Forex Today: Gold renews record-high above $3,000, Canadian Dollar awaits inflation data
Here is what you need to know on Tuesday, March 18:
Gold benefits from escalating geopolitical tensions and trades at a new record-high above $3,000 early Tuesday. The European economic calendar will feature Economic Sentiment data from Germany and Euro area Trade Balance readings. In the second half of the day, Industrial Production and housing data from the US, alongside February inflation figures from Canada will be watched closely by market participants.
Israeli Prime Minister Benjamin Netanyahu's office stated on Tuesday that Israel resumes military operations against Hamas across the Gaza Strip, per Reuters. "From now on, Israel will act against Hamas with increasing military force," Netanyahu further added. Meanwhile, US President Donald Trump said that they will hold Iran responsible for any attacks carried by the Houthis after the group launched an attack comprising 18 ballistic and cruise missiles, as well as drones, targeting the USS Harry S Truman aircraft carrier on Sunday. In response, the US reportedly carried out new airstrikes on the Red Sea port city of Hodeidah and Al Jawf governorate north of the capital Sanaa on Monday. After gaining about 0.5% on Monday, Gold continues to push higher and was last seen trading at a fresh all-time high near $3,020.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.37% | -0.33% | 0.72% | -0.60% | -0.76% | -1.33% | -0.41% | |
| EUR | 0.37% | -0.08% | 0.69% | -0.22% | -0.53% | -0.97% | -0.06% | |
| GBP | 0.33% | 0.08% | 1.09% | -0.36% | -0.47% | -0.91% | -0.05% | |
| JPY | -0.72% | -0.69% | -1.09% | -1.30% | -1.68% | -1.98% | -1.24% | |
| CAD | 0.60% | 0.22% | 0.36% | 1.30% | -0.37% | -0.74% | -0.36% | |
| AUD | 0.76% | 0.53% | 0.47% | 1.68% | 0.37% | -0.42% | 0.49% | |
| NZD | 1.33% | 0.97% | 0.91% | 1.98% | 0.74% | 0.42% | 0.92% | |
| CHF | 0.41% | 0.06% | 0.05% | 1.24% | 0.36% | -0.49% | -0.92% |
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 US Dollar (USD) Index edged lower following a bullish opening in Wall Street on Monday and closed the day in negative territory. In the European morning on Tuesday, the index holds steady at around 103.50, while US stock index futures lose between 0.2% and 0.3%.
USD/CAD lost more than 0.5% on Monday and dropped below 1.4300. The pair clings to small recovery gains near 1.4300 to begin the European session. On a yearly basis, the Consumer Price Index (CPI) in Canada is forecast to rise by 2.1% in February, following the 1.9% increase recorded in January.
EUR/USD capitalized on the USD weakness and closed above 1.0900 on Monday. The pair fluctuates in a tight channel at around 1.0920 early Tuesday.
GBP/USD rose more than 0.4% on Monday and touched its highest level since early November near 1.3000. In the European morning, the pair stays in a consolidation phase at around 1.2980.
USD/JPY continues to push higher after posting gains on Monday and trades at a two-week-high above 149.70. Speaking at a news briefing on Tuesday, Japan’s Finance Minister Katsunobu Kato said that bond markets should decide on rate moves after the 40-year government debt yield briefly jumped to a record high.
Gold FAQs
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.
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.
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.
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.
Author
Eren Sengezer
FXStreet
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.
