Forex Today: China Q4 GDP beats estimates, US Dollar finds demand
Here is what you need to know on Friday, January 17:
Markets remain in a cautiously optimistic mood, digesting the stronger-than-expected Chinese growth and activity data, while staying nervous before US President-elect Donald Trump’s inaugaration and amid looming tariffs.
China’s economy expanded by 5.4% in the fourth quarter of 2024, exceeding the market’s expectation of 5%. In December, Retail Sales climbed 3.7% from a year earlier, beating forecast of 3.5%,, while Industrial Production increased 6.2% from a year earlier versus expectations of 5.4%.
Mixed market sentiment seems to help revive the haven demand for the US Dollar (USD). Traders resort to short-covering, following the recent USD correction, triggering a minor recovery.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.53% | 0.30% | 0.09% | 0.10% | 0.29% | 0.14% | |
| EUR | -0.17% | 0.35% | 0.14% | -0.08% | -0.07% | 0.13% | -0.03% | |
| GBP | -0.53% | -0.35% | -0.21% | -0.43% | -0.42% | -0.23% | -0.38% | |
| JPY | -0.30% | -0.14% | 0.21% | -0.20% | -0.21% | -0.01% | -0.16% | |
| CAD | -0.09% | 0.08% | 0.43% | 0.20% | -0.00% | 0.20% | 0.05% | |
| AUD | -0.10% | 0.07% | 0.42% | 0.21% | 0.00% | 0.19% | 0.04% | |
| NZD | -0.29% | -0.13% | 0.23% | 0.01% | -0.20% | -0.19% | -0.15% | |
| CHF | -0.14% | 0.03% | 0.38% | 0.16% | -0.05% | -0.04% | 0.15% |
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).
Meanwhile, the US Treasury bond yields continue their lacklustre performance, consolidating weekly losses due to renewed bets that the Federal Reserve (Fed) will deliver two interest rate cuts this year.
Across the FX board, AUD/USD keeps its offered tone intact at around 0.6200 amid lingering US-China trade concerns, shrugging off a strong Chinese data deluge. USD/JPY extends its rebound from monthly lows of 154.98 amid easing China’s economic concerns and a modest US Dollar rebound. But sellers could jump in at higher levels due to increased expectations of an interest rate hike by the Bank of Japan (BoJ) next week.
GBP/USD accelerated its decline toward 1.2150 after the UK Retail Sales unexpectedly fell 0.3% over the month in December, against the estimated 0.4% growth. The annual Retail Sales data also undermined expectations. Soft UK inflation and Retail Sales data fan expectations of aggressive Bank of England (BoE) rate cuts this year.
EUR/USD also incurrs losses to trade under 1.0300 as dovish European Central Bank (ECB) commentary continues to boost the odds for further rate cuts.
USD/CAD recaptures 1.4400 amid USD demand but the upside could remain capped by rebounding Oil prices. WTI oil price is up 0.68% on the day, approaching $78.50 as of writing.
Gold price consolidates weekly gains above $2,700 in the European session, having hit a monthly high of $2,725 on Thursday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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