Forex Today: Gold corrects from record-high, USD awaits key data releases
Here is what you need to know on Thursday, September 4:
Financial markets turn relatively quiet early Thursday, following the volatile action seen in the first half of the week. The US Dollar (USD) holds its ground as investors await key macroeconomic data releases, including weekly Jobless Claims, July Goods Trade Balance, August ADP Employment Change and the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI). Several Federal Reserve (Fed) policymakers are scheduled to deliver speeches during the American trading hours as well.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.41% | 0.55% | 0.89% | 0.58% | 0.35% | 0.43% | 0.68% | |
| EUR | -0.41% | 0.12% | 0.41% | 0.16% | -0.06% | 0.01% | 0.27% | |
| GBP | -0.55% | -0.12% | 0.16% | 0.04% | -0.18% | -0.11% | 0.19% | |
| JPY | -0.89% | -0.41% | -0.16% | -0.26% | -0.53% | -0.43% | -0.19% | |
| CAD | -0.58% | -0.16% | -0.04% | 0.26% | -0.20% | -0.15% | 0.15% | |
| AUD | -0.35% | 0.06% | 0.18% | 0.53% | 0.20% | 0.07% | 0.37% | |
| NZD | -0.43% | -0.01% | 0.11% | 0.43% | 0.15% | -0.07% | 0.30% | |
| CHF | -0.68% | -0.27% | -0.19% | 0.19% | -0.15% | -0.37% | -0.30% |
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 improving risk mood and the disappointing employment-related data from the US, which showed that the JOLTS Job Openings declined to 7.18 million in July from 7.35 million in June, caused the USD Index to stretch lower in the American session on Wednesday. US President Donald Trump said on Wednesday that he remains committed to pursuing a peace agreement between Russia and Ukraine, despite mounting uncertainty over the prospect of talks between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. In the European session on Thursday, the USD Index clings to small daily gains above 98.00, while US stock index futures trade virtually unchanged.
Gold extended its bullish rally into a seventh consecutive trading day on Wednesday and touched a new record-high of $3,578. Early Thursday, XAU/USD corrects lower and trades below $3,550.
EUR/USD closed marginally higher on Wednesday but struggled to gather further bullish momentum early Thursday. The pair was last seen fluctuating in a narrow channel at around 1.1650. Later in the European session, Eurostat will release Eurozone Retail Sales data for July.
The data from Australia showed in the Asian session that the trade surplus widened to A$7.3 billion ($4.74 billion) in July, from a revised A$5.4 billion in June. This reading surpassed the market expectation for a surplus of A$4.9 billion by a wide margin. Despite the upbeat data, AUD/USD stays on the back foot and trades in negative territory below 0.6550.
GBP/USD rose nearly 0.4% on Wednesday and erased a portion of Tuesday's losses as yields on the long-dated UK gilts corrected lower. GBP/USD edges lower early Thursday and trades below 1.3450. United Kingdom (UK) Chancellor of the Exchequer Rachel Reeves dismissed concerns from Britain's National Institute of Economic and Social Research (NIESR), which forecast that the UK faces a £50 billion budget gap and that the government may need to dip into International Monetary Fund (IMF) funding pools in the future if Parliament can't sort out its budget issues.
After rising to its highest level in a month above 149.00 on Wednesday, USD/JPY lost its traction and closed the day marginally lower. USD/JPY holds its ground early Thursday and rises toward 148.50.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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