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Forex Today: Dollar stands tall, as US Retail Sales data grab eyeballs

Here is what you need to know on Wednesday, January 17:

The US Dollar (USD) continues to maintain its upper hand across the board, as markets remain jittery on the back of China’s economic concerns and persisting Middle East geopolitical tensions. China’s fourth-quarter Gross Domestic Product (GDP) showed that the economic recovery clearly remains shaky.

The world’s second-largest economy expanded 5.2% YoY in the fourth quarter of 2024 but missed the market estimates of a 5.3% growth. On a quarterly basis, the Chinese GDP lost its momentum and rose 1.0% in Q4, as expected. China’s Retail Sales grew 7.4% YoY in December, below the expectations of 8.0%. Industrial Production increased 6.8% YoY in the same period vs. 6.6% expected.

On the geopolitical front,  Iran-backed Houthi rebels struck a US-owned cargo vessel with an anti-ship ballistic missile off the coast of Yemen, keeping investors on the edge.

The US Dollar also finds support from the recent less dovish remarks from US Federal Reserve (Fed) Governor Christopher Waller. Waller walked back on his previous view on the dovish policy pivot, noting on Tuesday that while inflation was approaching the central bank's 2.0% target, the Fed should not rush to cut interest rates until lower inflation can clearly be sustained.

Markets are now pricing in a 62% probability of a rate cut by the Fed in March, according to the CME Group’s FedWatch tool, compared with the 81% likelihood at the start of the week. The Greenback continues to capitalize on easing bets of aggressive Fed rate cuts, courtesy of the hawkish Fed chorus.

That said, the upcoming US Retail Sales data will hold the key for the next leg higher in the USD, as it could help reprice the market’s expectations of the Fed rate cuts this year.

At the time of writing, the US Dollar Index is flirting with five-week highs above 103.50, despite a muted performance in the US Treasury bond yields. Meanwhile, a barometer of risk sentiment, US S&P 500 futures, are down 0.33% on the day, justifying the risk-off market mood.  

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 Australian Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD 0.17%-0.03%0.21%0.56%0.44%0.39%0.19%
EUR-0.17% -0.17%0.09%0.44%0.32%0.27%0.02%
GBP0.03%0.20% 0.23%0.59%0.47%0.42%0.21%
CAD-0.21%-0.04%-0.24% 0.35%0.23%0.18%-0.02%
AUD-0.57%-0.44%-0.59%-0.35% -0.12%-0.17%-0.42%
JPY-0.44%-0.27%-0.47%-0.23%0.11% -0.04%-0.25%
NZD-0.39%-0.22%-0.42%-0.17%0.18%0.06% -0.21%
CHF-0.19%-0.01%-0.17%0.03%0.42%0.30%0.25% 

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).

Within the G10 currency basket, risk aversion is taking its toll on the Antipodeans, as they extend their downward spiral. AUD/USD is shedding 0.55% on the day to trade near 0.6550 while the NZD/USD is closing in on the 0.6100 level, down 0.30% so far.

USD/JPY keeps pushing higher, alongside the US Dollar, currently approaching 148.00. The pair is up 0.47% on a daily basis.

EUR/USD is trading close to over one-month lows near 1.0850, despite the latest pushback by the European Central Bank’s (ECB) policymakers against interest rates cuts. A mixed German ZEW survey added to the grim Eurozone economic outlook, exerting additional pressure on the Euro. All eyes remain on ECB President Christine Lagarde’s speech at the World Economic Forum (WEF) Annual Meeting in Davos.  

GBP/USD is staging a rebound to test 1.2650 after the headline UK annual CPI inflation surprised with an increase to 4.0% in December, against a drop to 3.8% expected.  

USD/CAD is holding higher ground above 1.3500, as the WTI oil price trades listlessly at around the $72 mark. The geopolitical developments surrounding the Red Sea will continue to grab attention. Meanwhile, the Canadian Dollar has reversed the hotter-than-expected Canadian CPI inflation-led rebound, which poured cold water on early rate-cut bets by the Bank of Canada (BoC).

Gold price is hitting weekly lows near $2,020, extending the previous decline on fading hopes of aggressive Fed rate cuts.

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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