Next, what you need to know on Tuesday, May 6:
The main pairs of currencies fluctuate in family ranges early on Tuesday, since investors refrain from taking great positions before the important central banks meetings of this week. Eurostat will publish the production index data for March. Later in the day, the figures of the trade balance of Canada and the US will be presented in the economic calendar.
US dollar last 7 days
The lower table shows the percentage of change of the US dollar (USD) compared to the main currencies last 7 days. US dollar was the strongest currency against pound sterling.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.70% | 0.88% | 0.86% | -0.12% | -0.44% | -0.12% | 0.32% | |
| EUR | -0.70% | 0.21% | 0.20% | -0.80% | -1.07% | -0.81% | -0.36% | |
| GBP | -0.88% | -0.21% | -0.06% | -1.01% | -1.31% | -1.01% | -0.58% | |
| JPY | -0.86% | -0.20% | 0.06% | -0.97% | -1.28% | -1.04% | -0.53% | |
| CAD | 0.12% | 0.80% | 1.01% | 0.97% | -0.32% | -0.00% | 0.43% | |
| Aud | 0.44% | 1.07% | 1.31% | 1.28% | 0.32% | 0.32% | 0.75% | |
| NZD | 0.12% | 0.81% | 1.01% | 1.04% | 0.00% | -0.32% | 0.44% | |
| CHF | -0.32% | 0.36% | 0.58% | 0.53% | -0.43% | -0.75% | -0.44% |
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).
He US Dollar (USD) The week began under bear, but managed to find a support point in the second half of the day.
The US data showed that the ISM Purchase Management Manager Index (PMI) improved 51.6 in April from 50.8 in March. This reading was better than the market expectation of 50.6 and helped the USD maintain its position. Meanwhile, US Treasury Secretary Scott Besent, said Monday that they are very close to reaching some commercial agreements. Similarly, the US Secretary of Commerce, Howard Lutnick, told Fox Business that they hope to announce trade agreements soon, adding that the first agreement will probably be with an economy of the Top 10. The futures of the US stock market indices Negative on Monday, and the USD index moves laterally in a narrow range above 99.50. The two -day monetary policy meeting of the Federal Reserve will begin later in the day.
In the Asian session on Tuesday, China’s data showed that the Caixin Services PMI dropped to 50.7 in April from 51.9 in March. After reaching a new maximum of 2025 about 0.6500 on Monday, AUD/USD It seems to have entered a consolidation phase slightly above 0.6450 on Tuesday.
EUR/USD Marginally lifes up on the day, but remains below 1,1350 in the European session.
GBP/USD He closed in positive territory on Monday and broke a four -day loss streak. The pair continues to rise and quote above 1,3320 early Tuesday. The Bank of England will announce its monetary policy decision on Thursday.
USD/JPY It fell almost 0.9% on Monday and erased a part of the profits of the previous week. The torque is maintained under bearish pressure and listed below 143.50 in the European morning.
The climb of tensions in the Middle East allowed the Gold gathered bullish impulse to start the week. After climbing almost 3% on Monday, the Xau/USD extends its rebound towards 3,400 $ on Tuesday, already winning more than 1% in the day.
FAQS Central Banks
Central banks have a key mandate that consists in guaranteeing the stability of prices in a country or region. Economies constantly face inflation or deflation when the prices of certain goods and services fluctuate. A constant rise in the prices of the same goods means inflation, a constant decrease in the prices of the same goods means deflation. It is the Central Bank’s task to keep the demand online 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 maintain inflation about 2%.
A central bank has an important tool to raise or lower inflation: modify its reference interest rate. In precommunicated moments, the Central Bank will issue a statement with its reference interest rate and give additional reasons of why it maintains or modifies it (cut it or the SUBE). Local banks will adjust their savings and loan rates accordingly, which in turn will make it difficult or facilitate that citizens obtain profits from their savings or that companies ask for loans and invest in their businesses. When the Central Bank substantially rises interest rates, there is talk of monetary hardening. When it reduces its reference rate, it is called monetary relaxation.
A central bank is usually politically independent. The members of the Central Bank Policy Council go through a series of panels and hearings before being appointed for a position in the Policy Council. Each member of that council usually has a certain conviction on how the Central Bank should control inflation and the consequent monetary policy. Members who want a very flexible monetary policy, with low types and cheap loans, to substantially boost the economy, while comprising with inflation slightly greater than 2%, are called “pigeons.” Members who prefer higher types to reward savings and want to control inflation at all times are called “hawks” and will not rest until inflation is located at 2% or just below.
Normally, there is a president who directs each meeting, has to create a consensus between the hawks or the pigeons and has the last word when the votes must be divided to avoid a draw to 50 on whether the current policy must be adjusted. The president will pronounce speeches, which can often be followed live, in which he will communicate the current monetary position and perspectives. A central bank will try to boost its monetary policy without causing violent oscillations of the fees, the actions or their currency. All members of the Central Bank will channel their position towards 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, the members are prohibited from speaking publicly. It is what is called a period of silence.
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.
