Forex Today: Japanese Yen – a big loser; eyes turn to US CPI data
Here is what you need to know on Tuesday, January 13:
Ahead of the European opening bells, the US Dollar (USD) pauses its late recovery seen in Monday’s North American session. The Greenback enters a consolidative mode as traders switch to the sidelines amid a typical market caution before the first US Consumer Price Index (CPI) report of this year.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | -0.05% | 0.38% | -0.03% | 0.09% | -0.13% | -0.01% | |
| EUR | -0.04% | -0.09% | 0.35% | -0.07% | 0.04% | -0.17% | -0.05% | |
| GBP | 0.05% | 0.09% | 0.43% | 0.02% | 0.14% | -0.08% | 0.04% | |
| JPY | -0.38% | -0.35% | -0.43% | -0.41% | -0.30% | -0.52% | -0.39% | |
| CAD | 0.03% | 0.07% | -0.02% | 0.41% | 0.11% | -0.10% | 0.01% | |
| AUD | -0.09% | -0.04% | -0.14% | 0.30% | -0.11% | -0.21% | -0.10% | |
| NZD | 0.13% | 0.17% | 0.08% | 0.52% | 0.10% | 0.21% | 0.12% | |
| CHF | 0.00% | 0.05% | -0.04% | 0.39% | -0.01% | 0.10% | -0.12% |
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).
Following a mixed December labor market report, the US inflation data is eagerly awaited to determine whether the US Federal Reserve (Fed) will opt for an interest rate cut in the first quarter of 2026 amid receding odds for such a move.
The US Core Consumer Price Index is expected to rise by 2.7% on an annual basis in December. The monthly core CPI is set to increase by 0.3% in the same period after reporting a 0.2% growth in November. The headline CPI inflation is expected to hold steady at 2.7%.
Meanwhile, the Trump administration’s criminal investigation into Chairman Jerome Powell’s comments on the central bank's renovation of its Washington headquarters and Powell’s retaliation deepen the feud and keep concerns over the Fed’s independence alive.
Markets also digest the latest geopolitical developments surrounding the Iranian civil unrest and the Greenland issue.
US President Donald Trump warned in a post on Truth Social on Monday,"effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America.”
While speaking to reporters on Monday, Trump once again openly pushed for the US to acquire Greenland, dismissing Denmark’s role and warning that the Arctic island could otherwise fall under Russian or Chinese influence.
Across the G10 currency space, AUD/USD gyrates above 0.6700, staying better bid amid a pause in the USD upside and the hawkish expectations surrounding the Reserve Bank of Australia’s (RBA) rate outlook.
USD/JPY firms up and tests 159.00, sitting at the highest level since July 2024. The Japanese Yen (JPY) keeps falling amid intensifying Japanese political tensions. “Japanese Prime Minister Sanae Takaichi had conveyed to a ruling party executive her intention to dissolve parliament's lower house at the outset of its regular session scheduled to start on January 23,” per Reuters.
The JPY hits record low against Euro (EUR) and the Swiss franc (CHF).
EUR/USD trades with caution near 1.1650 amid a data-empty European calendar, while looking forward to the high-impact US CPI data.
GBP/USD hovers below 1.3500, with the upside attempts capped by a softer risk tone.
Gold is on a profit-taking decline below $4,600, with the daily technical setup still pointing to further bullish potential.
WTI is at monthly highs, testing offers at the $60 mark. Traders remain hopeful that heightened concerns surrounding Iran and potential supply disruptions will likely outweigh the potential crude oversupply from Venezuela.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Author
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.
