Forex Today: US Dollar softens as Fed caution meets improving US-Iran optimism
Here is what you need to know for Thursday, May 21:
The US Dollar Index (DXY) trades with a softer tone near the 99.10 region as improving market sentiment reduces safe-haven demand for the Greenback. The Federal Open Market Committee (FOMC) Meeting Minutes released on Wednesday showed Federal Reserve (Fed) officials remain concerned about persistent inflation pressure and prefer to wait for clearer evidence before considering interest rate cuts, helping US Treasury yields stabilize.
Optimism increased after reports indicated that negotiations between the United States (US) and Iran are progressing, with US President Donald Trump saying that the US is in the “final stages” of talks with Iran, according to a White House pool report.
During a press conference at Joint Base Andrews, Trump delivered a typical mixed message regarding the ongoing diplomatic efforts. He stated, “We’ll see what happens,” and emphasized that a deal could be reached. He added, “If not, we may resort to some tough measures, but hopefully that won’t be necessary.”
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.39% | -0.17% | -0.00% | -0.73% | -0.72% | -0.30% | |
| EUR | 0.23% | -0.17% | 0.07% | 0.23% | -0.51% | -0.48% | -0.07% | |
| GBP | 0.39% | 0.17% | 0.23% | 0.40% | -0.36% | -0.32% | 0.09% | |
| JPY | 0.17% | -0.07% | -0.23% | 0.17% | -0.57% | -0.51% | -0.13% | |
| CAD | 0.00% | -0.23% | -0.40% | -0.17% | -0.73% | -0.66% | -0.30% | |
| AUD | 0.73% | 0.51% | 0.36% | 0.57% | 0.73% | 0.03% | 0.43% | |
| NZD | 0.72% | 0.48% | 0.32% | 0.51% | 0.66% | -0.03% | 0.41% | |
| CHF | 0.30% | 0.07% | -0.09% | 0.13% | 0.30% | -0.43% | -0.41% |
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 rebounds toward the 1.1630 region as the softer US Dollar (USD) supports the shared currency. On another note, an ECB rate hike is very likely in June as the inflation outlook is moving toward the adverse scenario.
GBP/USD rises near the 1.3450 zone, benefiting from broad USD weakness and the improved risk environment.
USD/JPY falls toward the 158.80 region as declining US Treasury yields and softer safe-haven demand pressure the pair.
AUD/USD climbs near the 0.7160 region as investors focus on Australia’s upcoming Employment Change report. Markets expect around 17.5K jobs to have been added in April, while the Unemployment Rate is forecast to remain at 4.3%.
West Texas Intermediate (WTI) Oil fell near $98.30 per barrel as talk of negotiations between the US and Iran reduced fears of supply disruptions in the Middle East.
Gold surged toward the $4,550 region as safe-haven demand left the USD and if now focused on the precious metal.
What’s next in the docket:
Thursday, May 21:
- Australia May Consumer Inflation Expectations
- Australia April Labor Market Data (Employment Change, Participation Rate, Unemployment Rate)
- Germany April Producer Price Index
- Switzerland Q1 Industrial Production
- France May Preliminary HCOB PMIs
- Germany May Preliminary HCOB PMIs
- EU May Preliminary HCOB PMIs
- UK May Preliminary S&P Global PMIs
- US April Housing Data (Building Permits, Housing Starts)
- US Initial Jobless Claims, May Philadelphia Fed Manufacturing Survey
- US May Preliminary S&P Global PMIs
- EU May Preliminary Consumer Confidence
- NZ Q1 Retail Sales
- UK May GfK Consumer Confidence
- Japan April CPI
Friday, May 22:
- Germany Q1 Gross Domestic Product
- UK April Retail Sales
- Germany May IFO Survey (Business Climate, Current Assessment, Expectations)
- Canada March Retail Sales
- US May Michigan Consumer Sentiment and Inflation Expectations
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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