US Dollar Struggles as Risk Mood Improves
On Friday, October 18, the US Dollar (USD) faced challenges in maintaining its strength as the risk sentiment improved in the market. Key economic indicators and events are shaping the currency landscape, including Building Permits, Housing Starts data for September, and speeches by Federal Reserve (Fed) policymakers.
USD Index Performance
- The USD Index reached a new multi-month high above 103.80 before experiencing a slight decline, currently trading around 103.60.
US Dollar Price This Week
The table below illustrates the percentage change of the US Dollar (USD) against major currencies this week:
The heat map provides a visual representation of the percentage changes of major currencies against each other, offering insights into currency performance dynamics.
Gold Continues its Rally
Gold extended its weekly rally, gaining 0.7% on Thursday. XAU/USD reached a new all-time high above $2,710 before a minor pullback.
China Economic Data Highlights
China’s economic indicators for September showed positive changes, with GDP expanding at a rate of 4.6%, surpassing market expectations. Industrial Production and Retail Sales also exceeded estimates, contributing to a more optimistic economic outlook.
European Central Bank Policy Update
The ECB lowered key rates by 25 basis points during the October policy meeting. The decision aimed to address economic challenges, with a focus on maintaining a data-dependent approach to policy adjustments.
EUR/USD Performance Post-ECB
Following the ECB event, EUR/USD dropped to its lowest level since early August but rebounded slightly on Friday amid USD weakness, trading near 1.0850.
Other Currency Updates
- AUD/USD reversed its downward trend, rising nearly 0.5% on Thursday.
- GBP/USD registered gains after positive Retail Sales data from the UK.
- USD/JPY retreated below 150.00 as Japanese officials expressed concerns about FX movements.
Risk Sentiment FAQs
Understanding “risk-on” and “risk-off” market dynamics is crucial for investors navigating market trends and asset allocation strategies. Here are some key points to consider:
Key Takeaways:
- In a “risk-on” market, investors are optimistic and willing to take on more risk, favoring assets with higher growth potential.
- During “risk-off” periods, investors seek safety, opting for less volatile and more secure assets.
- Currencies and commodities exhibit distinct behaviors during different market sentiments, influenced by economic factors and investor preferences.