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Forex Today: US Dollar slides to begin the week, Japanese Yen rallies
Here is what you need to know on Monday, August 19:
The US Dollar (USD) stays under selling pressure early Monday, with the USD Index dropping to its weakest level since early January near 102.00. The economic calendar will not offer any high-impact data releases and investors will pay close attention to comments from central bank officials.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | -0.18% | -1.40% | -0.10% | -0.30% | -0.51% | -0.23% | |
| EUR | 0.20% | -0.06% | -1.17% | 0.09% | -0.20% | -0.49% | -0.07% | |
| GBP | 0.18% | 0.06% | -1.27% | 0.12% | -0.15% | -0.36% | -0.01% | |
| JPY | 1.40% | 1.17% | 1.27% | 1.24% | 1.07% | 1.01% | 1.04% | |
| CAD | 0.10% | -0.09% | -0.12% | -1.24% | -0.23% | -0.33% | -0.17% | |
| AUD | 0.30% | 0.20% | 0.15% | -1.07% | 0.23% | -0.13% | 0.13% | |
| NZD | 0.51% | 0.49% | 0.36% | -1.01% | 0.33% | 0.13% | 0.30% | |
| CHF | 0.23% | 0.07% | 0.00% | -1.04% | 0.17% | -0.13% | -0.30% |
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 USD Index fell over 0.5% on Friday and closed the fifth consecutive week in negative territory. Improving risk mood and the decline seen in the US Treasury bond yields made it difficult for the USD to hold its ground heading into the weekend. In the European morning on Monday, the 10-year US yield stays in the red below 3.9% and US stock index futures trade virtually unchanged on the day.
The Japanese Yen (JPY) is one of the best performing major currencies at the start of the new week. At the time of press, USD/JPY was down 1.5% on the day at 145.30 and EUR/JPY was losing 1.4% near 160.50. During the Asian trading hours, the data from Japan showed that Machinery Orders rose by 2.1% on a monthly basis in June, following the 3.2% contraction recorded in May and surpassing the market expectation for an increase of 1.1%.
After rising 0.5% on Friday, EUR/USD continued to stretch higher and set a new 2024-high at 1.1050 early Monday. Germany's Bundesbank will publish its monthly report later in the European session.
Gold gathered bullish momentum and reached a new record high near $2,510 in the late American session on Friday. XAU/USD stays in a consolidation phase above $2,500 in the European morning on Monday.
GBP/USD extended its uptrend on Friday and registered its highest weekly close since early July at 1.2945. The pair inches higher in the early European session and was last seen trading a few pips above 1.2960.
AUD/USD benefits from the broad-based selling pressure surrounding the US Dollar and trades at its highest level in nearly a month at around 0.6700. Similarly, NZD/USD rises 0.4% on the day near 0.6080.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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