Forex Today: USD sell-off pauses for now, focus shifts to PMI surveys
Here is what you need to know on Friday, December 15:
The US Dollar (USD) suffered heavy losses against its major rivals for the second consecutive day on Thursday. The US Dollar Index declined below 102.00 for the first time since August before stabilizing near that level early Friday. S&P Global will release preliminary December Manufacturing and Services PMIs for the Euro area, Germany, the UK and the US. The Federal Reserve will publish November Industrial Production data later in the day as well.
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 Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -2.05% | -1.66% | -1.43% | -1.79% | -2.06% | -1.20% | -1.42% | |
| EUR | 2.00% | 0.38% | 0.60% | 0.25% | -0.07% | 0.83% | 0.61% | |
| GBP | 1.64% | -0.39% | 0.22% | -0.14% | -0.40% | 0.45% | 0.23% | |
| CAD | 1.40% | -0.62% | -0.25% | -0.38% | -0.63% | 0.21% | 0.00% | |
| AUD | 1.76% | -0.26% | 0.12% | 0.35% | -0.27% | 0.58% | 0.37% | |
| JPY | 2.02% | 0.01% | 0.29% | 0.60% | 0.26% | 0.83% | 0.63% | |
| NZD | 1.20% | -0.82% | -0.45% | -0.22% | -0.58% | -0.84% | -0.20% | |
| CHF | 1.40% | -0.62% | -0.24% | -0.02% | -0.37% | -0.64% | 0.21% |
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).
The European Central Bank (ECB) left key rates unchanged as anticipated and revised inflation projections lower. In its policy statement, however, the ECB reiterated that future decisions will ensure that policy rates will be set at sufficiently restrictive levels for "as long as necessary." In the post-meeting press conference, ECB President Christine Lagarde noted that they did not discuss rate cuts, adding that it wasn't time to lower their guard since they had more work to be done. Lagarde's hawkish tone provided a boost to the Euro, lifting EUR/USD to multi-week highs above 1.1000. At the time of press, the pair was consolidating its weekly gains slightly below this level.
The Bank of England (BoE) held the policy rate steady at 5.25% following the last policy meeting of the year. Three members of the Monetary Policy Committee (MPC), Megan Greene, Jonathan Haskel and Catherine Mann, voted to raise the policy rate by 25 bps. The BoE repeated that the monetary policy is likely to need to be restrictive for an "extended period of time." In a statement released after the rate decision, BoE Governor Andrew Bailey said that it was too early to start speculating about cutting rates and added that they can't yet say that interest rates have peaked. GBP/USD gathered bullish momentum in the BoE aftermath and advanced to its highest level since late August near 1.2800. Early Friday, the pair staged a technical correction and retreated to the 1.2750 area.
During the Asian trading hours, the data from China revealed that Industrial Production expanded by 6.6% on a yearly basis, compared to the market expectation of 5.6%. On a negative note, Retail Sales grew by 10.1% in the same period to fall short of the market expectation for an expansion of 12.5%.
Judo Bank Composite PMI in Australia improved to 47.4 in December from 46.2 in November. AUD/USD showed no reaction to this report and was last seen moving sideways at around 0.6700.
The Swiss National Bank kept the interest rate unchanged at 1.75% as forecast on Thursday. USD/CHF continued to push lower and fell to its lowest level since late July below 0.8650. Although the pair managed to erase a portion of its daily losses, it's still down more than 200 pips on a weekly basis.
Following the impressive upsurge seen late Wednesday, Gold came within a touching distance of $2,050 on Thursday as the 10-year US yield broke below 4%. Early Friday, XAU/USD turned quiet slightly below $2,040 while the 10-year yield rebounded toward 4%.
USD/JPY extended its downtrend and dropped to a fresh multi-month low below 141.00 on Thursday. Following a late rebound, the pair seems to have stabilized at around 142.00 on the last trading day of the week.
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.
