Forecasting the upcoming week: US Dollar steady amid rising PCE inflation, soft GDP
The US Dollar (USD) held firm on Friday after the release of top-tier data, but the US Dollar Index (DXY) posted an acceptable weekly gain of almost 1%. The December Core Personal Consumption Expenditures (PCE) rose by 3% YoY, above market forecasts, signalling an uptick in inflation pressures and supporting the USD. Additionally, the US flash Q4 Gross Domestic Product (GDP) fell to 1.4% from the 3% expected, impacting investors' attraction to the Greenback.
The US Dollar Index (DXY) is trading near the 97.80 level, struggling to attract buyers after weaker-than-expected GDP. On Monday, the US will release the December Factory Orders. On Tuesday, the ADP Employment Change 4-week average, the December Housing Price Index and the February Consumer Confidence reports will be released. On Thursday, Initial Jobless Claims will be the focus of the American session. Last but not least, the US will release the Chicago Purchasing Managers Index (PMI).
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 | -0.08% | -0.19% | 0.00% | -0.05% | -0.34% | -0.04% | 0.02% | |
| EUR | 0.08% | -0.11% | 0.05% | 0.04% | -0.24% | 0.05% | 0.10% | |
| GBP | 0.19% | 0.11% | 0.19% | 0.14% | -0.15% | 0.16% | 0.21% | |
| JPY | 0.00% | -0.05% | -0.19% | -0.04% | -0.34% | -0.04% | 0.02% | |
| CAD | 0.05% | -0.04% | -0.14% | 0.04% | -0.31% | -0.00% | 0.07% | |
| AUD | 0.34% | 0.24% | 0.15% | 0.34% | 0.31% | 0.31% | 0.40% | |
| NZD | 0.04% | -0.05% | -0.16% | 0.04% | 0.00% | -0.31% | 0.06% | |
| CHF | -0.02% | -0.10% | -0.21% | -0.02% | -0.07% | -0.40% | -0.06% |
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 1.1780 price region, sliping even after the United States (US) Supreme Court ruled against President Donald Trump's tariffs. On Monday, the Germany IFO reports will release alongside Italian January CPI. On Wednesday, Germany GDP and March’s GfK Consumer Confidence Survey will be the spotlight. On Thursday, Eurozone February Business Climate, Consumer Confidence and Economic Sentiment Indicator will be released. On Friday, Germany will release its Unemployment Change and Rates alongside Spain’s February flash Harmonized Index of Consumer Prices (HICP).
GBP/USD is trading near the 1.3490 price zone, losing ground throughout the week, as United Kingdom (UK) jobs and inflation data both supported a BoE interest rate cut next month, bolstering market expectations of such a move.
AUD/USD is trading near the 0.7080 level after having moved up and down during the day, but staying in the green as the American session fades. Australia will release the Private Capital Expenditure on Thursday.
USD/JPY is trading near the 155.10 price zone, trimming almost all its gains after weaker-than-expected US data. On Thursday, Japan will see the January Large Retailer Sales, Retail Trade, and the Retail Trade S.A.
USD/CAD is trading near the 1.3690 price region, little changed after Canadian Retail Sales declined 0.4% MoM in December, slightly better than the expected 0.5% drop but reversing November’s 1.2% increase. On Thursday, Canada will release the Current Account report.
Gold is trading at $5,077, trimming almost all of this week’s losses as market uncertainty stepped up.
Anticipating economic perspectives: Voices on the horizon
Monday, February 23:
- BoE's Taylor.
- Fed’s Waller.
- ECB’s Lagarde.
Tuesday, February 24:
- Fed's Goolsbee.
- Fed's Bostic.
- Fed's Collins.
- Fed's Cook.
- Fed's Barkin.
- Fed's Collins.
Wednesday, February 25:
- President Donald Trump.
- RBA Governor Bullock.
- Fed's Schmid.
- Fed's Musalem.
Thursday, February 26:
- ECB’s Lagarde.
- BoE’s Lombardelli.
- Fed's Bowman.
Friday, February 27:
- BoE’s Pill.
- ECB’s Kocher.
Central banks' meetings and upcoming data releases to shape monetary policies
Sunday, February 22:
- NZD Retail Sales.
Wednesday, February 25:
- Australian CPI.
Thursday, February 26:
- Tokyo CPI.
Friday, February 27:
- Swiss GDP (Q4).
- Germany’s February flash CPI.
- Germany’s February flash HICP.
- Canadian GDP (Q4).
- US Producers Price Index (PPI).
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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