Forex Today: US Dollar selloff pauses in quiet start to week
Here is what you need to know on Monday, July 8:
The US Dollar (USD) stays resilient against its major rivals at the beginning of the new week. After losing nearly 1% and snapping a four-week winning streak in the previous week, the US Dollar Index fluctuates in a tight range at around 105.00. Sentix Investor Confidence for July will be featured in the European economic docket. Later in the day, May Consumer Credit Change data from the US will be looked upon for fresh impetus.
US Dollar PRICE Last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.10% | -1.28% | 0.10% | -0.29% | -1.13% | -0.75% | -0.38% | |
| EUR | 1.10% | -0.41% | 0.91% | 0.51% | -0.15% | 0.04% | 0.42% | |
| GBP | 1.28% | 0.41% | 1.30% | 0.93% | 0.27% | 0.46% | 0.84% | |
| JPY | -0.10% | -0.91% | -1.30% | -0.39% | -1.17% | -0.86% | -0.46% | |
| CAD | 0.29% | -0.51% | -0.93% | 0.39% | -0.80% | -0.47% | -0.09% | |
| AUD | 1.13% | 0.15% | -0.27% | 1.17% | 0.80% | 0.19% | 0.64% | |
| NZD | 0.75% | -0.04% | -0.46% | 0.86% | 0.47% | -0.19% | 0.40% | |
| CHF | 0.38% | -0.42% | -0.84% | 0.46% | 0.09% | -0.64% | -0.40% |
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 data published by the US Bureau of Labor Statistics (BLS) showed on Friday that Nonfarm Payrolls (NFP) rose 206,000 in June. Although this reading came in above the market expectation of 190,000, the USD struggled to find demand as the BLS also announced that it revised the May's NFP increase of 272,000 lower to 218,000. Other details of the report showed that the Unemployment Rate ticked up to 4.1%, while the annual wage inflation softened to 3.9% from 4.1% in May.
The left-wing alliance New Popular Front won the second round of French election, securing 182 seats in the National Assembly but falling short of the 289 seats required for an absoulte majority. President Macron’s centrist Ensemble Alliance came in second, winning 163 seats, ahead of Marine Le Pen’s far-right National Rally (RN) party, which secured 143 seats. This development failed to trigger a noticeable reaction and EUR/USD was last seen trading virtually unchanged on the day at around 1.0830.
GBP/USD benefited from the selling pressure surrounding the USD and gained more than 1% last week. The pair stays in a consolidation phase slightly above 1.2800 in the European morning on Monday.
USD/JPY registered marginal losses on Thursday and Friday. At the beginning of the new week, the pair fluctuates in a narrow range at around 161.00.
Gold gathered bullish momentum and climbed to a fresh multi-week high above $2,380 ahead of the weekend as US Treasury bond yields turned south following the US employment data. XAU/USD struggles to extend its rally and consolidates its gains at around $2,380.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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.
