Forex Today: US Dollar struggles to recover, more Fedspeak on the agenda


Here is what you need to know on Thursday, April 4:

The US Dollar (USD) came under renewed selling pressure on Wednesday and the USD Index closed the second consecutive day in negative territory. S&P Global will release revisions to Services PMI data for Germany, the Eurozone and the UK on Thursday. Later in the day, the US economic docket will feature weekly Initial Jobless Claims and Goods Trade Balance data for February. Several Federal Reserve (Fed) policymakers will be delivering speeches during the American trading hours.

ISM Services PMI in the US declined to 51.4 in March from 52.6 in February. This reading came in below the market expectation of 52.7 and weighed on the USD on Tuesday. Additionally, the Prices Paid Index of the survey, the inflation component, declined to 53.4 from 58.6. Later in the American session, Federal Reserve Chairman Jerome Powell reiterated that they were in no rush to reduce rates. "The Fed has time to let incoming data guide its policy decisions; the central bank is making decisions meeting by meeting," Powell added. These comments failed to support the USD and the USD Index fell 0.5% on Wednesday.

Wall Street's main indexes closed mixed on Wednesday and the benchmark 10-year US Treasury bond yield retreated toward 4.35% after reaching its highest level since November above 4.4%. Early Thursday, US stock index futures trade in positive territory.

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 Australian Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.45% -0.13% -0.07% -0.83% 0.19% -0.83% 0.51%
EUR 0.45%   0.32% 0.38% -0.38% 0.65% -0.38% 1.00%
GBP 0.12% -0.33%   0.06% -0.70% 0.32% -0.70% 0.65%
CAD 0.06% -0.39% -0.08%   -0.77% 0.24% -0.78% 0.57%
AUD 0.82% 0.38% 0.70% 0.75%   1.01% -0.01% 1.33%
JPY -0.20% -0.64% -0.33% -0.24% -0.99%   -1.04% 0.34%
NZD 0.82% 0.37% 0.69% 0.76% 0.00% 1.00%   1.33%
CHF -0.54% -0.98% -0.65% -0.60% -1.37% -0.34% -1.36%  

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).

 

Earlier in the day, the data from Australia showed that Building Permits declined by 1.9% on a monthly basis in February, following the 2.5% contraction recorded in January. AUD/USD ignored the weak data and extended its recovery toward 0.6600 in the Asian session after rising more than 0.7% on Wednesday.

Australian Dollar holds position after gains amid firmer US Dollar, Initial Jobless Claims eyed.

EUR/USD preserves its bullish momentum early Thursday and trades in positive territory above 1.0800 after rising over 0.8% in the previous two days. 

GBP/USD advanced beyond 1.2600 and gained 0.6% on Wednesday. The pair clings to small daily gains above 1.2650 in the early European session.

Gold extended its rally and reached a new all-time high above $2,300 in the Asian session on Thursday. XAU/USD stages a technical correction and retreats toward $2,290 in the European trading hours.

Gold price remains on the defensive below $2,300 as traders look to US NFP on Friday.

USD/JPY ignores the selling pressure surrounding the USD and continues to move up and down in a narrow range above 151.50.

Japanese Yen struggles to attract buyers, hangs near multi-decade low against USD.

 

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD retreats below 1.0650 after upbeat US data

EUR/USD retreats below 1.0650 after upbeat US data

EUR/USD lost its traction and declined below 1.0650 in the early American session on Monday. The upbeat Retail Sales data from the US helped the US Dollar regather its strength and caused the pair to turn south.

EUR/USD News

USD/JPY sits at multi-decade high near 154.00 as Japan's intervention risks loom

USD/JPY sits at multi-decade high near 154.00 as Japan's intervention risks loom

USD/JPY is sitting at multi-decade highs shy of 154.00 in the European session on Monday. The Japanese Yen continues to be undermined by the BoJ’s uncertain outlook about future rate hikes. Intervention fears and persistent geopolitical tensions could help limit losses for the safe-haven JPY. 

USD/JPY News

Gold continues to fluctuate at around $2,350

Gold continues to fluctuate at around $2,350

Following a bullish opening to the week, Gold went into a consolidation phase at around $2,350 on Monday. The benchmark 10-year US Treasury bond yield is up nearly 2% after strong US data, not allowing XAU/USD to push higher.

Gold News

XRP price recovers from nearly eleven month low of $0.41 as developers propose native lending on XRPLedger

XRP price recovers from nearly eleven month low of $0.41 as developers propose native lending on XRPLedger

Ripple price recovered from weekend low of $0.4188, surged past $0.50 on Monday. XRPLedger developers have proposed a Native Lending Protocol to help Ripple establish a foothold in DeFi, lending and borrowing for users. 

Read more

Week ahead: Data from the US, UK and Canada in focus

Week ahead: Data from the US, UK and Canada in focus

Similar to Fed and ECB pricing, swaps traders have scaled back bets of rate cuts for the Bank of England (BoE’s) Bank Rate to below 50bps for the year.

Read more

Forex MAJORS

Cryptocurrencies

Signatures