Forex Today: US Dollar continues to gather strength ahead of PMI data
Here is what you need to know on Wednesday, September 23:
The US Dollar (USD) outperforms its major rivals early Wednesday, with the USD Index climbing to its highest level since late July above 100.70. The economic calendar will feature preliminary September Manufacturing and Services Purchasing Managers' Index (PMI) data for Germany, the Eurozone, the UK and the US later in the day.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.53% | 0.57% | 0.55% | 0.69% | 0.22% | 0.34% | -0.07% | |
| EUR | -0.53% | 0.06% | 0.04% | 0.16% | -0.31% | -0.18% | -0.59% | |
| GBP | -0.57% | -0.06% | -0.13% | 0.12% | -0.37% | -0.24% | -0.65% | |
| JPY | -0.55% | -0.04% | 0.13% | 0.19% | -0.33% | -0.19% | -0.59% | |
| CAD | -0.69% | -0.16% | -0.12% | -0.19% | -0.41% | -0.37% | -0.75% | |
| AUD | -0.22% | 0.31% | 0.37% | 0.33% | 0.41% | 0.13% | -0.35% | |
| NZD | -0.34% | 0.18% | 0.24% | 0.19% | 0.37% | -0.13% | -0.41% | |
| CHF | 0.07% | 0.59% | 0.65% | 0.59% | 0.75% | 0.35% | 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).
The USD Index built on Monday's gains and closed in positive territory on Tuesday. Although crude Oil prices declined on growing optimism about de-escalation of the conflict in the Middle East, hawkish comments from Federal Reserve (Fed) policymakers helped the USD gather strength.
Collins’ hawkish tilt reinforces Dollar support as inflation risks rise
Boston Federal Reserve (Fed) President Susan Collins delivered a notably more hawkish tone, with the FXS Speechtracker score at 8.1/10, clearly above the established baseline of 6.6/10. The explicit support for last week’s rate hike and the warning that inflation could remain “notably above 2%,” alongside a stronger labor market backdrop, signalled a clear willingness to keep policy restrictive for longer. The emphasis on a “somewhat more restrictive” federal funds rate to ensure a durable return to target underscored persistent upside inflation risks, a backdrop typically supportive for the Dollar.
The FXS Fed Sentiment Index rose by 0.53 points to 150.49, reinforcing a firmly hawkish stance well above the neutral 100 threshold. This upward move, in tandem with the elevated FXS Speechtracker score, confirms that Fed communication leaned toward tighter policy expectations, a configuration that should continue to underpin the Dollar against major peers.
The USD Index was last seen rising 0.2% on the day at 100.75, while US stock index futures were trading marginally higher.
Analysts at Commerzbank highlight that Brent crude has come under sustained pressure, with prices "fell for a fifth consecutive session, breaking below USD100 a barrel for the first time since early September, as optimistic diplomatic signals eased supply fears." According to the bank, "the combination of pipeline restart progress and direct US-Iran talks drove oil’s fifth consecutive daily decline," even though they caution that "the Strait of Hormuz remains closed and the broader conflict unresolved," underscoring that the recent pullback reflects a reduction in immediate supply anxiety rather than a resolution of underlying geopolitical risks.
EUR/USD remains under bearish pressure for the third consecutive day and continues to decline toward 1.1400.
GBP/USD is down more than 0.2% on the day so far and trades within a touching distance of 1.3300 in the European morning.
USD/JPY continues to stretch higher and trades above 157.50 in the European session midweek.
The data from Australia showed earlier in the day that the S&P Global Manufacturing PMI dropped to 49.3 in September's flash reading from 52 in August. In this period, the Services PMI fell to 51.4 from 53.2. After posting small losses on Tuesday, AUD/USD stays on the back foot and tests 0.7100.
Gold (XAU/USD) benefited from falling Oil prices on Tuesday and staged a decisive rebound to close the day marginally higher. Nevertheless, XAU/USD struggles to preserve its recovery momentum and trades in the red below $4,350 in the European morning.
China emerges as key driver of Gold demand in 2026
Analysts at Commerzbank underscore the strength of China’s physical gold appetite, noting that, “according to data from the customs authority, China imported more than 1,000 tons of gold in the first eight months of the year, already exceeding last year’s total.” They add that official sector demand has also picked up, with the Chinese central bank having “purchased a good 80 tons of gold between January and August, with purchases increasing noticeably in recent months and reaching their highest level in nearly three years in August.” Commerzbank concludes that, on this basis, “China is therefore a key driver of gold demand this year.”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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