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Forex Today: Major pairs hold steady ahead of key US data
Here is what you need to know on Thursday, March 14:
Major currency pairs continue to fluctuate in relatively tight ranges in the second half of the week. After posting small losses on Wednesday, the US Dollar (USD) Index stays calm below 103.00 in the European morning on Thursday as investors await producer inflation and Retail Sales data for February.
US Retail Sales: Economists expect consumption to rebound in February after shaky start of the year.
The benchmark 10-year US Treasury bond yield extended its recovery on Wednesday and rose back above 4.2% for the first time in over a week. Early Thursday, the 10-year US yield holds steady at around 4.2% and US stock index futures trade mixed following Wednesday's choppy action.
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 | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.05% | 0.48% | -0.06% | 0.14% | 0.76% | 0.34% | 0.26% | |
| EUR | -0.05% | 0.44% | -0.12% | 0.05% | 0.72% | 0.28% | 0.22% | |
| GBP | -0.48% | -0.43% | -0.54% | -0.36% | 0.28% | -0.13% | -0.21% | |
| CAD | 0.07% | 0.11% | 0.53% | 0.17% | 0.81% | 0.38% | 0.32% | |
| AUD | -0.14% | -0.05% | 0.36% | -0.17% | 0.67% | 0.23% | 0.17% | |
| JPY | -0.75% | -0.72% | -0.04% | -0.83% | -0.66% | -0.42% | -0.50% | |
| NZD | -0.32% | -0.30% | 0.12% | -0.39% | -0.19% | 0.44% | -0.10% | |
| CHF | -0.26% | -0.21% | 0.22% | -0.32% | -0.16% | 0.48% | 0.07% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Earlier in the day, Reuters reported that Japan's largest industrial union UA Zensen announced that an average pay rise offered by 231 firms reached the biggest on record since 2013. USD/JPY continues to move up and down in a narrow band below 148.00 after closing virtually unchanged on Wednesday.
Japanese Yen hangs near weekly low against USD, looks to US data for fresh impetus.
AUD/USD registered modest gains on Wednesday and snapped a two-day losing streak. The pair stays in a consolidation phase slightly above 0.6600 early Thursday.
Australian Dollar weakens as the ASX 200 index declines, awaits US key data.
EUR/USD gained traction and closed in positive territory on Wednesday. The pair, however, started to edge lower after meeting resistance at 1.0950. In the absence of high-tier data releases from the Euro area, investors will keep a close eye on comments from European Central Bank (ECB) officials.
GBP/USD struggles to find direction and extending its sideways grind at around 1.2800 in the European morning on Thursday.
Gold managed to erase a large portion of Tuesday's losses on Wednesday but had a hard time gathering further bullish momentum amid rising US yields. XAU/USD was last seen trading marginally lower on the day slightly below $2,170.
Gold price trades with mild negative bias amid modest USD strength, lacks follow-through.
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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