Forex Today: Eyes on FOMC Minutes, Nvidia earnings
Here is what you need to know on Wednesday, November 19:
The action in financial markets remains relatively subdued early Wednesday following Tuesday's choppy movements as investors adopt a cautious stance while waiting for the Federal Reserve's (Fed) October meeting minutes and Nvidia's earnings report.
The US Dollar (USD) captured safe-haven demand and held resilient against its rivals on Tuesday as the selloff in risk-sensitive assets continued. Wall Street's main indexes lost about 1% on the day and the USD Index closed marginally higher. Early Wednesday, US stock index futures trade mixed, while the USD Index moves sideways slightly above 99.50. The US Department of Labor (DOL) announced on Tuesday that there were 232,000 Initial Jobless Claims in the week ended October 18. Nvidia will release third-quarter earnings after the closing bell. In the meantime, US President Donald Trump said on Tuesday that they are conducting interviews for Fed Chair and noted that he already know who his choice is going to be.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.11% | 0.58% | -0.22% | 0.63% | 0.65% | 0.64% | |
| EUR | -0.27% | -0.05% | 0.67% | -0.48% | 0.34% | 0.39% | 0.38% | |
| GBP | -0.11% | 0.05% | 0.45% | -0.43% | 0.40% | 0.45% | 0.44% | |
| JPY | -0.58% | -0.67% | -0.45% | -0.76% | 0.08% | 0.09% | 0.05% | |
| CAD | 0.22% | 0.48% | 0.43% | 0.76% | 0.86% | 0.87% | 0.87% | |
| AUD | -0.63% | -0.34% | -0.40% | -0.08% | -0.86% | 0.05% | 0.04% | |
| NZD | -0.65% | -0.39% | -0.45% | -0.09% | -0.87% | -0.05% | -0.01% | |
| CHF | -0.64% | -0.38% | -0.44% | -0.05% | -0.87% | -0.04% | 0.00% |
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 lost 0.1% on Tuesday and closed the third consecutive day in negative territory. The pair stages a modest recovery early Wednesday but remains below 1.1600. Later in the European session, Eurostat will publish revisions to the October inflation data.
Following the bearish action seen on Monday, Gold benefited from risk-aversion and posted marginal gains on Tuesday. XAU/USD continues to edge higher and closes in on $4,100 early Wednesday.
GBP/USD extends its sideways grind near 1.3150 early Wednesday. The data published by the UK's Office for National Statistics showed that annual inflation in the UK, as measured by the change in the Consumer Price Index, declined to 3.6% in October from 3.8% in September. This reading came in line with analysts' estimates. On a monthly basis, the CPI was up 0.4% after staying unchanged in September.
USD/JPY built on Monday's gains and touched its highest level since early February above 155.70 on Tuesday. The pair stays in a consolidation phase and fluctuates at around 155.50 in the European morning on Wednesday.
AUD/USD recovered following Monday's slide but lost its traction early Wednesday. The pair was last seen trading slightly below 0.6500, losing about 0.2% on the day. The data from Australia showed that the Wage Price Index was up 3.4% on a yearly basis in the third quarter.
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.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
