Here’s your update for Friday, September 26th:
The US Dollar (USD) index is still hovering below the 98.50 mark following a two-day meeting, as of early Friday in Europe. On the 1st, the U.S. Economic Analysis Agency (BEA) will unveil August’s personal consumption expenditure (PCE) price index, which is an important measure for the Federal Reserve.
This week’s US Dollar Price
Below is the movement of the US dollar (USD) against other currencies this week, showing it was particularly strong against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.57% | 0.80% | 1.27% | 1.17% | 0.98% | 1.75% | 0.56% | |
| EUR | -0.57% | 0.25% | 0.66% | 0.58% | 0.37% | 1.15% | -0.05% | |
| GBP | -0.80% | -0.25% | 0.36% | 0.35% | 0.14% | 0.92% | -0.24% | |
| JPY | -1.27% | -0.66% | -0.36% | -0.11% | -0.32% | 0.47% | -0.70% | |
| CAD | -1.17% | -0.58% | -0.35% | 0.11% | -0.21% | 0.58% | -0.58% | |
| AUD | -0.98% | -0.37% | -0.14% | 0.32% | 0.21% | 0.79% | -0.38% | |
| NZD | -1.75% | -1.15% | -0.92% | -0.47% | -0.58% | -0.79% | -1.19% | |
| CHF | -0.56% | 0.05% | 0.24% | 0.70% | 0.58% | 0.38% | 1.19% |
The currency heatmap illustrates the fluctuations among major currencies. You can select the base currency from the left column and the estimated currency from the top row. For instance, if you choose US dollars and move to Japanese Yen, the value shown in that box reflects USD compared to JPY.
The USD gained traction due to favorable macroeconomic data released, strengthening against its counterparts during the American session on Thursday. Durable goods orders rose by 2.9% in August, and the BEA revised the annual GDP growth rate for Q2 upward to 3.8% from earlier estimates. Meanwhile, initial weekly unemployment claims decreased from 232,000 to 218,000. By Thursday, the USD index had surged more than 0.6% daily, peaking at 98.60, its highest since early September.
In political news, President Donald Trump announced plans to implement tariffs starting October 1 on imports of branded or patented drugs, aiming for 100% unless the companies establish U.S. manufacturing plants. He also indicated there would be a 50% tariff on certain kitchen cabinets and related products.
On the economic front in Japan, the Tokyo Consumer Price Index saw a 2.5% annual increase in September, matching August’s rise and aligning with projections. Japanese trade negotiator Ryosei Akazawa remarked that U.S. tariffs on pharmaceuticals and tips won’t exceed those applied to other nations, and further analysis of the U.S. tariff impact would follow. As for the USD/JPY pair, trading has been relatively calm and is just below the 150.00 level, rising nearly 1.5% this week.
The broad strength of the USD kept the EUR/USD pair on a bearish path Thursday. It dipped to a three-week low beneath 1.1650 but was adjusted upward while remaining below 1.1700 as of Friday morning in Europe.
For GBP/USD, the pair fell nearly 0.8% on Thursday, hitting its lowest point below 1.3330 since early August. There was a slight recovery early Friday, with trading around 1.3350.
Gold found some support on Thursday but struggled to gain momentum. It fluctuated within narrow ranges below $3,750 in European trading.
Inflation FAQ
Inflation refers to the increase in prices for a standard set of goods and services. Headline inflation is often shown as changes in monthly and year-on-year percentages, while core inflation discounts volatile items like food and fuel, which can be swayed by geopolitical events or seasonal changes. Central banks usually aim for a core inflation rate around 2%.
The Consumer Price Index (CPI) tracks price changes in goods and services over time and is often presented as percentage changes monthly and annually. Core CPI, which excludes less stable components, is sought by central banks; if it surpasses 2%, interest rates may rise, and conversely, they might fall when under that mark. Rising interest rates can strengthen a currency, while lower inflation rates usually result in a weaker currency.
This might sound odd, but high inflation in a country can elevate its currency’s value. This happens because central banks often increase interest rates to manage high inflation, attracting more investments. Conversely, lower inflation can weaken a currency.
Even though gold traditionally holds value, during high inflation, investors may hesitate to buy it due to rising interest rates, as cash becomes more attractive than gold. However, when inflation decreases, it can be favorable for gold since lower interest rates make it a more appealing investment option.
