Mixed Session in European Trading as Dollar Sees Volatility

The forex market witnessed a mixed session in European trading, as the US dollar displayed volatility against various major currencies. Initially weaker, the greenback has since gained ground against the euro, Australian dollar, and New Zealand dollar while remaining lower against the Japanese yen, British pound, and Swiss franc.

Pound Boosted by Strong Wages Data, Dollar Shows Mixed Performance

The British pound received a modest boost from the UK labour market report, which featured strong wage data. However, given that markets have already factored in a terminal rate close to 6.50%, this data reaffirms existing expectations. GBP/USD initially rose from 1.2870 to 1.2900 following the data and extended gains to 1.2935. The pair is now trading around 1.2900 as the dollar partially recovers earlier losses.

USD/JPY experienced significant movement, falling sharply through 141.00 from Asia to reach a low of 140.17 in Europe. The pair remains down 90 pips at around 140.30, with lower Treasury yields also exerting pressure. Bond markets have maintained a stronger bid this week, and 10-year Treasury yields have dipped back below 4% today.

Equities Remain Steady as Investors Await US CPI Data

Shifting focus back to the US dollar, it initially weakened against the euro, with EUR/USD trading around 1.1000-1.1010 levels, but has now dropped to the day’s lows at 1.0985. AUD/USD followed a similar pattern, rising to a high of 0.6695 before retracing to 0.6660 levels during the day.

In other markets, equities are holding steady as investors seek further breathing room ahead of the US Consumer Price Index (CPI) data scheduled for tomorrow. Gold has also benefited from the situation, with lower yields contributing to its gains. Buyers are now encountering some near-term resistance around the $1,935 level.