Key Insights on the Financial Markets for September 16
Overview of the US Dollar Performance
The US Dollar (USD) is facing challenges against major rivals as central bank announcements and macroeconomic data releases loom. The European Central Bank (ECB) will provide updates on Labor Cost data, Eurostat will publish Trade Balance figures, and the US will feature NY Empire State Manufacturing Index data on Monday.
- Expectations of a significant Federal Reserve (Fed) rate cut have put pressure on the USD.
- USD Index is down 0.3% below 101.00, with US stock index futures slightly lower and the 10-year Treasury bond yield above 3.6%.
US Dollar Price Changes Against Major Currencies
The table below shows the percentage changes of the US Dollar (USD) against major currencies over the last 7 days, with the USD being weakest against the Japanese Yen.
EUR/USD and GBP/USD Trends
- EUR/USD closed the previous week unchanged and is trading slightly above 1.1100.
- GBP/USD failed to sustain gains but is trading above 1.3150 in the European session.
Gold and USD/JPY Movements
- Gold (XAU/USD) is reaching record highs, trading around $2,590.
- USD/JPY remains bearish, trading below 140 and at its weakest level since July 2023.
Market Update on AUD/USD
AUD/USD gained momentum from USD weakness, climbing above 0.6700. Australia will release August employment data early Thursday.
Insights on Central Banks
Central banks play a vital role in maintaining price stability by managing inflation and deflation. Here are some FAQs:
- Central banks adjust policy rates to control inflation and stimulate or cool down economies.
- Central bank members have varying stances, with ‘doves’ favoring loose monetary policy and ‘hawks’ leaning towards tighter control.
- Chairmen lead policy meetings, aiming for consensus and communicating monetary policy effectively to the markets.