Forex Today: Risk mood improves but market action remains subdued
Here is what you need to know on Monday, September 4:
There is a positive shift in risk mood at the beginning of the week, as reflected by the impressive gains recorded in major Asian equity indexes on Monday. The European economic docket will feature Sentix Investor Confidence data for September and European Central Bank President Christine Lagarde will be delivering a speech in the early American session. Nevertheless, trading action is likely to remain subdued in the second half of the day, as markets in the US and Canada will be closed in observance of the Labor Day holiday.
In the late American session on Friday, the US Dollar gathered strength against its major rivals. Following the sharp decline seen in the first half of the week, the US Dollar Index (DXY) closed the week virtually unchanged above 104.00. In the European morning, DXY trades modestly lower on the day.
Nonfarm Payrolls in the US rose 187,000 in August, the US Bureau of Labor Statistics announced on Friday. Although this reading surpassed the market expectation of 170,000, the downward revision to the July print - from 187,000 to 157,000, made it difficult for the USD to gather strength against its rivals with the immediate reaction. Other details of the report revealed that the Unemployment Rate climbed to 3.8% from 3.5% as the Labor Force Participation Rate improved to 62.8% from 62.6%.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | -0.21% | -0.08% | -0.90% | -0.25% | -0.76% | -0.04% | |
| EUR | -0.06% | -0.27% | -0.12% | -0.96% | -0.31% | -0.82% | -0.12% | |
| GBP | 0.21% | 0.26% | 0.14% | -0.69% | -0.04% | -0.57% | 0.14% | |
| CAD | 0.06% | 0.09% | -0.15% | -0.84% | -0.19% | -0.72% | 0.00% | |
| AUD | 0.90% | 0.94% | 0.69% | 0.83% | 0.64% | 0.12% | 0.84% | |
| JPY | 0.25% | 0.32% | 0.06% | 0.19% | -0.64% | -0.50% | 0.19% | |
| NZD | 0.76% | 0.81% | 0.55% | 0.68% | -0.14% | 0.51% | 0.70% | |
| CHF | 0.07% | 0.12% | -0.15% | 0.00% | -0.85% | -0.19% | -0.72% |
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Following the decision by the People's Bank of China to lower the foreign exchange reserve requirement ratio to boost onshore US Dollar liquidity ahead of the weekend, news of troubled Chinese real-estate developer Country Garden winning approval from creditors to extend payments for an onshore private bond helped market mood improve early Monday. Hong Kong's Hang Seng gained more than 2% on the first trading day of the week and the Shanghai Composite rose nearly 1.5%.
EUR/USD lost more than 50 pips on Friday and closed the week in negative territory below 1.0800. The pair holds its ground early Monday and recovers toward 1.0800. Earlier in the day, the data from Germany showed that the country's trade surplus narrowed to €15.9 billion in July from €18.7 billion in June.
GBP/USD registered strong gains in the first half of the week but erased them all in a two-day slide ahead of the weekend. The pair clings to modest daily gains above 1.2600 in the European morning on Monday.
AUD/USD benefited from improving risk mood and started to climb toward 0.6500 on Monday. In the Asian trading hours on Tuesday, the Reserve Bank of Australia (RBA) will announce monetary policy decisions. The RBA is widely expected to leave its key interest rate unchanged at 4.1%.
Gold struggled to preserve its bullish momentum on Friday but ended up posting gains for the second consecutive week. XAU/USD holds steady above $1,940 on Monday.
USD/JPY rallied on surging US yields on Friday and stabilized above 146.00 at the beginning of the week.