Tuesday, 14 Jul 2009

Mixed Data Helps Maintain Trading Ranges

With renewed risk appetite ahead of the release of the U.S second quarter earnings, supported mostly by the expectation of very good results from Goldman Sachs, the USD and JPY are mostly down today against their major currency counterparts. The biggest gainer for today seems to be the GBP as it has reached a high of 1.6341 against the USD following a stronger than expected rise of the RICS House Price Balance.

The release of the worse-than-expected ZEW Economic Sentiment Report, and mixed data from the U.S., caused great volatility in the EUR/USD pair; however, the pair still maintains trading in a rather narrow range, possibly signaling that currently the Dollar is affected mostly by movements in equity markets with economic data failing to provide the necessary direction for the pair.

The weak Dollar and the rally in U.S stocks have helped push Oil prices above $61 a barrel today. However, Crude Oil has retraced some of the gains and is currently trading around $60.50 a barrel. As US market participants begin to base their trades on the most current information, forex traders may continue to see the major currency pairs float within their current ranges with few distortions.