What You Need to Know for Tuesday, August 26th
The US Dollar (USD) has found some stability after a tumultuous period of fluctuations during the American trading sessions on Monday and Tuesday. Looking ahead, the economic calendar will showcase July durable goods orders and the Conference Board’s Consumer Confidence Index for August on the 1st.
US Dollar Prices Over the Past 7 Days
The table below outlines the changes in the US dollar (USD) against major currencies over the last week. Notably, the US dollar performed best against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.32% | 0.40% | 0.00% | 0.38% | 0.30% | 1.35% | -0.19% | |
| EUR | -0.32% | 0.06% | -0.43% | 0.06% | -0.12% | 1.02% | -0.50% | |
| GBP | -0.40% | -0.06% | -0.62% | -0.00% | -0.14% | 0.96% | -0.57% | |
| JPY | 0.00% | 0.43% | 0.62% | 0.45% | 0.37% | 1.37% | -0.12% | |
| CAD | -0.38% | -0.06% | 0.00% | -0.45% | -0.09% | 0.95% | -0.57% | |
| AUD | -0.30% | 0.12% | 0.14% | -0.37% | 0.09% | 1.11% | -0.42% | |
| NZD | -1.35% | -1.02% | -0.96% | -1.37% | -0.95% | -1.11% | -1.51% | |
| CHF | 0.19% | 0.50% | 0.57% | 0.12% | 0.57% | 0.42% | 1.51% |
The heatmap illustrates how the major currencies have changed over time. For example, by selecting USD from the left and moving to JPY at the top, you can see the rate of change between the two.
There’s new bearish pressure on the USD following comments from President Donald Trump regarding Federal Reserve Governor Lisa Cook. Trump conveyed his intent to remove Cook from her position, stating, “I have determined that there is enough cause.” In response, Cook indicated through her lawyers that Trump was overstepping his authority.
This news initially boosted the USD, which held steady at about 98.40 on the index at the time. Meanwhile, Trump has reignited tariff threats, prompting some caution in the market. He mentioned that countries taxing US digital service providers might face further tariffs, adding that China would be subject to high tariffs if they don’t accommodate US interests.
EUR/USD dropped more than 0.8% on Monday, reversing gains made on Friday. This currency pair is expected to remain within tight channels around 1.1600 during Tuesday’s European session.
GBP/USD took a downturn on Monday, losing about 0.5%. It appears to be in a consolidation phase, hovering around 1.3450 as the European session opens.
The Reserve Bank of Australia (RBA) is set to release minutes from its August monetary policy meeting on Tuesday. AUD/USD continues to struggle for momentum below 0.6500.
After a significant drop on Friday, USD/JPY gained bullish momentum, rising over 0.5% on Monday. Despite this, the pair saw a slight decrease, closing just below 148.00. Japan’s Finance Minister commented on the surprising movements in the forex market, mentioning speculator influences.
Meanwhile, after a slight loss on Monday, gold seems to be benefitting from risk appetite, trading at a fresh two-week high of nearly $3,380 early on Tuesday.
Risks of Sentiment FAQ
In finance, terms like “risk-on” and “risk-off” describe investor attitudes toward risk during certain periods. In a “risk-on” environment, there’s optimism about the future; conversely, “risk-off” indicates more caution and a preference for safer assets.
Typically, when markets are “risk-on,” stock prices rise and most commodities (except gold) see increased values. Currencies from countries heavily dependent on commodity exports strengthen due to rising demand and investor confidence in economic activity. Conversely, during “risk-off” periods, bonds gain value, and safe-haven currencies like the USD, JPY, and CHF become more sought after.
Minor currencies like the Australian, Canadian, and New Zealand dollars tend to strengthen in “risk-on” markets due to their economies relying on exports. This ultimately leads to higher commodity prices. However, during “risk-off,” safer currencies and assets like US government bonds rise in popularity due to a general preference for security amidst uncertainty.
