Forex Today: Market volatility wanes ahead of mid-tier data releases
Here is what you need to know on Tuesday, April 15:
The action in financial markets turns subdued early Tuesday as investors finally take a break following the previous week's wild fluctuations. Eurostat will publish February Industrial Production data later in the session. In the second half of the day, inflation data from Canada, Export Price Index and Import Price Index data from the US will be watched closely by investors.
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 | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | -1.05% | -0.46% | -0.01% | -1.20% | -1.60% | -0.40% | |
| EUR | -0.07% | -0.63% | -0.10% | 0.37% | -0.54% | -1.24% | -0.04% | |
| GBP | 1.05% | 0.63% | 0.93% | 0.99% | 0.09% | -0.61% | 0.60% | |
| JPY | 0.46% | 0.10% | -0.93% | 0.45% | -0.96% | -1.35% | 0.22% | |
| CAD | 0.01% | -0.37% | -0.99% | -0.45% | -1.15% | -1.59% | -0.46% | |
| AUD | 1.20% | 0.54% | -0.09% | 0.96% | 1.15% | -0.69% | 0.51% | |
| NZD | 1.60% | 1.24% | 0.61% | 1.35% | 1.59% | 0.69% | 1.24% | |
| CHF | 0.40% | 0.04% | -0.60% | -0.22% | 0.46% | -0.51% | -1.24% |
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 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).
The US Dollar (USD) Index moves up and down in a tight band below 100.00 after closing the day marginally lower on Monday. US President Donald Trump said late Monday that his administration will look at semiconductors and the whole electronics supply chain in the upcoming national security tariff investigations. Trump also noted that he expects to impose tariffs on imported pharmaceuticals in the "not-too-distant future." US stock index futures trade modestly higher in the European morning on Tuesday after Wall Street's main indexes gained between 0.6% and 0.8% on Monday.
Following the previous week's record-setting upsurge, Gold stays in a consolidation phase above $3,200 after closing little changed on Monday.
The Consumer Price Index (CPI) in Canada is forecast to rise 2.6% on a yearly basis in March, matching February's increase. USD/CAD stays relatively quiet and moves sideways above 1.3850 early Tuesday. On Wednesday, the Bank of Canada will announce monetary policy decisions.
USD/JPY lost about 0.3% on Monday and closed the third consecutive day in negative territory. The pair recovers toward 143.50 in the European morning on Tuesday. Japanese Finance Minister Shunichi Kato repeated on Tuesday that excessive volatility in financial markets would negatively affect economic and financial stability.
AUD/USD preserves its bullish momentum and trades in positive territory above 0.6350 early Tuesday. The Reserve Bank of Australia's (RBA) Minutes of its April monetary policy meeting showed that board members agreed the May meeting would be an opportune time to reconsider the policy outlook but noted that the decision was not predetermined.
EUR/USD holds steady at around 1.1350 in the early European session on Tuesday.
GBP/USD gained nearly 0.8% on Monday and continued to stretch higher early Tuesday. At the time of press, the pair was trading at its highest level since October above 1.3200. The UK's Office for National Statistics (ONS) reported early in the day that the ILO Unemployment Rate held steady at 4.4% in the three months to February, matching the market expectation. On Wednesday, the ONS will publish inflation data for March.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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