Here’s what you need to know on Monday, September 16:
He United States Dollar (USD) The US economy is struggling to hold its own against its main rivals at the start of the week, which will feature monetary policy announcements from major central banks and key macroeconomic data releases. The European Central Bank (ECB) will publish a revised second quarter Labour Cost data and Eurostat will publish the July Trade Balance figures on Monday. Later in the day, the US economic calendar will feature data from the New York Empire State Manufacturing Index for September.
Rising expectations of a large rate cut by the Federal Reserve (Fed) at this week’s monetary policy meeting caused the USD to come under selling pressure in the second half of the previous week. The USD Index remains on the defensive in the European morning and was last seen losing 0.3% on the day below 101.00. Meanwhile, US stock index futures are trading slightly lower on the day with the US 10-year Treasury bond yield holding slightly above 3.6%.
US Dollar PRICE Last 7 days
The table below shows the percentage change of the US Dollar (USD) against major currencies over the past 7 days. The US Dollar was the weakest currency against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.27% | -1.76% | 0.10% | -0.82% | -0.07% | 0.05% | |
| EUR | 0.23% | -0.09% | -1.48% | 0.38% | -0.64% | 0.18% | 0.26% | |
| GBP | 0.27% | 0.09% | -1.51% | 0.43% | -0.55% | 0.25% | 0.35% | |
| JPY | 1.76% | 1.48% | 1.51% | 1.91% | 0.99% | 1.72% | 2.05% | |
| CAD | -0.10% | -0.38% | -0.43% | -1.91% | -0.88% | -0.19% | 0.11% | |
| AUD | 0.82% | 0.64% | 0.55% | -0.99% | 0.88% | 0.80% | 0.88% | |
| NZD | 0.07% | -0.18% | -0.25% | -1.72% | 0.19% | -0.80% | 0.11% | |
| CHF | -0.05% | -0.26% | -0.35% | -2.05% | -0.11% | -0.88% | -0.11% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the chart will represent the USD (base)/JPY (quote).
EUR/USD closed the previous week virtually unchanged. The pair is trading modestly higher on the day, a few pips above 1.1100 on Monday morning.
GBP/USD failed to build on Thursday’s gains and ended the last day of the previous week flat. The pair gained traction in the early European session and traded above 1.3150.
Gold continues to climb after posting impressive gains on Thursday and Friday. XAU/USD was last seen trading at a new all-time high around $2,590.
USD/JPY remains under bearish pressure to start the week and is trading at its lowest level since July 2023 below 140. The Bank of Japan will announce monetary policy decisions in the Asian session on Friday.
After posting small losses on Friday, the AUD/USD benefited from the broad-based selling pressure around the US Dollar and rose above 0.6700. Australian August employment data is due out early on Thursday.
Central Banks FAQs
Central banks have a key mandate which is to ensure price stability in a country or region. Economies constantly face inflation or deflation when prices of certain goods and services fluctuate. A constant rise in the prices of the same goods means inflation, a constant fall in the prices of the same goods means deflation. It is the job of the central bank to keep demand in line by adjusting its interest rate. For larger central banks, such as the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has an important tool to raise or lower inflation: changing its benchmark interest rate. At pre-announced times, the central bank will issue a statement with its benchmark interest rate and give additional reasons for why it is holding or changing it (cutting or raising it). Local banks will adjust their savings and lending rates accordingly, which in turn will make it harder or easier for citizens to earn profits on their savings or for companies to borrow and invest in their businesses. When the central bank substantially raises interest rates, it is called monetary tightening. When it lowers its benchmark rate, it is called monetary easing.
A central bank is usually politically independent. Members of the central bank’s policy council go through a series of panels and hearings before being appointed to a position on the policy council. Each member of that council usually has a particular conviction about how the central bank should control inflation and the resulting monetary policy. Members who want very loose monetary policy, with low rates and cheap loans, to substantially boost the economy, while being content with inflation just above 2%, are called “doves.” Members who prefer higher rates to reward saving and want to keep inflation under control at all times are called “hawks,” and they will not rest until inflation is at or just below 2%.
Typically, there is a chairman who chairs each meeting, has to build consensus between hawks or doves, and has the final say when votes must be split to avoid a 50-50 tie on whether current policy should be tightened. The chairman will make speeches, which can often be followed live, in which he or she will communicate the current monetary stance and outlook. A central bank will try to push its monetary policy forward without causing wild swings in rates, stocks, or its currency. All central bank members will channel their stance to the markets before a monetary policy meeting. A few days before a monetary policy meeting is held and until the new policy has been communicated, members are prohibited from speaking publicly. This is called a silent period.
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.
