Here's what you need to know on Wednesday, January 22nd.
Following a rebound during Tuesday's European trading hours. United States dollar (USD) The second half of the day lost momentum as risk flows took control. The U.S. dollar index held ground early Wednesday as markets turned cautious. The economic calendar does not include the release of top macroeconomic data.
USD price this week
The table below shows the percentage change of the US dollar (USD) against major currencies this week. The US dollar was the weakest against the euro.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.35% | -1.20% | -0.28% | -0.87% | -1.07% | -1.12% | -0.70% | |
| EUR | 1.35% | 0.09% | 0.99% | 0.37% | 0.34% | 0.12% | 0.53% | |
| GBP | 1.20% | -0.09% | 0.84% | 0.28% | 0.26% | 0.03% | 0.44% | |
| JPY | 0.28% | -0.99% | -0.84% | -0.59% | -0.76% | -0.95% | -0.61% | |
| CAD | 0.87% | -0.37% | -0.28% | 0.59% | -0.14% | -0.25% | 0.18% | |
| australian dollar | 1.07% | -0.34% | -0.26% | 0.76% | 0.14% | -0.31% | 0.12% | |
| new zealand dollar | 1.12% | -0.12% | -0.03% | 0.95% | 0.25% | 0.31% | 0.23% | |
| swiss franc | 0.70% | -0.53% | -0.44% | 0.61% | -0.18% | -0.12% | -0.23% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select USD from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents USD (base)/JPY (estimate).
U.S. President Donald Trump's threat to impose tariffs on Mexico and Canada sparked safe-haven flows in financial markets early Tuesday, helping the U.S. dollar gain momentum against rivals. . But a bullish start for Wall Street's major indexes made it difficult for the greenback to outperform its rivals in U.S. trading. Meanwhile, President Trump said late Tuesday that he was considering imposing a 10% tariff on imports from China, arguing that the fentanyl China sends to Canada and Mexico ends up in the United States. U.S. stock index futures traded mixed during the European morning on Wednesday, while the U.S. dollar index clung to modest daily gains above 108.00.
New Zealand figures released early Wednesday showed the consumer price index (CPI) rose at an annualized rate of 2.2% in the fourth quarter, in line with the previous quarter's rate of rise but ahead of market expectations of 2.1%. New Zealand dollar/US dollar It is under moderate bearish pressure and is trading around 0.5650.
Statistics Canada reported Tuesday that annual inflation, as measured by change in CPI, was 1.8 per cent in December, down slightly from 1.9 per cent in October. On a monthly basis, the CPI fell by 0.4%. Following Tuesday's erratic behavior, US dollar/Canadian dollar Wednesday morning in Europe was stable around 1.4350.
Following the downward revision in the European session, euro/usd It regained momentum and closed slightly higher on Tuesday. The pair consolidated its weekly gains around 1.0400 early Wednesday. Later in the session, European Central Bank President Christine Lagarde will speak on a panel at the World Economic Forum in Davos.
GBP/USD It fell slightly during European trading on Wednesday, but managed to stay above 1.2300 after registering a modest rise on Tuesday.
gold The stock gained bullish momentum, rising more than 1% on Tuesday. XAU/USD hit its highest since early November around $2,760 in Wednesday's Asian session, before declining slightly and last trading around $2,750.
USD/JPY The index remained flat on Wednesday, just below 156.00, as investors refrained from taking large positions ahead of Friday's Bank of Japan monetary policy meeting.
US Dollar Frequently Asked Questions
The United States Dollar (USD) is the official currency of the United States and the “de facto” currency of many other countries, circulating alongside local paper currency. The US dollar is the most frequently traded currency in the world, accounting for over 88% of global foreign currency trading volume, or an average daily trading volume of $6.6 trillion, according to 2022 data. . After World War II, the US dollar took over. From the British pound as the world's reserve currency. For most of its history, the U.S. dollar was backed by gold until the 1971 Bretton Woods agreement abolished the gold standard.
The most important single factor influencing the value of the US dollar is the monetary policy formed by the Federal Reserve System (Fed). The Fed has two responsibilities: achieving price stability (controlling inflation) and promoting full employment. The main tool to achieve these two goals is to adjust interest rates. If prices rise too fast and inflation exceeds the Fed's 2% target, the Fed will raise interest rates to support the value of the U.S. dollar. If inflation falls below 2% or unemployment is too high, the Fed could cut interest rates, which would weigh on the dollar.
In extreme circumstances, the Federal Reserve could also print more dollars and implement quantitative easing (QE). QE is a process by which the Fed significantly increases the flow of credit in a stymied financial system. This is a non-standard policy tool used when credit is exhausted because banks do not lend to each other (for fear of default by the other party). It is a last resort when simply lowering your interest rate does not seem to produce the desired results. This was the Fed's weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. This involves the Fed printing more dollars and using it to buy U.S. Treasuries, primarily from financial institutions. QE usually leads to a weaker US dollar.
Quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal of maturing bonds in new purchases. Usually positive for the US dollar.
