufacturing index due for release.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.