Forex Today: US Dollar recovery loses steam ahead of high-tier data releases
Here is what you need to know on Tuesday, September 10:
The US Dollar (USD) struggles to preserve its strength early Tuesday after outperforming its major rivals on Monday. The USD Index holds steady above 101.50 following Monday's 0.4% gain, while the benchmark 10-year US Treasury bond yield fluctuates slightly above 3.7%. NFIB Business Optimism Index for August will be the only data featured in the US economic docket ahead of Wednesday's highly-anticipated Consumer Price Index (CPI) readings.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.33% | 0.24% | 0.79% | -0.01% | -0.00% | 0.31% | 0.45% | |
| EUR | -0.33% | -0.15% | 0.52% | -0.33% | -0.38% | -0.01% | 0.10% | |
| GBP | -0.24% | 0.15% | 0.55% | -0.18% | -0.24% | 0.12% | 0.24% | |
| JPY | -0.79% | -0.52% | -0.55% | -0.77% | -0.76% | -0.48% | -0.13% | |
| CAD | 0.00% | 0.33% | 0.18% | 0.77% | 0.04% | 0.30% | 0.61% | |
| AUD | 0.00% | 0.38% | 0.24% | 0.76% | -0.04% | 0.35% | 0.47% | |
| NZD | -0.31% | 0.00% | -0.12% | 0.48% | -0.30% | -0.35% | 0.13% | |
| CHF | -0.45% | -0.10% | -0.24% | 0.13% | -0.61% | -0.47% | -0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The data from China showed in the Asian session that the trade surplus widened to $91.02 billion in August from $84.65 billion. Exports increased by 8.7% on a yearly basis, while Imports grew by 0.5%. AUD/USD largely ignored these figures and the pair was last seen trading modestly higher on the day near 0.6670.
The UK's Office for National Statistics (ONS) reported early Tuesday that the ILO Unemployment Rate edged lower to 4.1% in the three months to July from 4.2%, as expected. The Employment Change came in at 265K in the same period, up from 97K, and the annual wage inflation, as measured by the Average Earnings Excluding Bonus, softened to 5.1% from 5.4%, matching analysts' estimates. GBP/USD recovered toward 1.3100 after these figures from the multi-week low it touched near 1.3050 earlier in the day.
Germany's Destatis confirmed that the CPI rose by 1.9% on a yearly basis in August. This reading matched the initial estimate and the market expectation. After closing the second consecutive trading day in negative territory on Monday, EUR/USD holds steady at around 1.1050 in the European morning on Tuesday.
USD/JPY gained traction and closed in the green on Monday, snapping a four-day losing streak. The pair continues to push higher early Tuesday and was last seen trading near 143.50.
Following a quiet start to the week, Gold gained traction amid retreating US yields in the American session and closed above $2,500 on Monday. XAU/USD trades in a narrow channel in the European morning on Tuesday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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