Forex Today: US Dollar trims gains despite strong ADP jobs data
Here is what you need to know on Wednesday, February 18:
The United States (US) released the four-week average of the ADP Employment Change, which showed the private sector added 10.3 K jobs, beating the previous week 7.8K. Moving up, the Bank of Canada (BoC) released its January Consumer Price Index (CPI), showing inflation fell to 2.3% YoY from the expected and previous 2.4%.
The US Dollar Index (DXY) is trading near the 97.20 price region, trimming back all its intraday gains after hitting a one-week high of 97.54.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.50% | -0.15% | 0.03% | -0.09% | -0.21% | 0.12% | |
| EUR | -0.04% | 0.46% | -0.22% | 0.00% | -0.14% | -0.26% | 0.08% | |
| GBP | -0.50% | -0.46% | -0.64% | -0.47% | -0.59% | -0.71% | -0.38% | |
| JPY | 0.15% | 0.22% | 0.64% | 0.19% | 0.07% | -0.05% | 0.28% | |
| CAD | -0.03% | -0.00% | 0.47% | -0.19% | -0.12% | -0.24% | 0.08% | |
| AUD | 0.09% | 0.14% | 0.59% | -0.07% | 0.12% | -0.12% | 0.21% | |
| NZD | 0.21% | 0.26% | 0.71% | 0.05% | 0.24% | 0.12% | 0.34% | |
| CHF | -0.12% | -0.08% | 0.38% | -0.28% | -0.08% | -0.21% | -0.34% |
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 is trading near the 1.1850 level, broadly unchanged after trimming its intraday losses following the release of Germany's January Harmonized Index of Consumer Prices (HICP), which aligned with expectations of 2.1%. The February ZEW Survey was released for both Germany and the Eurozone, showing that overall sentiment declined across the European area.
GBP/USD is trading near the 1.3560 price region, sloping downward after the United Kingdom (UK) Claimant Count Change, Employment Change, and the ILO Unemployment Rate for December showed a broad deterioration in the labor market.
AUD/USD is trading near the 0.7080 price region, having recovered after touching a five-day low following the release of the Reserve Bank of Australia (RBA) minutes.
USD/CAD is trading near the 1.3640 price region, stepping down from the surge it had before the Canadian CPI was released lower-than-expected.
USD/JPY is trading near the 153.20 price region, cutting back on its losses but still in the red, as Japanese Prime Minister Sanae Takaichi’s pro-stimulus policy agenda and the Bank of Japan (BoJ) hawkish stance are bolstering the Japanese Yen (JPY)
Gold is trading near the $4,877 level, struggling to recover the $5,000 level .
What's next in the docket:
Wednesday, February 18:
- RBNZ Interest Rate Decision.
- January UK CPI.
- US Federal Open Market Committee Minutes.
Thursday, February 19:
- Australian January Employment Change.
- Australian Unemployment Rate.
Friday, February 20:
- UK January Retail Sales.
- Germany February flash HCOB Composite PMIs
- Eurozone PMIs
- UK flash February S&P Global PMIs.
- US December Core Personal Consumption Expenditures.
- February US S&P Global PMIs.
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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