Forex Today: Market action slows down ahead of this week's key events
|Here is what you need to know on Tuesday, April 9:
Major currency pairs fluctuate in familiar ranges early Tuesday as investors move to sidelines while waiting for a fresh catalyst. The European Central Bank (ECB) will release the findings of the Bank Lending Survey in the European session. Later in the day, NFIB Business Optimism Index for March and RealClearMarkets/TIPP Economic Optimism Index for April will be featured in the US economic docket.
The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for March on Wednesday and the ECB will announce monetary policy decisions on Thursday.
The US Dollar (USD) Index edged slightly lower during the American trading hours on Monday and closed the day in negative territory. Wall Street's main indexes ended the day virtually unchanged and the benchmark 10-year US Treasury bond yield retreated toward 4.4% after reaching its highest level since November at 4.46%. In the European morning, the USD Index holds steady above 104.00 and US stock index futures trade mixed.
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 New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.24% | -0.26% | -0.20% | -0.50% | 0.12% | -0.56% | 0.15% | |
| EUR | 0.25% | 0.00% | 0.05% | -0.24% | 0.38% | -0.29% | 0.40% | |
| GBP | 0.25% | 0.02% | 0.06% | -0.24% | 0.38% | -0.30% | 0.41% | |
| CAD | 0.20% | -0.06% | -0.05% | -0.32% | 0.33% | -0.35% | 0.33% | |
| AUD | 0.53% | 0.28% | 0.27% | 0.32% | 0.65% | -0.02% | 0.66% | |
| JPY | -0.13% | -0.38% | -0.38% | -0.32% | -0.64% | -0.68% | 0.02% | |
| NZD | 0.55% | 0.30% | 0.27% | 0.35% | 0.05% | 0.67% | 0.68% | |
| CHF | -0.16% | -0.41% | -0.41% | -0.35% | -0.65% | -0.02% | -0.70% |
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).
NZD/USD registered modest gains on Monday and continued to stretch higher toward 0.6050 early Tuesday. In the Asian trading hours on Wednesday, the Reserve Bank of New Zealand is expected to leave the policy rate unchanged at 5.5%.
The data from Australia showed on Tuesday that the Westpac Consumer Confidence declined by 2.4% in April. AUD/USD showed no reaction to this data and was last seen moving sideways slightly above 0.6600.
Australian Dollar edges lower amid stable US Dollar, awaits US CPI.
USD/JPY trades within a few pips of a fresh multi-decade high near 152.00 in the early European session. Bank of Japan (BoJ) Governor Kazuao Ueda said on Tuesday that they could possibly further reduce monetary stimulus if trend inflation were to accelerate toward the 2% inflation target. These comments, however, failed to help the Japanese Yen find demand.
Japanese Yen struggles to lure buyers, remains vulnerable near multi-decade low.
EUR/USD edged higher on Monday before stabilizing slightly above 1.0850 early Tuesday.
GBP/USD posted marginal gains on Monday and went into a consolidation phase. The pair was last seen fluctuating in a narrow channel at around 1.2650.
Gold retreated after touching a new all-time high above $2,350 on Monday but ended up closing the day marginally higher. XAU/USD stays relatively quiet and moves up and down near $2,340 in the European morning.
Gold price consolidates its recent gains to all-time high, bullish potential seems intact.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
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