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Forex Today: Gold climbs above $3,800, US Dollar retreats

Here is what you need to know on Monday, September 29:

The US Dollar (USD) starts the week on the back foot, pressured by the heightened risk of a US government shutdown. Meanwhile, Gold continues to push higher following the previous week's consolidative action and trades at a new record-high above $3,800. The economic calendar will feature business and consumer sentiment data from the Eurozone and Pending Home Sales from the US. Policymakers from major central banks will be delivering speeches throughout the day as well.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.20%-0.39%-0.64%-0.12%-0.34%-0.12%-0.30%
EUR0.20%-0.19%-0.61%0.06%-0.15%0.06%-0.12%
GBP0.39%0.19%-0.30%0.27%-0.00%0.27%0.08%
JPY0.64%0.61%0.30%0.56%0.34%0.41%0.40%
CAD0.12%-0.06%-0.27%-0.56%-0.18%-0.00%-0.19%
AUD0.34%0.15%0.00%-0.34%0.18%0.21%0.03%
NZD0.12%-0.06%-0.27%-0.41%0.00%-0.21%-0.04%
CHF0.30%0.12%-0.08%-0.40%0.19%-0.03%0.04%

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).

The USD Index, which tracks the USD's valuation against a basket of six major currencies, ended the previous week in positive territory despite posting daily losses on Friday. Early Monday, the index continues to stretch lower and was last seen fluctuating slightly below 98.00.

United States (US) President Donald Trump will meet with top congressional leaders from both parties on Monday to avoid a government shutdown by the end of Tuesday. Markets are also concerned that the Bureau of Labor Statistics might not be able to release the September employment data this Friday if the government shutdowns midweek.

In the meantime, investors await news from the upcoming talks between US President Trump and Israeli Prime Minister Benjamin Netanyahu at the White House. Trump will reportedly push for a peace agreement in Gaza. Earlier in the day, Axios report Barak Ravid claimed in a social media post that the US and Israel were very close to reach a deal to end the war. US stock index futures rise between 0.3% and 0.5% in the European morning on Monday.

Gold benefits from the renewed USD weakness and trades at a new all-time-peak above $3,800.

EUR/USD builds on Friday's gains and trades in positive territory above 1.1700 in the European morning on Monday. The European Commission will publish Economic Sentiment Indicator, Industrial Confidence, Services Sentiment and Consumer Confidence data for September.

AUD/USD gains traction and trades above 0.6550 early Monday after falling 0.7% in the previous week. In the Asian session on Tuesday, the Reserve Bank of Australia (RBA) will announce monetary policy decisions.

GBP/USD extends its rebound in the European morning and gains more than 0.3% on the day, trading at around 1.3450.

USD/JPY stays under heavy bearish pressure early Monday and trades at around 148.50.

Risk sentiment FAQs

In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
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