The coming week will bring a novel test for major currency pairs as investors digest the Federal Reserve’s (Fed) first policy decision under Chairman Kevin Warsh and look forward to United States (US) personal consumption expenditure (PCE) data, global PMI releases and central bank commentary.
The US Dollar Index (DXY) is trading near the 100.70 price zone on Friday, after hitting a 13-month high of 101.13 earlier in the day. The dollar surged this week following the Fed’s decision to leave interest rates unchanged at 3.50%-3.75% and remove a previous reference to “additional rate adjustments.” A hotter-than-expected PCE report, the Fed’s favorite inflation gauge, could reinforce the Fed’s hawkish stance and extend the USD’s upward trend.
Today’s US dollar price
The table below shows the current percentage change of the United States Dollar (USD) against the major listed currencies. The US dollar was strongest against the Swiss franc.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.22% | -0.06% | 0.25% | -0.02% | 0.23% | 0.28% | |
| EUR | 0.16% | -0.05% | 0.13% | 0.41% | 0.14% | 0.37% | 0.44% | |
| GBP | 0.22% | 0.05% | 0.17% | 0.45% | 0.21% | 0.44% | 0.50% | |
| JPY | 0.06% | -0.13% | -0.17% | 0.30% | 0.06% | 0.27% | 0.33% | |
| BOOR | -0.25% | -0.41% | -0.45% | -0.30% | -0.22% | -0.03% | 0.03% | |
| AUD | 0.02% | -0.14% | -0.21% | -0.06% | 0.22% | 0.21% | 0.30% | |
| NZD | -0.23% | -0.37% | -0.44% | -0.27% | 0.03% | -0.21% | 0.05% | |
| CHF | -0.28% | -0.44% | -0.50% | -0.33% | -0.03% | -0.30% | -0.05% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select 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 EUR/USD rate fell more than 0.80% this week to 1.1480 amid an overall mighty US dollar. The euro zone calendar will focus on flash PMI data, which should give investors a clearer picture of whether activity in the manufacturing and services sectors remains volatile. Germany will also be vital, where preliminary PMI indicators, the Ifo Business Climate and GfK Consumer Confidence surveys will be published this week. Any signs of deterioration in German business sentiment could weigh on the euro, especially after ECB officials warned of uncertainty over energy prices, the transmission of inflation and the effects of the second round of wages.
GBP/USD is trading near 1.3230, with a acute weekly decline after the Bank of England (BoE) left interest rates unchanged at 3.75% by a 7-2 majority, with two policymakers supporting an raise to 4.00%. Next week, flash PMI indexes and final gross domestic product (GDP) data for the first quarter from the UK will be key for the pound sterling.
USD/JPY remains near intervention levels at 161.30, which focuses on the balance between the Fed’s caution and the Bank of Japan’s (BoJ) tightening stance. The BOJ recently raised interest rates to 1.00%, while officials continue to warn that inflation risks may require further action. Flash PMIs for Japan, CPI for Tokyo and comments from BOJ officials will be closely watched.
AUD/USD fell towards the 0.7020 level this week, providing a significant domestic test following Australia’s release of flash PMI, monthly CPI and labor market data. A stronger CPI print or solid employment data could support the Aussie, while weaker numbers could leave AUD/USD vulnerable to renewed US dollar strength.
Gold (XAU/USD) remains near the $4,155 level as geopolitical uncertainty and concerns over the Middle East may limit the downside for the precious metal.
West Texas Intermediate (WTI) crude oil fell near $76.50 a barrel for the second week in a row following the signing of a peace agreement between the United States and Iran, weighing on oil prices. Markets will be watching whether oil flows continue to normalize, as lower energy prices could ease inflation concerns and weigh on central bank expectations.
Anticipating the economic outlook: voices on the horizon
Monday, June 22
- President of the ECB Lagarde
- Waller Fed
- President of the ECB Lagarde
Tuesday, June 23
- ECB belt
- BoC Governor Macklem
- Elderson EBC
- Vujcic from the ECB
- Taylor of the BoE
- Dhingra from BoE
Wednesday, June 24
- Nagel of the ECB
- Breeden from the BoE
- Cipollone from the ECB
- Dhingra from BoE
Thursday, June 25
- Philip from the ECB
- Cipollone from the ECB
- Williams of the Fed
- Goolsbee Fed
Friday, June 26
- Nagel of the ECB
- Williams of the Fed
- Vujcic from the ECB
Saturday, June 27
- Schnabel ECB
- RBA Governor Bullock
Central bank meetings and policy decisions designed to shape markets
There are no major Fed, BoE, BoJ or RBA decisions scheduled for this week on interest rates, leaving investors focused on speeches, incoming data and market interpretation of recent policy meetings.
