Forex Today: Major currency pairs stay calm to start week, partial market holiday in US

Source Fxstreet

Here is what you need to know on Monday, October 14:

Major currency pairs trade near the previous week's closing levels to start the new week. The New York Stock Exchange and the Nasdaq Stock Market will be open in normal hours on Monday but bond markets will be closed in observance of the Columbus Day holiday. During the American trading hours, Minneapolis Federal Reserve President Neel Kashkari and Federal Reserve Governor Christopher Waller will be delivering speeches.

The US Dollar (USD) gathered strength against its major rivals last week, with the USD Index posting gains for the second consecutive week. In the European morning on Monday, the index holds steady at around 103.00. Meanwhile, US stock index futures trade marginally lower on the day, reflecting a cautious stance. A spokesperson at the US Department of State said on Monday that they are “seriously concerned by the People's Liberation Army (PLA) military drills in the Taiwan strait and around Taiwan.” In the meantime, CNN reported on Sunday that at least four Israeli soldiers were killed and more than 60 people were injured by a Hezbollah drone attack in north-central Israel.

US Dollar PRICE Last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Canadian Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.41% 0.38% 0.33% 1.52% 0.86% 1.03% -0.01%
EUR -0.41%   0.03% -0.07% 1.15% 0.42% 0.61% -0.45%
GBP -0.38% -0.03%   -0.14% 1.12% 0.39% 0.62% -0.36%
JPY -0.33% 0.07% 0.14%   1.19% 0.51% 0.65% -0.30%
CAD -1.52% -1.15% -1.12% -1.19%   -0.63% -0.49% -1.52%
AUD -0.86% -0.42% -0.39% -0.51% 0.63%   0.24% -0.82%
NZD -1.03% -0.61% -0.62% -0.65% 0.49% -0.24%   -1.00%
CHF 0.01% 0.45% 0.36% 0.30% 1.52% 0.82% 1.00%  

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).

EUR/USD closed the last trading day of the previous week unchanged but ended the week in the red. The pair fluctuates in a tight range near 1.0930 to begin the European session on Monday.

GBP/USD stays in a consolidation phase below 1.3100 after posting small losses last week. The UK's Office for National Statistics will release employment data on Tuesday and publish Consumer Price Index (CPI) figures on Wednesday.

USD/JPY moves up and down in a narrow band above 149.00 on Monday. Japanese Prime Minister Shigeru Ishiba said on Sunday that he would not intervene in monetary policy affairs, as the Japanese central bank is mandated to achieve price stability.

After declining with the immediate reaction to the upbeat Canadian labor market data, USD/CAD regained its traction and closed the eighth consecutive trading day in positive territory on Friday. The pair holds its ground early Monday and edges higher toward 1.3800. Canadian markets will remain closed in observance of the Thanksgiving Day on Monday. On Tuesday, the Canadian economic calendar will feature September inflation data.

Gold managed to build on Thursday's gains and rose nearly 1% on Friday. At the time of press, XAU/USD was moving sideways at around $2,660.

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Dollar holds above 100 near a 3-month high — three Fed speakers and a $69 billion auction land tonightThe dollar index closed at 100.43 on Monday, its highest close since late July, after a weekly gain of about 1% — the best in more than three months — and is holding above the 100.00 handle in Asia. Three Fed officials speak tonight alongside a $69 billion two-year note auction, the first leg of $183 billion of Treasury supply this week.
Author  Suzie
Sep 22, Tue
The dollar index closed at 100.43 on Monday, its highest close since late July, after a weekly gain of about 1% — the best in more than three months — and is holding above the 100.00 handle in Asia. Three Fed officials speak tonight alongside a $69 billion two-year note auction, the first leg of $183 billion of Treasury supply this week.
placeholder
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Author  Irene Q.
Sep 23, Wed
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
placeholder
Memory chips surge, Nasdaq notches a second straight record close — why the Dow fell 185 points anywayMicron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
Author  Irene Q.
Sep 23, Wed
Micron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
placeholder
US input costs rose at the fastest pace in four years — the September flash PMI beat is an inflation story, not a growth storyUS September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
Author  Suzie
Sep 24, Thu
US September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
placeholder
Gold Price Forecast: Gold Drops Below $4,300, Will It Continue to Fall? As of the European session on September 24, gold prices (XAUUSD) extended their correction, dipping below $4,300 intraday to hit a low of $4,262.45. After previously rebounding close to $
Author  TradingKey
Sep 24, Thu
As of the European session on September 24, gold prices (XAUUSD) extended their correction, dipping below $4,300 intraday to hit a low of $4,262.45. After previously rebounding close to $
goTop
quote