Forex today: Dollar ended U.S. session on front-foot, Asia shrugs-off Wall Street

  • Consumer confidence the latest in a series of upbeat US data.
  • DXY and U.S. Yields supported technically. 

Asian equity markets have ignored last Friday's poor performance om Wall Street related to losses on Wall Street at the start of this week and bourses have reacted to regional developments including better than expected Japanese GDP and Australian PM Morrison's surprise election victory. the ASX 200 is up +1.0% at the time of writing, the Nikkei 225 was higher by +0.7% and the KOSPI climbed 0.8%.

However, as a recap and while the tides still may turn, Wall Street's closing session benchmarks ended as follows:

  • The Dow Jones Industrial Average (DJIA), fell 98.68 points, or 0.4%, to close at 25,764.
  • The S&P 500 index lost 16.79 points, or 0.6%, to 2,859.53. 
  • The Nasdaq Composite Index slid 81.76 points, or 1%, to end at 7,816.28.

Investors offloaded risk on concerns that the U.S. / Sino trade negotiations had stalled. Chinese state media was reporting that there has been little appetite in Beijing to resume negotiations following the Trump administration’s hike in tariffs on Chinese imports and a more recent combative move in the Huawei order that came into effect on Friday, announced yesterday by Commerce Sec. Wilbur Ross. 

However, there was some reprieve in the data again. US consumer confidence surprised markets, beating expectations in May, surging to a 15-year high at 102.4 (from 97.2 in the month prior). The dollar also got a boost from the inflation expectations that picked up with 1-year expectations rising to 2.8% (from 2.5% in the month prior) and 5-10-year inflation expectations measure rising to 2.6% (from 2.3% in the month prior). 

DXY and U.S. yields on the rise

The DXY rallied onto the 98 handle and gold plummetted. The greenback was showing a mixed technical picture with short term indicators overstretched following a number of positive days advancing a whole point on the week in the DXY although daily stochastics offer some room to go yet which opens room to 98.50 and then 98.70 and the top of the rising wedge formation. US 10 years are trading off a double bottom and 2015 historic resistance line in oversold territory which should be supportive of the greenback and negative for gold prices. As the day ended, the US 10yr treasury yield ranged sideways between 2.36% and 2.41%. With the FOMC minutes around the corner, it is worth noting that the chance of a Fed rate cut by December, implied by Fed fund futures, remained at 120%, with September priced at 60%.

Currency action

In the rest of the FX space, the majors which analysts at Westpac reported on in a summary below performed as follows:

  • EUR/USD fell slightly, to 1.1165. Sterling underperformed with Brexit once again in focus, -0.5% over the day to 1.2735. 
  • USD/JPY bounced from 109.50 to 110.20. 
  • AUD/USD fell from 0.6890 to 0.6865 – marking a fresh three-year closing low – but squeezed as high as 0.6938 this morning in the wake of the Coalition’s surprise win in the Australian federal election. The pair then steadied around 0.6900. 
  • NZD/USD fell from 0.6545 to 0.6514 – a seven-month low. 
  • AUD/NZD closed around 1.0540 on Friday, then probed 1.0600 this morning before steadying around 1.0565/70.

Key events ahead: 

"The busy Fed calendar includes Governor Clarida and NY Fed president Williams at another ‘Fed listens’ event. Fed Chair Powell will deliver the keynote speech at the Atlanta Fed’s annual Financial Market’s Conference at 7pm EST Monday (9am Syd/ 7am Sing/HK Tuesday)," analysts at Westpac explained. 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD retreats on the hawkish Fed cut

EUR/USD is trading closer to 1.10 after the Fed cut rates but signaled no further rate reductions. The bank acknowledged the strong labor market and robust consumption. However, it is worried about investment.


GBP/USD: Rising wedge at the top inflates downside risk

GBP/USD portrays a short-term rising wedge bearish formation while trading near 1.2475 during the Asian session on Thursday. One-week-old rising wedge surrounding monthly tops questions buyers.


USD/JPY pops 20 pips on the as expected Fed

USD/JPY is currently trading at 108.32 following the FOMC, travelling between 108.08 and 108.33 but is virtually flat on the day as the Fed lowered rats as expected by 25 basis points.


Gold drops on strength in the Greenback following a dubious Fed rate cut

Gold prices have dropped on the Federal Reserve decision whereby no real assurance of more cuts down the line were presented. However, the door has been left open which limits the downside potential in this move.

Gold News

Australian Employment Preview: The Fed and then the RBA

Higher unemployment could set the stage for RBA cuts. Employment is expected to increase by 10,000 in August after July’s addition of 41,100. Federal Reserve rate decision and economic projections in the background

Read more