Forex Today: US Dollar holds gains ahead of US data, Fedspeak
Here is what you need to know on Thursday, January 15:
The US Dollar (USD) gains ground against its major counterparts on Thursday, supported by robust US Retail Sales data for November. Traders will take more cues from the weekly US Initial Jobless Claims report, which will be released later on Thursday. Fed officials are also set to speak, including Raphael Bostic, Michael Barr, Thomas Barkin, and Jeff Schmid.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.02% | -0.02% | 0.11% | 0.06% | 0.17% | 0.09% | |
| EUR | -0.08% | -0.06% | -0.09% | 0.03% | -0.02% | 0.09% | 0.02% | |
| GBP | -0.02% | 0.06% | -0.04% | 0.09% | 0.04% | 0.14% | 0.07% | |
| JPY | 0.02% | 0.09% | 0.04% | 0.11% | 0.07% | 0.14% | 0.10% | |
| CAD | -0.11% | -0.03% | -0.09% | -0.11% | -0.04% | 0.06% | -0.00% | |
| AUD | -0.06% | 0.02% | -0.04% | -0.07% | 0.04% | 0.11% | 0.04% | |
| NZD | -0.17% | -0.09% | -0.14% | -0.14% | -0.06% | -0.11% | -0.07% | |
| CHF | -0.09% | -0.02% | -0.07% | -0.10% | 0.00% | -0.04% | 0.07% |
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).
The US Retail Sales rose more than expected in November, while US producer prices picked up slightly during the same period. These reports have supported the case for the US central bank to hold the interest rates steady in January. Markets still expect two rate reductions this year, but not before Powell's term ends in May.
Meanwhile, Fed Chair Jerome Powell called out the US President Donald Trump administration's decision to subpoena him, saying it amounted to intimidating the US central bank into delivering lower interest rates. Trump stated on Wednesday that he has no plans to fire Powell despite the Justice Department's criminal investigation into the Fed Chair, but it was "too early" to say what he would ultimately do.
Traders will closely monitor the latest geopolitical developments surrounding the Iranian civil unrest. Trump said early Thursday that Iran has “no plan for executions,” amid fears for the fate of a detained anti-government protester. Nonetheless, the US President declined to take military action off the table, saying his administration will wait and see.
AUD/USD holds losses below 0.6700 after Australia’s Consumer Inflation Expectations data. The figure eased to 4.6% in January from 4.7% in the previous month.
USD/JPY attracts some sellers to near 158.40, but is pinned near 18-month highs. Traders remain wary of intervention after strong warnings ahead of an election in Japan.
EUR/USD remains capped below 1.1650 as tensions in the Middle East keep the shared currency within familiar levels. Traders await the Harmonized Index of Consumer Prices (HICP) data from Germany, which is due on Friday.
GBP/USD holds steady around 1.3430 as traders prefer to wait on the sidelines ahead of the UK Gross Domestic Product (GDP) report for November. The UK economy is projected to grow 0.1% MoM in November.
Gold retreats after hitting a fresh record high of $4,643 in the previous session, trading around $4,600 per troy ounce in Thursday’s early European session. Silver retraces from its all-time high of $93.51 amid easing tensions in Iran, resulting in a decline in the appeal of safe-haven demand.
WTI declines to near $60.00 after Trump signaled that he might not attack Iran. Furthermore, the Energy Information Administration (EIA) weekly report showed crude oil inventories continue to rise.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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