Here’s what’s happening on Tuesday, May 5th.
Financial markets are on edge as concerns grow regarding the ceasefire between the U.S. and Iran. Later, the U.S. will release the Institute for Supply Management’s (ISM) April Services Purchasing Managers Index (PMI) and March JOLTS jobs data.
USD price this week
The table below outlines the percentage changes of the US dollar (USD) compared to major currencies for this week. The USD performed strongest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.50% | 0.43% | 0.35% | 0.22% | 0.84% | 0.41% | 0.40% | |
| EUR | -0.50% | -0.09% | -0.20% | -0.28% | 0.39% | -0.09% | -0.07% | |
| GBP | -0.43% | 0.09% | -0.11% | -0.20% | 0.48% | -0.00% | 0.00% | |
| JPY | -0.35% | 0.20% | 0.11% | -0.07% | 0.55% | 0.15% | 0.04% | |
| CAD | -0.22% | 0.28% | 0.20% | 0.07% | 0.64% | 0.21% | 0.20% | |
| australian dollar | -0.84% | -0.39% | -0.48% | -0.55% | -0.64% | -0.48% | -0.47% | |
| new zealand dollar | -0.41% | 0.09% | 0.00% | -0.15% | -0.21% | 0.48% | 0.01% | |
| swiss franc | -0.40% | 0.07% | -0.01% | -0.04% | -0.20% | 0.47% | -0.01% |
This table shows the percentage changes between major currencies. The base currency is from the left column, and the quote currency is from the top row. For example, selecting USD from the left and JPY across the top gives the percentage change for USD to JPY.
Following the launch of Project Freedom by President Trump on Monday, which aims to facilitate the passage of vessels from neutral nations through the Strait of Hormuz, there are reports that Iran has targeted U.S. warships in the vicinity. Trump claimed that U.S. forces had “shot down” seven Iranian speedboats, but Iran disputes this. Additionally, Iran attacked an oil depot in the UAE, igniting a fire, and a South Korean ship sustained damage. The UAE Ministry of Defense stated it encountered 12 ballistic missiles, three cruise missiles, and four drones from Iran.
The United States dollar (USD) index was stable around 98.50 in European markets on Tuesday, after rising approximately 0.3% on Monday. Meanwhile, oil prices corrected their previous decline, with West Texas Intermediate (WTI) trading around $101.50, down roughly 1% for the day after a 3% increase on Monday.
The Reserve Bank of Australia (RBA) announced it raised its benchmark interest rate by 25 basis points (bps) to 4.35%, which was consistent with analysts’ expectations. RBA Governor Michelle Bullock explained that this move is intended to manage inflationary pressures, mentioning that there would be time to assess the overall situation before any further policy tightening. After a 0.5% decline on Monday, the Australian dollar struggled for momentum, hovering around 0.7150 against the USD in European trading.
The euro (EUR) is currently stabilizing just below 1.1700 after a 0.25% drop on Monday. Notably, the European Central Bank (ECB) President Christine Lagarde is expected to speak later in the day.
The GBP/USD pair fell about 0.3% on Monday but stabilized near 1.3550 early Tuesday.
Japan’s Finance Minister Satsuki Katayama has reiterated the country’s preparedness to act decisively against speculative currency fluctuations, with USD/JPY struggling to gain traction in a narrow range around 157.00.
Gold (XAU/USD) fell nearly 2% on Monday, reaching a one-month low of about $4,500 but rebounded slightly in early trading on Tuesday, now around $4,550.
Frequently asked questions about risk sentiment
“Risk-on” and “risk-off” are common financial terms reflecting the level of risk investors are willing to accept during certain periods. In a “risk-on” scenario, there’s an overall optimism, and investors tend to purchase riskier assets. Conversely, in a “risk-off” setting, fear drives investors to choose safer assets, leading them to play it safe.
During “risk-on” phases, stock markets typically rise and most commodities appreciate, except for gold. Currencies from large commodity-exporting nations see gains, reflecting increased demand, while virtual currencies may also rise. On the flip side, in “risk-off” markets, bonds—especially government bonds—gain traction, gold becomes desirable, and safe-haven currencies like the yen, franc, and dollar benefit.
The Australian dollar (AUD), Canadian dollar (CAD), New Zealand dollar (NZD), and other minor currencies, like the ruble and rand, often strengthen during “risk-on” markets because their economies lean on commodity exports, which tend to rise as investors foresee higher future demand due to economic activity.
In “risk-off” situations, currencies like the USD, JPY, and CHF generally appreciate. The U.S. dollar serves as the world’s reserve currency, drawing investors during crises due to the relative safety it offers, while the yen’s demand stems from Japanese government bonds. The Swiss Franc is also sought after owing to Switzerland’s stringent banking regulations that enhance capital protection.
