Forex Today: US Dollar stays under pressure as mood improves
Here is what you need to know on Thursday, February 13:
The US Dollar (USD) struggles to find demand early Thursday after having failed to capitalize on January inflation data on Wednesday. The European economic calendar will feature Industrial Production data for December. Later in the day, January Producer Price Index (PPI) data from the US will be watched closely by market participants, who will also be awaiting new headlines surrounding US President Donald Trump's trade policy.
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 Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.01% | -0.90% | 1.79% | -0.21% | -0.24% | 0.12% | 0.20% | |
| EUR | 1.01% | 0.18% | 2.96% | 0.92% | 0.77% | 1.23% | 1.29% | |
| GBP | 0.90% | -0.18% | 2.62% | 0.71% | 0.59% | 1.05% | 1.11% | |
| JPY | -1.79% | -2.96% | -2.62% | -2.02% | -1.93% | -1.65% | -1.56% | |
| CAD | 0.21% | -0.92% | -0.71% | 2.02% | 0.01% | 0.30% | 0.37% | |
| AUD | 0.24% | -0.77% | -0.59% | 1.93% | -0.01% | 0.45% | 0.52% | |
| NZD | -0.12% | -1.23% | -1.05% | 1.65% | -0.30% | -0.45% | 0.06% | |
| CHF | -0.20% | -1.29% | -1.11% | 1.56% | -0.37% | -0.52% | -0.06% |
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 US Bureau of Labor Statistics announced on Wednesday that the annual Consumer Price Index (CPI) rose by 3% in January, coming in above the market expectation and December's increase of 2.9%. Meanwhile, the core CPI rose by 0.4% on a monthly basis, following the 0.2% rise recorded in the previous month. With the immediate reaction, the USD gathered strength against its rivals. The improving risk mood, however, caused the USD to lose its footing later in the American session.
President Trump said that he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin to begin negotiations to end the war in Ukraine. In the meantime, Trump refrained from announcing reciprocal tariffs. According to CNBC, Trump could still unveil his reciprocal tariff plan before he meets with Indian Prime Minister Narendra Modi on Thursday. After closing marginally lower on Wednesday, the USD Index continues to push lower and was last seen near 107.50.
The UK's Office for National Statistics reported on Thursday that the Gross Domestic Product (GDP) expanded at an annual rate of 1.4% in the fourth quarter. This reading came in above the market expectation for an expansion of 1.1%. GBP/USD gathers bullish momentum following the upbeat data and trades above 1.2500.
The Bank of Canada's (BoC) Meeting Minutes showed late Wednesday that impending trade tariffs from the United States (US) have become a key risk to policy guidance looking forward. "BoC Governing Council felt that retaliatory measures by Canada and other nations would put upward pressure on inflation," the document read. USD/CAD stays under bearish pressure and trades at its lowest level since mid-December near 1.4250 early Wednesday.
After falling toward 1.0300 with the immediate reaction to US inflation data on Wednesday, EUR/USD regained its traction and ended the day marginally higher. The pair continues to push up toward 1.0450 to begin the European session.
USD/JPY gathered bullish momentum on Wednesday, supported by rising US yields, and gained more than 1% on a daily basis. The pair stages a downward correction toward 154.00 early Thursday.
Gold fell toward $2,860 in the early American session on Wednesday but managed to erase its daily losses. XAU/USD holds its ground on Thursday and rises toward $2,920.
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.
