Next, what you need to know on Wednesday, May 7:
The US dollar (USD) struggles to stay resistant to its rivals while market attention focuses on the Federal Reserve Monetary Policy Ads (Fed) and the press conference of the President of the FED, Jerome Powell, later in the American session. During European negotiation hours, Eurostat will publish March retail sales.
US dollar price this week
The lower table shows the percentage of the US dollar change (USD) compared to the main currencies this week. American dollar was the weakest currency against Japanese and in Japanese.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.38% | -0.78% | -1.24% | -0.09% | -0.47% | -0.97% | -0.30% | |
| EUR | 0.38% | -0.13% | -0.62% | 0.55% | 0.18% | -0.32% | 0.34% | |
| GBP | 0.78% | 0.13% | -0.71% | 0.68% | 0.31% | -0.20% | 0.47% | |
| JPY | 1.24% | 0.62% | 0.71% | 1.19% | 0.80% | 0.37% | 1.08% | |
| CAD | 0.09% | -0.55% | -0.68% | -1.19% | -0.67% | -0.87% | -0.21% | |
| Aud | 0.47% | -0.18% | -0.31% | -0.80% | 0.67% | -0.50% | 0.17% | |
| NZD | 0.97% | 0.32% | 0.20% | -0.37% | 0.87% | 0.50% | 0.66% | |
| CHF | 0.30% | -0.34% | -0.47% | -1.08% | 0.21% | -0.17% | -0.66% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the US dollar of the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will represent the USD (base)/JPY (quotation).
The USD index, which tracks the USD yield in front of a basket of six main currencies, closed in negative territory for the third consecutive negotiation day on Tuesday. In Wednesday, the USD index fluctuates in a narrow channel below 99.50. Later in the day, it is widely expected that the Fed maintains the interest rate without changes in 4.25%-4.5%. Market participants will pay special attention to Powell’s comments about inflation and growth prospects. Meanwhile, the futures of the US stock market indices were seen by rising around 0.4% in the day, after the main Wall Street indices registered great losses on Tuesday. The US Treasury Undersecretary of the Treasury, Michael Faulkender, said Tuesday night that, despite the current market tensions and investors on the economic stability of the US, the demand for US Treasury Bonds and USD treasure bonds and the USD remains high.
During the Asian negotiation hours, the governor of the Popular Bank of China (PBOC), PAN GOSHENG, announced that they have decided to cut the reserve requirements ratio (RRR) and the policy rate in 50 basic points (PBS) and 10 PBS, respectively, after a meeting with the Chinese Stock Regulatory Commission and the National Financial Regulation Authority. AUD/USD He advanced to a new maximum of 2025 above 0.6500 after this development before retreating below this level in the European session.
Gold It was based on the impressive profits on Monday and rose almost 3% on Tuesday to touch a new two weeks above $ 3,430. The Xau/USD corrects downwards and listed below $ 3,400, losing more than 1% in the day. In addition to the growing geopolitical tensions in the Middle East, the Indian-Pakistan conflict helped the precious metal to rise abruptly in the first half of the week.
EUR/USD It benefited from the general weakness of the USD and rose almost 0.5% on Tuesday. The pair moves laterally above 1,1350 in the European session on Wednesday.
GBP/USD He acquired bullish impulse and rose above 1,3400 on Tuesday. The pair moves downward on Wednesday, but remains above 1,3350. The Bank of England will announce policy decisions on Thursday.
After losing almost 1% on Monday, USD/JPY He continued down and fell around another 1% on Tuesday. The torque stars in a rebound early on Wednesday and quotes about 143.00. In Thursday’s Asian session, the Bank of Japan will publish the minutes of the Monetary Policy meeting.
Fed Faqs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
