Forex Today: Major pairs stabilize as focus shifts to central banks
Here is what you need to know on Tuesday, May 6:
Major currency pairs fluctuate in familiar ranges early Tuesday as investors refrain from taking large positions ahead of this week's key central bank meetings. Eurostat will release Producer Price Index data for March. Later in the day, trade balance figures from Canada and the US will be featured in the economic calendar.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.70% | 0.88% | 0.86% | -0.12% | -0.44% | -0.12% | 0.32% | |
| EUR | -0.70% | 0.21% | 0.20% | -0.80% | -1.07% | -0.81% | -0.36% | |
| GBP | -0.88% | -0.21% | -0.06% | -1.01% | -1.31% | -1.01% | -0.58% | |
| JPY | -0.86% | -0.20% | 0.06% | -0.97% | -1.28% | -1.04% | -0.53% | |
| CAD | 0.12% | 0.80% | 1.01% | 0.97% | -0.32% | -0.00% | 0.43% | |
| AUD | 0.44% | 1.07% | 1.31% | 1.28% | 0.32% | 0.32% | 0.75% | |
| NZD | 0.12% | 0.81% | 1.01% | 1.04% | 0.00% | -0.32% | 0.44% | |
| CHF | -0.32% | 0.36% | 0.58% | 0.53% | -0.43% | -0.75% | -0.44% |
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 US Dollar (USD) started the week under bearish pressure but managed to find a foothold in the second half of the day.
The data from the US showed that the ISM Services Purchasing Managers Index (PMI) improved to 51.6 in April from 50.8 in March. This reading came in better than the market expectation of 50.6 and helped the USD hold its ground. Meanwhile, US Treasury Scott Bessent noted on Monday that they are very close to reaching some agreements on trade. Similarly, US Commerce Secretary Howard Lutnick told Fox Business that they are hoping to announce trade deals soon, adding that the first deal is likely to be a with a top-10 economy. US stock index futures lose between 0.2% and 0.5% in the European morning on Tuesday, after Wall Street's main indexes closed in negative territory on Monday, and the USD Index moves sideways in a narrow band above 99.50. The Federal Reserve's two-day policy meeting will go underway later in the day.
In the Asian session on Tuesday, the data from China showed that the Caixin Services PMI edged lower to 50.7 in April from 51.9 in March. After setting a fresh 2025-high near 0.6500 on Monday, AUD/USD seems to have entered a consolidation phase slightly above 0.6450 on Tuesday.
EUR/USD trades marginally higher on the day but remains below 1.1350 in the European session.
GBP/USD closed in positive territory on Monday and snapped a four-day losing streak. The pair continues to stretch higher and trades above 1.3320 early Tuesday. The Bank of England will announce monetary policy decision on Thursday.
USD/JPY fell nearly 0.9% on Monday and erased a portion of the previous week's gains. The pair stays under bearish pressure and trades below 143.50 in the European morning.
Escalating tensions in the Middle East allowed Gold to gather bullish momentum to start the week. After rising nearly 3% on Monday, XAU/USD extends its rally toward $3,400 on Tuesday, already gaining more than 1% on the day.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
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