Forex Today: US Dollar consolidates gains near multi-month highs, eyes on Fedspeak
|Here is what you need to know on Thursday, September 7:
The US Dollar capitalized on upbeat US data midweek, with the USD (DXY) touching its highest level since mid-March above 105.00. Early Thursday, DXY consolidates its gains as investors await weekly Initial Jobless Claims data and a revision to the second-quarter Unit Labor Costs print. Market participants will also pay close attention to comments from Federal Reserve (Fed) policymakers.
The ISM Services PMI report showed on Wednesday that the business activity in the US service sector continued to expand at an accelerating pace in August. Underlying details survey showed that employment in the sector grew at a healthy pace, while input price pressures gathered strength. The benchmark 10-year US Treasury bond yield climbed to 4.3% and provided a boost to the USD after this data as investors reassessed the possibility of the Fed raising the policy rate one more time before the end of the year.
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 | 0.59% | 0.93% | 0.34% | 1.02% | 0.95% | 0.95% | 0.73% | |
| EUR | -0.57% | 0.36% | -0.23% | 0.47% | 0.39% | 0.38% | 0.15% | |
| GBP | -0.93% | -0.34% | -0.59% | 0.11% | 0.03% | 0.03% | -0.20% | |
| CAD | -0.34% | 0.25% | 0.60% | 0.69% | 0.61% | 0.61% | 0.40% | |
| AUD | -1.02% | -0.42% | -0.07% | -0.67% | -0.06% | -0.08% | -0.28% | |
| JPY | -0.95% | -0.37% | 0.00% | -0.64% | 0.08% | -0.01% | -0.21% | |
| NZD | -0.99% | -0.34% | 0.00% | -0.63% | 0.08% | -0.02% | -0.20% | |
| CHF | -0.70% | -0.13% | 0.22% | -0.38% | 0.32% | 0.23% | 0.24% |
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).
EUR/USD came within a touching distance of 1.0700 for the second day in a row on Wednesday but managed to find support. The pair was last seen moving sideways slightly above that level. Eurostat will release revisions to second-quarter Employment Changed and Gross Domestic Product (GDP) data later in the session.
GBP/USD dropped to its lowest level since June 12 below 1.2500 on Wednesday. Although the pair recovered modestly toward the end of the day, it failed to stabilize above that level in the Asian session on Thursday. In addition to the broad-based USD strength, cautious comments from Bank of England officials caused the pair to stay under bearish pressure. While testifying before the UK Treasury Select Committee, Bank of England Governor Andrew Bailey noted that many indicators are pointing to a fall in inflation and added that they were "much nearer of peak rates." Additionally, BoE policymaker Swati Dhingra noted that the BoE's policy was already "sufficiently restrictive."
The data from China showed in the Asian session that the trade surplus narrowed to $68.36 billion in August from $80.6 billion. In the meantime, Australia's Exports declined 2% in July, while Imports rose 3%. Following Wednesday's indecisive action, AUD/USD continues to move sideways at around 0.6400 early Thursday. Outgoing Reserve Bank of Australia (RBA) Governor Philip Lowe reiterated that a tighter monetary policy would be required if inflation became sticky.
USD/CAD advanced to its highest level since March above 1.3670 but retreated below 1.3650 on Thursday. The Bank of Canada (BoC) announced on Wednesday that it left the policy rate unchanged at 5% as widely expected. BoC Governor Tiff Macklem will deliver the Economic Progress Report later in the day.
USD/JPY lost its bullish momentum and went into a consolidation phase at around 147.50. "Further tweak to YCC cannot be ruled out as option if inflation expectations heighten more, but this is not an imminent issue now," Bank of Japan (BoJ) board member Junko Nakagawa said on Thursday.
Gold price registered losses for the fifth straight day on Friday and dropped below $1,920 for the first time in September. With 10-year US yield holding steady early Thursday, XAU/USD trades in a tight channel slightly below $1,920.
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