Forex Today: US Dollar near four-week high ahead of core PCE, GDP and PMI data
Here is what you need to know on Friday, February 20:
The number of United States (US) citizens submitting new unemployment insurance applications decreased to 206K, much lower than initial estimates of 225K, and down from the previous week’s revised 229K, according to the US Department of Labor.
Focus now turns to US data released on Friday, including the Core Personal Consumption Expenditures (PCE) Price Index, the advance estimate for fourth-quarter US Gross Domestic Product (GDP), and preliminary February Purchasing Managers Index (PMI) data.
The US Dollar Index (DXY) trades near a four-week high of 97.90, underpinned by stronger-than-expected results from the weekly US labour market data. Investors keep digesting Wednesday’s release of the FOMC Minutes, which showed a still pretty divided Committee.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.36% | 0.16% | 0.05% | -0.06% | 0.00% | 0.37% | |
| EUR | -0.17% | 0.19% | -0.04% | -0.14% | -0.23% | -0.16% | 0.21% | |
| GBP | -0.36% | -0.19% | -0.21% | -0.31% | -0.42% | -0.35% | 0.01% | |
| JPY | -0.16% | 0.04% | 0.21% | -0.12% | -0.22% | -0.18% | 0.20% | |
| CAD | -0.05% | 0.14% | 0.31% | 0.12% | -0.10% | -0.05% | 0.32% | |
| AUD | 0.06% | 0.23% | 0.42% | 0.22% | 0.10% | 0.07% | 0.44% | |
| NZD | -0.00% | 0.16% | 0.35% | 0.18% | 0.05% | -0.07% | 0.37% | |
| CHF | -0.37% | -0.21% | -0.01% | -0.20% | -0.32% | -0.44% | -0.37% |
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 1.1770 price region after markets digested the news that European Central Bank (ECB) President Christine Lagarde may step down earlier than her planned retirement in October 2027.
GBP/USD is trading near the 1.3460 price region, under pressure from cooling United Kingdom (UK) inflation and job market conditions, which have weighed heavily on the British currency.
USD/JPY is trading near the 154.90 price region, trimming almost half of yesterday’s losses after resilient US economic data and a hawkish tone in the Federal Open Market Committee (FOMC) Minutes.
AUD/USD is trading near the 0.7050 price zone, losing all its momentum after having posted a three-year high last week.
USD/CAD is trading close to the 1.3700 level, maintaining a week-long rally as the Bank of Canada (BoC) adopts a dovish stance while inflationary pressure has remained close to the central bank’s 2% target.
Gold is trading at $4,982 seeing little change throughout the day as geopolitical tensions eased.
What’s next in the docket:
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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