Here’s what you need to know on Wednesday, December 18:
Financial markets remain calm midweek as investors stay on the sidelines preparing for the Federal Reserve (Fed) to announce its monetary policy decisions after the last meeting of the year. During European trading hours, Eurostat will publish revisions to the Harmonized Index of Consumer Prices (HICP) readings for November. Ahead of the Fed’s decision, November housing starts and building permits data will be highlighted on the US economic agenda.
US Dollar PRICE Last 7 days
The table below shows the percentage change of the United States Dollar (USD) against the main currencies in the last 7 days. US dollar was the strongest currency against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.53% | 1.00% | 1.09% | 0.93% | 0.95% | 1.06% | |
| EUR | -0.17% | 0.36% | 0.82% | 0.91% | 0.76% | 0.77% | 0.87% | |
| GBP | -0.53% | -0.36% | 0.45% | 0.55% | 0.40% | 0.41% | 0.50% | |
| JPY | -1.00% | -0.82% | -0.45% | 0.09% | -0.06% | -0.05% | 0.05% | |
| CAD | -1.09% | -0.91% | -0.55% | -0.09% | -0.15% | -0.14% | -0.05% | |
| AUD | -0.93% | -0.76% | -0.40% | 0.06% | 0.15% | 0.02% | 0.11% | |
| NZD | -0.95% | -0.77% | -0.41% | 0.05% | 0.14% | -0.02% | 0.10% | |
| CHF | -1.06% | -0.87% | -0.50% | -0.05% | 0.05% | -0.11% | -0.10% |
The heat map shows percentage changes for 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 box will represent USD (base)/JPY (quote).
In the absence of high-impact economic releases and fundamental drivers, major currency pairs fluctuated in relatively tight ranges on Tuesday. He US Dollar Index (USD) recorded small gains but failed to stabilize above 107.00. Early on Wednesday, the index is moving sideways near 106.80, while the 10-year US Treasury bond yield is stable slightly below 4.4%. The Fed is widely expected to reduce the policy rate by 25 basis points (bps) to the range of 4.25%-4.5%. The revised Summary of Projections (SEP), also known as the dot plot, released alongside the policy statement will provide important clues about how many more rate cuts Fed officials project in 2025. Finally, Fed Chair Jerome Powell will discuss the policy outlook and answer questions at a press conference starting at 19:30 GMT.
Data released by the UK’s Office for National Statistics showed that annual inflation, as measured by the change in the Consumer Price Index (CPI), rose to 2.6% in November from 2.3% in October. This reading was in line with market expectations. In the same period, the core CPI rose 3.5%, up from a 3.3% increase in October but below analysts’ estimate of 3.6%. On a monthly basis, the Retail Price Index rose 0.1%, while the Output Price Index – Input remained unchanged. GBP/USD largely ignored these figures and was last seen trading around 1.2700.
EUR/USD extends its sideways move slightly above 1.0500 after posting marginal losses on Tuesday.
USD/JPY corrected lower and snapped a six-day winning streak on Tuesday. The pair remains firm early on Wednesday and is trading around 153.50.
The Gold He failed to make a decisive move in either direction on Tuesday and closed the day little changed. XAU/USD remains confined in a narrow channel below $2,650 in the early European session on Wednesday.
Fed FAQs
The monetary policy of the United States is directed by the Federal Reserve (Fed). The Fed has two mandates: achieving price stability and promoting full employment. Your main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the Federal Reserve’s 2% target, it raises interest rates, raising borrowing costs throughout the economy. This translates into a strengthening of the US Dollar (USD), as 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 encourage borrowing, which weighs on the greenback.
The Federal Reserve (Fed) holds eight meetings a 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 Federal Reserve officials: the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the eleven presidents of the regional Reserve banks, who serve for one year on a rotating basis.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. QE usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the capital of the maturing bonds it has in its portfolio 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.
