Tag: EconomicIndicator

  • Core PCE inflation softens to 2.5% in April as forecast

    Core PCE inflation softens to 2.5% in April as forecast


    Annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, declined to 2.1% in April from 2.3% in March, the US Bureau of Economic Analysis reported on Friday. This reading came in below the market expectation of 2.2%.

    The core PCE Price Index, which excludes volatile food and energy prices, rose 2.5% in the same period, down from the 2.7% increase reported in March and in line with analysts’ estimates. The PCE Price Index and the core PCE Price Index both rose 0.1% on a monthly basis.

    Other details of the report showed that Personal Income and Personal Spending grew 0.8% and 0.2%, respectively, on a monthly basis in April.

    Market reaction to US PCE inflation data

    The US Dollar Index showed no immediate reaction to these figures and was last seen rising 0.1% on the day at 99.44.

    US Dollar PRICE Today

    The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.23% 0.04% -0.32% -0.06% 0.37% 0.01% -0.05%
    EUR -0.23% -0.17% -0.59% -0.28% 0.19% 0.11% -0.27%
    GBP -0.04% 0.17% -0.39% -0.10% 0.37% 0.11% -0.09%
    JPY 0.32% 0.59% 0.39% 0.27% 0.79% 0.49% 0.34%
    CAD 0.06% 0.28% 0.10% -0.27% 0.52% 0.20% 0.01%
    AUD -0.37% -0.19% -0.37% -0.79% -0.52% -0.06% -0.46%
    NZD -0.01% -0.11% -0.11% -0.49% -0.20% 0.06% -0.38%
    CHF 0.05% 0.27% 0.09% -0.34% -0.01% 0.46% 0.38%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    This section below was published as a preview of the US Personal Consumption Expenditures (PCE) Price Index data for April at 06:00 GMT.

    • The core Personal Consumption Expenditures Price Index is expected to rise 0.1% MoM and 2.5% YoY in April.
    • Markets expect the Federal Reserve to hold the policy setting unchanged in June.
    • Annual PCE inflation is forecast to edge lower to 2.2%.

    The United States (US) Bureau of Economic Analysis (BEA) is set to release the Personal Consumption Expenditures (PCE) Price Index data for April on Friday at 12:30 GMT. This index is the Federal Reserve’s (Fed) preferred measure of inflation.

    The core PCE Price Index, which excludes volatile food and energy prices, is projected to rise 0.1% on a monthly basis in April, after remaining unchanged in March. Over the last twelve months, the core PCE inflation is forecast to edge lower to 2.5% from 2.6%. Meanwhile, the headline annual PCE inflation is seen retreating to 2.2% from 2.3% in this period. 

    Anticipating the PCE: Insights into the Fed’s key inflation metric

    PCE inflation data is usually seen as a big market mover because it is taken into account by Fed officials when deciding on the next policy move. During the press conference following the May meeting, Fed Chairman Jerome Powell noted that inflation remains above their target and added that they expect upward pressure to persist. Citing “a great deal of uncertainty about tariffs,” Powell argued that the right thing for them to do is to await further clarity before taking the next policy step. 

    Previewing the PCE inflation report, TD Securities said: “We look for core PCE prices to remain subdued in April, rising 0.1% m/m after printing flat in March—though last month’s data will be revised higher. Headline PCE inflation should also come in soft at 0.06%. On a y/y basis, we look for core PCE inflation to rise 2.6%. We also expect personal spending to mean-revert after front-loading led to a 0.7% m/m surge in March.”

    New York Fed President John Williams said earlier in the week that he wants to avoid inflation becoming highly persistent because that could become permanent. Meanwhile, Minneapolis Fed President Neel Kashkari noted that he supports maintaining interest rates until there is some more clarity on the impact of higher tariffs on inflation.

    How will the Personal Consumption Expenditures Price Index affect EUR/USD?

    Market participants are likely to react to an unexpected reading in the monthly core PCE Price Index, which is not distorted by base effects. A print of 0.3% or higher MoM could support the US Dollar (USD) with an immediate reaction. On the other hand, a reading of 0% or a negative print could have the opposite effect on the USD’s performance against its major rivals.

    According to the CME FedWatch Tool, markets currently see virtually no chance of a Fed rate cut in June, while pricing in about a 25% probability of a cut in July. Hence, the market positioning suggests that the USD has some room left on the upside if the monthly core PCE reading surprises to the upside. Conversely, investors could reassess the probability of a rate reduction in July if a soft PCE figure eases concerns that inflation remains sticky. 

    Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief technical outlook for EUR/USD:

    “The Relative Strength Index (RSI) indicator on the daily chart holds slightly above 50, and EUR/USD fluctuates above the 20-day Simple Moving Average (SMA), reflecting a lack of seller interest. On the downside, 1.1200 (Fibonacci 23.6% retracement of the January-April uptrend, lower limit of the ascending regression channel) aligns as first support before 1.1015-1.1000 (Fibonacci 38.2% retracement, round level).”

    “Looking north, resistance levels could be spotted at 1.1400 (static level), 1.1500 (static level, round level) and 1.1575 (April 21 high).”

    Inflation FAQs

    Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure 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 prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

    Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

    Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
    Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.



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  • Core PCE inflation softens to 2.5% in April as forecast

    UK inflation jumps to 3.5% YoY in April vs. 3.3% forecast


    • The United Kingdom’s annual CPI rose % in April vs. 3.3% forecast.
    • British inflation jumped to 1.2% MoM in April vs. a 1.1% anticipated.
    • GBP/USD regains 1.3450 after UK CPI inflation data.

    The United Kingdom (UK) annual headline Consumer Price Index (CPI) jumped by 3.5% in April after recording a 2.6% growth in March, the data released by the Office for National Statistics (ONS) showed on Wednesday. 

    The market forecast was for a 3.3% acceleration in the reported period. The reading moves further away from the Bank of England’s (BoE) 2% target.

    The core CPI (excluding volatile food and energy items) rose 3.8% year-over-year (YoY) in the same period, as against a 3.4% increase in March, beating the expected print of 3.6%.

    Services inflation firmed up to 5.4% YoY in April from March’s 4.7%.

    Meanwhile, the monthly UK CPI inflation jumped to 1.2% in April from 0.3% in March. Markets predicted a 1.1% reading.

    GBP/USD reaction to the UK CPI inflation data

    The UK CPI data provides a fresh boost to the Pound Sterling, driving GBP/USD briefly above 1.3450 before reversing to near 1.3432, where it now wavers. The pair is still up 0.32% on the day.

    British Pound PRICE Today

    The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.36% -0.26% -0.55% -0.18% -0.35% -0.32% -0.63%
    EUR 0.36% 0.10% -0.21% 0.16% 0.03% 0.04% -0.28%
    GBP 0.26% -0.10% -0.27% 0.09% -0.05% -0.05% -0.39%
    JPY 0.55% 0.21% 0.27% 0.34% 0.19% 0.21% -0.10%
    CAD 0.18% -0.16% -0.09% -0.34% -0.17% -0.13% -0.47%
    AUD 0.35% -0.03% 0.05% -0.19% 0.17% 0.02% -0.30%
    NZD 0.32% -0.04% 0.05% -0.21% 0.13% -0.02% -0.33%
    CHF 0.63% 0.28% 0.39% 0.10% 0.47% 0.30% 0.33%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

    This section below was published at 02:15 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.

    • The United Kingdom’s Office for National Statistics will publish the April CPI data on Wednesday.
    • Inflation, as measured by the CPI, is forecast to be much higher than in March.
    • The GBP/USD pair trades near its 2025 high and aims to advance beyond it.

    The United Kingdom (UK) will release the Consumer Price Index (CPI) data for April on Wednesday at 06:00 GMT. The report, released by the Office for National Statistics (ONS), has a relevant impact on the Sterling Pound (GBP) amid its potential effect on future Bank of England (BoE) monetary policy decisions.

    Inflation, as measured by the CPI, is foreseen to have risen by 1.1% on a monthly basis, much higher than the 0.3% posted in March. The annual figure is expected to be 3.3%, also higher than the previous 2.6%. Finally, the annual core CPI is forecast to hit 3.7% after posting 3.4% in the previous month.

    What to expect from the next UK inflation report?

    The UK CPI is then seen almost doubling the BoE’s goal of 2%. The news, while discouraging, would come as no surprise.

    The BoE’s last decision on monetary policy was to cut the benchmark interest rate to 4.25% from 4.5%, with five out of the nine Monetary Policy Committee (MPC) members backing such a decision. Two other voting members aimed for a larger cut, while the other two preferred to keep rates on hold.

    In the accompanying statement, policymakers noted, “There is also a lot of uncertainty from global developments, partly because of changes in global trade policies. We are assessing what this could mean for UK inflation closely.” Officials also added: “We expect an increase in inflation this year. It is likely to rise temporarily, to 3.7%, partly because of higher energy prices. Inflation is expected to fall back to the 2% target after that.”

    Uncertainty has dominated central banks’ messages since United States (US) President Donald Trump arrived in the White House with his protectionist policies. Massive tariffs pose a risk to global growth and inflation. While the UK is among the economies less affected by Trump’s decision, it is indeed not exempt from suffering an economic setback due to levies.

    Markets are cautiously optimistic amid a 90-day pause in levies and a reduction of retaliatory tariffs between Washington and Beijing. Still, it is worth noting tensions remain in the background, with trade negotiations underway without progress being reported.

    Deutsche Bank senior economist Sanjay Raja adds: “April inflation will present the biggest test for the Monetary Policy Committee so far this year”.

    How will the UK Consumer Price Index report affect GBP/USD?

    The inflation uptick falls within the BoE’s predictions, but that does not make it less worrisome. Generally speaking, higher than anticipated CPI figures would suggest the BoE will adopt a more hawkish stance and refrain from trimming interest rates, resulting in a firmer GBP. The opposite scenario is also valid, with softer-than-anticipated inflationary pressures leaving the door open for additional rate reductions.

    Ahead of the announcement, the GBP/USD pair comfortably trades above the 1.3300 mark, roughly 100 pips away from the 2025 peak at 1.3445 amid broad US Dollar weakness. The Greenback came under selling pressure after Moody’s Investors Service, a rating agency, downgraded the United States sovereign credit rating from Aaa to Aa1 on Friday, expressing concerns about piling up debt.

    Valeria Bednarik, Chief Analyst at FXStreet, expects GBP/USD to reach higher highs for the year in the upcoming days. “Given the broad USD weakness and increasing price pressures in the UK, the GBP/USD pair is likely to resume its advance and challenge the yearly peak.”

    Bednarik adds: “From a technical point of view, GBP/USD is in a consolidative stage since mid-April. The daily chart shows that moving averages have turned flat, reflecting the lack of directional strength, yet the pair holds above them all, with the 20 Simple Moving Average (SMA) providing support at around the 1.3300 mark. Below such level, buyers have been defending the downside at around the 1.3250 region, while the base of the monthly range comes at 1.3140.”

    Finally, Bednarik states: “A steady advance beyond the 1.3400 mark should favor a run past the year high and towards the 1.3500 area, while additional gains expose the 1.3560 price zone, where GBP/USD peaked in September 2022.”

    Inflation FAQs

    Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure 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 prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

    Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

    Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
    Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.



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  • China’s Caixin Services PMI drops to 50.7 in April vs. 51.7 expected

    China’s Caixin Services PMI drops to 50.7 in April vs. 51.7 expected


    China’s Services Purchasing Managers’ Index (PMI) declined to 50.7 in April from 51.9 in March, the latest data published by Caixin showed on Tuesday.

    The data missed the market forecast of 51.7 in the reported period by a wide margin.

    AUD/USD reaction to China’s Services PMI

    The Chinese proxy, the Australian Dollar (AUD) remains deep in the red on the data release, with AUD/USD losing 0.30% on the day to trade at 0.6450 as of writing.

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.



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  • Core PCE inflation softens to 2.5% in April as forecast

    Nonfarm Payrolls rise by 177,000 in April vs. 130,000 expected


    Nonfarm Payrolls (NFP) in the United States (US) rose by 177,000 in April, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 185,000 increase (revised from 228,000) reported in March and came in better than the analysts’ estimate of 130,000.

    Follow our live coverage here

    Other details of the employment report showed that the Unemployment Rate remained unchanged at 4.2%, as expected, while the Labor Force Participation Rate ticked up to 62.6% from 62.5%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 3.8%.

    “The change in total nonfarm payroll employment for February was revised down by 15,000, from +117,000 to +102,000, and the change for March was revised down by 43,000, from +228,000 to +185,000,” the BLS noted in its press release. “With these revisions, employment in February and March combined is 58,000 lower than previously reported.”

    Market reaction to US Nonfarm Payrolls data

    The US Dollar Index (DXY) edged slightly higher with the immediate reaction and was last seen losing 0.2% on the day near 100.00.

    US Dollar PRICE This week

    The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.43% 0.30% 0.83% -0.28% -0.58% 0.30% -0.33%
    EUR -0.43% -0.18% 0.38% -0.72% -1.09% -0.13% -0.78%
    GBP -0.30% 0.18% 0.56% -0.53% -0.93% 0.04% -0.59%
    JPY -0.83% -0.38% -0.56% -1.07% -1.35% -1.91% -0.89%
    CAD 0.28% 0.72% 0.53% 1.07% -0.42% 0.57% -0.04%
    AUD 0.58% 1.09% 0.93% 1.35% 0.42% 0.97% 0.33%
    NZD -0.30% 0.13% -0.04% 1.91% -0.57% -0.97% -0.62%
    CHF 0.33% 0.78% 0.59% 0.89% 0.04% -0.33% 0.62%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    This section below was published as a preview of the April Nonfarm Payrolls data at 06:00 GMT.

    • Nonfarm Payrolls are expected to rise by 130K in April, lower than the 228K gain reported in March.
    • The United States Bureau of Labor Statistics will publish the employment data on Friday at 12:30 GMT.
    • The US jobs report could significantly impact the odds of a June Fed rate cut, rocking the US Dollar.

    The United States (US) Bureau of Labor Statistics (BLS) is due to publish the high-impact Nonfarm Payrolls (NFP) data for April on Friday at 12:30 GMT.

    The April employment report will be critical to affirm a Federal Reserve (Fed) interest rate cut in June amid prospects of US trade deals with its major Asian trading partners and an unexpected US economic contraction in the first quarter of this year.  The data could, therefore, have a strong bearing on the US Dollar (USD) performance in the near term.  

    In a NewsNation Town Hall interview early Thursday, US President Donald Trump said that he has “potential” trade deals with India, South Korea and Japan and that there is a very good chance of reaching an agreement with China.

    What to expect from the next Nonfarm Payrolls report?

    Economists expect the Nonfarm Payrolls to show a 130,000 job gain in April after recording a stellar 228,000 print in March. The Unemployment Rate (UE) is set to stay at 4.2% during the same period.

    Meanwhile, Average Hourly Earnings (AHE), a closely watched measure of wage inflation, are expected to rise by 3.9% year-over-year (YoY) in April, following a 3.8% increase in March.

    Previewing the April employment report, TD Securities analysts said: “Job growth is likely to show no material signs of deterioration in April despite the spectre of high tariffs impacting economic conditions. Indeed, we expect payrolls to decelerate closer to its steady-state following the series’ noticeable jump in March.”

    “The UE rate is expected to stay unaltered at 4.2%, while wage growth likely lost some momentum, posting a 0.2% month-over-month (MoM) increase,” they added.

    How will US April Nonfarm Payrolls affect EUR/USD?

    The US Dollar is looking to extend its recovery stint against its major currency rivals as easing trade tensions continue to underpin risk sentiment, outweighing the negative impact from this week’s important US economic data releases.

    The first estimate of the US annualized Gross Domestic Product (GDP) showed on Wednesday that the US economy contracted by an annualized rate of 0.3% in the first quarter, due to a surge in imports as US firms frontloaded to get ahead of the US levies.

    Meanwhile, the core Personal Consumption Expenditures (PCE) Price Index, which excludes volatile food and energy prices, rose 2.6% in March, down from the 3% increase reported in February. Earlier on Wednesday, the ADP report showed that the US private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, down from 147,000 in March and missing the consensus forecast for an increase of 108,000.

    All these discouraging US data supported the case for a 25 basis points (bps) interest rate cut by the Fed in June, while a decision to keep rates steady at the current levels is fully priced for next week’s policy meeting. Markets continue predicting a total of four rate cuts by the end of the year, a potential indication that the Fed will prioritize economic growth over inflation.

    Last month, Fed policymakers remained wary about the US labor market outlook. Minneapolis Fed President Neel Kashkari said he was worried about potential layoffs caused by trade uncertainty. Additionally, Fed Governor Christopher Waller told Bloomberg that it “wouldn’t surprise me to see more layoffs, higher unemployment,” adding that the “easiest place to offset tariff costs is by cutting payrolls.”

    Against this backdrop, the April jobs data will be closely scrutinized for any clarity on the state of the US labor market and hints on the Fed’s future interest rate moves.

    A reading below the 100,000 level could double down on the Fed’s easing prospects, reviving the USD downtrend while lifting Gold price back toward record highs. In case of an upside surprise of a reading above 200,000, Gold could continue its corrective decline as the data could push back against expectations of a June rate cut.

    Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD: 

    “The main currency pair threatens the key 21-day Simple Moving Average (SMA) at 1.1256 in the lead-up to the NFP showdown. The 14-day Relative Strength Index (RSI) points lower while above the midline, suggesting that the pair remains at a critical juncture.”

    “Buyers must defend the 21-day SMA cap to retain the bullish bias. If that happens, a rebound toward the 1.1425 supply zone cannot be ruled out. Further up, the 1.1500 round number will come into play. Conversely, EUR/USD could drop sharply toward 1.1100 if the 21-day SMA gives way sustainably. The next healthy support levels are at the 1.1000 psychological barrier and the 50-day SMA at 1.0956.”

    Employment FAQs

    Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

    The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

    The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.



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  • Core PCE inflation softens to 2.5% in April as forecast

    Nonfarm Payrolls increase by 228,000 in March vs. 135,000 forecast


    Nonfarm Payrolls (NFP) in the US rose by 228,000 in March, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 117,000 increase (revised from 151,000) recorded in February and surpassed the market expectation of 135,000 by a wide margin.

    Join us for our NFP Live Coverage here

    Other details of the report showed that the Unemployment Rate edged higher to 4.2% from 4.1%, while the Labor Force Participation Rate ticked up to 62.5% from 62.4%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, declined to 3.8% from 4%.

    “The change in total nonfarm payroll employment for January was revised down by 14,000, from +125,000 to +111,000, and the change for February was revised down by 34,000, from +151,000 to +117,000. With these revisions, employment in January and February combined is 48,000 lower than previously reported,” the BLS noted in its press release.

    Market reaction to Nonfarm Payrolls data

    The US Dollar (USD) Index showed no immediate reaction to these figures and was last seen posting small daily gains at 102.05.

    US Dollar PRICE This week

    The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Swiss Franc.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -2.01% -0.67% -2.87% -0.66% 2.74% 1.32% -3.13%
    EUR 2.01% 1.46% -0.77% 1.41% 4.93% 3.45% -1.10%
    GBP 0.67% -1.46% -2.26% -0.01% 3.40% 1.99% -2.48%
    JPY 2.87% 0.77% 2.26% 2.22% 5.78% 4.32% -0.39%
    CAD 0.66% -1.41% 0.01% -2.22% 3.46% 2.02% -2.48%
    AUD -2.74% -4.93% -3.40% -5.78% -3.46% -1.38% -5.74%
    NZD -1.32% -3.45% -1.99% -4.32% -2.02% 1.38% -4.41%
    CHF 3.13% 1.10% 2.48% 0.39% 2.48% 5.74% 4.41%

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    This section below was published as a preview of the March Nonfarm Payrolls data at 06:00 GMT.

    • Nonfarm Payrolls are forecast to rise by 135K in March, following a 151K gain reported in February.
    • The United States Bureau of Labor Statistics will release the jobs data on Friday at 12:30 GMT.
    • US labor data could impact the Fed’s interest rate path, potentially affecting the US Dollar’s price action.

    The all-important United States (US) Nonfarm Payrolls (NFP) data for March will be released by the Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.

    Amidst US President Donald Trump’s tariff policies-induced increased recession risks and escalating trade war fears, the details of the March employment report will be closely scrutinised to gauge the Federal Reserve’s (Fed) next interest rate move and the US Dollar’s (USD) performance in the near term.

    Trump announced on Wednesday a 10% baseline tariff on most goods imported to the US, with much higher duties on products from dozens of countries, including its major trading partners  – China, Japan and the European Union (EU).

    What to expect from the next Nonfarm Payrolls report?

    Economists expect the Nonfarm Payrolls to rise by 135,000 jobs in March, following a 151,000 job gain in February. The Unemployment Rate (UER) is likely to remain at 4.1% during the same period.

    Meanwhile, Average Hourly Earnings (AHE), a closely watched measure of wage inflation, are expected to increase by 3.8% year-over-year (YoY) in March, following a 4.0% growth in February.

    Following the March policy meeting, the Fed left its benchmark policy rate in the 4.25%-4.50% range, but the Bank’s updated quarterly projections, the so-called Dot Plot chart, signalled two interest rate cuts this year. The Fed also raised its inflation forecast while lowering its growth and employment outlook due to the impact of Trump’s tariffs, fueling concerns about potential stagflation in the US.

    Fed Chairman Jerome Powell, in his post-policy press conference, stated that “uncertainty around policy changes and economic effects is high” due to US tariffs. “If the labor market weakens, we can ease if needed,” Powell noted before quickly adding that “we are not going to be in any hurry to move on rate cuts.”

    Therefore, the March jobs data will likely hold the key to gauging the US labor market conditions, which could alter expectations for this year’s Fed rate cuts. Markets are fully pricing in the US central bank’s likely resumption of its rate-cutting cycle in June.

    Previewing the March employment report, TD Securities analysts said: “Payrolls likely lost modest momentum in March amid rising uncertainty around the US economic outlook and given DOGE-related layoffs.”

    “We also look for the UE rate to rise for a second month straight to 4.2%,” they added.

    How will US March Nonfarm Payrolls affect EUR/USD?

    The US Dollar has been on the losing end against its major currency rivals due to heightened fears of a recession, primarily driven by US President Trump’s aggressive tariff policies. Will the US NFP report help change the USD’s fate?  

    Earlier in the week, the BLS reported that the JOLTS Job Openings declined to 7.56 million in February, down from 7.76 million in January. The reading hit the lowest level since September 2024. Meanwhile, the Automatic Data Processing (ADP) published data on Wednesday, which showed that the American private sector added 155,000 jobs in March, a sharp increase from the upwardly revised 84,000 in February and better than the forecast for 105,000.

    That said, the stakes are high as the US employment data release approaches, amid increased expectations that the Fed will need to opt for aggressive rate cuts in the wake of the economic fallout from Trump’s tariffs.

    Hence, a disappointing labor market report, with an NFP reading below 120,000, could bring forward expectations for a May Fed rate cut. In this scenario, the USD is expected to see a fresh leg lower, driving EUR/USD further northward. Conversely, market participants could refrain from pricing in a May rate cut if the NFP data offers a positive surprise with a reading above 150,000.

    Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD: 

    “The main currency pair trades close to its highest level in seven months above the 1.1050 level, with the 14-day Relative Strength Index (RSI) holding within the overbought region. This suggests that there is a scope for a fresh pullback. Buyers look for acceptance above the 1.1050 psychological level for a sustained uptrend. Further north, the seven-month high of 1.1147 could be retested.”

    “In case EUR/USD fails to sustain above 1.1050, the immediate support will come in at 1.0900. A daily close below this support level could prompt a test of the 21-day Simple Moving Average (SMA) at 1.0860. A deeper correction will likely challenge the 200-day SMA at 1.0731.”

    Employment FAQs

    Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.

    The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.

    The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.



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  • Australia’s Retail Sales rise 0.2 % MoM in February vs. 0.3% expected

    Australia’s Retail Sales rise 0.2 % MoM in February vs. 0.3% expected


    Australia’s Retail Sales, a measure of the country’s consumer spending, rose 0.2% MoM in February, compared to a rise of 0.3% in January, the official data published by the Australian Bureau of Statistics (ABS) showed on Tuesday.

    The reading came in below the market expectations of 0.3%. 

    Market reaction to Australia’s Retail Sales data

    At the time of writing, the AUD/USD pair is down 0.10% on the day at 0.6241.

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

     



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  • US CB Consumer Confidence Index dropped to 92.9 in March

    US CB Consumer Confidence Index dropped to 92.9 in March


    • US CB Consumer Confidence Index declined further in March.
    • The US Dollar Index trades on the defensive near recent lows.

    US consumer sentiment extended its decline in March, as the Conference Board’s Consumer Confidence Index fell from 98.3 to 92.9—its weakest reading since February 2021.

    Views of current business and job market conditions also slipped, with the Present Situation Index declining by 3.6 points to 134.5. Even more concerning, the Expectations Index—which gauges short-term outlooks for income, business, and employment—tumbled 9.6 points to 65.2, the lowest level in the last 12 years and below the 80 threshold, which is usually associated with an incoming recession.

    Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board, reported that consumer confidence declined for the fourth consecutive month in March, falling below the narrow range that had prevailed since 2022. She noted that, among the Index’s five components, only consumers’ assessment of present labor market conditions improved, albeit slightly. Guichard added that views of current business conditions weakened to nearly neutral and that consumers’ expectations were particularly gloomy, with pessimism about future business conditions deepening and confidence in future employment prospects falling to a 12-year low.

    Market reaction

    The US Dollar (USD) is coming under renewed selling pressure, causing the US Dollar Index (DXY) to challenge the key 104.00 support on Tuesday, halting a four-day positive streak.



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  • Japanese Yen struggles to lure buyers; looks to BoJ Governor Ueda’s speech for fresh impetus

    Japanese Yen struggles to lure buyers; looks to BoJ Governor Ueda’s speech for fresh impetus


    • The Japanese Yen attracts some sellers following the release of softer domestic data.
    • A modest USD recovery from a multi-month trough further lends support to USD/JPY.
    • The JPY moves little after the BoJ decision to keep short-term interest rates unchanged.

    The Japanese Yen (JPY) sticks to its negative bias through the Asian session on Wednesday in the wake of weaker-than-expected domestic data and reacted little to the Bank of Japan’s (BoJ) decision to leave short-term interest rate target unchanged. Apart from this, a modest US Dollar (USD) bounce, from a multi-month low touched on Tuesday, assist the USD/JPY pair to maintain its bid tone around mid-149.00s. 

    Traders, however, seem reluctant to place aggressive bets and opt to wait for the post-meeting press conference, where comments from Governor Kazuo Ueda might infuse some volatility around the JPY. The focus will then shift to the outcome of a two-day FOMC meeting, scheduled to be announced later during the US session, which will influence the USD and provide some meaningful impetus to the USD/JPY pair. 

    Japanese Yen bulls remain on the defensive after the crucial BoJ decision

    • The Bank of Japan (BoJ) announced on Wednesday that it maintained the short-term interest rate target in the range of 0.40%- 0.50% after concluding its two-day monetary policy review meeting. In the accompanying policy statement, the central bank noted that the uncertainty surrounding Japan’s economy, prices remains high.
    • Data released earlier this Wednesday showed that Japan’s Trade Balance shifted to a surplus of ¥584.5 billion in February from a deficit of ¥415.43 billion in the same month a year earlier. The reversal was driven by a surge in exports, which increased by 11.4% YoY, and a larger-than-expected fall of 0.7% in imports. 
    • Meanwhile, Japan’s Machinery Orders fell 3.5% MoM in January 2025, significantly worse than the 1.2% decline registered in the previous month. On an annual basis, Machinery Orders rose 4.4% during the reported month, slightly above December’s 4.3% increase, though the reading was below the 6.9% forecast.
    • Adding to this, a Reuters Tankan poll indicated that business sentiment among Japanese manufacturers worsened for the first time in three months during March amid concerns about US tariff policies and weakness in China’s economy. In fact, the manufacturers’ index came in at -1, down from +3 in February. 
    • The results of Japan’s annual spring labor negotiations, which concluded on Friday, showed that firms largely agreed to union demands for strong wage growth for the third straight year. This could boost consumer spending and contribute to rising inflation, giving the BoJ headroom to keep hiking rates.
    • Investors on Wednesday will also focus on the outcome of a two-day FOMC monetary policy meeting, due to be announced later during the US session. Heading into the key central bank event risks, a modest US Dollar recovery from a multi-month low pushes the USD/JPY pair back above mid-149.00s.

    USD/JPY might struggle to move beyond 150.00 amid mixed technical setup

    From a technical perspective, the recent breakout above the 100-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bulls. Moreover, oscillators on the said chart are holding comfortably in positive territory and support prospects for additional gains. That said, the overnight failure ahead of the 150.00 psychological mark warrants some caution. Hence, it will be prudent to wait for a sustained strength beyond the said handle before positioning for a move towards the 150.75-150.80 region, or the 200-period SMA on the 4-hour chart, en route to the 151.00 round figure. 

    On the flip side, the 149.20 area, followed by the 149.00 mark and the 148.80 region (100-period SMA on the 4-hour chart) should act as immediate support. A convincing break below the latter will suggest that the recent move-up witnessed over the past week or so has run out of steam and drag the USD/JPY pair to the 148.25-148.20 support en route to the 148.00 mark. The downward trajectory could extend further towards the 147.70 area, 147.20 region, and the 147.00 mark before spot prices eventually drop to retest a multi-month low, around the 146.55-146.50 region touched on March 11.

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

     



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  • Gold renews record-high above ,000, Canadian Dollar awaits inflation data

    Gold renews record-high above $3,000, Canadian Dollar awaits inflation data


    Here is what you need to know on Tuesday, March 18:

    Gold benefits from escalating geopolitical tensions and trades at a new record-high above $3,000 early Tuesday. The European economic calendar will feature Economic Sentiment data from Germany and Euro area Trade Balance readings. In the second half of the day, Industrial Production and housing data from the US, alongside February inflation figures from Canada will be watched closely by market participants.

    Israeli Prime Minister Benjamin Netanyahu’s office stated on Tuesday that Israel resumes military operations against Hamas across the Gaza Strip, per Reuters. “From now on, Israel will act against Hamas with increasing military force,” Netanyahu further added. Meanwhile, US President Donald Trump said that they will hold Iran responsible for any attacks carried by the Houthis after the group launched an attack comprising 18 ballistic and cruise missiles, as well as drones, targeting the USS Harry S Truman aircraft carrier on Sunday. In response, the US reportedly carried out new airstrikes on the Red Sea port city of Hodeidah and Al Jawf governorate north of the capital Sanaa on Monday. After gaining about 0.5% on Monday, Gold continues to push higher and was last seen trading at a fresh all-time high near $3,020.

    US Dollar PRICE This week

    The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.37% -0.33% 0.72% -0.60% -0.76% -1.33% -0.41%
    EUR 0.37%   -0.08% 0.69% -0.22% -0.53% -0.97% -0.06%
    GBP 0.33% 0.08%   1.09% -0.36% -0.47% -0.91% -0.05%
    JPY -0.72% -0.69% -1.09%   -1.30% -1.68% -1.98% -1.24%
    CAD 0.60% 0.22% 0.36% 1.30%   -0.37% -0.74% -0.36%
    AUD 0.76% 0.53% 0.47% 1.68% 0.37%   -0.42% 0.49%
    NZD 1.33% 0.97% 0.91% 1.98% 0.74% 0.42%   0.92%
    CHF 0.41% 0.06% 0.05% 1.24% 0.36% -0.49% -0.92%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    The US Dollar (USD) Index edged lower following a bullish opening in Wall Street on Monday and closed the day in negative territory. In the European morning on Tuesday, the index holds steady at around 103.50, while US stock index futures lose between 0.2% and 0.3%.

    USD/CAD lost more than 0.5% on Monday and dropped below 1.4300. The pair clings to small recovery gains near 1.4300 to begin the European session. On a yearly basis, the Consumer Price Index (CPI) in Canada is forecast to rise by 2.1% in February, following the 1.9% increase recorded in January. 

    EUR/USD capitalized on the USD weakness and closed above 1.0900 on Monday. The pair fluctuates in a tight channel at around 1.0920 early Tuesday.

    GBP/USD rose more than 0.4% on Monday and touched its highest level since early November near 1.3000. In the European morning, the pair stays in a consolidation phase at around 1.2980.

    USD/JPY continues to push higher after posting gains on Monday and trades at a two-week-high above 149.70. Speaking at a news briefing on Tuesday, Japan’s Finance Minister Katsunobu Kato said that bond markets should decide on rate moves after the 40-year government debt yield briefly jumped to a record high.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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  • Core PCE inflation softens to 2.5% in April as forecast

    The ADP Employment Report rose by 77K in February


    In February, private sector employment in the US grew by just 77K, coming in short of initial estimates of 140K, according to the latest Automatic Data Processing (ADP) report. In addition, the reading was lower than January’s 186K (revised from 183K).

    Following the release, Nela Richardson, ADP’s Chief Economist, said that policy uncertainty and a slowdown in consumer spending might have led to layoffs or reduced hiring during the previous month. She noted that ADP’s data, along with other recent indicators, pointed to a cautious approach among employers as they evaluated the economic outlook.

    Market reaction

    The Greenback extends its decline and challenges the 105.00 support for the first time since early November when tracked by the US Dollar Index (DXY).

    US Dollar PRICE Today

    The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.88% -0.27% 0.10% -0.53% -0.51% -0.59% -0.01%
    EUR 0.88%   0.62% 0.99% 0.35% 0.37% 0.29% 0.89%
    GBP 0.27% -0.62%   0.34% -0.26% -0.25% -0.33% 0.26%
    JPY -0.10% -0.99% -0.34%   -0.64% -0.64% -0.72% -0.12%
    CAD 0.53% -0.35% 0.26% 0.64%   0.02% -0.06% 0.53%
    AUD 0.51% -0.37% 0.25% 0.64% -0.02%   -0.07% 0.52%
    NZD 0.59% -0.29% 0.33% 0.72% 0.06% 0.07%   0.60%
    CHF 0.00% -0.89% -0.26% 0.12% -0.53% -0.52% -0.60%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

    This section below was published as a preview of the US ADP Employment Change data at 08:30 GMT.

    • The ADP Employment Change, and the US labour market, take centre stage this week.
    • The US private sector is seen adding 140K new jobs in February. 
    • The US Dollar Index continues to trade in the lower end of the range.

    The US labor market is set to take center stage this week as fresh concerns mount that the economy may be losing its momentum — a sentiment echoed by recent slower growth and worrisome fundamental data.

    In the spotlight, the ADP Research Institute is poised to release its February Employment Change report on Wednesday, offering a snapshot of private-sector job creation.

    Typically coming out two days before the official Nonfarm Payrolls (NFP) report, the ADP survey is often seen as an early indicator of trends expected in the Bureau of Labor Statistics (BLS) jobs report — even if the two don’t always tell the same story.

    The economic equation: Job growth and Fed policy in focus

    Employment is critical as it forms one of the two legs of the Federal Reserve’s (Fed) dual mandate. The US central bank is tasked with maintaining price stability while pursuing maximum employment. As inflationary pressures remain stubborn, the focus appears to have temporarily shifted to the performance of the US labour market following the Fed’s hawkish stance at its January 28–29 meeting.

    In the meantime, investors continue to closely monitor the White House’s trade policies and their consequences, particularly after US tariffs on Canadian and Mexican imports took effect on March 4. Fears that these levies could fan the flames of a resurgence in inflationary pressure have driven both the Fed’s prudent approach and the cautious remarks from many of its policymakers.

    So far, and in light of the recent set of weaker-than-expected results that have challenged the notion of US “exceptionalism”, market participants now expect the Fed to reduce interest rates by 50 basis points this year.

    Amid the ongoing tariff turmoil, the apparent slowing momentum of the US economy, and persistent consumer price pressures, the ADP report — and especially Friday’s Nonfarm Payrolls report — has gained renewed relevance and could help shape the Fed’s next move.

    When will the ADP Report be released, and how could it affect the US Dollar Index?

    The ADP Employment Change report for February is set to drop on Wednesday at 13:15 GMT with forecasts pointing to an addition of 140K new jobs following January’s gain of 183K. In anticipation, the US Dollar Index (DXY) remains securely on the defensive, putting the key support at 106.00 to the test amid rising jitters over the US economy.

    If the ADP report delivers robust numbers, it could momentarily cool the mounting concerns over the US economic slowdown. However, if the results fall short of expectations, it might reinforce worries that the economy is losing momentum—potentially prompting the Fed to reconsider an earlier restart of its easing cycle.

    According to Pablo Piovano, Senior Analyst at FXStreet, “If the recovery gains traction, the DXY could revisit the weekly peak of 107.66 (February 28), a region that appears reinforced by the proximity of the transitory 55-day SMA around 107.90, ahead of the February high of 109.88 set on February 3, and the YTD peak of 110.17 from January 13. Surpassing that level might pave the way toward the next resistance at the 2022 high of 114.77 recorded on September 28.

    “On the flip side, if sellers manage to seize control, the index might first find support at the 2025 bottom of 105.89 reached on March 4, prior to the December 2024 bottom of 105.42, and eventually at the critical 200-day SMA in the 105.00 zone. Staying above that key threshold is essential for sustaining bullish momentum,” Piovano concludes.

    GDP FAQs

    A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

    A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

    When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.

    Fed FAQs

    Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

    The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

    In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

    Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

     



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  • China’s Caixin Services PMI surprisingly jumps to 51.4 in February vs. 50.8 expected

    China’s Caixin Services PMI surprisingly jumps to 51.4 in February vs. 50.8 expected


    China’s Services Purchasing Managers’ Index (PMI) unexpectedly firmed to 51.4 in February from 51 in January, the latest data published by Caixin showed Wednesday.

    The market consensus was for a 50.8 reading.

    AUD/USD reaction to China’s Services PMI

    At the time of writing, the AUD/USD pair is trading modestly flat on the day just above 0.6250, unimpressed by upbeat Chinese data.

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

     



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  • US CB Consumer Confidence Index drops to 104.1 in January

    US CB Consumer Confidence Index drops to 104.1 in January


    • US CB Consumer Confidence Index declined in January. 
    • The US Dollar Index consolidates daily gains slightly below 108.00.

    Consumer sentiment in the US deteriorated in January, with the Conference Board’s (CB) Consumer Confidence Index declining to 104.1 from 109.5 in December.

    In this period, the Present Situation Index fell by 9.7 points to 134.3 and the Expectations Index dropped to 83.9. 

    Assessing the survey’s findings, “views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row,” said Dana M. Peterson, Chief Economist at The Conference Board.

    “Meanwhile, consumers were also less optimistic about future business conditions and, to a lesser extent, income. The return of pessimism about future employment prospects seen in December was confirmed in January,” Peterson added.

    Market reaction

    The US Dollar Index largely ignored this report and was last seen rising 0.42% on the day at 107.87.



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  • German Retail Sales climb 2.5% YoY in November vs. 1.9% expected


    Germany’s Retail Sales fell 0.6% MoM in November after declining 1.5% in October, the official data released by Destatis showed on Wednesday.

    Annually, Retail Sales in the Eurozone’s top economy rose by 2.5% in November versus 1.9% expected and 1.0% in October.

    EUR/USD reaction to the German data

    Mixed German data serves negative for the Euro, driving EUR/USD slightly lower at around 1.0345, flat on the day, as of writing.

    Euro PRICE Today

    The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Canadian Dollar.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   0.00% -0.03% 0.05% -0.07% 0.02% -0.01% 0.03%
    EUR -0.00%   -0.03% 0.05% -0.07% 0.02% -0.01% 0.03%
    GBP 0.03% 0.03%   0.10% -0.04% 0.05% 0.02% 0.07%
    JPY -0.05% -0.05% -0.10%   -0.12% -0.04% -0.07% -0.02%
    CAD 0.07% 0.07% 0.04% 0.12%   0.08% 0.06% 0.09%
    AUD -0.02% -0.02% -0.05% 0.04% -0.08%   -0.02% 0.01%
    NZD 0.01% 0.00% -0.02% 0.07% -0.06% 0.02%   0.04%
    CHF -0.03% -0.03% -0.07% 0.02% -0.09% -0.01% -0.04%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

     



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