US Dollar Approaches Three Week Peak in Forex Markets

James West
Cash dollars lying on the plane

The US dollar found itself approaching a three-week peak on Wednesday morning.

The dollar index, which tracks how the greenback performs in relation to a group of six other currencies, was recorded at 96.32 – close to the high point of 96.484 it reached before.

The move came largely as a result of the Bank of Japan’s decision to keep its interest rates low – leading to a plunge in value for the yen.

This was reinforced by worries about how the global economy is performing as a whole. Recent days have seen various pessimistic interpretations of what could come next for major economies, and risk aversion has spiked.

Elsewhere in the world, there was bad news for the dollar. The pound sterling managed to edge upwards in the GBP/USD pair, and rose 0.5% over the course of the earlier trading session.

It was recorded at $1.2961. This came despite a continued deadlock in parliament, with Prime Minister Theresa May’s preferred Brexit options, or indeed any other options, seemingly unable to find support.

The euro held steady at $1.1367.

With the midweek point where there is still plenty for foreign exchange traders to keep their eyes out for as trading continues.

This afternoon sees retail sales information for November out of Canada. This is due at 1.30pm GMT and is expected to show a move from 0.3% to -0.6%.

Japanese foreign bond investment information is due at 11.50pm GMT, while data on foreign investment in Japanese stocks will be out at the same time.

The World Economic Forum in Davos continues today and will go on into tomorrow as well. However, this year’s event has been perceived by some to not be quite as significant as previous years, given that several leaders, including US President Donald Trump, will not be attending.

All eyes will be on the Asia-Pacific tomorrow too. Australia’s employment change data for December is due at 12.30am GMT, while the participation rate for November is expected at the same time. This latter metric is due to stay at 65.7%.

New Zealand will release credit card spending information for December at 2am.

The significant political event of tomorrow will be the US Senate’s vote on the government shutdown. The Senate will vote on several different options and attempt to open up some of the government organisations which have been closed in recent weeks.

The day will close with the Tokyo CPI (excluding fresh food) out of Japan, which covers January and is due at 11.30pm GMT.

On Friday, German information on the business climate in January will be out at 9am GMT.

A mortgage approvals measure from the British Bankers’ Association (BBA) will be out at 9.30am GMT. This will cover the month of December and is expected to show a slight drop.

The US monthly budget statement will be out on Friday covering the month of December. This is expected at 7pm GMT.

The Australia Day public holiday will take place on Saturday, meaning there may be some slowdown around AUD trading.

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