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Forex Today: US Dollar weakens to start week as markets await PMI data

2 June 2025, 10:10

Here is what you need to know on Monday, June 2:

The US Dollar (USD) weakens against its major rivals on the first trading day of June. In the second half of the day, the US economic calendar will feature the ISM Manufacturing Purchasing Managers (PMI) data for May. Market participants will also pay close attention to comments from central bank officials.

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 USD Index, which gauges the USD's performance against a basket of six major currencies, ended the previous week marginally higher. The data published by the US Bureau of Economic Analysis showed on Friday that the annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, declined to 2.1% in April from 2.3% in March.

Early Monday, the USD Index stays in negative territory slightly below 99.00. Meanwhile, US stock index futures were last seen losing between 0.5% and 0.7% on the day, reflecting a cautious market mood at the start of the week. Escalating geopolitical tensions on news of Ukraine carrying out a large scale drone attack against Russian military bombers in Siberia seem to be weighing on risk sentiment.

Japan’s Prime Minister Shigeru Ishiba reiterated early Monday that Japan will not back down in its request to reduce tariffs. On Thursday, Japan's Economy Minister Ryosei Akazawa is expected to hold discussions with US Treasury Secretary Scott Bessent. USD/JPY stays under bearish pressure early Monday and trades below 143.50.

EUR/USD gains traction in the European morning and trades near 1.1400. The European economic calendar will feature revisions to the Eurozone and Germany HCOB Manufacturing PMI data for May.

Following Friday's modest decline, GBP/USD turns north on Monday and trades comfortably above 1.3500. The Bank of England (BoE) will publish Mortgage Approvals data for April.

Gold benefits from the risk-averse market atmosphere and registers strong gains early Monday. XAU/USD was last seen trading slightly below $3,350, rising more than 1.5% on a daily basis.

The data from Switzerland showed on Monday that the Gross Domestic Product (GDP) expanded at an annual rate of 2% in the second quarter. This reading surpassed the market expectation of 1.5%. USD/CHF edges lower following the upbeat data and trades slightly below 0.8200.

Risk sentiment FAQs

What do the terms"risk-on" and "risk-off" mean when referring to sentiment in financial markets?

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.

What are the key assets to track to understand risk sentiment dynamics?

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.


Which currencies strengthen when sentiment is "risk-on"?

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.

Which currencies strengthen when sentiment is "risk-off"?

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.

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Forex Today: The FX universe takes a breather

27 May 2024, 21:40

The Greenback came under extra selling pressure against the backdrop of marginal volatility in response to the US and UK holidays. Markets are expected to enter some consolidative phase ahead of the release of US PCE and EMU CPI, both due on Friday.

Here is what you need to know on Tuesday, May 28:

The USD Index (DXY) added to Friday’s pullback and revisited the 104.60-104.50 band on Monday. On May 28, the Conference Board’s Consumer Confidence takes centre stage, seconded by the FHFA’s House Price Index. In addition, Fed’s Mester, Kashkari and Cook are due to speak.

Further gains lifted EUR/USD to four-day highs around 1.0870 amidst a renewed selling bias in the US Dollar. Wholesale Prices in Germany are due on May 28 along with the ECB’s Schnabel speech.

GBP/USD accelerated its gains beyond the 1.2700 barrier and hit a new two-month tops following the weaker Greenback. The CBI Distributive Trades are expected on May 28.

Price action around USD/JPY remained flat near the 157.00 hurdle following a solid performance of JGB 10-year yields. There are no scheduled releases in “The Land of the Rising Sun” on May 28.

A solid session saw AUD/USD advance to three-day highs near 0.6660 amidst the softer Dollar and an improved tone in the commodity complex. Flash Retail Sales are next on tap in Oz on May 28.

Prices of WTI rose for the second session in a row, managing to reclaim the area above the $78.00 mark per barrel in response to the selling pressure hurting the greenback.

Gold prices edged higher and surpassed the $2,350 mark per troy ounce, adding to Friday’s small uptick. Silver followed suit and rose markedly more than 4% to surpass the $31.00 mark per ounce.

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Forex Today: US data sustains Dollar strength, focus shifts to inflation

6 October 2023, 21:34

After the release of US labor data, the focus turns to inflation data and the FOMC minutes. These upcoming data points are expected to spur movements in the bond market and potentially challenge the dollar's strength.

Here is what you need to know for next week:

The US Dollar Index (DXY) continued its correction on Friday, despite the better-than-expected US employment report. The numbers triggered a rally in the Greenback, which was short-lived, suggesting some exhaustion of the rally. The DXY is set to end the week around 106.00, posting marginal losses and ending an 11-week positive streak. Although the trend remains upward, it has softened. Fundamentals still favor the Dollar, and the slide appears to be corrective in nature.

On Monday, the US market will be closed due to Columbus Day; it will also be a holiday in Canada.

The US will release wholesale inflation data on Wednesday. The Producer Price Index (PPI) is expected to rise by 0.4% in September. Later in the day, the Federal Reserve will release the minutes of its latest meeting, which will be closely watched.

Thursday will be a key day with the release of the US Consumer Price Index (CPI). The headline and core rates are expected to show a 0.3% monthly increase. A surprise with higher inflation would increase expectations of further tightening from the Federal Reserve and could lead to a stronger US Dollar and higher yields, potentially causing market concerns. Conversely, numbers below estimates could fuel risk appetite and weigh on the US Dollar. The weekly Jobless Claims report will also be closely watched, especially after the upbeat Nonfarm Payrolls.

Several Fed officials are scheduled to deliver remarks, including Vice Chair Jefferson and Logan on Monday, and Waller on Tuesday. The next FOMC decision is on November 1.

EUR/USD rose after falling for 11 consecutive weeks, gaining ground after the Nonfarm Payrolls release on Friday. The pair appears to be stabilizing, and a break above 1.0630 could strengthen the rebound. The European Central Bank (ECB) will release the minutes of its latest meeting on Thursday.

GBP/USD rose on Friday for the third day, approaching the 20-day Simple Moving Average (SMA) at 1.2260. The pair had its best week since early July. The UK's monthly GDP and Manufacturing Production data are due on Thursday.

USD/JPY remains near the critical area of 150.00, which is suspected of having triggered intervention from Japanese authorities to curb the yen's strength on Tuesday. The pair posted its highest weekly close in decades around 149.35 and remains supported by the divergence between US and Japanese bond yields.

Commodity-linked currencies were the worst performers during the week. Declines in crude oil prices, metals, and deteriorating market sentiment weighed on these currencies. However, they ended the week on a positive note, with a move that could continue into next week.

China will release trade data on Friday, which will be important for market sentiment and Antipodean currencies. The economic calendar for Australia and New Zealand is quiet for the week ahead.

AUD/USD finished the week slightly lower, hovering around 0.6390 but far from the monthly low it reached earlier. The pair returned to the previous range, and the recovery signals positive momentum for the Aussie. However, it needs to rise above 0.6500 to change the short-term outlook.

NZD/USD ended the week flat, slightly below 0.6000. It remains below the 20-day Simple Moving Average at 0.6050, an area that could be challenged next week.

Canadian data and the reversal in crude oil prices brought volatility to the Loonie. While the sharp decline in crude oil prices weighed on the currency, positive Canadian employment data boosted it. USD/CAD posted its highest weekly close since March, around 1.3660. The pair peaked at 1.3785 and pulled back sharply, increasing the risk of an extension to the downside.

Gold rebounded at the 200-week SMA and managed to stay above $1,800. On Friday, it staged a recovery, surging above $1,830. The trend is downward, but short-term momentum favors the yellow metal.



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Forex Today: US Dollar stretches higher on surging bond yields ahead of key data

4 October 2023, 09:52

Here is what you need to know on Wednesday, October 4:

The US Dollar continues to outperform its rivals mid-week as US Treasury bond yields keep on climbing higher. The US Dollar Index holds at multi-month highs above 107.00 and the 10-year US yield closes in on 4.9% in the European morning. ADP private sector employment and ISM Services PMI data for September, alongside August Factory Orders, will be featured in the US economic docket in the second half of the day. Market participants will continue to keep a close eye on comments from central bankers as well.

The data from the US showed on Tuesday that the number of job openings on the last business day of August stood at 9.6 million. This reading came in much higher than the July's reading and the market expectation of 8.8 million, attracting hawkish Federal Reserve (Fed) bets. In turn, US T-bond yields gained traction, Wall Street's main indexes turned south and the USD held its strength in the American trading hours.


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.

USD EUR GBP CAD AUD JPY NZD CHF
USD 0.99% 1.09% 1.01% 1.98% -0.23% 1.84% 0.75%
EUR -1.00% 0.08% 0.00% 1.01% -1.25% 0.85% -0.25%
GBP -1.10% -0.07% -0.08% 0.93% -1.34% 0.77% -0.33%
CAD -1.02% -0.01% 0.11% 0.97% -1.25% 0.83% -0.26%
AUD -2.02% -1.02% -0.94% -1.01% -2.28% -0.16% -1.29%
JPY 0.20% 1.23% 1.31% 1.25% 2.19% 2.06% 1.00%
NZD -1.86% -0.86% -0.77% -0.85% 0.16% -2.12% -1.11%
CHF -0.77% 0.24% 0.32% 0.25% 1.25% -1.01% 1.10%

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).



Meanwhile, several Republicans in the House of Representatives sided with Democrats and ousted Speaker Kevin McCarthy with a 216-to-210 vote. Legislative activity in the House will pause until there is a new House Speaker. Republicans are set to meet on October 10 to discuss McCarthy's replacement. Markets remain risk-averse following this development with another government shutdown deadline coming in on November 17. Reflecting the sour mood, US stock index futures were last seen losing between 0.5% and 0.8%.

During the Asian trading hours on Wednesday, the Reserve Bank of New Zealand (RBNZ) announced that if left the policy rate unchanged at 5.5% as expected. “Committee agreed that interest rates may need to remain at a restrictive level for a more sustained period of time," the RBNZ said in its policy statement. NZD/USD came under bearish pressure and dropped below 0.5900.

After rising a few pips above 105.00 in the American session, USD/JPY fell sharply and lost more than 200 pips in a matter of minutes. This price action revived market chatter about a Bank of Japan intervention in the foreign exchange market. Japanese Finance Minister Shunichi Suzuki, however, said that he doesn’t want to “comment on whether Japan intervened in the FX market.” USD/JPY climbed back above 149.00 and stabilized there on Wednesday.

EUR/USD registered small losses on Tuesday but failed to stage a correction on Wednesday. At the time of press, the pair was trading within a touching distance of 1.0450. European Central Bank President Christine Lagarde will speak at the 2023 ECB Conference on Monetary Policy later in the day. Additionally, Eurostat will release August Retail Sales data.

GBP/USD rose a few pips above 1.2100 during the European session on Tuesday but lost its traction in the second half of the day. Early Wednesday, the pair trades modestly lower while holding slightly above 1.2050.

Pressured by surging US yields, Gold price closed the seventh consecutive day in negative territory on Tuesday. In the European morning, XAU/USD stays on the back foot below $1,820.

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