Forex Today: Japanese Yen rallies on suspected intervention, focus shifts to US data
Here is what you need to know on Wednesday, May 6:
Volatility in financial markets heighten midweek as investors react to latest headlines surrounding the conflict in the Middle East and keep a close eye on the Japanese Yen's action following another suspected foreign exchange intervention. Later in the day, the US economic calendar will feature private sector employment data for April.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.35% | -0.41% | -1.06% | -0.18% | -0.75% | -1.05% | -0.34% | |
| EUR | 0.35% | -0.06% | -0.70% | 0.18% | -0.39% | -0.73% | 0.03% | |
| GBP | 0.41% | 0.06% | -0.64% | 0.25% | -0.33% | -0.64% | 0.11% | |
| JPY | 1.06% | 0.70% | 0.64% | 0.88% | 0.30% | -0.02% | 0.77% | |
| CAD | 0.18% | -0.18% | -0.25% | -0.88% | -0.57% | -0.89% | -0.13% | |
| AUD | 0.75% | 0.39% | 0.33% | -0.30% | 0.57% | -0.31% | 0.44% | |
| NZD | 1.05% | 0.73% | 0.64% | 0.02% | 0.89% | 0.31% | 0.76% | |
| CHF | 0.34% | -0.03% | -0.11% | -0.77% | 0.13% | -0.44% | -0.76% |
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 has paused the "Project Freedom", citing "great progress" toward a permanent peace agreement with Iran. Iranian President Masoud Pezeshkian said the US is pursuing "a policy of maximum pressure" and noted that it's "impossible" for Iran to submit to the US' unilateral demands. Nevertheless, crude Oil prices correct lower on this development and the barrel of West Texas Intermediate (WTI) was last seen trading near $96, losing about 4% on the day. Meanwhile, the US Dollar (USD) Index stays under bearish pressure and falls about 0.5% on the day, near 98.00. Reflecting a positive shift in market mood, US stock index futures rise between 0.3% and 0.8% in the European session.
In the late Asian session, USD/JPY declined sharply and slumped to 155.00 from around 158.00 in less than an hour, pointing to another possible market intervention. At the time of press, USD/JPY was trading at 156.20, down 1.1% on the day.
After struggling to make a decisive move in either direction on Tuesday, EUR/USD gains traction early Wednesday and trades near 1.1730, rising about 0.4% on a daily basis.
GBP/USD gathers bullish momentum and advances to the 1.3600 region after posting marginal gains on Tuesday.
AUD/USD builds on its weekly gains and rises more than 0.7% on the day, trading at its highest level since June 2022 above 0.7230.
Gold (XAU/USD) benefits from the renewed USD weakness and climbs toward $4,700 on Wednesday, rising more than 2.5% on the day.
Employment FAQs
How do employment levels affect currencies?
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
Why is wage growth important?
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
How much do central banks care about employment?
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
