Forex Today: USD firms after FOMC minutes, ECB succession in focus
Here is what you need to know on Thursday, February 19
European Central Bank (ECB) President Christine Lagarde may step down from her job earlier than her planned retirement in October 2027, according to a report by the Financial Times. That would allow French President Emmanuel Macron to influence the nomination of Lagarde’s successor before his term ends in May next year. An ECB spokesperson said on Wednesday that Lagarde hasn't made a decision on whether to serve out her full term.
Regarding the US, the Federal Reserve (Fed) released the Minutes of the Federal Open Market Committee (FOMC) January monetary policy meeting, where several policymakers reportedly said that further rate cuts would be appropriate if inflation declined in line with their expectations.
At the same time, the Committee made clear it is not operating with a one-way bias. Several participants said they would have supported describing future decisions in more two-sided terms, reflecting the possibility that hikes could be appropriate if inflation remained above target. In other words, the reaction function remains flexible. Officials continued to anticipate a move on inflation toward the 2% objective, but acknowledged uncertainty about the pace and timing.
The US Dollar Index (DXY) is trading near the 97.70 price region, posting a one-week high after the FOMC Minutes release.
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 | 0.56% | 0.46% | 1.01% | 0.44% | 0.59% | 1.37% | 0.37% | |
| EUR | -0.56% | -0.10% | 0.42% | -0.12% | 0.03% | 0.81% | -0.19% | |
| GBP | -0.46% | 0.10% | 0.52% | -0.02% | 0.13% | 0.91% | -0.09% | |
| JPY | -1.01% | -0.42% | -0.52% | -0.54% | -0.38% | 0.41% | -0.61% | |
| CAD | -0.44% | 0.12% | 0.02% | 0.54% | 0.15% | 0.94% | -0.07% | |
| AUD | -0.59% | -0.03% | -0.13% | 0.38% | -0.15% | 0.78% | -0.22% | |
| NZD | -1.37% | -0.81% | -0.91% | -0.41% | -0.94% | -0.78% | -0.99% | |
| CHF | -0.37% | 0.19% | 0.09% | 0.61% | 0.07% | 0.22% | 0.99% |
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 1.1790 after the USD strengthened following the FOMC Minutes and rumours about ECB Lagarde.
GBP/USD is trading near the 1.3500 level, nearing a one-month low after soft UK inflation and labor data fueled Bank of England rate cut bets.
USD/JPY: surged to a one-week high near the 154.80 price region as the USD bolstered. On another note, Japanese Prime Minister Sanae Takaichi said she won't comment on market moves, including FX.
AUD/USD is trading near 0.7040, slipping as the Australian Dollar (AUD) loses ground against a stronger USD.
USD/CAD is trading near the 1.3700 price zone, touching a one-week high after softer-than-expected Canadian CPI figures strengthened the Bank of Canada (BoC) rate cut expectations.
Gold is trading at $4,980 throughout the American session, having seen little movement after recovering Tuesday’s losses.
What’s next in the docket:
Thursday, February 19:
- Australian January Employment Change.
- Australian Unemployment Rate.
- ECB’s Lagarde speech.
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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