Forex News
Federal Reserve (Fed) Governor Michelle Bowman said that “bringing inflation down remains a priority,” and that “CPI data suggests inflation pressures may persist.”
In remarks made at the Council on Foreign Relations, Bowman commented that economic growth has gained momentum, that the labour market has improved and does not add to inflation and that longer-term inflation expectations are “very well anchored.”
Key takeaways:
Persistent inflation, firming labor conditions suggest still work to do
Financial conditions have tightened, the Fed must weigh the costs of additional policy tightening.
Bringing inflation down remains a priority.
Core PCE likely rose 3.3% in October on energy prices, AI-related demand
As shocks unwind, forecast core PCE to move closer to 2% next year
Economic growth gained momentum this year
CPI data suggests inflation pressures may persist
Focused on financial stability risks if AI returns fall short
Labor market has improved, not tight, not adding to inflation
AI development increasingly backed by external funding
Longer-term inflation expectations are very well anchored.
Inflation expectations are an important data point, but they are not necessarily controlling how I think about things.
I would need to see AI and Middle East risks abate before I could be confident inflation will come down next year
The Fed is trying to gather data on AI debt counterparties
Open lines of communication with the Treasury are critically important
I don't think AI will rob the US economy of jobs
AI will make workers more productive, create new jobs, and eliminate less-necessary jobs
The Fed does ongoing cybersecurity examinations of banks, and has seen a great deal of focus on identifying and patching vulnerabilities
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.51% | 0.73% | 0.52% | 0.48% | 0.87% | 0.51% | 0.72% | |
| EUR | -0.51% | 0.21% | 0.02% | -0.03% | 0.35% | 0.01% | 0.21% | |
| GBP | -0.73% | -0.21% | -0.23% | -0.25% | 0.14% | -0.21% | 0.00% | |
| JPY | -0.52% | -0.02% | 0.23% | -0.03% | 0.35% | 0.00% | 0.20% | |
| CAD | -0.48% | 0.03% | 0.25% | 0.03% | 0.39% | 0.03% | 0.24% | |
| AUD | -0.87% | -0.35% | -0.14% | -0.35% | -0.39% | -0.35% | -0.14% | |
| NZD | -0.51% | -0.01% | 0.21% | -0.00% | -0.03% | 0.35% | 0.20% | |
| CHF | -0.72% | -0.21% | -0.00% | -0.20% | -0.24% | 0.14% | -0.20% |
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).
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.
The European Central Bank (ECB) Chief Economist Philip Lane said that “it would be a surprise if there are no second-round effects,” and that if energy prices edge lower, “headline inflation could fall while underlying inflation rises,” he said at the Bank of England and its Watchers Conference.
Lane added that the ECB puts a “very high premium on consensus” in the Governing Council, adding that he would put a “high bar on directional forward guidance now.”
Key takeaways:
We put a very high premium on consensus, would be difficult with dots
I would put a high bar on directional forward guidance now
Important that ECB has an instrument for multiple equilibriums on bond market
It's informative that underlying inflation hasn't moved yet, it means it's the usual delayed response
Underlying inflation is a guide to 1-year ahead inflation
Energy prices are already reversing; if that continues, headline inflation could fall while underlying inflation rises
It would be a surprise if there are no second-round effects
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.53% | 0.75% | 0.56% | 0.50% | 0.89% | 0.53% | 0.74% | |
| EUR | -0.53% | 0.21% | 0.02% | -0.02% | 0.36% | 0.02% | 0.21% | |
| GBP | -0.75% | -0.21% | -0.19% | -0.21% | 0.14% | -0.22% | -0.00% | |
| JPY | -0.56% | -0.02% | 0.19% | -0.04% | 0.34% | -0.02% | 0.19% | |
| CAD | -0.50% | 0.02% | 0.21% | 0.04% | 0.38% | 0.02% | 0.23% | |
| AUD | -0.89% | -0.36% | -0.14% | -0.34% | -0.38% | -0.36% | -0.15% | |
| NZD | -0.53% | -0.02% | 0.22% | 0.02% | -0.02% | 0.36% | 0.20% | |
| CHF | -0.74% | -0.21% | 0.00% | -0.19% | -0.23% | 0.15% | -0.20% |
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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Kansas City Federal Reserve (Fed) President Jeffrey Schmid said that “inflation is top of mind,” adding that current monetary policy is “fairly accommodative,” in hawkish comments delivered at a Conference in Houston, TX, hosted on Tuesday by the Dallas Fed and the Kansas City Fed.
Schmid added that there are “some concerning trends in prices, underneath the whole energy story.” He emphasized that the labor market is solid, as “hiring is pretty robust lately.”
Key highlights:
Some concerning trends in prices, underneath the whole energy story
US hiring pretty robust lately.
Fed benchmark rate fairly accommodative today
Could argue housing is going through an 'interesting dynamic’ but elsewhere can't find any restriction
Demand is strong, and rates not a cause for hesitation
Inflation is top of mind
instant payments will leap over digital asset structures
A lot of interesting data points between now and Fed's December meeting
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.53% | 0.73% | 0.57% | 0.48% | 0.89% | 0.54% | 0.73% | |
| EUR | -0.53% | 0.20% | 0.05% | -0.04% | 0.36% | 0.02% | 0.21% | |
| GBP | -0.73% | -0.20% | -0.17% | -0.23% | 0.16% | -0.19% | 0.00% | |
| JPY | -0.57% | -0.05% | 0.17% | -0.08% | 0.32% | -0.03% | 0.16% | |
| CAD | -0.48% | 0.04% | 0.23% | 0.08% | 0.40% | 0.05% | 0.24% | |
| AUD | -0.89% | -0.36% | -0.16% | -0.32% | -0.40% | -0.35% | -0.16% | |
| NZD | -0.54% | -0.02% | 0.19% | 0.03% | -0.05% | 0.35% | 0.18% | |
| CHF | -0.73% | -0.21% | -0.00% | -0.16% | -0.24% | 0.16% | -0.18% |
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).
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.
- USD/CHF reclaims 50-day SMA at 0.8227, extending its recovery.
- RSI crosses above neutral, reinforcing bullish momentum near 0.8250.
- Daily close above 0.8250 exposes 0.8300, followed by 0.8382.
The USD/CHF climbed on Tuesday during the North American session, up 0.74%, as hawkish comments by Federal Reserve (Fed) officials and a high US inflation report bolstered the US Dollar amid growing expectations of a Fed rate hike in December.
USD/CHF Price Forecast: Technical outlook
After falling to a nearly two-month low of 0.8127, the USD/CHF has recovered some ground. As of writing, the pair has cleared the 50-day Simple Moving Average (SMA) at 0.8227 and reached a high of 0.8270, but has retreated towards 0.8250, a nearly seven-day high.
The Relative Strength Index (RSI) cleared its 50-neutral level, as buyers gain momentum. This, along with a daily close above 0.8250, could cement the case for a recovery towards the 0.8300 level. Above this level, the next area of interest would be the year-to-date high of 0.8382, reached on October 1.
On the downside, the first support for USD/CHF is the 50-day SMA. Once cleared, the next stop is the low of the day at 0.8174, followed by the 100-day SMA at 0.8164. Below is the 0.8100 figure, ahead of the 200-day SMA lying at 0.8009.
USD/CHF Price Chart – Daily
Swiss Franc Price Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.53% | 0.73% | 0.57% | 0.48% | 0.90% | 0.54% | 0.72% | |
| EUR | -0.53% | 0.19% | 0.04% | -0.04% | 0.37% | 0.02% | 0.22% | |
| GBP | -0.73% | -0.19% | -0.17% | -0.23% | 0.17% | -0.19% | 0.00% | |
| JPY | -0.57% | -0.04% | 0.17% | -0.08% | 0.32% | -0.02% | 0.16% | |
| CAD | -0.48% | 0.04% | 0.23% | 0.08% | 0.40% | 0.05% | 0.24% | |
| AUD | -0.90% | -0.37% | -0.17% | -0.32% | -0.40% | -0.36% | -0.16% | |
| NZD | -0.54% | -0.02% | 0.19% | 0.02% | -0.05% | 0.36% | 0.18% | |
| CHF | -0.72% | -0.22% | -0.01% | -0.16% | -0.24% | 0.16% | -0.18% |
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 Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
The US Dollar (USD) has regained strong upside traction, retracing a big chunk of Monday’s pullback as investors have started to reprice another Federal Reserve rate hike in December, particularly following October inflation data.
The US Dollar Index (DXY) has regained the 102.00 barrier and beyond, refocusing on recent highs around 102.50. The usual MBA Mortgage Applications are due, along with a speech by Fed’s Bowman.
EUR/USD has resumed its decline, slipping back toward the 1.1170 region following marked gains in the US Dollar. The final Inflation Rate in Germany is due next, followed by speeches by the ECB’s Cipollone and Lagarde.
GBP/USD has set aside Monday’s rebound, trading with sharp losses and revisiting the 1.3350 zone. Next on tap across the Channel will be the RICS House Price Balance comes on Thursday, along with the preliminary Q3 GDP Growth Rate, flash quarterly Business Investment figures, Balance of Trade results, Construction Orders/Output, Industrial/Manufacturing Production and the NIESR Monthly GDP Tracker.
USD/JPY has advanced sharply past the 158.00 hurdle, testing the area of two-week tops. The Reuters Tankan Index comes next alongside Machine Tool Orders.
AUD/USD has plummeted to eight-month lows around 0.6850, fully fading Monday’s bullish attempt. The quarterly Home Loans data and Investment Lending for Homes are due next in Oz.
Front-month WTI futures (December contract) have further extended their pullback, this time briefly piercing the $84.00 mark per barrel for the first time since late August in response to cooling tensions in the Middle East.
Gold has dropped to two-day lows, threatening its key $4,000 level per troy ounce following the strong bid bias in the US Dollar, rising US Treasury yields across the curve and rising speculation of extra tightening by the Fed.
- Gold tumbles after retracing from a $4,146 daily high.
- US Core CPI rises 0.3% MoM, fueling expectations of further Fed tightening.
- US 10-year Treasury yields surge 12 basis points to 5.012%.
Gold (XAU/USD) tumbles during the North American session on Tuesday as Federal Reserve (Fed) officials were hawkish, expecting further tightening following the release of a red-hot inflation report in the United States (US). At the time of writing, XAU/USD trades at $4,021 after peaking near $4,146, down nearly 3%.
Bullion plunges nearly 3% on Fed hawkish rhetoric after stubborn US inflation data
US Consumer Price Index (CPI) in October rose by 0.4% MoM, down from 0.6% but exceeding forecasts of 0.3%. Core CPI, which excludes volatile items and is usually a clearer reading of inflation, expanded by 0.3% MoM, above forecasts of 0.2% and unchanged from September’s print, signaling that the disinflation process is stalling.
Earlier, Fed Governor Christopher Waller said that if core CPI showed an improvement in inflation, he would support a 25-basis-point hike. Nevertheless, if the reading came at 0.3%, he would go for a 50-basis-point increase, as he added: “Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take.”
Dallas Fed President Lorie Logan echoed some of Waller’s comments. She said that “more rapid rate hikes possibly needed this winter,” adding that the Fed is 50 basis points below a “modestly restrictive level.”
Money markets have fully priced in a 25-basis-point rate hike in December, while the odds of a 50-basis-point rate hike are at 10%, according to the CME FedWatch Tool.
Given the backdrop, Bullion prices collapsed as the US Dollar Index (DXY), which tracks the American currency’s value against six currencies, rose nearly 0.70% to 102.36. US Treasury yields, namely the 10-year T-note yield, soared 12 basis points to 5.012%, as investors grow confident that the Fed’s December rate hike is cooked.
Of note, Oil prices remain almost unchanged amid growing speculation that Washington and Tehran may agree to a ceasefire dealthat could end the conflict, which started by the end of February.
Ahead, the US economic docket will gain traction on Thursday, following the country's Veterans Day holiday, with traders eyeing jobless claims, housing data, and speeches by Fed officials.
XAU/USD technical outlook: Gold price sinks towards $4,000, further downside expected
Given the fundamental backdrop, Gold collapses to a four-day low of $4,015 with sellers eyeing a decisive break below the $4,000 psychological level. Momentum shifted bearishly, as indicated by the Relative Strength Index (RSI), suggesting further downside lies ahead.
For a bearish continuation, Gold must drop below $4,000. In that outcome, a potential move towards the November 4 daily low at $3,919 is likely, followed by the October 30 year-to-date low at $3,870.
On the other hand, if Gold buyers reclaim $4,050, the next area of interest is $4,100. A breach of the latter opens the door for a recovery, with the next key resistance area being the confluence of the 50- and 100-day Simple Moving Averages (SMAs), at $4,185 and $4,200, respectively.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- Silver slips as stronger-than-expected US inflation lifts the US Dollar and Treasury yields.
- Hawkish Fed comments strengthen expectations of further interest rate hikes.
- XAG/USD trades below its 21-day, 100-day and 200-day SMAs, keeping the bearish outlook intact.
Silver (XAG/USD) comes under heavy selling pressure on Tuesday as stronger-than-expected US inflation lifts the US Dollar (USD) and pushes US Treasury yields higher. At the time of writing, XAG/USD trades around $51.23, down 3.97% on the day.
The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but below September's 0.6% increase. Core CPI, which excludes food and energy, increased 0.3%, matching September's pace and exceeding the 0.2% expected.
Adding to the pressure, Dallas Fed President Lorie Logan said the Federal Reserve (Fed) needs “at least two more 25-basis-point (bps) rate increases” and that it “may be possible to move more rapidly this winter.” Before the release, Fed Governor Christopher Waller said a half-point rate hike may be needed in December if October core CPI comes in “around 0.3% or higher.”
According to the CME FedWatch Tool, traders now see an 89.2% chance of a 25-bps rate hike in December and a 10.8% probability of a larger 50-bps increase. Expectations of further Fed tightening remain a headwind for Silver, as higher interest rates raise the opportunity cost of holding non-yielding assets. Rising US Treasury yields and a stronger Greenback also make the precious metal less attractive to investors.
Technical analysis
On the daily chart, XAG/USD remains under a clear bearish bias as price holds below the 21-day, 100-day and 200-day simple moving averages (SMAs). The Relative Strength Index (RSI) near 38 keeps a weak tone, while the Moving Average Convergence Divergence (MACD) has turned marginally positive, hinting at a modest attempt to stabilize rather than a confirmed bullish reversal.
On the downside, immediate support is seen at the horizontal level near $50, followed by the year-to-date low of $48.62. A break below this level could open the door for deeper losses.
On the topside, initial resistance is aligned at the 21-day SMA around $54, followed by a horizontal barrier at $55. Beyond that, the 100-day SMA at $60.50 and the higher horizontal level at $65 precede the longer-term 200-day SMA near $68.60, which together define a broad overhead supply zone that would need to be reclaimed to ease the prevailing bearish pressure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.64% | 0.87% | 0.57% | 0.54% | 1.16% | 0.79% | 0.86% | |
| EUR | -0.64% | 0.22% | -0.05% | -0.09% | 0.51% | 0.15% | 0.22% | |
| GBP | -0.87% | -0.22% | -0.30% | -0.31% | 0.29% | -0.08% | -0.00% | |
| JPY | -0.57% | 0.05% | 0.30% | -0.04% | 0.57% | 0.20% | 0.28% | |
| CAD | -0.54% | 0.09% | 0.31% | 0.04% | 0.61% | 0.24% | 0.31% | |
| AUD | -1.16% | -0.51% | -0.29% | -0.57% | -0.61% | -0.37% | -0.29% | |
| NZD | -0.79% | -0.15% | 0.08% | -0.20% | -0.24% | 0.37% | 0.08% | |
| CHF | -0.86% | -0.22% | 0.00% | -0.28% | -0.31% | 0.29% | -0.08% |
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).
- USD/JPY climbs as stronger-than-expected US inflation lifts the US Dollar.
- Dallas Fed President Logan calls for at least two more rate hikes.
- The wide US-Japan yield gap continues to weigh on the Yen.
USD/JPY strengthens on Tuesday as stronger-than-expected US inflation and hawkish remarks from Federal Reserve (Fed) officials lift demand for the US Dollar (USD). At the time of writing, the pair trades around 158.76, up 0.55% on the day.
The US Consumer Price Index (CPI) rose 0.4% MoM in October, above the 0.3% forecast but down from 0.6% in September. Core CPI, which excludes food and energy, rose 0.3%, matching September’s pace and beating the 0.2% forecast. The Bureau of Labor Statistics (BLS) did not publish annual figures for October because of last year’s government shutdown.
The US Dollar Index (DXY) climbs 0.68% to around 102.38, while the benchmark 10-year US Treasury yield rises 12 basis points to reclaim 5.00%.
Dallas Fed President Lorie Logan said the Fed needs “at least two more 25-basis-point (bps) rate increases” and that it “may be possible to move more rapidly this winter.” She said the policy rate is at least 50 basis points below a modestly restrictive level and pointed to inflation pressures beyond wartime energy disruptions.
Before the release, Fed Governor Christopher Waller said a half-point rate hike may be needed in December if October core CPI comes in “around 0.3% or higher.” Traders now assign an 89.2% chance to a 25-bps hike and a 10.8% chance to a 50-bps hike, according to the CME FedWatch Tool.
Meanwhile, the Bank of Japan (BoJ) remains on a gradual rate-hiking path, with its policy rate at 1.25%. The 10-year Japanese government bond yield sits near 2.17%, roughly 283 basis points below its US counterpart. Higher US yields and a firmer US Dollar weigh on the Japanese Yen, while the prospect of further Fed hikes could keep the gap between US and Japanese interest rates wide.
With a light Japanese economic calendar for the rest of the week, USD/JPY traders will focus on remarks from Fed officials and producer price data from Japan on Thursday and the US on Friday.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.63% | 0.88% | 0.56% | 0.52% | 1.11% | 0.75% | 0.88% | |
| EUR | -0.63% | 0.23% | -0.09% | -0.10% | 0.47% | 0.12% | 0.24% | |
| GBP | -0.88% | -0.23% | -0.34% | -0.33% | 0.24% | -0.12% | 0.00% | |
| JPY | -0.56% | 0.09% | 0.34% | -0.02% | 0.56% | 0.19% | 0.32% | |
| CAD | -0.52% | 0.10% | 0.33% | 0.02% | 0.58% | 0.21% | 0.34% | |
| AUD | -1.11% | -0.47% | -0.24% | -0.56% | -0.58% | -0.36% | -0.24% | |
| NZD | -0.75% | -0.12% | 0.12% | -0.19% | -0.21% | 0.36% | 0.13% | |
| CHF | -0.88% | -0.24% | -0.01% | -0.32% | -0.34% | 0.24% | -0.13% |
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).
Dallas Federal Reserve (Fed) President Lorie Logan said on Tuesday the Fed will need at least two additional 25-basis-point rate hikes, adding that the Fed is 50 basis points below a “modestly restrictive level.”
In remarks at the 11th joint energy conference hosted by the Federal Reserve banks of Dallas and Kansas City, Logan said that “more rapid rate hikes possibly needed this winter,” and that adjusting policy gradually can reduce the risks that economic activity could deteriorate sharply. She stated that after two rate increases, “it would make sense to pause” to assess what further action might be needed.
Key highlights:
It is clear that Fed needs at least two more quarter-percentage-point rate increases
More rapid rate hikes possibly needed this winter
It may be possible to raise interest rates more rapidly this winter than the US central bank has moved so far
Adjusting policy gradually can reduce the risk that economic activity deteriorates more sharply than necessary
Important to promptly achieve balance in outlook, risks for inflation and employment
Higher bond-market rates signal monetary policy has work to do, not an independent tailwind for activity
After two more rate hikes, it would make sense to pause and assess what further action may be appropriate
Fed policy rate is at least 50 basis points below a modestly restrictive level
Wartime energy disruptions not the only source of price pressures
Accommodative policy is adding to inflationary pressures; the real Fed funds rate is 78 basis points, data suggest
Concerned that higher-than-expected consumer price index means personal consumption expenditures inflation could rise
Labor market is balanced and even tightening a bit
Inflation is trending meaningfully higher than the 2% goal
Economic growth is strong, consumer spending solid, business spending robust
Price pressures are also broader than tariffs, and the broad trend is likely to persist
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.60% | 0.81% | 0.52% | 0.61% | 1.04% | 0.72% | 0.86% | |
| EUR | -0.60% | 0.20% | -0.07% | 0.02% | 0.44% | 0.13% | 0.26% | |
| GBP | -0.81% | -0.20% | -0.28% | -0.18% | 0.23% | -0.08% | 0.05% | |
| JPY | -0.52% | 0.07% | 0.28% | 0.09% | 0.51% | 0.19% | 0.32% | |
| CAD | -0.61% | -0.02% | 0.18% | -0.09% | 0.42% | 0.10% | 0.24% | |
| AUD | -1.04% | -0.44% | -0.23% | -0.51% | -0.42% | -0.31% | -0.19% | |
| NZD | -0.72% | -0.13% | 0.08% | -0.19% | -0.10% | 0.31% | 0.14% | |
| CHF | -0.86% | -0.26% | -0.05% | -0.32% | -0.24% | 0.19% | -0.14% |
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).
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.
In an interview with Bloomberg TV, Bundesbank President Joachim Nagel, also a member of the European Central Bank (ECB) Governing Council, said that “it is rather obvious that we have to increase in December,” cementing the case for a rate hike next month.
Nagel added that the drop in energy prices following the US midterm elections is good news. He stated that market expectations do not drive their decisions at the central bank, but stressed that “we’ll do what’s needed to return inflation to 2%.
Key highlights:
It is rather obvious that we have to increase in December
Drop in energy prices since US midterms is good news
Market expectations important but not driving factor
I don't see a risk of fiscal dominance
We'll do what's needed to return inflation to 2%
France must look at its fiscal challenges
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.49% | 0.46% | 0.38% | 0.75% | 0.48% | 0.56% | |
| EUR | -0.37% | 0.10% | 0.05% | 0.01% | 0.36% | 0.11% | 0.18% | |
| GBP | -0.49% | -0.10% | -0.06% | -0.09% | 0.26% | -0.01% | 0.08% | |
| JPY | -0.46% | -0.05% | 0.06% | -0.04% | 0.32% | 0.04% | 0.13% | |
| CAD | -0.38% | -0.01% | 0.09% | 0.04% | 0.36% | 0.08% | 0.17% | |
| AUD | -0.75% | -0.36% | -0.26% | -0.32% | -0.36% | -0.27% | -0.19% | |
| NZD | -0.48% | -0.11% | 0.01% | -0.04% | -0.08% | 0.27% | 0.09% | |
| CHF | -0.56% | -0.18% | -0.08% | -0.13% | -0.17% | 0.19% | -0.09% |
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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Forex Market News
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