US Dollar Index hits a fresh one-month low below 99.00 as risk appetite improves
- DXY extends losses to a fresh one-month low at 98.70.
- Trump's decision to pause 50% tariffs on EU imports has boosted risk appetite.
- The highlights of the week will be the Fed meeting and the PCE Price Index release.
The US Dollar Index (DXY) has opened the week in the same weak tone seen during the last one. An improved market sentiment, after US President Donald Trump backtracked on his threat to impose 50% levies on EU imports, has boosted the Euro and risk-sensitive currencies, to the detriment of the US Dollar.
The DXY, which measures the value of the Greenback against the six most traded currencies, reached a fresh one-month low of 98.70 during Monday’s Asian Trading session. It is nearing the multi-year low of 97.95, hit in late April.
Donald Trump announced a pause on the 50% tariffs plan from June 1st after a phone call with EU Commission president Von der Leyen in which both leaders agreed to give some time to reach a good deal.
Tariffs' pause boosts risk appetite
The market has welcomed the news, amid easing concerns of a severe blow to global economic growth. The combined trade between the US and the EU accounts for 30% of the global GDP, and reciprocal tariffs between the two, combined with the 30% tariffs on China, would pose a significant weigh on global growth.
Beyond that, President Trump affirmed that his sweeping Tax Bill will go through significant changes in the Senate, which has contributed to soothing investors, wary about the bill’s impact on the US fiscal stability, and has provided an additional boost to risk appetite.
With the USD losing ground against riskier assets, but also against safe havens like the Yen and the Swiss Franc, the DXY depreciated 0.3% on the day and nearly 3% from early May highs. Trading volumes are likely to remain light with US markets closed on a bank holiday.
Later this week, the minutes of the latest Fed meeting and the Personal Consumption Expenditures (PCE) Price Index data will provide further fundamental background for US Dollar traders.
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 | -0.41% | -0.46% | 0.06% | -0.26% | -0.59% | -0.67% | -0.10% | |
| EUR | 0.41% | -0.04% | 0.50% | 0.15% | -0.17% | -0.25% | 0.33% | |
| GBP | 0.46% | 0.04% | 0.23% | 0.19% | -0.13% | -0.21% | 0.38% | |
| JPY | -0.06% | -0.50% | -0.23% | -0.33% | -0.66% | -0.80% | -0.17% | |
| CAD | 0.26% | -0.15% | -0.19% | 0.33% | -0.31% | -0.40% | 0.19% | |
| AUD | 0.59% | 0.17% | 0.13% | 0.66% | 0.31% | -0.12% | 0.51% | |
| NZD | 0.67% | 0.25% | 0.21% | 0.80% | 0.40% | 0.12% | 0.59% | |
| CHF | 0.10% | -0.33% | -0.38% | 0.17% | -0.19% | -0.51% | -0.59% |
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).
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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