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Forex Today: US Dollar consolidates gains before mid-tier data releases
Here is what you need to know on Friday, March 15:
Following a quiet first half of the week, the US Dollar (USD) gathered strength against its rivals on Thursday. The USD Index stays in a consolidation phase near 103.50 early Friday after rising more than 0.5% in the previous day. February Export and Import Price Index and Industrial Production data will be featured in the US economic docket later in the day. The University of Michigan will release the preliminary Consumer Sentiment Index for March and the Federal Reserve Bank of New York will publish the findings of the Empire State Manufacturing Survey.
The data from the US showed that the Producer Price Index rose 1.6% on a yearly basis in February. This reading followed the 1% increase recorded in January and surpassed the market expectation of 1.1%. Meanwhile, the US Census Bureau reported that Retail Sales grew by 0.6% in February after contracting by 1.1% in January. The benchmark 10-year US Treasury bond yield climbed to 4.3% after these data releases and provided a boost to the USD. In the European morning, the 10-year yield fluctuates slightly below 4.3%. Meanwhile, US stock index futures trade marginally lower after Wall Street's main indexes closed in negative territory on Thursday.
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 New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.58% | 0.89% | 0.39% | 0.84% | 0.99% | 1.22% | 0.80% | |
| EUR | -0.58% | 0.31% | -0.19% | 0.26% | 0.41% | 0.64% | 0.23% | |
| GBP | -0.90% | -0.32% | -0.51% | -0.05% | 0.12% | 0.33% | -0.09% | |
| CAD | -0.40% | 0.18% | 0.50% | 0.44% | 0.57% | 0.82% | 0.40% | |
| AUD | -0.85% | -0.26% | 0.05% | -0.45% | 0.15% | 0.41% | -0.04% | |
| JPY | -1.00% | -0.45% | 0.13% | -0.61% | -0.16% | 0.22% | -0.21% | |
| NZD | -1.23% | -0.65% | -0.34% | -0.85% | -0.39% | -0.25% | -0.43% | |
| CHF | -0.81% | -0.22% | 0.09% | -0.41% | 0.04% | 0.18% | 0.42% |
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).
USD/JPY extended its rebound and closed above 148.00 on Thursday despite growing speculation about the Bank of Japan looking to end the negative interest rate policy at next week's policy meeting. After reaching a fresh weekly high above 148.50 in the Asian trading hours on Friday, USD/JPY retreated below this level into the European session.
Japanese Yen recovers early lost ground to over one-week low, lacks bullish conviction.
EUR/USD declined sharply in the second half of the day on Thursday and closed below 1.0900. The pair stays relatively calm in the European morning on Friday.
EUR/USD Price Analysis: The first downside target is located at 1.0840.
AUD/USD continued to push lower after losing 0.6% on Thursday and touched its lowest level since March 6 near 0.6550 in the Asian session on Friday. Although the pair managed to erase a portion of its losses, it remains well below 0.6600.
Australian Dollar drops as ASX 200 Index declines, awaits US Consumer Sentiment.
GBP/USD extended its slide after breaking below 1.2800 and closed deep in negative territory on Thursday. The pair stays on the back foot and trades below 1.2750 in the early European session.
Pressured by rising US Treasury bond yields, Gold turned south and fell below $2,160 in the American session on Thursday. XAU/USD stages a rebound early Friday and holds above $2,160 as the 10-year US yield struggles to build on Thursday's upside.
Gold price edges higher in a familiar trading range, manages to hold above $2,150 level.
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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