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Forex market affected by caution ahead of major data

by LLB Finance Reporter
8th Aug 23 10:05 am

The USD was recording some volatility with traders turning to more caution. The US credit rating downgrade has affected expectations to a certain extent.

Nevertheless, the dollar could remain the go-to currency for traders seeking a safe haven.

In the meantime, traders continue to monitor economic data in order to anticipate potential changes in monetary policy.

Denys Peleshok, Head of Asia at CPT Markets said, “In this regard, US inflation data could remain the center of attention later this week and could generate a significant amount of volatility, impacting all major currency pairs.

“The US dollar could remain on a strong footing ahead of the data after the Federal Reserve kept the door open for additional interest rate hikes. In addition, strong US economic data continue to support this possibility.

“As a result, the USD could appreciate against the Chinese yuan which was weighed by the weaker-than-expected economic recovery in the country. A faster-than-expected decline in Chinese exports and imports has also affected the currency’s trajectory against its US equivalent.

“While the British pound stabilized to a certain extent against the dollar, it could remain exposed to the downside with the USD strengthening to a certain extent and traders awaiting UK GDP figures at the end of the week.

“The GBP and EUR were seeing positive performances this year but could come under additional pressure if traders increasingly move toward the USD.”

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