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Forex Today: Markets start the week on a cautious note

Here is what you need to know on Monday, January 8:

Investors seem to have adopted a cautious stance to start the new week. The US Dollar (USD) Index holds steady near 102.50 after snapping a three-week losing streak and US stock index futures trade in negative territory. The European economic docket will feature Retail Sales data for November on Monday, alongside consumer and business sentiment figures for December.

The USD gathered strength on Friday with the immediate reaction to December jobs data but the underlying details of the report made it difficult for the currency to carry its bullish momentum into the new week. Nonfarm Payrolls (NFP) rose by 216,000, surpassing the market expectation of 170,000 by a wide margin, and the Unemployment Rate held steady at 3.7%. However, the US Bureau of Labor Statistics announced downward revisions to November and October NFP readings, while the Labor Force Participation rate declined to 62.5% from 62.8% in December. The benchmark 10-year US Treasury bond yield stabilized above 4% after the labor market data and the USD Index gained 1% in the previous week.

US Dollar price in the last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Japanese Yen.

 USDEURGBPCADAUDJPYNZDCHF
USD 1.03%0.16%0.88%1.56%2.25%1.22%1.22%
EUR-0.88% -0.70%0.00%0.69%1.24%0.35%0.29%
GBP-0.18%0.70% 0.72%1.39%2.16%1.03%1.00%
CAD-0.89%-0.03%-0.54% 0.66%1.35%0.34%0.29%
AUD-1.58%-0.69%-1.40%-0.70% 0.52%-0.34%-0.39%
JPY-2.28%-1.24%-2.05%-1.18%-0.50% -0.89%-1.10%
NZD-1.25%-0.35%-1.06%-0.36%0.34%0.86% -0.01%
CHF-1.22%-0.33%-1.04%-0.31%0.37%1.02%0.08% 

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).

Major equity indexes in Asia started the new week under bearish pressure. News of Chinese wealth manager Zhongzhi Enterprise Group filing for bankruptcy liquidation after failing to repay debt late Friday revived fears over the property sector crisis impacting the broader financial conditions. Hong Kong's Hang Seng Index fell over 2% and Shanghai Composite lost 1% on Monday.

After fluctuating wildly during the American trading hours on Friday, EUR/USD stabilized near 1.0950 and registered small losses for the week. The pair stays relatively calm early Monday and fluctuates at around weekly closing levels. 

GBP/USD closed the previous week virtually unchanged and went into a consolidation phase slightly above 1.2700 early Monday.

USD/JPY spiked to a multi-week high of 146.00 on Friday but erased its daily gains in the American trading hours. The pair stays on the back foot early Monday and trades in negative territory below 144.50. Tokyo Consumer Price Index (CPI) data for December will be released in the Asian session on Tuesday.

Gold slumped below $2,030 as US yields rallied with the immediate reaction to US jobs report on Friday. XAU/USD, however, regained its traction and closed the week near $2,050. Early Monday, the pair stays under bearish pressure and trades below $2,040.

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.

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