Relative Currency Strength
The top performers of the past week were the Swedish krona and the Australian dollar. The former made its winning surge on Friday, gaining 0.92% on its base value against the background of positive news on Sweden’s Retail Sales and Household Lending, while the Aussie took the leadership on Wednesday, when the currency rate surged in reaction to greater-than-previous CPI release. The same day was associated with the Kiwi’s drop. It lost 0.9% of base value on the spot and was continuing to move down until Friday, becoming the worst performer of the week with 1.42% loss over the period.
The first half of the week was calm for the dollar, with no major enough news to greatly influence the currency strength. The USD Index varied in a narrow range of 99.9-100.25, mostly responding to changes in the counterparts’ rates. The Greenback started to appreciate on Wednesday evening and continued to grow during the next two days against the background of initial and continuing jobless claims being below expectations and durable goods orders reporting growth. As a result, USD became the third best performer of the week with 0.57% gain.
Volatility
After a quite calm Monday, the rest of the week was rather turbulent, even though the percent of elevated volatility declined for most of the observed currency pairs compared to the previous period ending on July 24. The most noticeable surge of the week took place on Wednesday, when NZD Volatility Index jumped to 8.38 right after New Zealand interest rate decision came out. The excessive lowering of the Kiwi has affected the overall market, and the composite Volatility Index rose to the week’s maximum value of 2.02.
The first perceptible peak of the EUR/USD volatility occurred on Tuesday. U.S. CPI release raised the index to 2.16 – the third greatest value of the week. On Thursday, EUR/USD index reached the week’s highest level of 2.49, but the spike was mostly caused by German and Euro zone PMI data releases. U.S. jobless claims report also affected the turbulence of the pair, but the index only managed to climb to 1.84 mark. Friday’s first surge of the Index could be attributed to non-U.S. developments, as it happened against the background of the German IFO report. In total, despite the not-so-high volatility peaks, the period could be considered reasonably turbulent as volatility was elevated for more than a third of the past week.
Currency Significance
The USD significance measure was very unstable during the past week, with hardly any periods of constancy or trending. The components’ values grouped around their historical averages, with period’s means weaker than the long-term ones. Nevertheless, the average value of the composite itself ended up above 0.35, and even the minimum was on a reasonable level of 0.2. It was largely due to very few negative correlation values, which were mostly isolated and marked major non-U.S. data releases.
The main surge, which brought the USD significance measure to the period’s maximum, happened on Tuesday against the background of the U.S. inflation releases. The strengthening was supported by all the components as the Greenback slipped on lower-than-expected core CPI, and the subsequent easing was smooth enough for the composite to hold around 0.5 for a prolonged period. However, Wednesday’s Australian CPI proved to be too influential and pushed the measure below 0.4. Later on, the pound repeatedly stole the spotlight, as first BoE reports and then Retail Sales figures introduced some more negative component values, resulting in two dips of the USD significance. The period ended with the composite jumping to 0.48 at the opening of the European session and slowly sliding down by the end of the day.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.