Forex News

US Dollar strengthens ahead of Fed: Forex Today

Published by
Nonhlanhla P Dube
  • The US dollar strengthened on Monday, following Friday’s gains and better-than-anticipated American data, while rising US government bond yields also supported the currency.
  • Central banks take center stage, with the Bank of Japan and the Reserve Bank of Australia announcing their decisions last week, and the United States Federal Reserve and the European Central Bank set to follow this week.
  • Wall Street advanced on news of JP Morgan buying most First Republic Bank assets, while commodity-linked currencies were the best performers against the US dollar.

Financial markets experienced volatility on Monday, despite most major countries celebrating Labour Day, keeping local markets closed. The US Dollar gained strength against its rivals, initially extending Friday’s gains and later taking advantage of better-than-anticipated American data.

The US Dollar rally continued at the beginning of the week, then reversed during European hours, with thin volumes exacerbating the movements. It later resumed its advance following the release of US figures, including the April ISM Manufacturing PMI that improved more than anticipated, and March Construction Spending that rose by 0.3% MoM, better than the 0.1% decline expected by market players. The US Dollar was also supported by rising US government bond yields.

Central banks are expected to take center stage this week, with the Bank of Japan, the Reserve Bank of Australia, the United States Federal Reserve, and the European Central Bank all making announcements. Wall Street advanced following news that JP Morgan bought most First Republic Bank assets, rescuing the troubled institution with blessings from the US regulator, the Federal Deposit Insurance Corporation. XAU/USD briefly traded above $2,000 but shed over $20 ahead of the close, opening the door for a bearish extension. EUR/USD settled around 1.0960, maintaining the pressure at the lower end of its latest range and at risk of falling further.

GBP/USD trades below 1.2500, but the risk of another leg lower is limited. The Japanese yen is the worst performer, as USD/JPY surged to the 137.50 region, and commodity-linked currencies were the best performers against the US Dollar, finding support in the better tone of Wall Street.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube
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