Majors and deep trending swings were the flavors of the week this week, with the USD appearing to have last licks. EUR/USD started out the week ranging with the dollar rallying on Monday due to lower commodity prices and a $3 drop in Oil futures during the New York session. Optimism was short lived however as investors remained skeptical. Their austerity proved fruitful as the EUR rally which took hold later that evening continued Wednesday as confounding US retail sales helped push it to a 16 month high. This trend continued until an abrupt turnaround Thursday in anticipation of key economic indicators which created one of the week’s major swings. The USD swung nearly 200 pips ahead of US Jobless Claims and the Producer Price Index (PPI). Disappointing numbers led to a huge pullback in EUR/USD further prolonging the weeklong ranging trend. Friday’s trading appeared no different as CPI numbers came out at their expected level and the dollar gained back some ground to leave it at just about where it started the week off.
On Tuesday Japan decided to raise the Nuclear Crises Severity level to 7 placing it on par with the Chernobyl disaster, and led to selloffs in riskier currencies. The Japanese Yen and Swiss Franc were buoyed as investors sought to place their assets in safe heavens.
We also saw the release of the Consumer Price Index from China, which hit 5.4%. This is an indication of higher inflation expectations, and many fear a rate hike in China could lead to slower global growth.
This week may see additional movement on the EUR/USD pair. Key indicators from an array of European countries are set to come out which should highlight the health of some of Europe’s economic workhorses. US Unemployment claims can be expected Thursday morning and may potentially cap off what appears to be an exciting week!