Forex Today: US Dollar steadies as strong PMI data supports cautious Fed outlook

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The US Dollar Index (DXY) trades with a neutral tone near the 99.20 level after stronger than expected US Manufacturing Purchasing Managers Index (PMI) data reinforced expectations that the Federal Reserve (Fed) may maintain a cautious stance on interest rate cuts.

Here is what you need to know for Friday, May 22:

Additional support for the Greenback emerged as Richmond Fed President Thomas Barkin stated that current policy is “in a good place to respond to ongoing shocks,” while adding that long-term inflation expectations remain contained.

US Dollar Price Today

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		0.05%	-0.01%	0.02%	0.25%	-0.00%	-0.05%	-0.06%
EUR	-0.05%		-0.07%	-0.02%	0.19%	-0.07%	-0.17%	-0.13%
GBP	0.00%	0.07%		0.04%	0.25%	0.01%	-0.08%	-0.08%
JPY	-0.02%	0.02%	-0.04%		0.20%	-0.01%	-0.17%	-0.10%
CAD	-0.25%	-0.19%	-0.25%	-0.20%		-0.21%	-0.32%	-0.33%
AUD	0.00%	0.07%	-0.01%	0.01%	0.21%		-0.10%	-0.12%
NZD	0.05%	0.17%	0.08%	0.17%	0.32%	0.10%		-0.00%
CHF	0.06%	0.13%	0.08%	0.10%	0.33%	0.12%	0.00%

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 falls toward the 1.1620 level as broad US Dollar (USD) strength pressures the shared currency. The Euro also remains weighed down by cautious sentiment surrounding the Eurozone growth outlook and expectations that the European Central Bank (ECB) could continue easing policy later this year.

GBP/USD is muted near the 1.3440 level as a stronger USD dominates market sentiment. Sterling also faces pressure after recent UK economic data pointed to a slowdown in growth momentum, while traders continue to assess the outlook for Bank of England (BoE) rate cuts.

USD/JPY rises toward the 158.90 region, approaching the key 160.00 level that previously prompted intervention by Japanese authorities. The pair gained support after the US Manufacturing PMI rose to 55.3 in May, while US Treasury Secretary Scott Bessent stated that the United States and Japan agree that excessive volatility in currency markets is undesirable.

AUD/USD trades higher near the 0.7150 level as traders monitor developments in China’s economic outlook and commodity demand for additional direction.

West Texas Intermediate (WTI) Oil trades near $97.60 per barrel as geopolitical tensions linked to Iran continue to fuel supply concerns and inflation fears.

Gold trades muted near the $4,542 region, struggling to gain momentum as higher US Treasury yields and a firmer USD reduce demand for the non-yielding precious metal.

What’s next in the docket:

Friday, May 22:

Germany Q1 Gross Domestic Product
UK April Retail Sales
Germany May IFO Survey (Business Climate, Current Assessment, Expectations)
Canada March Retail Sales
US May Michigan Consumer Sentiment and Inflation Expectations

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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.

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