Here is what you need to know on Friday, February 21:
The action in financial markets quiets down on Friday as investors await preliminary February Manufacturing and Services Purchasing Managers' Index (PMI) data from Germany, the Eurozone, the UK and the US. In the second half of the day, the US economic calendar will also feature Existing Home Sales data for January and several Federal Reserve (Fed) policymakers will be delivering speeches heading into the weekend.
Following a two-day recovery, the US Dollar (USD) Index came under renewed bearish pressure during the American trading hours on Thursday and dropped to its lowest level in over two months near 106.30. The data from the US showed that the weekly Initial Jobless Claims rose to 219,000 from 214,000. Meanwhile, the benchmark 10-year US Treasury bond yield dropped below 4.5%, putting additional weight on the USD's shoulders. Early Friday, the index stays in a consolidation phase at around 106.50.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.68% | -1.17% | 0.00% | -0.61% | -0.68% | -0.08% | |
| EUR | 0.01% | -0.52% | -1.20% | 0.11% | -0.52% | -0.58% | 0.03% | |
| GBP | 0.68% | 0.52% | -0.59% | 0.63% | 0.05% | -0.06% | 0.55% | |
| JPY | 1.17% | 1.20% | 0.59% | 1.18% | 0.60% | 0.71% | 1.07% | |
| CAD | -0.00% | -0.11% | -0.63% | -1.18% | -0.59% | -0.69% | -0.09% | |
| AUD | 0.61% | 0.52% | -0.05% | -0.60% | 0.59% | -0.06% | 0.55% | |
| NZD | 0.68% | 0.58% | 0.06% | -0.71% | 0.69% | 0.06% | 0.61% | |
| CHF | 0.08% | -0.03% | -0.55% | -1.07% | 0.09% | -0.55% | -0.61% |
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).
In the early trading hours of the Asian session, the data from Japan showed that the National Consumer Price Index (CPI) in Japan increased by 4% on a yearly basis in January, up from 3.6% in December. Commenting on the policy outlook, "more interest rate hikes could come into sight if the price outlook continues to improve, and there might be some unpredictable impact on the economy," Bank of Japan (BoJ) Governor Kazuo Ueda said on Friday. After losing more than 1% on Thursday, USD/JPY stages a rebound on Friday and was last seen rising about 0.6% on the day at 150.50.
Jibun Bank Composite PMI in Australia edged higher to 51.2 in January from 51.1, suggesting that the private sector's economic activity continued to expand at a modest pace. In the meantime, Reserve Bank of Australia Governor Michele Bullock said that they will remain cautious about the prospects for further policy easing. After reaching its highest level since early December above 0.6400, AUD/USD corrects lower toward 0.6380 in the early European session.
The UK's Office for National Statistics (ONS) reported on Friday that Retail Sales in the UK rose by 1.7% on a monthly basis in January. This reading followed the 0.6% decrease recorded in December and beat the market expectation of 0.3% by a wide margin. GBP/USD holds its ground in the European morning and trades at a fresh two-month high above 1.2670.
EUR/USD benefited from the broad-based USD weakness and rose more than 0.7% on Thursday. The pair fluctuates in a narrow band at around 1.0500 early Friday.
Gold reached yet another record-high above $2,950 on Thursday but struggled to preserve its bullish momentum. In the European morning, XAU/USD trades in negative territory near $2,930.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Recovery needs a stronger catalyst
Despite the US Dollar’s firm performance, AUD/USD managed to shake off four consecutive daily declines and retest the 0.6300 barrier, buoyed by widespread risk-on sentiment fuelled by Trump’s tariff headlines.
EUR/USD does not rule out extra declines
EUR/USD traded on the defensive in response to the continuation of the buying interest around the Greenback, dropping to three-week lows in the sub-1.0800 region.
Gold nears $3,000 amid tariffs’ optimism
The intense march north in the Greenback, in combination with the marked rebound in US yields across the curve are prompting Gold prices to recede to the proximity of the critical $3,000 mark per troy ounce.
Crypto Today: Trump’s tariff updates sparks Bitcoin rally, as AVAX, SOL, Chainlink lead altcoin gains
The US Fed decision to maintain rates unchanged last week ignited risk-on appetite across global risk assets markets. This saw demand for the US weaken 4% from its January peaks, according to Bloomberg.
Seven Fundamentals for the Week: Tariff news, fresh surveys, the Fed's preferred inflation gauge are eyed Premium
Reports and rumors ahead of Trump’s reciprocal tariffs announcement next week will continue moving markets. Business and consumer surveys will try to gauge where the US economy is heading. Core PCE, the Fed's preferred inflation gauge, is eyed late in the week.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.