Forex Today: Markets quiet down on Thanksgiving Day holiday
Here is what you need to know on Thursday, November 27:
The trading action turns subdued in financial markets on Thursday, with volumes thinning out amid the Thanksgiving Day holiday in the United States (US). The European economic calendar will feature business and consumer sentiment data, and the European Central Bank (ECB) will publish the accounts of the October policy meeting.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -0.98% | -0.20% | -0.46% | -1.04% | -1.80% | -0.48% | |
| EUR | 0.61% | -0.37% | 0.42% | 0.16% | -0.44% | -1.20% | 0.14% | |
| GBP | 0.98% | 0.37% | 0.79% | 0.53% | -0.06% | -0.83% | 0.51% | |
| JPY | 0.20% | -0.42% | -0.79% | -0.26% | -0.89% | -1.74% | -0.27% | |
| CAD | 0.46% | -0.16% | -0.53% | 0.26% | -0.57% | -1.36% | -0.02% | |
| AUD | 1.04% | 0.44% | 0.06% | 0.89% | 0.57% | -0.76% | 0.59% | |
| NZD | 1.80% | 1.20% | 0.83% | 1.74% | 1.36% | 0.76% | 1.35% | |
| CHF | 0.48% | -0.14% | -0.51% | 0.27% | 0.02% | -0.59% | -1.35% |
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 upbeat macroeconomic data releases from the US helped the US Dollar (USD) hold its ground in the early American session on Wednesday but the risk-positive market atmosphere made it difficult for the currency to gather strength.
The US Department of Labor reported that there were 216,000 Initial Jobless Claims in the week ending November 22, a decrease of 6,000 from the previous week's revised level. Other data from the US showed that Durable Goods Orders rose by 0.5% in September, beating the market expectation for an increase of 0.3%. Meanwhile, Wall Street's main indexes built on weekly gains after the opening bell on Wednesday, reflecting the risk-positive market atmosphere. Early Thursday, the USD Index moves sideways slightly above 99.50, losing more than 0.5% on a weekly basis.
While presenting the Autumn Budget, UK Finance Minister Rachel Reeves announced on Wednesday that they will increase tax rates on savings, dividend and property income by 2%. She also noted that they will extend the freeze on income tax thresholds by a further 3 years from 2028 but raise alcohol duties in line with inflation. GBP/USD rose about 0.6% on Wednesday and touched its highest level in about a month near 1.3270 in the Asian session on Thursday before entering a consolidation phase below 1.3250.
After posting strong gains for two consecutive days, EUR/USD tested 1.1610 in the Asian session on Thursday. The pair stays relatively quiet to start the European session on Thursday and fluctuates in a narrow channel below 1.1600.
Following Tuesday's decline, USD/JPY benefited from the improving risk mood and registered modest gains midweek. The pair stays on the back foot early Thursday and declines toward 156.00.
Gold holds steady above $4,150 after rising about 0.8% on Wednesday. Growing expectations for a Federal Reserve (Fed) rate cut in December helps XAU/USD cling to its bullish stance in the near term.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.