Forex Today: Geopolitics overshadow data releases to start week
Here is what you need to know on Monday, June 23:
Markets turn risk-averse at the beginning of the week as geopolitical tensions in the Middle East escalate further following the United States' bombing of several Iranian nuclear sites over the weekend. Preliminary June Purchasing Managers Index (PMI) data releases from the Eurozone, the UK and the US will be featured in the economic calendar on Monday. Policymakers from the European Central Bank (ECB) and the Federal Reserve (Fed) will also be delivering speeches throughout the day.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.36% | -0.28% | 0.37% | 0.02% | 0.12% | 0.31% | -0.06% | |
| EUR | 0.36% | 0.05% | 0.76% | 0.38% | 0.43% | 0.68% | 0.26% | |
| GBP | 0.28% | -0.05% | 0.75% | 0.33% | 0.39% | 0.63% | 0.22% | |
| JPY | -0.37% | -0.76% | -0.75% | -0.36% | -0.27% | 0.00% | -0.49% | |
| CAD | -0.02% | -0.38% | -0.33% | 0.36% | 0.15% | 0.30% | -0.11% | |
| AUD | -0.12% | -0.43% | -0.39% | 0.27% | -0.15% | 0.22% | -0.17% | |
| NZD | -0.31% | -0.68% | -0.63% | -0.01% | -0.30% | -0.22% | -0.41% | |
| CHF | 0.06% | -0.26% | -0.22% | 0.49% | 0.11% | 0.17% | 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).
Oil prices shot higher at the weekly opening after Iran's parliament approved a measure to close the Strait of Hormuz, a key sea passage through which around 20% of global oil and gas demand flows, in response to the US' attacks. The final decision will be taken by the Supreme National Security Council. Although Iran's attempts to block the Strait of Hormuz remained short-lived in the past, with the US Navy taking action quickly, oil prices rose sharply early Monday. After climbing above $77 per barrel in the Asian session, the West Texas Intermediate (WTI) oil prices corrected lower and were last seen trading at around $74.50.
The US Dollar (USD) Index started the week with a bullish gap before retreating slightly. At the time of press, the USD Index was trading in positive territory at around 99.00. On Tuesday, Fed Chairman Jerome Powell will deliver the semi-annual Monetary Policy testimony to Congress. Meanwhile, US stock index futures trade flat in the European morning.
Gold advanced toward $3,400 early Monday after losing nearly 2% in the previous week. XAU/USD edges lower to start the European session and holds slightly above $3,350.
The data from Australia showed earlier in the day that the S&P Global Composite PMI improved to 51.2 in June's flash estimate from 50.5 in May. This reading showed that the business activity in the private sector expanded at an accelerating pace. AUD/USD stays on the back foot despite the upbeat data and trades in negative territory below 0.6450.
EUR/USD holds steady at around 1.1500 in the early European session on Monday. HCOB Composite PMI in Germany rose to 50.4 in June (preliminary) from 48.5 in May. Later in the day, ECB President Christine Lagarde will an introductory statement at a hearing before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels, Belgium.
GBP/USD fell nearly 1% in the previous week and edged lower in the Asian session on Monday. The pair rebounds from daily lows and trades near 1.3450.
USD/JPY gains traction on Monday and trades at its highest level since mid-May above 147.00.
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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