Here is what you need to know for Friday, March 20:
The US Dollar Index (DXY) fell below the 100 mark and is now trading near the 99.40 price zone after investors assessed the Fed’s interest rate decision. Chair Jerome Powell claimed on Wednesday that higher energy prices will likely lead to inflation. Rising inflation will then forestall rates cuts, Powell said, showing a more hawkish stance than expected.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.87% | -1.06% | -1.26% | 0.03% | -0.45% | -0.89% | -0.28% | |
| EUR | 0.87% | -0.20% | -0.42% | 0.89% | 0.42% | -0.03% | 0.59% | |
| GBP | 1.06% | 0.20% | -0.21% | 1.11% | 0.62% | 0.18% | 0.78% | |
| JPY | 1.26% | 0.42% | 0.21% | 1.30% | 0.81% | 0.34% | 1.00% | |
| CAD | -0.03% | -0.89% | -1.11% | -1.30% | -0.47% | -0.93% | -0.32% | |
| AUD | 0.45% | -0.42% | -0.62% | -0.81% | 0.47% | -0.45% | 0.16% | |
| NZD | 0.89% | 0.03% | -0.18% | -0.34% | 0.93% | 0.45% | 0.61% | |
| CHF | 0.28% | -0.59% | -0.78% | -1.00% | 0.32% | -0.16% | -0.61% |
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).
EUR/USD surged to a one-week high, trading near the 1.1560 level after the European Central Bank’s (ECB) interest rate decision left them on hold at 2.00%, the refinancing rate at 2.15%, and the marginal lending rate at 2.40%. In the ECB’s statements, it warned about the upside risks that the Middle East war will pose to inflation worldwide. They also talked about how it would affect economic growth in the near future.
GBP/USD is trading near 1.3400, surging to a one-week high as the Great British Pound (GBP) capitalizes on a weaker US Dollar (USD) after a hawkish hold by the Bank of England (BoE). The rates were unchanged at 3.75% because the Monetary Policy Committee (MPC) expects inflation to keep rising amid the Middle East War. Additionally, BoE governor Andrew Bailey cemented the bullish stance by saying the right place to be is on hold.
USD/JPY fell to an eight-day low at 157.80 after the Bank of Japan (BoJ) also delivered a hold, leaving rates unchanged at 0.75%. The vote was almost unanimous, with eight voting members in favor and one dissenting, who proposed a hike.
AUD/USD stands on fresh gains at 0.7060, trimming half of Wednesday’s losses as the Australian Dollar (AUD) remains supported by high inflation in Australia and the RBA’s hawkish stance.
West Texas Intermediate (WTI) Oil is trading at $94.60 per barrel, erasing all its intraday gains after breaking the $100 mark earlier in the Asian session.
Gold plummeted to an almost two-month low at $4,502, now trading at $4,615 after a week-long bearish rally.
What’s next in the docket:
Friday, March 20
- CNY PBoC Interest Rate Decision
- EUR Producer Price Index (YoY) (Feb)
- CAD Retail Sales (MoM) (Jan)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
