Forex News

News source: FXStreet
May 23, 13:10 HKT
Japanese Yen ticks upward, while US Dollar remains stable ahead of PMI release
  • The Japanese Yen edges higher ahead of the US PMI release on Thursday.
  • Japan's Manufacturing PMI climbed to 50.5 in May from April's 49.6, suggesting the first expansion since May 2023.
  • The US Dollar gained ground after the FOMC Minutes cast doubt on the Fed's willingness to proceed with rate cuts.

The Japanese Yen (JPY) shows a slight upward movement following the Bank of Japan (BoJ) announcing on Thursday that it left the Japanese government bonds (JGB) amounts unchanged compared to the previous operation. Over a month ago, the BoJ trimmed the amount of 5-10 years it bought in a scheduled operation.

The JPY avoided to cheer the Purchasing Managers Index (PMI) data from Japan that showed that private sector growth hit a nine-month high in May as manufacturing activity returned to expansion.

The US Dollar (USD) remains firm ahead of the US PMI data due on Thursday. However, the Greenback gained ground on Wednesday, with the release of minutes from the latest Federal Open Market Committee (FOMC) policy meeting on Wednesday.

Federal Reserve (Fed) policymakers have voiced worries regarding the slow progress on inflation, which has demonstrated greater persistence than initially anticipated at the beginning of 2024. Consequently, the Fed is cautious about moving forward with interest rate cuts.

Daily Digest Market Movers: Japanese Yen remains calm amid US PMI

  • Tensions are escalating following Lai Ching-te's assumption of office as Taiwan's new president. Chinese state media reports indicate that China has deployed numerous fighter jets and conducted simulated strikes in specific areas in the region, including actions from naval vessels.
  • Japan’s Manufacturing Purchasing Managers Index (PMI), released monthly by Jibun Bank and S&P Global, rose to 50.5 in May from April’s 49.6, surpassing market expectations of 49.7. This marks the first growth since May 2023. Meanwhile, the Services PMI fell to 53.6 from the previous 54.3, still indicating the fastest expansion in eight months.
  • On Wednesday, Japan's Merchandise Trade Balance showed that the trade deficit increased to ¥462.5 billion in April, swinging from the previous surplus of ¥387.0 billion. This outcome exceeded market expectations of a deficit of ¥339.5 billion. The deficit was mainly driven by the recent depreciation of the JPY, which led to an increase in the value of imports, outweighing gains from a rise in exports.
  • Japan’s 10-year government bond yield surpassed 1% on Wednesday for the first time since May 2013, fueled by traders' increasing bets that the Bank of Japan would tighten policy further in 2024
  • According to the CME FedWatch Tool, the probability of the Federal Reserve implementing a 25 basis-point rate cut in September has seen a slight downtick to 50.7%, compared to 51.6% a day ago.
  • Federal Reserve Bank of Boston President Susan Collins spoke at the event titled "Central Banking in the Post-Pandemic Financial System" on Tuesday. Collins stated that progress toward interest rate adjustment will take longer and emphasized that patience is the right policy for the Fed, per Reuters.

Technical Analysis: USD/JPY remains above the level of 156.50

The USD/JPY pair trades around 156.70 on Thursday. A rising wedge on a daily chart indicates a bearish turn as the price of the USD/JPY pair moves toward the wedge’s tip. However, the momentum indicator 14-day Relative Strength Index (RSI) is still positioned slightly above the 50 mark. A further decline would be considered as a momentum shift.

The USD/JPY pair could retest the upper boundary of the rising wedge near the psychological barrier at 157.00. A break above this level could propel the pair toward the recent high of 160.32.

On the downside, the lower threshold of the rising wedge would act as immediate support, followed by the 21-day Exponential Moving Average (EMA) at 155.49. A break below this level could exert downward pressure on the USD/JPY pair, potentially moving it toward the throwback support at 151.86.

USD/JPY: Daily Chart

Japanese Yen price today

The table below shows the percentage change of the Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Euro.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.02% -0.03% -0.07% -0.10% -0.04% -0.30% 0.00%
EUR -0.02%   -0.05% -0.07% -0.11% -0.05% -0.31% -0.03%
GBP 0.03% 0.05%   -0.01% -0.06% 0.01% -0.26% 0.02%
CAD 0.06% 0.07% 0.02%   -0.04% 0.03% -0.24% 0.04%
AUD 0.11% 0.11% 0.06% 0.02%   0.05% -0.21% 0.07%
JPY 0.03% 0.05% -0.03% -0.03% -0.09%   -0.28% 0.01%
NZD 0.30% 0.32% 0.27% 0.24% 0.20% 0.26%   0.30%
CHF 0.03% 0.03% -0.02% -0.04% -0.07% -0.01% -0.28%  

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).

Bank of Japan FAQs

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.

The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.

A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. Still, the Bank judges that the sustainable and stable achievement of the 2% target has not yet come in sight, so any sudden change in the current policy looks unlikely.

 

May 23, 14:08 HKT
EUR/USD remains above 1.0800 ahead of Eurozone PMI
  • EUR/USD holds its position ahead of the releases of PMI data from the Eurozone and Germany.
  • Eurozone Manufacturing Services PMIs are expected to tick upwards slightly in May.
  • FOMC Minutes suggested a hawkish sentiment surrounding the Fed policy stance.

EUR/USD treads water to halt its three-day losing streak, hovering around 1.0820 during the Asian session on Thursday. The Euro's appreciation against the US Dollar (USD) can be attributed to a corrective move for the latter. Investors are likely to await Purchasing Managers Index (PMI) data from both the Eurozone and Germany, with subsequent attention turning to the US PMI later in the North American session on Thursday.

Projections suggest that Eurozone Manufacturing PMI in May is anticipated to rise to 46.2 from 45.7, while the Services PMI is expected to show a slight uptick to 53.5 from 53.3. Meanwhile, in the United States (US), both Manufacturing and Services PMIs are expected to remain unchanged at 50.0 and 51.3, respectively.

The Euro could face challenges ahead as the European Central Bank (ECB) is expected to consider reducing borrowing costs in its June meeting. This anticipation stems from the current inflation rate in the Euro Area, which stands at 2.4%, very close to the ECB's target of 2.0%. President Christine Lagarde recently indicated a high probability of such action in June if data continues to support the confidence that inflation will eventually align with the ECB's target in the medium term.

On Wednesday, the US Dollar (USD) strengthened as the minutes from the latest Federal Open Market Committee (FOMC) policy meeting indicated hawkish sentiment surrounding the Federal Reserve (Fed) policy stance. Fed policymakers expressed concerns about the lack of progress on inflation, which has proven to be more persistent than expected at the start of 2024. As a result, the Fed is hesitant to proceed with interest rate cuts.

EUR/USD

Overview
Today last price 1.0825
Today Daily Change 0.0002
Today Daily Change % 0.02
Today daily open 1.0823
 
Trends
Daily SMA20 1.078
Daily SMA50 1.0778
Daily SMA100 1.0816
Daily SMA200 1.0788
 
Levels
Previous Daily High 1.0864
Previous Daily Low 1.0818
Previous Weekly High 1.0895
Previous Weekly Low 1.0766
Previous Monthly High 1.0885
Previous Monthly Low 1.0601
Daily Fibonacci 38.2% 1.0835
Daily Fibonacci 61.8% 1.0846
Daily Pivot Point S1 1.0806
Daily Pivot Point S2 1.0789
Daily Pivot Point S3 1.076
Daily Pivot Point R1 1.0852
Daily Pivot Point R2 1.0881
Daily Pivot Point R3 1.0898

 

 

May 23, 11:01 HKT
Australian Dollar remains firmer due to risk-on mood, US PMI eyed
  • The Australian Dollar appreciates ahead of US PMI data on Thursday.
  • Australia's Consumer inflation expectations dropped to 4.1% in May from 4.6% in April, hitting the lowest point since October 2021.
  • FOMC Minutes suggested a lack of progress on inflation, casting doubt on the Fed's willingness to proceed with rate cuts.

The Australian Dollar (AUD) halts its three-day losing streak on Thursday, possibly driven by the improved risk appetite. However, the Aussie Dollar came under pressure following the Consumer Inflation Expectation, released by the Melbourne Institute. Consumer expectations of future inflation over the next 12 months fell to 4.1% in May from 4.6% in April, marking the lowest level since October 2021.

Australian private sector activity remained expansionary for the fourth straight month in May. The preliminary Judo Bank Composite Purchasing Managers Index (PMI) decreased to 52.6 in May from April’s reading of 53.0, indicating a slight moderation in growth. The growth was mainly fueled by an expansion in the services sector, while the decline in manufacturing output slowed down.

The US Dollar (USD) remains strong following recent gains, as the minutes from the latest Federal Open Market Committee (FOMC) policy meeting were released on Wednesday. Federal Reserve (Fed) policymakers expressed concerns about the lack of progress on inflation, which has proven to be more persistent than expected at the start of 2024. As a result, the Fed is hesitant to proceed with interest rate cuts.

Daily Digest Market Movers: Australian Dollar inches higher due to risk-on mood

  • Tensions are escalating following Lai Ching-te's assumption of office as Taiwan's new president. Chinese state media reports indicate that China has deployed numerous fighter jets and conducted simulated strikes in specific areas in the region, including actions from naval vessels. Any geopolitical tension in the region may impact the Australian market as China and Australia are both close trade partners.
  • The Judo Bank Australia Services PMI was 53.1 in May, down from April’s reading of 53.6. This marks the fourth consecutive month of expansion, albeit at a slower yet still solid pace. The Manufacturing PMI remained unchanged at 49.6 in May, indicating that manufacturing conditions continued to deteriorate for the fourth consecutive month.
  • The ASX 200 Index moves below 7,800 on Thursday due to declines in mining and energy stocks following a significant drop in commodity prices. Additionally, Australian shares were influenced by a weak performance on Wall Street overnight after FOMC meeting minutes suggested concerns about the slow progress on inflation.
  • According to the CME FedWatch Tool, the probability of the Federal Reserve implementing a 25 basis-point rate cut in September has seen a slight downtick to 50.7%, compared to 51.6% a day ago.
  • Federal Reserve Bank of Boston President Susan Collins spoke at the event titled "Central Banking in the Post-Pandemic Financial System" on Tuesday. Collins stated that progress toward interest rate adjustment will take longer and emphasized that patience is the right policy for the Fed, per Reuters. Fed Governor Christopher Waller stated that he needs to see several more months of favorable inflation data before he would be comfortable supporting an easing in policy.
  • Minutes from the RBA meeting in May 2024 showed that the board considered raising rates but ultimately judged the case for maintaining a steady policy to be stronger. Policymakers agreed that it was challenging to either rule in or rule out future changes in the cash rate. They noted that the flow of data had increased the risk of inflation remaining above the target for an extended period.

Technical Analysis: Australian Dollar remains below a key level of 0.6650

The Australian Dollar trades around 0.6620 on Thursday. The Analysis of the daily chart indicates a weakening of a bullish bias as the AUD/USD pair has breached below the lower boundary of the rising wedge. Despite this, the 14-day Relative Strength Index (RSI) remains slightly above the 50 level. However, a further decline in this momentum indicator could confirm a bearish bias.

The psychological support level of 0.6600 is significant. A continued decline may increase pressure on the AUD/USD pair, potentially leading it toward the throwback support region at 0.6470.

Conversely, the nine-day Exponential Moving Average (EMA) at 0.6639 could pose immediate resistance, followed by the major level of 0.6650. Breaking above the lower boundary of the rising wedge could reinforce the prevailing bullish bias for the AUD/USD pair.

AUD/USD: Daily Chart

Australian Dollar price today

The table below shows the percentage change of the Australian Dollar (AUD) against listed major currencies today. The Australian Dollar was the strongest against the Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.05% -0.08% -0.09% -0.19% 0.03% -0.37% -0.09%
EUR 0.05%   -0.04% -0.02% -0.13% 0.09% -0.31% -0.05%
GBP 0.08% 0.04%   0.01% -0.10% 0.13% -0.28% -0.01%
CAD 0.08% 0.02% 0.00%   -0.09% 0.12% -0.29% -0.03%
AUD 0.19% 0.14% 0.10% 0.10%   0.22% -0.18% 0.09%
JPY -0.03% -0.08% -0.14% -0.11% -0.24%   -0.39% -0.14%
NZD 0.39% 0.31% 0.27% 0.29% 0.17% 0.39%   0.28%
CHF 0.10% 0.05% 0.01% 0.02% -0.09% 0.14% -0.27%  

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).

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.

 

May 23, 11:48 HKT
USD/INR weakens following Indian PMI data
  • Indian Rupee trades firmer on Thursday.
  • The first reading of India’s HSBC PMI was mixed in May.
  • Investors will closely monitor the preliminary US PMI data for May, which is due on Thursday. 

Indian Rupee (INR) recovers some lost ground on Thursday following the mixed Indian Purchasing Managers Index (PMI) reports. The nation’s HSBC Manufacturing PMI dropped to 58.4 in May from 58.5 in April, while the Services PMI figure improved to 61.4 in May from the previous reading of 60.8. Furthermore, the potential foreign exchange intervention from the Reserve Bank of India (RBI) might cap the INR’s weakness in the near term. 

However, the hawkish stance from the FOMC Minutes and the Federal Reserve (Fed) policymakers might boost the Greenback and create a tailwind for the pair. The foreign outflows ahead of India's upcoming election outcome might also weigh on the INR. Market players will keep an eye on the preliminary US S&P Global PMI on Thursday. In case the report shows a stronger-than-estimated reading, this might delay the timing of a rate cut cycle, underpinning the US Dollar (USD).  

Daily Digest Market Movers: Indian Rupee gathers strength despite the Fed’s hawkish stance

  • Food prices remain high in India and may keep inflation elevated, according to the Reserve Bank of India's (RBI) latest ‘State of the economy’ report.
  • Foreign investors sold Indian equities worth more than $3 billion in May, the biggest monthly outflow since January 2023.
  • The FOMC released the minutes of the April 30 - May 1 policy meeting on Wednesday, indicating that inflation in recent months had shown a lack of further progress toward the Fed’s 2% objective.”
  • The Fed policymakers are likely to keep its benchmark rate unchanged at least until September after their confidence in lowering price pressures was eroded by higher-than-expected inflation in the first three months of the year.
  • Financial markets continue to adjust their expectations for rate cuts this year, with nearly a 60% chance of the first reduction in September, according to the CME FedWatch tool. 

Technical analysis: USD/INR’s positive stance seems fragile on the daily chart

The Indian Rupee trades on a stronger note on the day. The USD/INR pair has formed the Head and Shoulders pattern since March 21. The bullish outlook of the pair seems vulnerable as the pair hovers around the key 100-day Exponential Moving Average (EMA) and the neckline on the daily chart. A cross below this level will resume its downtrend, with the 14-day Relative Strength Index (RSI) holding below the 50-midline.  

The 83.20–83.25 regions act as a crucial support level for USD/INR, portraying the confluence of the 100-day EMA and the neckline. A breach of this level will see a drop to the 83.00 psychological mark, followed by a low of January 15 at 82.78. 

On the bright side, the first upside target will emerge at the right shoulder of the Head and Shoulders pattern of 83.54 (high of May 13). A bullish breakout above the mentioned level would end up invalidating the chart pattern and see a rally to a high of April 17 at 83.72, en route to 84.00. 

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 .

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.42% -0.16% 0.53% 1.06% 0.63% 0.27% 0.62%
EUR -0.44%   -0.58% 0.10% 0.64% 0.21% -0.16% 0.19%
GBP 0.16% 0.57%   0.68% 1.21% 0.79% 0.43% 0.77%
CAD -0.53% -0.12% -0.67%   0.54% 0.11% -0.26% 0.09%
AUD -1.07% -0.65% -1.23% -0.54%   -0.43% -0.80% -0.45%
JPY -0.63% -0.18% -0.80% -0.09% 0.43%   -0.38% -0.02%
NZD -0.27% 0.15% -0.43% 0.26% 0.79% 0.35%   0.34%
CHF -0.63% -0.21% -0.78% -0.09% 0.45% 0.02% -0.35%  

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).

RBI FAQs

The role of the Reserve Bank of India (RBI), in its own words, is '..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

 

May 23, 09:29 HKT
Gold price extends the decline on Fed's hawkish stance
  • Gold price trades with a negative bias on Thursday. 
  • The hawkish stance of the FOMC minutes from last month's meeting might cap the precious metal’s upside. 
  • Investors will focus on the first reading of US PMI data for May, due on Thursday.  

Gold price (XAU/USD) attracts some sellers on Wednesday. The further upside of the yellow metal might be limited, as the FOMC minutes were interpreted as significantly more hawkish than previous releases. The cautious approach of the US Fed to hold its restrictive policy for longer boosts the Greenback broadly and exerts some selling pressure on the gold price. 

Gold traders will closely watch the preliminary reading of the US Manufacturing and Services Purchasing Managers Index (PMI) for May. A weaker reading might trigger hope for Fed rate cuts and support gold. Additionally, geopolitical tensions, uncertainties, and sticky inflation could support the precious metal and cap the downside in the near term. Apart from this, the Chicago Fed National Activity Index, weekly Initial Jobless Claims, New Home Sales, and Fed’s Bostic will be in focus. 

Daily Digest Market Movers: Gold price remains sensitive to the Fed’s hawkish remarks

  • The minutes from the recent policy meeting of the FOMC released Wednesday indicated that “participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective.”
  • The minutes further stated that “participants assessed that maintaining the current target range for the federal funds rate at this meeting was supported by data indicating continued solid economic growth.” 
  • Investors have priced in nearly a 60% chance of the first cut to happen in September and two reductions of a quarter percentage point before the end of the year, according to the CME FedWatch Tool.
  • The preliminary of US S&P Global Manufacturing and Service PMI is expected to remain unchanged at 50.0 and 51.3 in May, respectively. 
  • The People's Bank of China (PBoC) has been the largest buyer among its worldwide counterparts over the past year. Its addition of 225 tonnes to its gold reserves last year was the highest on record since at least 1977.

Technical Analysis: Gold price keeps the bullish picture on the daily chart, eyes are on a Bearish Divergence

Gold price trades softer on the day. The constructive view of the yellow metal remains intact as it is above the key 100-period Exponential Moving Average (EMA) on the daily timeframe. The 14-day Relative Strength Index (RSI) holds above the bullish zone near 56.10, supporting the buyers for the time being. Nonetheless, XAU/USD has formed a bearish divergence as the price has moved to an all-time high on May 20, but the RSI indicator has formed lower highs, suggesting the momentum is slowing and there will likely be a correction or consolidation in price in the near term.

The key resistance level for the precious metal will emerge near the the upper boundary of Bollinger Band and an all-time high of $2,450. A break above this level will expose the $2,500 psychological round mark. 

On the downside, a low of May 13 at $2,332 acts as an initial support level for gold. The additional downside filter to watch is the lower limit of the Bollinger Band at $2,270. A breach of the mentioned level will see a drop to the 100-period EMA of $2,216. 

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   0.43% -0.15% 0.54% 1.08% 0.60% 0.26% 0.63%
EUR -0.44%   -0.58% 0.14% 0.67% 0.19% -0.15% 0.21%
GBP 0.16% 0.57%   0.69% 1.23% 0.77% 0.44% 0.78%
CAD -0.55% -0.13% -0.68%   0.54% 0.06% -0.27% 0.08%
AUD -1.09% -0.67% -1.24% -0.55%   -0.48% -0.83% -0.46%
JPY -0.60% -0.19% -0.76% -0.07% 0.46%   -0.34% 0.01%
NZD -0.26% 0.15% -0.45% 0.28% 0.82% 0.34%   0.36%
CHF -0.66% -0.22% -0.80% -0.10% 0.45% -0.03% -0.38%  

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).

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

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