Forex Today: Markets rally as US-EU tensions ease, Gold hits record high
Here is what you need to know on Friday, January 23:
Risk aversion eased after US President Donald Trump reiterated that he had agreed with NATO on "the framework of a future deal with respect to Greenland". Trump and NATO Secretary General Mark Rutte spoke in Switzerland. Following the meeting, Trump dropped threats to impose tariffs on eight European countries, effective on February 1.
DXY is trading near the 98.40 price region, continuing to slip even after positive US data. The Personal Consumption Expenditure (PCE) data for October and November came in pretty much as expected, showing inflation in the country remains a tad higher than what the Federal Reserve (Fed) would like, yet below concerning levels. Additionally, the Q3 Gross Domestic Product (GDP) was revised slightly higher, from 4.3% to 4.4%. As a result, expectations for a rate cut in the January 27-28 meeting have been completely eliminated.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.52% | -0.55% | -0.03% | -0.34% | -1.20% | -1.11% | -0.70% | |
| EUR | 0.52% | -0.03% | 0.48% | 0.16% | -0.68% | -0.59% | -0.18% | |
| GBP | 0.55% | 0.03% | 0.53% | 0.21% | -0.65% | -0.56% | -0.16% | |
| JPY | 0.03% | -0.48% | -0.53% | -0.30% | -1.14% | -1.07% | -0.65% | |
| CAD | 0.34% | -0.16% | -0.21% | 0.30% | -0.85% | -0.76% | -0.35% | |
| AUD | 1.20% | 0.68% | 0.65% | 1.14% | 0.85% | 0.10% | 0.50% | |
| NZD | 1.11% | 0.59% | 0.56% | 1.07% | 0.76% | -0.10% | 0.41% | |
| CHF | 0.70% | 0.18% | 0.16% | 0.65% | 0.35% | -0.50% | -0.41% |
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).
AUD/USD is trading near the 0.6840 price zone, holding near the highs reached in Oct 2024. time as the Australian Dollar (AUD) gains ground on a weakened USD.
EUR/USD is trading near the 1.1740 price region, trimming back some of its intraday gains, but still on the green in the American session.
USD/JPY is trading near 158.30, seeing little movement for the third American session in a row as markets await the Bank of Japan (BoJ) announcement of its monetary policy decision in the Asian session on Friday.
Gold hit a fresh record high of $4,915 and is now trading near that level at $4,908, even as risk appetite improved as tensions between the US and Europe eased following the beginning of an agreement over Greenland.
What’s next:
Later on Thursday, the Reserve Bank of New Zealand (RBNZ) will release the Consumer Price Index data alongside S&P Purchasing Managers' Indexes (PMI). Japan will later release the National CPI data.
The BoJ will release its monetary policy announcement, along with a statement and a press conference, in the Asian session on Friday.
The preliminary Hamburg Commercial Bank (HCOB) PMIs for January for Germany and the Eurozone will be released at the start of the European session on Friday. UK and US S&P PMIs for January.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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