Here’s the latest for Wednesday, November 12th.
The United States dollar (USD) had a tough time finding demand on Tuesday but saw some stabilization early on Wednesday. With no major economic data due for release, investors are likely to focus on comments from Federal Reserve officials and the upcoming House vote on a funding bill aimed at officially ending the government shutdown.
USD price this week
The table below highlights the percentage change of the US dollar (USD) against other major currencies this week. Notably, the US dollar has been weakest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | 0.02% | 0.40% | -0.35% | -0.74% | -0.63% | -0.71% | |
| EUR | 0.23% | 0.26% | 0.70% | -0.15% | -0.54% | -0.42% | -0.51% | |
| GBP | -0.02% | -0.26% | 0.51% | -0.38% | -0.77% | -0.65% | -0.74% | |
| JPY | -0.40% | -0.70% | -0.51% | -0.81% | -1.20% | -1.08% | -1.21% | |
| CAD | 0.35% | 0.15% | 0.38% | 0.81% | -0.31% | -0.29% | -0.43% | |
| Australian dollar | 0.74% | 0.54% | 0.77% | 1.20% | 0.31% | 0.11% | 0.03% | |
| New Zealand dollar | 0.63% | 0.42% | 0.65% | 1.08% | 0.29% | -0.11% | -0.09% | |
| Swiss franc | 0.71% | 0.51% | 0.74% | 1.21% | 0.43% | -0.03% | 0.09% |
This table illustrates the percentage changes between major currencies. The base currency is indicated in the left column, while the quote currency is in the top row. So, for example, choosing USD from the left column and moving to JPY in the top row shows how USD has changed relative to JPY.
On Tuesday, weekly figures from Automatic Data Processing (ADP) revealed that private firms have cut about 11,250 jobs on average per week in the four weeks leading up to October 25. This discouraging news impacted the US dollar during trading hours, leading to a decrease in the US dollar index, which finished the day lower. The European US dollar index remained steady at around 99.50 early Wednesday. Moreover, U.S. stock index futures saw a modest increase of 0.2% to 0.5%, suggesting a slightly positive sentiment in the market.
On Tuesday, the euro/usd found a boost due to the overall weakness of the dollar, rising above 1.1600 at one point. By Wednesday morning, the pair was stabilizing and fluctuating just below that mark.
Meanwhile, after dipping near 1.3100 during Tuesday’s European trading, GBP/USD managed to recover some losses. However, it faced challenges in gaining momentum on Wednesday, hovering around 1.3150.
After a quiet day on Tuesday following Monday’s meeting, gold closed with a slight increase, as XAU/USD continued to trade sideways, comfortably remaining above $4,100.
In Japan, Prime Minister Sanae Takaichi stated on Wednesday that the country has not fully emerged from deflation, expressing hope that the Bank of Japan (BOJ) will effectively manage policy to sustainably meet its price target. The USD/JPY pair, which had recorded modest gains on Monday and Tuesday, is now trading at its highest level since February, surpassing 154.50.
On Wednesday, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser remarked that he expects monetary policy to stay restrictive. He noted, “If we determine that the restrictions are no longer mild, this could significantly affect future policy.” The Australian dollar/US dollar pair maintained its ground on Wednesday, trending toward 0.6550. The Australian Bureau of Statistics is set to release labor market data for October during Thursday’s Asia session.
Fed Frequently Asked Questions
Monetary policy in the United States is primarily guided by the Federal Reserve Board (Fed). The Fed focuses on two key objectives: ensuring price stability and promoting full employment. To achieve these goals, the main strategy is to adjust interest rates. If inflation soars beyond the 2% target, the Fed will likely raise interest rates, which also increases borrowing costs across the economy. This often makes the US a more attractive investment destination and leads to an appreciation of the USD. Conversely, if inflation dips below 2% or unemployment rates rise, the Fed may reduce interest rates to stimulate borrowing, which could weaken the dollar.
The Federal Reserve conducts eight annual policy meetings where the Federal Open Market Committee (FOMC) reviews economic conditions and determines monetary policy. Twelve Federal Reserve officials participate in these meetings, including seven members of the Board of Directors, the president of the New York Fed, and four of the other 11 regional reserve bank presidents, serving on a rotating one-year term basis.
In unusual circumstances, the Federal Reserve may implement quantitative easing (QE). This strategy involves the Fed increasing credit flow within a troubled financial system. It’s an unconventional approach typically used during crises or when inflation is very low, much like during the Great Financial Crisis of 2008. Essentially, the Fed prints more dollars to purchase high-quality bonds from financial institutions, which can lead to a weakened USD.
On the flip side, there’s quantitative tightening (QT), which is the reverse of QE. In this scenario, the Federal Reserve stops buying bonds from financial institutions and refrains from reinvesting the principal from maturing bonds. This is generally favorable for the value of the USD.
