Market Insights for May 16th
Here’s the latest on this Friday: the market appears cautious as the US Dollar (USD) struggles to maintain its strength against major rivals. Building permits, a key economic indicator, are expected to begin reporting in April, while the University of Michigan will release its preliminary consumer sentiment index for May.
This Week’s US Dollar Price
This week, the performance of the US dollar against various currencies is notable. The USD showed the strongest position against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | -0.04% | -0.67% | 0.40% | -0.16% | 0.21% | -0.02% | |
| EUR | -0.37% | -0.28% | -0.47% | 0.51% | 0.08% | 0.33% | 0.09% | |
| GBP | 0.04% | 0.28% | -0.04% | 0.81% | 0.38% | 0.53% | 0.37% | |
| JPY | 0.67% | 0.47% | 0.04% | 1.06% | -0.13% | 0.02% | 0.41% | |
| CAD | -0.40% | -0.51% | -0.81% | -1.06% | -0.30% | -0.19% | -0.42% | |
| AUD | 0.16% | -0.08% | -0.38% | 0.13% | 0.30% | 0.14% | -0.03% | |
| NZD | -0.21% | -0.33% | -0.53% | -0.02% | 0.19% | -0.14% | -0.26% | |
| CHF | 0.02% | -0.09% | -0.37% | -0.41% | 0.42% | 0.03% | 0.26% |
The heatmap illustrates the change rate among major currencies. For instance, selecting USD against JPY will show the rate of change for that specific pairing.
Yesterday, the USD index experienced a slight decline during US trading hours. The Bureau of Labor Statistics noted a year-over-year increase of 2.4% in April, down from 2.7% in March. Meanwhile, retail sales saw a modest monthly rise of 0.1% for April, and initial unemployment claims held steady at 229,000. Following a 0.2% drop on Thursday, the index is now edging towards 100.50 this morning in Europe.
Turning to Japan, recent data revealed a 0.7% contraction in GDP for the first quarter, missing the anticipated 0.2% contraction. Consequently, USD/JPY remains under bearish pressure, trading at weekly lows just above 145.00.
Gold made a notable rebound late Thursday, gaining nearly 2%, but saw some decline on Friday, dropping to approximately $3,200.
EUR/USD is relatively stable, fluctuating around 1.1200 this Friday morning, with Eurostat set to release trade balance data for March.
GBP/USD improved over 0.3% on Thursday, recovering from losses earlier in the week, as it appears to stabilize around 1.3300.
In New Zealand, the Reserve Bank indicated a rise in inflation expectations for Q2 to 2.29% from 2.06%. Consequently, NZD/USD gained over 0.5% on Friday, trading above 0.5900.
In Canada, manufacturing and sales saw a decrease of 1.4% in March, according to Statistics Canada. USD/CAD is slightly lower today, trading around 1.3950 after a modest loss on Thursday.
Risks of Sentiment
In financial discussions, terms like “risk-on” and “risk-off” are commonly used. In a “risk-on” environment, investors feel optimistic and assets are generally on the rise. Conversely, in a “risk-off” scenario, investors may shift toward safer assets.
Typically, during “risk-on” periods, stock markets tend to rise, and demand for commodities increases, benefiting currencies tied closely to commodities. On the flip side, during “risk-off” phases, bonds and traditional safe-haven currencies like the USD, JPY, and CHF often perform well.
Minor currencies such as the AUD, CAD, and NZD usually gain traction in “risk-on” markets due to their reliance on exports. Meanwhile, during “risk-off” times, major currencies are favored as investors seek safety.
