Forex Today: US Dollar stabilizes, focus remains on central bank commentary
Here is what you need to know on Monday, November 17:
The US Dollar stays resilient against its major rivals to start the new week as markets reassess the probability of a Federal Reserve (Fed) rate cut in December. In the second half of the day, policymakers from major central banks will be delivering speeches. Investors will also pay close attention to the October inflation report from Canada.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.03% | 0.14% | -0.01% | 0.10% | -0.03% | 0.03% | |
| EUR | -0.09% | -0.07% | 0.09% | -0.08% | 0.01% | -0.12% | -0.05% | |
| GBP | -0.03% | 0.07% | 0.12% | -0.03% | 0.07% | -0.08% | 0.00% | |
| JPY | -0.14% | -0.09% | -0.12% | -0.16% | -0.07% | -0.20% | -0.13% | |
| CAD | 0.00% | 0.08% | 0.03% | 0.16% | 0.10% | -0.04% | 0.04% | |
| AUD | -0.10% | -0.01% | -0.07% | 0.07% | -0.10% | -0.13% | -0.05% | |
| NZD | 0.03% | 0.12% | 0.08% | 0.20% | 0.04% | 0.13% | 0.07% | |
| CHF | -0.03% | 0.05% | -0.00% | 0.13% | -0.04% | 0.05% | -0.07% |
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).
Hawkish remarks from Fed officials caused investors to scale back their bets on a December rate cut. According to the CME FedWatch Tool, markets are currently pricing in about a 56% chance that the Fed will hold the policy rate unchanged at the last meeting of the year, up from about 37% a week earlier. In the European morning on Monday, the USD Index edges higher toward 99.50. The Bureau of Labor Statistics announced that it will release the Nonfarm Payrolls data for September on Thursday. Meanwhile, US stock index futures were last seen gaining between 0.1% and 0.6% on the day. US Treasury Secretary Scott Bessent said over the weekend that a rare earths deal between the US and China will "hopefully" be done by Thanksgiving, as reported by Reuters.
USD/CAD trades in a narrow range above 1.4000 after closing the previous week marginally lower.
The data from Japan showed earlier in the day that the Gross Domestic Product (GDP) contracted at an annual rate of 1.8% in the third quarter, after expanding by 2.3% in the second quarter. This reading came in better than the market expectation for a contraction of 2.5%. USD/JPY stays relatively quiet in the European morning on Monday and trades at around 154.70. Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that they are maintaining an accommodative monetary policy because underlying inflation rate remains below target.
EUR/USD stays in a consolidation phase, slightly above 1.1600, in the early European session.
After rising in the first half of the previous week, Gold staged a sharp correction and closed below $4,100, erasing a large portion of its weekly gains. On Monday, XAU/USD holds steady near $4,070.
GBP/USD ended the previous week virtually unchanged after closing in negative territory on Friday. The pair moves sideways above 1.3150 early Monday.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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.
