Forex Today: US Dollar extends slide as Fed Chair Warsh refrains from hinting at rate path
Here is what you need to know on Friday, October 16:
The US Dollar (USD) continues to weaken against on Friday, after posting losses against its major rivals on Thursday. During the European trading hours, Eurostat will publish revisions to September Harmonized Index of Consumer Prices (HICP) data. Later in the day, the US economic calendar will offer Import Price Index and Export Price Index figures, alongsinde Industrial Production data for September.
The USD came under berish pressure on Thursday as US Treasury bond yields declined sharply. Although hotter-than-expected producer inflation and upbeat Retail Sales figures helped the USD limit its losses in the American session, Federal Reserve Chair Kevin Warsh's comments triggered another leg lower in US T-bond yields and put additional weight on the currency's shoulders. At the time of press, the USD Index was trading at its lowest level in two weeks near 101.70, losing about 0.3% on the day.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.26% | -0.36% | -0.08% | -0.15% | -0.58% | -0.73% | -0.30% | |
| EUR | 0.26% | -0.11% | 0.14% | 0.08% | -0.31% | -0.50% | -0.05% | |
| GBP | 0.36% | 0.11% | 0.27% | 0.22% | -0.21% | -0.38% | 0.06% | |
| JPY | 0.08% | -0.14% | -0.27% | -0.05% | -0.48% | -0.62% | -0.21% | |
| CAD | 0.15% | -0.08% | -0.22% | 0.05% | -0.42% | -0.64% | -0.15% | |
| AUD | 0.58% | 0.31% | 0.21% | 0.48% | 0.42% | -0.17% | 0.30% | |
| NZD | 0.73% | 0.50% | 0.38% | 0.62% | 0.64% | 0.17% | 0.46% | |
| CHF | 0.30% | 0.05% | -0.06% | 0.21% | 0.15% | -0.30% | -0.46% |
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).
Warsh cautious on crisis scars but upbeat on structural growth and AI
Fed Chair Warsh’s speech scored 5.6/10 on the FXS Speechtracker, modestly softer relative to the historical average of 6.1/10, reflecting a balanced but slightly less forceful tone. The admission of being “over-scarred from the global financial crisis” underscored a persistent risk-aware bias even as Warsh highlights structural growth and an investment surge driven by “good policies,” and stressed that upcoming FOMC meetings will be the “crystalizing moment” for decisions on output, employment, and inflation. Warsh’s focus on AI as a near-term demand catalyst and a tool to strengthen data confidence, alongside attention to negative tailside risks, pointed to a cautious optimism that keeps the Fed open to tightening while avoiding pre-commitment on the policy path.
FX strategists at OCBC highlight that the evolving AI-linked investment backdrop could produce what they describe as an “unusual combination: risk-off, lower Treasury yields and a softer USD.” They stress that “this is not the typical global risk-off shock where investors simply rush into USD.” Instead, if the source of market stress is “US-centric, Treasury safe-haven demand can push yields lower even as weaker US asset returns reduce the relative appeal of the USD,” underscoring the Dollar’s growing vulnerability to any slowdown in US-focused AI investment flows.
USD/JPY trades in a tight channel below 158.00 after closing marginally lower on Thursday. Bank of Japan Governor Kazuo Ueda said in a speech, which was read out by Deputy Governor Shinichi Uchida, on Friday that the central bank will continue to raise policy rate in accordance with economic, price, and financial developments.
EUR/USD benefits from the presistent USD weakness and rises toward 1.1250 in the European morning on Friday, rising about 0.2% on the day.
Gold preserves its bullish momentum after gaining more than 1.5% on Thursday and closes in on $4,200.
Gold steadies as US yields, USD and Brent ease while Fed signals patience
OCBC’s FX strategists highlight that Gold “rebounded over 1% overnight, recovering from three consecutive sessions of losses as US Treasury yields and the USD retreated.” They add that “Brent also eased, offering some relief to the inflation/rates backdrop,” while “Fed officials also appeared in no hurry to tighten policy further, helping to temper expectations for an October hike.” Against this backdrop, the bank remains cautiously constructive on the metal’s near-term prospects, with the pullback in yields and a more patient Fed stance seen as supportive for consolidation after recent declines.
GBP/USD broke above 1.3300 early Friday and was last seen trading at its highest level in three weeks near 1.3320. Bank of England (BoE) Governor Andrew Bailey said that the above-target infllation in the UK remains "enormously frustrutaing" but added that it was too early to form strong views on the strength of second round effects.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.