Here’s what you need to know on Wednesday, January 21:
Financial markets continued to dominate protected haven flows on Tuesday amid continued high geopolitical tensions between US President Donald Trump and Greenland/Europe.
US President Donald Trump argued again early on Tuesday that Denmark was unable to adequately protect Greenland and said they would discuss the issue in Davos. Trump also noted that he would impose a 200% tariff on French wines and champagnes if France refused to join the Gaza Peace Council.
US financial markets returned to action after the long weekend, but there were no significant data releases on the US economic calendar. The country has published data on the four-week average employment change under Automatic Data Processing (ADP), which shows that private employers added an average of 8,000 jobs. jobs per week in the 4-week period ending January 20, up from 11,000. added last week.
The US Dollar Index (USD) continues to decline during the US session and is currently trading near the 98.50 price zone.
Today’s US dollar price
The table below shows the current percentage change of the United States Dollar (USD) against the major listed currencies. The US dollar was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.71% | -0.12% | -0.06% | -0.26% | -0.30% | -0.69% | -1.04% | |
| EUR | 0.71% | 0.59% | 0.63% | 0.45% | 0.41% | 0.00% | -0.33% | |
| GBP | 0.12% | -0.59% | 0.06% | -0.14% | -0.18% | -0.57% | -0.92% | |
| JPY | 0.06% | -0.63% | -0.06% | -0.20% | -0.24% | -0.63% | -0.98% | |
| BOOR | 0.26% | -0.45% | 0.14% | 0.20% | -0.04% | -0.44% | -0.77% | |
| AUD | 0.30% | -0.41% | 0.18% | 0.24% | 0.04% | -0.39% | -0.72% | |
| NZD | 0.69% | -0.01% | 0.57% | 0.63% | 0.44% | 0.39% | -0.35% | |
| CHF | 1.04% | 0.33% | 0.92% | 0.98% | 0.77% | 0.72% | 0.35% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select 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).
GBP/USD is approaching the 1.3460 price zone after the Office for National Statistics reported on Tuesday that the ILO unemployment rate remained unchanged at 5.1% in the three months to November. During this period, employment change was +82,000 compared to a decline of 17,000 recorded in the three months to October.
EUR/USD is trading near the 1.1730 price zone after ZEW German sentiment data was released at 59.6, above the expected 50. EU economic sentiment was released at 40.8, well above the 35.2 expected by economists, helping to strengthen the euro (EUR) amid an already weakened US dollar (USD).
USD/CAD is trading near the 1.3830 level, falling and losing almost half of last week’s gains.
USD/JPY is trading little changed and is trading near the 157.90 price zone.
Gold is trading at a record high of $4,757 amid rising geopolitical tensions. Market attention is currently focused on US President Trump’s speech in Davos on Wednesday.
Gold FAQs
Gold has played a key role in human history as it has been widely used as a store of value and a medium of exchange. Nowadays, beyond its luster and employ in jewelry, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation because it is not tied to any particular issuer or government.
Central banks are the largest holders of gold. To support their currencies in turbulent times, central banks typically diversify their reserves and purchase gold to improve the perceived strength of the economy and currency. High gold reserves may provide a source of confidence in the country’s solvency. According to data from the World Gold Council, central banks added 1,136 tons of gold to their reserves in 2022, worth about $70 billion. This is the highest annual purchase since registration began. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has an inverse correlation with the US dollar and US treasury bonds, which are both major reserve assets and protected haven assets. When the dollar depreciates, gold tends to rise, allowing investors and central banks to diversify their holdings in turbulent times. Gold is also inversely correlated with risky assets. A rally in the stock market tends to weaken the price of gold, while sell-offs in riskier markets support the precious metal.
The price may change due to many factors. Geopolitical instability or fear of a deep recession can quickly cause gold prices to rise due to its safe-haven status. Gold, as a non-yielding asset, tends to rise at lower interest rates, while the higher cost of money tends to weigh on the yellow metal. Still, most of the movements depend on the behavior of the US dollar (USD) when the asset is priced in dollars (XAU/USD). A sturdy dollar tends to keep the gold price in check, while a weaker dollar will likely cause gold prices to rise.
Next in line:
The ONS will publish December inflation data in the UK on Wednesday.
On Thursday, the US will publish the PCE reports for October and November and the GDP report for the third quarter.
The BOJ will announce its monetary policy decision on Friday, and then Governor Kazuo Ueda will hold a news conference. Moreover, later in the European session, the PMI indices for the euro zone and the German HCOB Composite, Manufacturing and Services will be published. On Friday, the global PMI indices of the American and British S&P stock exchanges will also be published.
