Forex Today: Dollar retreats, as markets cheer China optimism ahead of US data

  • Friday, 15 September 2023 | 7:24 AM GMT

Here is what you need to know on Friday, September 15:

In the lead-up to the European trading session, the market exhibits a risk-on sentiment, mirroring the upward momentum witnessed in Asian markets following a robust performance on Wall Street. The successful IPO of Arm has bolstered confidence in the US capital markets, further enhancing overall market sentiment. Traders are also expressing optimism due to China’s proactive policy support measures and the release of robust business activity data, capping off the trading week on a positive note. Notably, the US S&P 500 futures have registered a gain of nearly 0.20% for the day.

The People’s Bank of China (PBOC) has taken proactive steps by reducing the bank’s Reserve Requirement Ratio (RRR) and adjusting the 14-day Reverse Repo rate in an effort to stimulate the somewhat sluggish economic recovery. Additionally, China has reported better-than-anticipated growth in Retail Sales and Industrial Production figures for the month of August.

The US Dollar (USD) has pulled back from its recent peak of 105.43 against major currency counterparts, as diminishing risk aversion diminishes its attractiveness as a safe-haven asset. Concurrently, US Treasury bond yields are in a period of upward consolidation, as they await the release of new US economic data for potential catalysts. In the upcoming US economic calendar, we can anticipate the release of mid-tier data on Industrial Production and high-impact reports on UoM preliminary Consumer Sentiment and Inflation Expectations.

US Dollar price today:

The following table illustrates the day’s percentage fluctuations in the US Dollar (USD) relative to major listed currencies. Notably, the US Dollar exhibited its greatest weakness in comparison to the Australian Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD -0.25%-0.24%-0.09%-0.57%0.03%-0.53%-0.14%
EUR0.26% 0.01%0.16%-0.34%0.28%-0.30%0.15%
GBP0.22%-0.04% 0.13%-0.37%0.28%-0.33%0.12%
CAD0.08%-0.18%-0.15% -0.50%0.11%-0.46%-0.01%
AUD0.57%0.32%0.35%0.49% 0.63%0.04%0.48%
JPY-0.04%-0.30%-0.28%-0.15%-0.61% -0.60%-0.17%
NZD0.53%0.27%0.30%0.43%-0.05%0.58% 0.41%
CHF0.12%-0.15%-0.12%0.01%-0.45%0.17%-0.42% 

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).

AUD/USD is continuing its upward momentum towards the 0.6500 level, driven by robust Chinese economic data and supportive policy measures. Meanwhile, USD/CAD is facing resistance near 1.3500 due to a pause in the recent oil price surge and a broader decline in the US Dollar. Notably, WTI crude oil is trading close to its multi-month high of $90.56 at the time of this report.

USD/JPY is maintaining its position around 147.50, remaining within the weekly trading range as investors await upcoming monetary policy decisions from both the Federal Reserve and the Bank of Japan.

EUR/USD is extending its rebound from the six-month lows reached at 1.0633 last Thursday. The European Central Bank (ECB) raised key interest rates by 25 basis points (bps) but hinted that this might be the last hike, given downward revisions to the central bank’s growth and inflation forecasts.

GBP/USD is holding firm above the 1.2400 level, buoyed by an improved market sentiment that is favoring the higher-yielding Pound Sterling.

The price of gold is distancing itself from multi-week lows and aims to reclaim the critical resistance level at $1,920.

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