Forex Today: Market mood improves as focus shifts to ECB
Here is what you need to know on Thursday, April 17:
A positive shift is being observed in market sentiment early Thursday, with US stock index futures gaining about 1% to start the European session. The European Central Bank (ECB) will announce monetary policy decisions later in the day, and ECB President Christine Lagarde will speak on the outlook and respond to questions in a press conference. The US economic calendar will feature weekly Initial Jobless Claims and Housing Starts data for March.
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 | 0.01% | -1.10% | -0.88% | 0.21% | -0.86% | -1.39% | -0.15% | |
| EUR | -0.01% | -0.62% | -0.44% | 0.65% | -0.14% | -0.97% | 0.28% | |
| GBP | 1.10% | 0.62% | 0.57% | 1.27% | 0.49% | -0.34% | 0.91% | |
| JPY | 0.88% | 0.44% | -0.57% | 1.08% | -0.21% | -0.71% | 0.92% | |
| CAD | -0.21% | -0.65% | -1.27% | -1.08% | -1.03% | -1.59% | -0.43% | |
| AUD | 0.86% | 0.14% | -0.49% | 0.21% | 1.03% | -0.82% | 0.41% | |
| NZD | 1.39% | 0.97% | 0.34% | 0.71% | 1.59% | 0.82% | 1.28% | |
| CHF | 0.15% | -0.28% | -0.91% | -0.92% | 0.43% | -0.41% | -1.28% |
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).
Wall Street's main indexes suffered large losses on Wednesday on growing fears over a deepening trade conflict between China and the United States (US). During the early trading hours of the Asian session on Thursday, China’s Foreign Ministry said in a statement that they will pay no attention if the US were to continue to play the "tariff numbers game." Meanwhile, US President Donald Trump said negotiators had made “big progress” following a meeting with Japanese representatives in Washington about tariffs.
While speaking at the Economic Club of Chicago late Wednesday, Federal Reserve (Fed) Chairman Jerome Powell reiterated that the Fed is well-positioned to wait for greater clarity before considering any changes to the policy stance. "Our obligation is to keep longer-term inflation expectations well-anchored," Powell noted. After losing about 0.8% on Wednesday, the US Dollar (USD) Index stages a rebound and stays in positive territory above 99.50 on Thursday.
EUR/USD gained more than 1% on Wednesday and registered its highest daily close since February 2022 at 1.1400. The pair corrects lower in the European morning on Thursday and trades slightly above 1.1350. The ECB is widely expected to lower key rates by 25 basis points (bps) following the April policy meeting. Investors will scrutinize the statement language and President Lagarde's comments, given the uncertainty surrounding the inflation and growth outlook on the new US trade regime.
USD/CAD came under bearish pressure on Wednesday and closed the day deep in negative territory. The Bank of Canada (BoC) announced that it left the policy rate unchanged at 2.75%, as widely anticipated. In the policy statement, the BoC refrained from gibing forward guidance, citing the elevated uncertainty due to the impact of US tariffs. The pair holds its ground on Thursday and recovers toward 1.3900.
The data from Australia showed earlier in the day that the Unemployment Rate edged higher to 4.1% in March from 4% in February. In this period, Employment Change was +32.2, up sharply from the 57.5K decline recorded previously but below the market expectation for an increase of +40K. AUD/USD registered gains for the sixth consecutive day on Wednesday but reversed its direction during the Asian trading hours on Thursday. At the time of press, the pair was down 0.5% on the day at 0.6340.
GBP/USD closed marginally higher on Wednesday as the softer-than-expected inflation data from the UK limited Pound Sterling's strength. The pair stretches lower in the European session on Thursday but manages to hold above 1.3200.
Gold benefited from safe-haven demand on Wednesday and gained more than 3.5% on Wednesday. After touching a new all-time high above $3,350 in the Asian session on Thursday, XAU/USD entered a consolidation phase and retreated to the $3,330 area.
USD/JPY lost about 1% and slumped to its weakest level since September below 142.00. The pair gains traction on Thursday and trades above 142.50. Japan's Economy Minister Ryosei Akazawa said that officials agreed to hold a second meeting with the United States this month for the next round of trade negotiations. In the meantime, Bank of Japan Governor Kazuo Ueda repeated on Thursday that the central bank will raise the policy rate if the economic outlook is achieved.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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