Muted Forex Market Volatility Hints At Ukrainian Distraction

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Risk-Off Sentiment Dictates the Weekly Close

Muted Forex Market Volatility Hints At Ukrainian Distraction

Fundamental data out of Europe and the U.S. sparks some volatility across the major pairs, but the reaction is somewhat muted on Friday as traders and investors look to the potential impact of the Crimean referendum on Sunday.

The EURUSD is up 0.30%, currently trading at 1.3908, just shy of key support turned resistance at 1.3915. The gain comes as Germany reports as-expected inflation data, and the U.S. reports disappointing producer price index (PPI) data, with the day’s headline release revealing the price of manufacturing goods fell by 0.1%, far short of the forecast rise of 0.2%.

Despite the U.S. data, the Sterling has weakened against its U.S. counterpart. The decline is relatively insignificant however, and likely comes more as the result of the stuation in Ukraine than the result of the data releases. The GBPUSD is currently trading at 1.6620, a small 0.02% discount on the day’s open, with UK National Statistics reporting a fall in exports and a resulting trade balance of -9.79B versus expectations of -8.60B.**relatedarticle**

The USDCHF is down heading into the close of the European afternoon session, with the Swiss Franc currently down 0.37% versus the dollar at 0.8714. The Swiss Federal Statistical Office reported PPI (MoM) data well short of expectations, with the price of manufacturing goods falling 0.4% versus a forecast of a 0.1% fall.

The Australian dollar has regained a small amount of strength against its U.S. counterpart, with the AUDUSD currently trading at 0.9041, a 0.10% premium on the day’s open. The Aussie has suffered this week as disappointing data streamed out of China, fuelling investors’ fears that the Asian nation is heading for an economic slowdown. The Chinese economy accounts for nearly 40% of Australian exports, meaning any sustained decline in output from China would severely affect Australia’s trade balance.

All said, the muted response to economic data comes as the situation in Ukraine distracts traders and dominates global sentiment. With the referendum as to the future of Crimea set for Sunday, and the proposed sanctions towards Russia if it goes ahead, traders and investors will likely wait Monday before taking any decisive market action.

To contact the reporter of this story: Samuel Rae at samuel@forexminute.com