US Dollar (USD) Struggles to Preserve Strength as Markets Await CPI Data – September 10 Update
On Tuesday, the US Dollar (USD) is facing challenges in maintaining its recent strength after a 0.4% gain on Monday. The USD Index is holding steady above 101.50, while the 10-year US Treasury bond yield hovers around 3.7%. The NFIB Business Optimism Index for August is the only US economic data on today’s agenda, with the highly-anticipated Consumer Price Index (CPI) readings set for release on Wednesday.
Meanwhile, the Asian session saw China’s trade surplus widen to $91.02 billion in August, with exports up 8.7% and imports growing by 0.5%. The AUD/USD pair showed little reaction to these figures, trading slightly higher near 0.6670.
In the UK, the Office for National Statistics reported a drop in the ILO Unemployment Rate to 4.1% in the three months to July, along with a rise in Employment Change to 265K. The GBP/USD pair recovered from multi-week lows near 1.3050 to approach the 1.3100 level following the release of this data.
In Germany, the CPI for August matched expectations by rising 1.9% year-on-year. After two consecutive negative sessions, the EUR/USD pair is holding steady around 1.1050 in European trading today.
USD/JPY managed to break its four-day losing streak on Monday, gaining momentum and trading near 143.50 early Tuesday. Gold prices also saw an uptick, closing above $2,500 on Monday amid lower US yields.
For more insights on risk sentiment in financial markets, check out these FAQs:
Risk Sentiment FAQs
What is “risk-on” and “risk-off” in financial markets?
In a “risk-on” market, investors are optimistic and willing to buy risky assets, while in a “risk-off” market, they tend to play it safe by investing in less risky assets.
How do markets react during “risk-on” and “risk-off” periods?
During “risk-on” periods, stock markets and most commodities rise, while in “risk-off” environments, bonds and safe-haven currencies like JPY, CHF, and USD tend to strengthen.
Which currencies benefit from “risk-on” sentiment?
Currencies like AUD, CAD, NZD, RUB, and ZAR tend to rise during “risk-on” periods due to increased demand for commodities, which are key exports for these economies.
Which currencies thrive in “risk-off” conditions?
During “risk-off” periods, USD, JPY, and CHF typically see gains as investors seek safety in US government debt, Japanese government bonds, and Swiss banking laws.