Forecasting the upcoming week: Middle East war boosts Oil, NFP miss shakes US Dollar
The Middle East crisis has escalated into an all-out war after the US and Israel assassinated the Supreme Leader of Iran on February 28. Iran not only targeted Israel but also attacked United States (US) military bases around the Persian Gulf. The Strait of Hormuz has been blocked by Iranian forces, cutting off Asia’s primary source of oil.
As demand for safety skyrocketed, the biggest beneficiary was not who you are guessing; it was the Greenback, which took investors' focus away from the bright metal as the US Dollar Index (DXY) traded around the 99.70 price region during the week, now settling down at 99.00, staying muted on Friday. On another note, the US Nonfarm Payrolls (NFP) report indicated a decline of 92K in employment in February, significantly missing expectations for an increase of 59K. Additionally, January’s figure was revised down from 130K to 126K. Additionally, the Unemployment Rate rose slightly to 4.4%, up from 4.3%.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | -0.27% | 0.06% | -0.59% | -0.22% | -0.11% | -0.59% | |
| EUR | 0.07% | -0.21% | 0.16% | -0.53% | -0.16% | -0.05% | -0.54% | |
| GBP | 0.27% | 0.21% | 0.38% | -0.32% | 0.05% | 0.16% | -0.33% | |
| JPY | -0.06% | -0.16% | -0.38% | -0.66% | -0.29% | -0.19% | -0.67% | |
| CAD | 0.59% | 0.53% | 0.32% | 0.66% | 0.36% | 0.47% | -0.01% | |
| AUD | 0.22% | 0.16% | -0.05% | 0.29% | -0.36% | 0.11% | -0.39% | |
| NZD | 0.11% | 0.05% | -0.16% | 0.19% | -0.47% | -0.11% | -0.49% | |
| CHF | 0.59% | 0.54% | 0.33% | 0.67% | 0.01% | 0.39% | 0.49% |
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 1.1600 level, trimming back almost all its intraday losses. On a weekly basis, the Euro (EUR) was heavily affected by Oil and gas price volatility, as Europe relies on energy imports. While the Union has planned ahead since the Russia-Ukraine war and has full storage ahead of the winter, demand will likely add to higher energy prices.
GBP/USD is trading near the 1.3400 price region, as the Pound gains some footing over the USD at the end of the week, supported by traders pricing in a 20-30% chance of a 25-basis-point Bank of England (BoE) interest rate cut in March, down from approximately 80% before the conflict.
USD/JPY is trading near the 157.70 price, trading in a tightly-bound range during the American session. Bank of Japan (BoJ) Deputy Governor Ryozo Himino commented that the central bank is vigilant about the Japanese Yen (JPY) moves, as it could affect core inflation.
AUD/USD is trading near the 0.7030 level as the Australian Dollar (AUD) regains some ground, aided by firmer Gold.
Oil prices soared to near highs it hadn’t touched since November 2023 at $90.20 per barrel.
Gold is trading at $5,147, hovering above Thursday’s losses now trying to test the $5,200 less again.
Anticipating economic perspectives: Voices on the horizon
Monday, March 9:
- ECB’s Elderson.
Wednesday, March 11
- ECB’s De Guindos.
- Fed’s Bowman.
- ECB’s Schnabel.
Thursday, March 12:
- BoE’s Governor Bailey.
- Fed’s Bowman.
Central banks' meetings and upcoming data releases to shape monetary policies
Sunday, March 8:
- Japan, January, Labor Cash Earnings
- Japan, January, Current Account n.s.a.
Monday, March 9:
- China, February, CPI.
- China, February, PPI.
- Germany, January, Factory Orders n.s.a.
- Germany, January, Factory Orders s.a.
- Germany, January, Industrial Production n.s.a. W.d.a.
- Germany, January Industrial Production s.a.
- Eurozone, Eurogroup meeting.
- Eurozone, March, Sentix Investor Confidence.
- Australia, March, Westpac Consumer Confidence.
- Japan, March, GDP (Q4).
Tuesday, March 10:
- United Kingdom, February, BRC Like-For-Like Retail Sale.
- China, February, Exports.
- China, February, Trade Balance.
- Germany, January, Trade Balance.
- Eurozone, EcoFin Meeting.
- United States, ADP Employment Change.
- United States, February, Existing Home Sales Change.
Wednesday, March 11:
- Germany, February, HICP.
- United Kingdom, BoE Monetary Policy Report Hearings.
- United Kingdom, Consumer Inflation Expectations.
- United States, February, CPI.
Thursday, March 12:
- Australia, March, Consumer Inflation Expectations
- UK, January, Industrial Production.
- United States, January, Building Permits.
- United States, January, Housing Starts.
- United States, Initial Jobless Claims.
- United States, February, Monthly Budget Statement.
- New Zealand, February, Business NZ PMI.
Friday, March 13:
- UK, January, GDP.
- UK, January, Manufacturing Production.
- Spain, February, HICP.
- Eurozone, January, Industrial Production s.a.
- Canada, February, Average Hourly Wages.
- Canada, February, Net Change in Employment.
- Canada, February, Unemployment Rate.
- United States, January, Core Personal Consumption Expenditures - Price Index.
- United States, Flash (Q4), Core Personal Consumption Expenditures.
- United States, January, Durable Goods Orders.
- United States, Flash (Q4), Gross Domestic Product Annualized.
- United States, Flash (Q4), Gross Domestic Product Price Index.
- United States, January, Nondefense Capital Goods Orders ex Aircraft.
- United States, January, Personal Consumption Expenditures - Price Index.
- United States, Flash (Q4), Personal Consumption Expenditures Prices.
- United States, January, Personal Income.
- United States, January, Personal Spending.
- United States, Flash March, Michigan Consumer Expectations Index.
- United States, Flash March, Michigan Consumer Sentiment Index.
- United States, Flash March, UoM 1-year Consumer Inflation Expectations.
- United States, January, JOLTS Job Openings.
- United States, Flash March, UoM 5-year Consumer Inflation Expectation.
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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