Forex Today: Middle East uncertainty keeps investors on edge

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.24%	0.35%	-0.32%	0.39%	-0.68%	0.73%	0.44%
EUR	0.24%		0.59%	-0.13%	0.63%	-0.44%	0.97%	0.67%
GBP	-0.35%	-0.59%		-0.65%	0.04%	-1.02%	0.40%	0.05%
JPY	0.32%	0.13%	0.65%		0.73%	-0.32%	1.07%	0.68%
CAD	-0.39%	-0.63%	-0.04%	-0.73%		-1.09%	0.33%	0.01%
AUD	0.68%	0.44%	1.02%	0.32%	1.09%		1.42%	1.09%
NZD	-0.73%	-0.97%	-0.40%	-1.07%	-0.33%	-1.42%		-0.33%
CHF	-0.44%	-0.67%	-0.05%	-0.68%	-0.01%	-1.09%	0.33%

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).

US President Donald Trump set a deadline at 20:00 EST on Tuesday for Iran to open the Strait of Hormuz and threatened to attack Iranian infrastructure, including power plants and bridges. In response, Iran said that there will be a "much more devastating" retaliation if the US were to carry on with its threats. Meanwhile, citing sources familiar with talks, Axios reported on Sunday that the US, Iran and a group of regional mediators were making a push for a 45-day ceasefire agreement.

US Stock index futures trade mixed in the early European session on Monday, while the US Dollar (USD) Index fluctuates in a tight channel above 100.00 after posting gains previous Thursday and Friday. Crude oil prices correct lower and the barrel of West Texas Intermediate trades at around $103 after rising more than 10% last Thursday.

The US Bureau of Labor Statistics announced on Friday that Nonfam Payrolls (NFP) rose by 178K in March. This print followed February's 133K decline (revised from -92K) and beat the market expectation for an increase of 60K by a wide margin. In this period, the Unemployment Rate edged lower to 4.3% from 4.4%, while the Labor Force Participation Rate declined to 61.9% from 62%. Finally, annual wage inflation, as measured by the change in the Average Hourly Earnings, softened to 3.5% from 3.8%.

EUR/USD moves sideways above 1.1500 in the European morning on Monday after posting marginal gains in the previous week. Sentix Investors Confidence Index data for April will be featured in the European economic calendar.

GBP/USD stages a modest rebound and trades above 1.3200 following a two-day slide.

Gold fell more than 1.5% ahead of the Easter holiday and started the new week with a small bearish gap before finding a foothold. XAU/USD holds steady above $4,650 in the Europen morning.

USD/JPY fluctuates in a narrow band above 159.50 in the European morning on Monday.

Risk sentiment FAQs

What do the terms"risk-on" and "risk-off" mean when referring to sentiment in financial markets?

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.

What are the key assets to track to understand risk sentiment dynamics?

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.

Which currencies strengthen when sentiment is "risk-on"?

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.

Which currencies strengthen when sentiment is "risk-off"?

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.