Forex Today: US Dollar consolidates gains ahead of US data dump
Here is what you need to know on Thursday, September 25:
The US Dollar (USD) holds steady early Thursday after posting decisive gains against its major rivals on Wednesday. Later in the session, August Durable Goods Orders, weekly Initial Jobless Claims and second-quarter Gross Domestic Product (GDP) revision will be featured in the US economic calendar. Several Federal Reserve (Fed) policymakers will be delivering speeches throughout the American session as well.
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 | -0.00% | 0.07% | 0.58% | 0.85% | 0.05% | 0.83% | 0.14% | |
| EUR | 0.00% | 0.08% | 0.56% | 0.83% | 0.01% | 0.81% | 0.11% | |
| GBP | -0.07% | -0.08% | 0.42% | 0.77% | -0.05% | 0.75% | 0.08% | |
| JPY | -0.58% | -0.56% | -0.42% | 0.26% | -0.56% | 0.24% | -0.44% | |
| CAD | -0.85% | -0.83% | -0.77% | -0.26% | -0.80% | -0.01% | -0.68% | |
| AUD | -0.05% | -0.01% | 0.05% | 0.56% | 0.80% | 0.80% | 0.13% | |
| NZD | -0.83% | -0.81% | -0.75% | -0.24% | 0.01% | -0.80% | -0.70% | |
| CHF | -0.14% | -0.11% | -0.08% | 0.44% | 0.68% | -0.13% | 0.70% |
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 benefited from the risk-averse market atmosphere and outperformed its peers midweek. Additionally, the data from the US showed that New Home Sales increased by 20.5% in August, further supporting the currency. After rising more than 0.6% on Wednesday, the USD Index fluctuates in a tight range below 98.00 in the European session on Thursday, while US stock index futures trade mixed.
The Swiss National Bank (SNB) will announce monetary policy decisions in the European session on Thursday and is expected to hold the policy rate unchanged at 0%. USD/CHF stays in a consolidation phase above 0.7950 after rising about 0.5% on Wednesday.
In an interview with West Midlands Magazines, Bank of England (BoE) Governor Andrew Bailey said that there is still some further journey down in interest rates to go, adding that there is some softening in the labor market, alongside cautiousness among consumers. GBP/USD fell more than 0.5% on Wednesday and touched its lowest level since early September below 1.3430. In the European session on Thursday, the pair stays in a consolidation phase at around 1.3450.
The minutes of the Bank of Japan's (BoJ) July policy meeting showed that some policymakers advocated for a resumption of interest rate hikes, arguing that the policy rate is below neutral level, while prices remain relatively high and the output gap staying around zero recently. USD/JPY gathered bullish momentum and Wednesday and rose more than 0.8%. The pair corrects lower early Thursday and trades below 149.00.
EUR/USD moves sideways at around 1.1750 after falling more than 0.6% and erasing this week's gains on Wednesday. The data from Germany showed earlier in the day that the GfK Consumer Confidence Index improved to -22.3 for October from -23.5 in September.
Gold fell 0.75% on Wednesday and snapped a three-day winning streak. XAU/USD trades in a narrow band below $3,750 in the early European session on Thursday.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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.
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