Last week was light on economic data releases, especially regarding the U.S. Dollar, which is typically the most important currency within the global Forex market. The highlight of the week’s releases for the greenback came on Friday, and the outcome was disappointing, reflecting poorly upon the underlying strength of the U.S. economy.
The Consumer Prices Index (the measure of inflation) rose by only 0.2%, at a slower pace than the expected 0.3%, while Retail Sales grew by only 0.4%, as opposed to the anticipated figure of 0.6%. The net result is that the economy is cooler than had been expected, and the probability of future rate hikes over the coming months has got a little lower, which in turn has made the U.S. Dollar a little weaker.
Nevertheless, the fall in the U.S. Dollar Index after the releases were given was very light in relative terms: about 0.25%, which is truly a small movement. The U.S. major stock Index, the S&P 500, was virtually unchanged.
There is very little in the way of market trends going on right now. This was Friday’s major event, and look how small it was in terms of impact. A good case can be made that now is an appropriate time to stay out of the market, with low volatility and an absence of strong trends. I cannot remember the last time only a single one of the most-trades 25 Forex currency pairs changed in value from a week’s open to close by more than 1%.
