Forex Today: Markets stabilize following two-day risk rally
Here is what you need to know on Wednesday, April 15:
Following the risk-on action seen on Monday and Tuesday, markets stay relatively quiet early Wednesday. In the second half of the day, the US economic calendar will feature Import Price Index and Export Price Index figures for March, alongside the Federal Reserve (Fed) Bank of New York's Empire State Manufacturing Index for April. During the American trading hours, several policymakers from the European Central Bank (ECB), the Bank of England (BoE) and the Fed will be delivering speeches.
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 weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.99% | -1.27% | -0.38% | -0.73% | -2.18% | -1.76% | -1.25% | |
| EUR | 0.99% | -0.30% | 0.54% | 0.27% | -1.15% | -0.77% | -0.26% | |
| GBP | 1.27% | 0.30% | 0.78% | 0.56% | -0.85% | -0.48% | 0.04% | |
| JPY | 0.38% | -0.54% | -0.78% | -0.31% | -1.70% | -1.27% | -0.87% | |
| CAD | 0.73% | -0.27% | -0.56% | 0.31% | -1.31% | -0.96% | -0.52% | |
| AUD | 2.18% | 1.15% | 0.85% | 1.70% | 1.31% | 0.41% | 0.86% | |
| NZD | 1.76% | 0.77% | 0.48% | 1.27% | 0.96% | -0.41% | 0.52% | |
| CHF | 1.25% | 0.26% | -0.04% | 0.87% | 0.52% | -0.86% | -0.52% |
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).
Gorwing optimism about the US and Iran reaching a deal to end the war before the deadline allowed risk flows to continue to dominate markets on Tuesday. The New York Post reported that US President Donald Trump told them that "something could be happening" in Pakistan over the next two days. Later, he told Fox News that the war on Iran was "very close to over" and reiterated that they want to make a deal "very badly." Meanwhile, US Vice President JD Vance also said that negotiations will continue and that both sides are working toward a deal.
US stock index futures trade virtually unchanged in the European morning after Wall Street's main indexes registered strong gains on Tuesday. The US Dollar (USD) Index holds steady at around 98.00 but it's down more than 0.5% since the beginning of the week.
EUR/USD stays in a consolidation phase slightly below 1.1800 after setting a six-week high above 1.1800 on Tuesday. Eurostat will release Industrial Production data for February later in the session.
AUD/USD trades in positive territory at around 0.7150 in the European morning on Wednesday. In the early trading hours of the Asian session on Thursday, March employment data from Australia and the first-quarter Gross Domestic Product (GDP) growth reading from China wil lbe watched closely by maket participants.
GBP/USD extended its bullish action on Tuesday and came within a touching distance of 1.3600. The pair corrects lower and fluctuates in a tight channel slightly above 1.3550 midweek.
USD/JPY holds steady at around 159.00 after losing 0.4% on Tuesday.
Gold gathered bullish momentum and rose more than 2% on Tuesday. XAU/USD edges lower early Wednesday and trades slightly above $4,800, down about 0.6% on the day.
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.
