Forex Today: US Dollar extends losses ahead of Fed decision as Middle East tensions escalate
Here is what you need to know for Wednesday, March 18:
The US Dollar (USD) lost its firmness and is now on a two-day losing spree. The Greenback initially fell because investors were cautious over the Middle East war and Wednesday's Federal Reserve (Fed) monetary policy decision. The USD remained under pressure after comments from United States (US) President Donald Trump, who informed us through Truth Social that US NATO allies don’t want to get involved in the US military operation in Iran. He went on to name Japan, Australia and South Korea, claiming the US no longer needs their support.
The US Dollar Index (DXY) is trading near the 99.60 price region, continuing to lose ground as investors part ways with the Greenback amid intensifying conflicts in the Middle East and the upcoming Federal Reserve (Fed) interest rate decision.
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 | -0.34% | -0.29% | -0.05% | 0.09% | -0.51% | -0.05% | -0.40% | |
| EUR | 0.34% | 0.04% | 0.28% | 0.42% | -0.17% | 0.29% | -0.06% | |
| GBP | 0.29% | -0.04% | 0.28% | 0.38% | -0.20% | 0.24% | -0.10% | |
| JPY | 0.05% | -0.28% | -0.28% | 0.15% | -0.45% | 0.04% | -0.34% | |
| CAD | -0.09% | -0.42% | -0.38% | -0.15% | -0.59% | -0.13% | -0.46% | |
| AUD | 0.51% | 0.17% | 0.20% | 0.45% | 0.59% | 0.46% | 0.10% | |
| NZD | 0.05% | -0.29% | -0.24% | -0.04% | 0.13% | -0.46% | -0.35% | |
| CHF | 0.40% | 0.06% | 0.10% | 0.34% | 0.46% | -0.10% | 0.35% |
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 is trading near the 1.1530 level, recording little gains throughout the day but is mildly bullish for two days in a row. The German ZEW Economic Sentiment report for March showed sentiment fell to -0.5 from 58.3 in February amid inflation fears. The European Central Bank (ECB) is meeting on Thursday and is expected to maintain interest rates on hold at 2%.
GBP/USD is trading near the 1.3350 price zone, as the Great British Pound (GBP) gains ground for a second consecutive day over a weak USD. The Bank of England (BoE) is expected to deliver a hawkish hold on Thursday.
USD/JPY is trading near the 159.00 level, sliding for a second consecutive day, even as the Japanese Yen (JPY) takes little advantage of the USD's decline.
AUD/USD has surged above the 0.7110 level, almost trimming back all of last week’s losses, even after a split vote in the Reserve Bank of Australia (RBA). The RBA hiked rates by 25 basis points, but the Aussie fell because five of nine voting members favoured the rate hike, while the remaining four were against it.
Oil is trading at $96 per barrel, trimming back almost all of its intraday gains but still capitalizing on the Strait of Hormuz blockage.
Gold is trading at $4,996, little changed throughout the day, as higher US government bond yields are more attractive to investors.
What’s next in the docket:
Wednesday, March 18
- EUR Core Harmonized Index of Consumer Prices (YoY) (Feb)
- USD Producer Price Index (Feb)
- CAD BoC Interest Rate Decision
- US Factory Orders (MoM) (Jan)
- US Fed Interest Rate Decision
- US FOMC Economic Projections
- NZD Gross Domestic Product (YoY) (Q4)
Thursday, March 19
- AUD Employment Change s.a. (Feb)
- JPY BoJ Interest Rate Decision
- UK Employment Change (3M) (Jan)
- UK BoE Interest Rate Decision
- CHF SNB Interest Rate Decision
- EUR ECB Interest Rate Decision
- USD Initial Jobless Claims
- USD Philadelphia Fed Manufacturing Survey (Mar)
- USD New Home Sales Change (MoM) (Jan)
- NZD Westpac Consumer Survey (Q1)
- NZD Trade Balance NZD (YoY) (Feb)
Friday, March 20
- CNY PBoC Interest Rate Decision
- EUR Producer Price Index (YoY) (Feb)
- CAD Retail Sales (MoM) (Jan)
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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