Forex Today: CAD and MXN under pressure, USD recovers modestly ahead of FOMC Minutes
Here is what you need to know on Tuesday, November 26:
Following the bearish action seen at the beginning of the week, the US Dollar (USD) recovers modestly early Tuesday. The US economic calendar will feature Housing Price Index for September, New Home Sales data for October and the Conference Board's Consumer Confidence Index for November. Later in the day, the Federal Reserve will release the minutes of the November policy meeting.
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.53% | -0.13% | -0.05% | 1.08% | 0.28% | 0.28% | -0.49% | |
| EUR | 0.53% | 0.23% | -0.11% | 1.02% | 0.74% | 0.23% | -0.54% | |
| GBP | 0.13% | -0.23% | -0.35% | 0.80% | 0.49% | 0.00% | -0.77% | |
| JPY | 0.05% | 0.11% | 0.35% | 1.13% | 0.77% | 0.40% | -0.25% | |
| CAD | -1.08% | -1.02% | -0.80% | -1.13% | -0.64% | -0.78% | -1.57% | |
| AUD | -0.28% | -0.74% | -0.49% | -0.77% | 0.64% | -0.50% | -1.27% | |
| NZD | -0.28% | -0.23% | -0.00% | -0.40% | 0.78% | 0.50% | -0.77% | |
| CHF | 0.49% | 0.54% | 0.77% | 0.25% | 1.57% | 1.27% | 0.77% |
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).
News of Donald Trump nominating fund manager Scott Bessent as the US Treasury Secretary triggered a USD selloff early Monday. Later in the day, reports of Israel and Lebanon closing in on a ceasefire agreement boosted risk sentiment, putting additional weight on the USD. However, markets seem to have adopted a cautious stance on Tuesday after Trump said he would impose a 25% tax on all products entering the country from Canada and Mexico and an additional 10% tariff on goods from China as one of his first executive orders. At the time of press, the USD Index was in positive territory above 107.00 and US stock index futures were trading flat.
EUR/USD benefited from the selling pressure surrounding the USD on Monday and registered daily gains. The pair struggles to find a foothold in the European morning on Tuesday and trades below 1.0500.
Gold came under heavy pressure amid easing geopolitical tensions on Monday and lost over 3%. XAU/USD consolidates its losses above $2,600 early Tuesday.
After rising above 1.2600, GBP/USD lost its bullish momentum and ended the first day of the week little changed. The pair continues to edge lower to begin the European session and was last seen trading at around 1.2550.
USD/CAD shot higher on Trump's tariff remarks and reached its highest level since April 2020 above 1.4150. The pair stages a downward correction and trades near 1.4100 in the European morning. Similarly, the Mexican Peso stays under pressure against the USD on Tuesday, with USD/MXN rising more than 1% on the day at 20.5875.
USD/JPY registered small losses on Monday. The pair stays relatively quiet on Tuesday and fluctuates in a narrow band at around 154.00.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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