Forex Today: Markets digest Japan election shock and await key US data

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		-0.79%	-0.51%	-0.76%	-0.65%	-1.06%	-0.60%	-1.13%
EUR	0.79%		0.27%	0.02%	0.13%	-0.27%	0.18%	-0.35%
GBP	0.51%	-0.27%		-0.26%	-0.18%	-0.55%	-0.11%	-0.62%
JPY	0.76%	-0.02%	0.26%		0.09%	-0.30%	0.17%	-0.39%
CAD	0.65%	-0.13%	0.18%	-0.09%		-0.40%	0.07%	-0.47%
AUD	1.06%	0.27%	0.55%	0.30%	0.40%		0.46%	-0.07%
NZD	0.60%	-0.18%	0.11%	-0.17%	-0.07%	-0.46%		-0.54%
CHF	1.13%	0.35%	0.62%	0.39%	0.47%	0.07%	0.54%

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).

USD/JPY falls to near the 155.80 price region, trimming back all its last week's gains after Japanese Prime Minister Sanae Takaichi’s landslide victory in the General Elections held on Sunday.

GBP/USD rises and trades near the 1.3680 level. Markets eye the United Kingdom (UK) flash Gross Domestic Product (GDP) to be released on Thursday.

USD/CAD is trading near the 1.3560 price zone, nearing a two-week low with no Canadian data on the horizon.

Gold is trading near the $5,064 price region, surging by over 2% in the day.

What’s next in the docket:

Tuesday 10:

US December Retail Sales.

Wednesday 11:

China January Consumer Price Index (CPI).
US Nonfarm Payrolls.

Thursday 12:

UK flash Gross Domestic Product (GDP) (Q4).

Friday 13:

RBNZ Inflation Expectations (Q1).
Swiss January CPI.
Eurozone flash GDP (Q4).
US January CPI.

Gold FAQs

Why do people invest in Gold?

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.

Who buys the most Gold?

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.

How is Gold correlated with other assets?

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.

What does the price of Gold depend on?

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.