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Forex Today: US Dollar strengthens further on rising yields, risk aversion

Here is what you need to know on Tuesday, September 26:

The US Dollar (USD) continues to outperform its rivals early Tuesday amid souring market mood and rising US Treasury bond yield. The USD Index trades at its highest level since November above 106.00 after closing in positive territory on Monday and the 10-year US yield holds at multi-year highs above 4.5%. August New Home Sales and Conference Board's Consumer Confidence Index for September will be featured in the US economic docket.

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 Australian Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD 0.58%0.52%0.00%0.74%0.28%0.21%0.72%
EUR-0.59% -0.05%-0.44%-0.02%-0.27%-0.50%0.08%
GBP-0.60%0.06% -0.44%0.03%-0.25%-0.38%0.13%
CAD-0.08%0.59%0.45% 0.59%0.38%0.00%0.53%
AUD-0.66%-0.01%-0.11%-0.58% -0.17%-0.49%0.10%
JPY-0.44%0.26%0.15%-0.40%0.29% -0.19%0.37%
NZD-0.22%0.43%0.50%0.09%0.49%0.17% 0.64%
CHF-0.72%-0.09%-0.13%-0.51%-0.13%-0.28%-0.59% 

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Reflecting the risk-averse market atmosphere, US stock index futures are down between 0.5% and 0.8% in the early European session and the Euro Stoxx 50 Index was last seen falling nearly 1% on the day. Meanwhile, Bloomberg reported earlier in the day that Senate Republican And Democrat negotiators were closing in on a deal on a short-term spending measure to avoid a government shutdown. This development, however, failed to help the mood improve.

EUR/USD lost more than 50 pips on Monday and dropped below 1.0600 for the first time since early March. On Tuesday, the pair fluctuates in a tight channel near Monday's closing level. While speaking before the European Parliament's Committee on Economic and Monetary Affairs, European Central Bank (ECB) President Christine Lagarde noted that recent indicators point to a further weakness in the economic activity in the third quarter.

GBP/USD extended its slide in the Asian session on Tuesday and touched a fresh multi-month low below 1.2170 before recovering modestly toward 1.2200.

USD/JPY rallied above 149.00 on Tuesday but made a sharp U-turn afterward. Investors remain on edge amid the possibility of the Bank of Japan intervening in the foreign exchange markets. Japan’s newly appointed Economy Minister Yoshitaka Shindo reiterated on Tuesday that it was important for currencies to move in a stable manner reflecting fundamentals. "Weak Yen has various effects on economy such as raising import costs for consumers, improving competitiveness of exporters," Shindo added.

Pressured by rising US yields, Gold price registered losses on Monday and fell below $1,910 early Tuesday. XAU/USD, however, managed to erase its daily losses and was last seen moving sideways at around $1,915.

Author

Eren Sengezer

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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