Here's what you need to know on Thursday, October 10th.
After remaining relatively quiet since the beginning of the week, the US dollar (USD) gained bullish momentum during Wednesday's US trading session, with the USD index rising to its highest since mid-August around 103.00. The European Central Bank (ECB) will announce the results of its monetary policy meeting later in the European meeting. Market participants will focus on US Consumer Price Index (CPI) data later in the day.
USD price this week
The table below shows the percentage change of the US dollar (USD) against major currencies this week. The US dollar was the strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.28% | 0.29% | 0.30% | 1.05% | 0.93% | 1.21% | 0.12% | |
| EUR | -0.28% | 0.07% | 0.05% | 0.79% | 0.62% | 0.92% | -0.19% | |
| GBP | -0.29% | -0.07% | -0.06% | 0.73% | 0.55% | 0.88% | -0.14% | |
| JPY | -0.30% | -0.05% | 0.06% | 0.73% | 0.61% | 0.85% | -0.14% | |
| CAD | -1.05% | -0.79% | -0.73% | -0.73% | -0.08% | 0.17% | -0.92% | |
| australian dollar | -0.93% | -0.62% | -0.55% | -0.61% | 0.08% | 0.34% | -0.77% | |
| new zealand dollar | -1.21% | -0.92% | -0.88% | -0.85% | -0.17% | -0.34% | -1.05% | |
| swiss franc | -0.12% | 0.19% | 0.14% | 0.14% | 0.92% | 0.77% | 1.05% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select USD from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents USD (base)/JPY (estimate).
The hawkish tone of the US Federal Reserve's September meeting minutes pushed the US dollar higher late on Wednesday. The publication notes that although a significant majority of Fed officials support a 50 basis point (bps) rate cut, this initial action does not lock the Fed into a specific pace of future rate cuts. Furthermore, there is a broad consensus that there is no. Additionally, some participants supported only cutting the policy rate by 25 basis points, and others said they could have supported that decision.
The annual US CPI inflation rate is expected to slow to 2.3% in September from 2.5% in August. Core CPI, which excludes volatile food and energy prices, is expected to rise 0.2% month-on-month. U.S. stock index futures are down slightly ahead of key CPI data, while the U.S. dollar index continues to consolidate.
German statistics released earlier showed retail sales rose 1.6% in August. This reading failed to provoke any noticeable reaction euro/usd. It was trading in a narrow range below 1.0950 early Thursday after falling nearly 0.4% on Wednesday.
GBP/USD It gradually fell in the second half of Wednesday, approaching $1.3050. The pair maintained its ground during Thursday's European morning, but remains below 1.3100.
Following Tuesday's indecisive action, USD/JPY It gained momentum and recorded a profit on Wednesday. The pair rose above 149.50 during Thursday's Asian trading hours, its highest since early August, before retreating towards 149.00.
gold The decline widened on Wednesday, closing in negative territory for the sixth consecutive trading day. XAU/USD has struggled to gather bullish momentum, but managed to hold above $2,600 on Thursday European morning.
Frequently asked questions about inflation
Inflation measures the increase in the price of a representative basket of goods and services. Headline inflation is typically expressed as a percentage change on a month-over-month (MoM) and year-over-year (YoY) basis. Core inflation excludes more volatile components such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. Core inflation is the number that economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level (usually around 2%).
The Consumer Price Index (CPI) measures the change in the price of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-over-month (MoM) and year-over-year (YoY) basis. Core CPI is a central bank target that excludes volatile food and fuel inputs. If core CPI rises above 2%, interest rates typically rise, and vice versa when it falls below 2%. A rise in interest rates is good for the currency, so a rise in inflation usually results in a rise in the currency. The opposite is true when inflation falls.
It may seem counterintuitive, but when a country's inflation rate is high, the value of its currency increases, and vice versa when its inflation rate is low. This is because central banks typically raise interest rates to combat rising inflation, which increases global capital inflows from investors looking for favorable places to park their money.
Previously, gold was an asset that investors looked to during times of high inflation because it maintained its value. Investors still often purchase gold as a safe-haven asset during times of extreme market turbulence, but this is not the case in most cases. . When inflation rises, central banks raise interest rates to counteract it. Rising interest rates are negative for gold because they increase the opportunity cost of holding gold as an interest-bearing asset or in a cash savings account. Conversely, lower inflation tends to be positive for gold as it lowers interest rates, making the bright metal a more viable investment option.
