Higher European industrial production, weak US retail sales

Today's trading session has offered currency investors plenty of intraday trading opportunities already with a large downturn and subsequent recovery of the EUR/USD exchange rate. During Asian trading hours, EUR/USD declined sharply all the way down to $1.304 but later recovered when the monthly change in European industrial production came in stronger than expected at 0.4% (previous value was -0.6%). The move up was supported by disappointing data from the United States, which were released three and a half hours later: Retail sales declined by 0.4% mom, further fueling worries about the health of the American economy after broadly weak economic data releases over the past two weeks. On top of that, the new value of the Michigan Consumer Sentiment index was a big negative surprise. At 72.3 it was way below the previous value of 78.6.

The dollar-yen cross has been quite volatile today, too. USD/JPY is currently trading at ¥98.75, one big figure below last night's rate when the exchange rate had come close to reaching the often-cited ¥100 level. However, today's intraday move is very small compared to the longer-term upward trend. When looking at weekly rates, USD/JPY is significantly above 2011-2013 levels. Since September 2012, the exchange rate has increased by 2,000 pips due to the Bank of Japan's renewed monetary easing programme. I have little doubt that trading the JPY depreciation story will continue to be profitable in the foreseeable future.

GBP/USD, on the other hand, has been relatively stable. Cable posted losses of 50 pips during the early hours of trading but has been swinging in the $1.5345-1.538 range since then.

As the final important event of this week, Federal Reserve chairman Ben Bernanke will speak to a panel in Washington in about an hour. Investors, keep an eye on your open positions in USD! Aside from that, I wish all beggars out there a nice weekend!