Forex Today: US Dollar stays offered as focus shifts to PPI inflation data
Here is what you need to know on Thursday, June 12:
Risk sentiment remains sour early Thursday as investors' take account of the latest trade headlines while holding their nerves ahead of the US Bureau of Labor Statistics’ (BLS) Producer Price Index (CPI) data for May and another US Treasury 10-year note auction.
The selling interest around the US Dollar (USD) remains unabated, with the Greenback hitting the lowest level in two months against its currency rivals near 98.25.
Despite easing US-China trade tensions, lingering uncertainties over US President Donald Trump’s tariffs against major trading partners continue to unnerve markets.
Trump said late Wednesday that he was open to extending a July 8 deadline for completing trade talks with countries.
Further, escalating Middle East geopolitical tensions contribute to the dour mood.
CBS News senior White House reporter Jennifer Jacobs reported that United States (US) officials have been told Israel is fully ready to launch an operation into Iran.
“US anticipates Iran could retaliate on certain US sites in Iraq,” Jacobs added.
This comes as US President Trump's Middle East envoy Steve Witkoff is still planning to meet with Iran for a sixth round of talks on the country's nuclear program on Sunday.
Meanwhile, the USD also feels the pain of the softer US inflation data for May. The US Consumer Price Index i(CPI) increased 0.1% for the month, putting the annual inflation rate at 2.4%. Both prints undermined expectations of 0.2% and 2.5% respectively.
Softer-than-expected US CPI data solidified the bets for a US Federal Reserve (Fed) interest rate cut in September.
CME Group’s FedWatch tool now shows markets' pricing in about a 62% probability of 25 basis points (bps) rate cut versus 52% seen pre-data release.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.11% | -0.52% | -0.15% | 0.03% | -0.09% | -0.41% | |
| EUR | 0.23% | 0.12% | -0.33% | 0.07% | 0.24% | 0.15% | -0.15% | |
| GBP | 0.11% | -0.12% | -0.45% | -0.05% | 0.11% | 0.02% | -0.30% | |
| JPY | 0.52% | 0.33% | 0.45% | 0.36% | 0.54% | 0.38% | 0.12% | |
| CAD | 0.15% | -0.07% | 0.05% | -0.36% | 0.19% | 0.05% | -0.25% | |
| AUD | -0.03% | -0.24% | -0.11% | -0.54% | -0.19% | -0.10% | -0.41% | |
| NZD | 0.09% | -0.15% | -0.02% | -0.38% | -0.05% | 0.10% | -0.31% | |
| CHF | 0.41% | 0.15% | 0.30% | -0.12% | 0.25% | 0.41% | 0.31% |
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 hangs close to seven-week highs above 1.1500 in the European morning on Thursday, building on Wednesday’s 0.50% gain.
GBP/USD drops back toward 1.3550 after facing rejection again near 1.3600. The Pound Sterling was hit by a bigger-than-expected contraction in the UK economy in April.
Data showed on Thursday that the UK Gross Domestic Product (GDP) dropped by 0.3% in April, following a 0.2% growth in March and against a 0.1% decline expected. The monthly Industrial Production and Manufacturing Production data also fell short of market expectations in the same period.
USD/JPY holds losses near 144.00, undermined by increasing haven demand for the Japanese Yen (JPY). The pair also remains pressured by the persistent weakness surrounding the US currency.
Gold price extends its upbeat momentum into the second consecutive day, hitting fresh weekly highs near $3,380.
WTI pulls back nearly 1% from 10-week highs of $67.82, reached in response to the Iran-Israel headlines.
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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