Forex News
Here is what you need to know for Wednesday, July 12:
The US Dollar Index (DXY) is trading little changed in the vicinity below the 100.00 price zone ahead of the United States (US) July Consumer Price Index (CPI), which is expected on Wednesday. Investors expect the report's annual reading to be lower than June’s reading, reducing rate-hike bets from the Federal Reserve (Fed) and weighing on the US Dollar. Wall Street traded in the red on Tuesday, weighing on the Greenback.
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 | 0.07% | 0.06% | 0.00% | -0.13% | -0.09% | 0.03% | 0.21% | |
| EUR | -0.07% | -0.01% | -0.06% | -0.18% | -0.12% | -0.03% | 0.15% | |
| GBP | -0.06% | 0.00% | -0.04% | -0.19% | -0.12% | -0.06% | 0.15% | |
| JPY | 0.00% | 0.06% | 0.04% | -0.14% | -0.08% | 0.01% | 0.21% | |
| CAD | 0.13% | 0.18% | 0.19% | 0.14% | 0.07% | 0.15% | 0.34% | |
| AUD | 0.09% | 0.12% | 0.12% | 0.08% | -0.07% | 0.09% | 0.29% | |
| NZD | -0.03% | 0.03% | 0.06% | -0.01% | -0.15% | -0.09% | 0.19% | |
| CHF | -0.21% | -0.15% | -0.15% | -0.21% | -0.34% | -0.29% | -0.19% |
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).
On another note, the Iranian Security Chief Mohsen Rezai asked the US to fulfill all of Iran’s conditions to end the war, freeing the blocked Iranian funds and assets, and to also pay back all of the damages caused by the Middle East conflict.
EUR/USD is largely unchanged on the day close to1.1540 as the pair awaits the July German Harmonized Index of Consumer Prices (HICP).
USD/JPY trades flat near the lower end of 159.00 after the intervention-generated losses wither away. There’s no relevant Japanese data to look out for this week.
AUD/USD trades muted around the 0.7060 level after the Reserve Bank of Australia (RBA) left rates unchanged at 4.35% on Tuesday in the Asian session.
USD/CAD fell to a two-month low as the Canadian Dollar (CAD) strengthens amid higher Oil prices.
Gold is trading lower near a two-month high around $4,400 per troy ounce amid the frozen conflict between the US and Iran.
West Texas Intermediate (WTI) Oil trades up slightly to $83.30 per barrel as the Strait of Hormuz remains closed.
Commerzbank’s energy team notes fading hopes for a US–Iran agreement to reopen the Strait of Hormuz, driving Brent toward USD 90 and gas oil to nearly USD 1,350 per ton. Drone attacks on refineries in Saudi Arabia, Russia, Libya and tight diesel supply add to the risk premium. The analysis underscores that European diesel markets, while not directly hit, face tighter global supply.
Conflict-driven crude and diesel rally
"Hopes for a new agreement between Iran and the US in the near future and for the Strait of Hormuz to be reopened are fading: after Iran set out its conditions for reopening the strait at the weekend – including, amongst other things, demands for reparations – US President Trump responded with a new demand for compensation payments for the victims of the conflict."
"The price of Brent crude rose by 5% as a result and this morning stood at nearly USD 90 per barrel for the first time since the end of July."
"The price of gas oil rose even more sharply: it climbed by almost 10% and is trading at just under USD 1,350 per ton for the first time since the end of April."
"The gasoil crack spread has climbed back above USD 70 per barrel. Reports of refinery outages are exacerbating the situation."
"Even though the European market is not directly affected, this is making the global supply of diesel tighter."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI Oil stays firm as uncertainty over the Strait of Hormuz keeps supply concerns alive.
- The technical outlook remains constructive as WTI holds above the 21-day and 50-day SMAs.
- RSI leans mildly bullish, while the 100-day SMA stands as the key resistance to watch.
West Texas Intermediate (WTI) Oil trades modestly higher on Tuesday after two-way price swings, as headlines from the Middle East keep energy markets volatile. At the time of writing, WTI trades around $82.13, up more than 7% so far this week.
Oil prices briefly came under pressure earlier in the day after Qatar said Iran-Oman talks on reopening the Strait of Hormuz had reached an advanced stage. Pakistan’s Defense Minister Khawaja Asif also told Bloomberg that the US and Iran were close to “some sort of an arrangement.”
However, prices regained their footing as a resumption of shipping through the Strait appears unlikely in the near term. Iran says the waterway will stay closed unless the US lifts sanctions, releases frozen Iranian assets, ends military threats, removes its naval blockade and pays war reparations. Reinforcing Tehran’s stance, adviser to Iran’s Supreme Leader Mohammad Mokhber wrote on X that the Strait would remain closed until the country’s conditions are met.
Against this backdrop, a geopolitical risk premium remains embedded in Oil prices, while the technical picture also leans bullish.
Technical analysis
On the daily chart, WTI Oil retains a constructive near-term bias as it holds slightly above the 21-day Simple Moving Average (SMA) at $81 and comfortably above the 50-day SMA at $78.
The Relative Strength Index (RSI) at 53.49 sits in neutral territory with a modest bullish tilt, while the Moving Average Convergence Divergence (MACD) indicator is slightly negative but close to the zero line, hinting at waning downside momentum rather than entrenched selling pressure.
On the downside, the 21-day SMA at $81.33 offers immediate support, followed by the 50-day SMA at $78.79. A deeper pullback would expose the horizontal support levels at $73.50 and $67.50.
On the topside, initial resistance is located at the 100-day SMA at $86.82. A sustained break above this level could open the door to further gains and strengthen the bullish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- DXY trades near 99.80, a seventh session holding the 200-day EMA near 99.50.
- Futures price no Fed cut at any meeting through July 2027.
- Consensus has core PPI at 4.2% YoY against core CPI at 2.5%.
Tuesday gives the Dollar Index a session with almost nothing in it. The index trades near 99.80 inside a range of under two tenths of a point, the tightest bar of a coil that has held between the 200-day Exponential Moving Average (EMA) near 99.50 and the 100.00 handle since the final days of July. Two releases have landed and neither carried a message, with the four-week average of private hiring slowing to 8.25K from 11K and existing home sales down 1.7% MoM.
A coin flip with only one way to break
Futures put the September 16 meeting at 50.1% for a hold against 49.9% for a quarter point, the flattest reading of the year and a second consecutive session at a dead heat. Nothing on Tuesday's tape will move that. The shape of the distribution behind the front meeting matters considerably more than the front meeting itself.
The column that would price a cut reads 0.0% at eight straight Federal Open Market Committee (FOMC) meetings, from September out to July 2027, and first prints anything worth naming at 0.5% in September 2027. Over the same run the modal outcome climbs a quarter point higher by the spring. A soft Consumer Price Index (CPI) print on Wednesday can postpone a hike, but it cannot buy the Dollar a cut, because there is no cut in the curve to buy.
The wedge the producer data has to close
Consensus has July CPI at 3.4% YoY from 3.5% and core at 2.5% from 2.6%, which is the disinflation headline the tape will trade at 12:30 GMT on Wednesday. Thursday's Producer Price Index (PPI) consensus tells a different story at the same hour: 4.9% YoY on the headline and 4.2% on core, running roughly a point and a half above the consumer measure for the same month.
That gap is where the war premium and the tariff pipeline are sitting, and the second-quarter productivity accounts identify who has been absorbing it. Unit labour costs ran 1.3% annualised against a value-added output deflator at 7.0%, with the labour share at its lowest reading since the series opened in 1947. Margin has taken the hit so far, and producer prices are the series that reports whether it still can.
Two regional Fed presidents speak on Thursday, one at 12:15 GMT and one at 12:40, bracketing the release. The earlier of them dissented in July for a quarter point and argued on Monday that more than one increase may be needed, and that a 3.50% to 3.75% range is not meaningfully restricting anything. A hot producer print landing between those two appearances is the cleanest hawkish setup on the week.
The war stopped paying the Dollar
Tehran has made compensation for war damage a condition of reopening the Strait of Hormuz, and Washington has answered with a compensation demand of its own. That is not a negotiation so much as two invoices, and Tuesday's coverage has the administration falling back on sanctions as the other routes stall.
The news has not changed nearly as much as the response to it. Escalation headlines that bid the Dollar as a haven in June now bid Crude Oil and the currencies that sell it instead. The index sits at levels last seen in early June with the conflict hardening rather than easing, which inverts the June relationship outright. The war reaches the Dollar through the inflation pipeline now, and that route runs through Thursday rather than through the tape.
Wednesday evening carries the other number
The monthly budget statement lands at 18:00 GMT on Wednesday, roughly six hours after CPI, with consensus at a deficit near 346 billion Dollars against 120 billion the month before. Tariff refunds have been running through customs receipts all summer, and the fiscal year is tracking well above the estimates carried into it.
Thursday also brings initial claims at 202K consensus from 199K. Friday delivers retail sales at 0.1% MoM from 0.2% and preliminary August Michigan sentiment at 54.5 from 55.2, with the one-year and five-year inflation expectation series carrying 4.2% and 3.3% priors and no consensus attached. A week that opens on a coin flip is unlikely to leave one standing.
Levels
Resistance: The 100.00 handle has capped every attempt since the final day of July and is the line that matters this week. Above it the declining 50-day EMA near 100.25 is the first real test, with the late-July peak just above 101.50 the level a hawkish week would aim at.
Support: The 200-day EMA near 99.50 has held four separate tests inside eight sessions, with the twin session lows sitting just beneath it in the 99.45 area. Losing that band opens the 99.00 handle and then the 98.50 area, where the index last based in May.
Bias: Bullish while the 99.50 band holds. The daily Stochastic Relative Strength Index (Stoch RSI) near 25 is rolling into oversold on equal lows rather than lower ones, and the week's repricing risk points one way, since a hawkish surprise has room to run while a dovish one has no cut to price into. Objectives are 100.00 and then the 50-day EMA near 100.25, with invalidation on a daily close beneath the 99.45 area, which would put the 99.00 handle in play quickly.
DXY daily chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
UOB economist Jester Koh highlights that Singapore’s 2Q26 Gross Domestic Product (GDP) was revised up to 5.9% year-on-year and 1.4% quarter-on-quarter, driven by AI-related strength in manufacturing and modern services. MTI raised its 2026 GDP forecast to 4.5%-5.5%, while UOB now projects 5.0% growth, expecting AI-linked capex and finance sector credit demand to support above-potential expansion despite tourism headwinds.
AI tailwinds lift Singapore growth outlook
"MTI upgraded its full-year 2026 Singapore GDP growth forecast range to "4.5 to 5.5 per cent" from "2.0 to 4.0 per cent" previously (note), reflecting better-than-expected 1H performance and an improved 2H outlook due to an acceleration in global AI-related capital expenditure, which could lift the growth prospects of economies integrated into the global technology value chain."
"We upgrade our 2026 GDP growth forecast slightly to 5.0% (from 4.8% prev; 2027F: 3.2%), with AI-related tailwinds continuing to support growth in 2H26, although momentum in the semiconductor/electronics-related sectors could moderate."
"Our baseline GDP growth projections remain relatively conservative, assuming below-trend growth of 0.5% q/q sa in both 3Q26 and 4Q26, implying 2H26 growth of 4.0% y/y (vs 1H26: 6.1%)."
"While MTI continues to cite downside risks to global growth (escalation and broadening of the ME conflict, additional US tariff actions, sharp correction in financial markets), MTI noted that Singapore’s external demand outlook for the year has improved compared with its assessment in May. US growth is expected to remain resilient on AI-related investment, although softer consumption amid sustained inflationary pressures could weigh on 2H growth."
"Growth is likely to run significantly above potential amid structural AI-related tailwinds, supported by the carryover from strong 2025 (5.0%) GDP growth."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- XAG/USD falls 2.70% as Hormuz closure risks pressure sentiment.
- RSI dip suggests consolidation despite buyers retaining near-term control.
- Break below $63.28 exposes 50-day SMA and $60.00.
Silver price reverses its course, drops some 2.70% on Tuesday, even though US Treasury yields and the Greenback remained steady, amid news that if the US does not comply with Iran’s demands, the Strait of Hormuz would remain closed. The XAG/USD trades at $64.77, after hitting a daily high of $66.49.
XAG/USD Price Forecast: Technical outlook
From a technical perspective, the white metal is neutral to upward-biased after it reclaimed the 50-day Simple Moving Average (SMA). Nevertheless, the market structure of lower highs and lower lows is intact, at risk of being broken, once Silver clears the June 16 swing high of $71.19
Momentum revealed that buyers continue in control as depicted in the Relative Strength Index (RSI). But a dip in the index suggests that consolidation lies ahead.
For a bullish continuation, the XAG/USD must surpass the 100-day SMA at $68.93. Above lies the $70.00 psychological figure, followed by the June 16 high at $71.19, ahead of the 200-day SMA at $71.39.
On the flip side, if XAG/USD retreats below the August 10 daily low of $63.28 it opens the door for a deeper pullback. The next area of interest would be the 50-day SMA at $61.76 ahead of the $60.00 milestone.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- USD/JPY is trading flat as intervention-fueled losses fade.
- Iran’s Security Chief claimed that the US must end the war and release blocked Iranian funds.
- On Wednesday, the US CPI will be this week's key data piece.
The Japanese Yen (JPY) trades flat above 159.00 on Tuesday after several days of US Dollar (USD) strength following the intervention that briefly boosted the Yen. The pair has retraced most of its sharp intervention-driven decline, facing pressure from elevated Oil prices and a firm US Dollar (USD).
The focus remains in the Middle East as Iran’s Security Chief Mohsen Rezai said that the United States (US) must end the war and release blocked Iranian funds, and that other conditions have been conveyed through intermediaries to the US. He finished by saying that “any Iran-Oman agreement on Strait of Hormuz shipping would be separate from the issue of closing the strait.”
Iran’s conditions are to stop all threatening language and insults directed at Iran's national and religious values, a permanent end to military attacks and operations against Iran and its allies across Lebanon, Palestine, Yemen, and Iraq, that the US lifts the naval blockade and withdraw American naval and air forces from the vicinity of Iran.
They also want full financial compensation for damages suffered during recent conflicts without any reduction, and lastly that economic and trade sanctions against the Iranian nation are lifted, alongside the unconditional release of frozen Iranian funds and assets abroad.
On another note, on Wednesday, the US Consumer Price Index (CPI) will be the main catalyst of the week, giving markets an insight into US inflation. July’s inflation is expected to be lower than June’s, which could temper Federal Reserve (Fed) rate hike bets.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 159.24, maintaining a constructive near-term bullish bias as it holds above the 20-period Simple Moving Average (SMA) at 158.63. A tight support cluster just below price at 159.14 and 158.95 reinforces the underlying bid, while the Relative Strength Index (RSI) around 61 suggests firm but not extreme upside momentum.
On the topside, initial resistance aligns at 159.40, with the 100-period SMA at 160.83 acting as a broader trend cap if bulls extend the move higher. On the downside, immediate support is seen at 159.14, followed by 158.95 and 158.81, before the 20-period SMA at 158.63, where a deeper pullback would begin to challenge the current bullish tone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- Gold edges lower as a firm US Dollar caps upside momentum.
- US CPI and PPI data could reshape Fed hike bets.
- Hormuz uncertainty keeps energy prices elevated, limiting bullion gains.
Gold (XAU/USD) price registers modest losses on Tuesday, driven by a firm US Dollar as traders await the release of crucial US inflation data and the potential reopening of the Strait of Hormuz. The rise in energy prices is also capping the yellow metal´s advance. At the time of writing, the XAU/USD pair trades at $4,381, down 0.18% in the day after hitting a daily high of $4,435.
XAU/USD eases near $4,380 as traders await US inflation data and monitor elevated energy-price risks
So far, the economic docket has remained scarce, despite the release of the ADP Employment Change 4-week average, which showed that the labor market is decelerating, coming at 8.25K jobs created, while the previous print was downward revised by 4K to 11K.
Other data, mostly ignored by markets awaiting US inflation, showed that Existing Home Sales fell further in July, by 1.7%, from 4.13 million to 4.06 million. The report stated that higher mortgage rates due to the Middle East conflict and higher house prices are capping home sales. 30-year fixed-rate mortgage rates have risen by over 71 basis points since the beginning of the US-Iran conflict, and are now at 6.69%.
On Wednesday, the US economic schedule will feature the release of the US Consumer Price Index (CPI), with analysts expecting July's headline inflation to be 3.4% YoY, a tenth lower than June. Core CPI is also projected to decrease by the same margin to 2.5% YoY.
A day after the US CPI, traders will turn to the release of the US Producer Price Index (PPI) and jobless claims, the first of which follows a disappointing July Nonfarm Payrolls report.
Chicago Federal Reserve (Fed) President Austan Goolsbee said the economy's biggest problem is inflation, not the collapse of industry and jobs. He reiterated that “prices have been rising too fast, we have an inflation problem, and people hate inflation.”
Money markets are still adjusting their forecasts for a Fed rate hike in September, with a 52% probability of a 25-basis-point increase, based on Prime Terminal data.
In the meantime, the US Dollar Index (DXY), which tracks the performance of the buck’s value against a basket of six currencies, holds steady at 99.82, unchanged. So far, US Treasury yields, which usually correlate inversely to Gold prices, are also down two basis points, at 4.687%.
Regarding geopolitics, the Secretary of the Supreme National Security Council of Iran commented that the Strait of Hormuz will not open until the US changes its behaviour and accepts Tehran’s conditions.
XAU/USD price forecast: Gold struggles as 100-day SMA, poised for sideways trading
Gold price seems to be consolidating after two bullish days, pushing the yellow metal above the $4,350 area. Momentum, although bullish as indicated by the Relative Strength Index (RSI), has stalled somewhat, suggesting XAU might trade sideways in the short term.
For a bullish resumption, Gold must clear the 100-day Simple Moving Average (SMA) at $4,389. Once done, the next stop is the $4,400 psychological level, followed by the 200-day SMA at $4,498 and the $4,500 milestone.
On the downside, initial support is at the July 6 high, now at $4,202. If this level fails, the next support levels are the 50-day SMA at $4,150 and $4,100
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.
The Chicago Fed President Austan Goolsbee revealed in a video posted by Wired, that “The biggest problem facing our economy right now is not the collapse of industry and the collapse of jobs; it's that the prices have been rising too fast, we got an inflation problem and people hate inflation.”
He commented that as long as the consumer remains healthy, the economy will remain healthy as well. Regarding economic indicators like the unemployment rate, the hiring rate, and the layoff rate, Goolsbee said: “They say the labor market is stable, without being good, is how I characterize it.”
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 | 0.07% | 0.06% | 0.00% | -0.14% | -0.09% | 0.03% | 0.20% | |
| EUR | -0.07% | -0.01% | -0.04% | -0.18% | -0.09% | -0.03% | 0.13% | |
| GBP | -0.06% | 0.00% | -0.04% | -0.19% | -0.11% | -0.03% | 0.13% | |
| JPY | 0.00% | 0.04% | 0.04% | -0.15% | -0.08% | 0.01% | 0.19% | |
| CAD | 0.14% | 0.18% | 0.19% | 0.15% | 0.08% | 0.16% | 0.31% | |
| AUD | 0.09% | 0.09% | 0.11% | 0.08% | -0.08% | 0.09% | 0.26% | |
| NZD | -0.03% | 0.03% | 0.03% | -0.01% | -0.16% | -0.09% | 0.17% | |
| CHF | -0.20% | -0.13% | -0.13% | -0.19% | -0.31% | -0.26% | -0.17% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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