Forex Today: Trump tariff threat weighs on Dollar, Gold hits record-high
Here is what you need to know on Monday, January 19:
Financial markets turn volatile start the week as investors assess US President Donald Trump's tariff announcements. Stock and bond markets in the US will remain closed in observance of Martin Luther King Jr. Day on Monday. In the second half of the day, December Consumer Price Index (CPI) data from Canada will be watched closely by market participants.
US President Trump said over the weekend that he will impose a 10% tariff from February 1st on all goods from eight European countries, which oppose his plan to take Greenland. These countries include Denmark, Sweden, France, Germany, the Netherlands, Finland, Britain and Norway. The tariff rate is also set to go up to 25% on June 1st if the US fails to reach a deal to purchase Greenland by that time. Citing EU diplomats, Reuters reported on Sunday that EU ambassadors reached broad agreement to retaliate with a tariff package on 93 billion Euros of US imports that was suspended for six months back in August.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.26% | -0.15% | -0.19% | -0.17% | -0.16% | -0.35% | -0.56% | |
| EUR | 0.26% | 0.11% | 0.07% | 0.08% | 0.10% | -0.09% | -0.30% | |
| GBP | 0.15% | -0.11% | -0.02% | -0.02% | -0.01% | -0.20% | -0.40% | |
| JPY | 0.19% | -0.07% | 0.02% | -0.00% | 0.02% | -0.17% | -0.38% | |
| CAD | 0.17% | -0.08% | 0.02% | 0.00% | 0.02% | -0.17% | -0.38% | |
| AUD | 0.16% | -0.10% | 0.00% | -0.02% | -0.02% | -0.20% | -0.40% | |
| NZD | 0.35% | 0.09% | 0.20% | 0.17% | 0.17% | 0.20% | -0.21% | |
| CHF | 0.56% | 0.30% | 0.40% | 0.38% | 0.38% | 0.40% | 0.21% |
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).
Gold started the week with a huge bullish gap and hit a new all-time-high at $4,690 before retreating slightly. At the time of press, XAU/USD was trading at $4675, rising more than 1.5% on a daily basis.
After closing the third consecutive week in positive territory, the US Dollar (USD) Index stays under bearish pressure early Monday and declines toward 99.00.
EUR/USD benefits from the broad-based USD weakness and trades above 1.1600 in the European morning. Eurostat will release revisions to Eurozone Harmonized Index of Consumer Prices data for December.
USD/CAD turns south and trades below 1.3900 on Monday after having touched its highest level since early December near 1.3930 on Friday. The annual CPI inflation in Canada is forecast to remain unchanged at 2.2% in December.
After posting large losses on Friday, Silver regains its traction and trades at a fresh record high above $93.50 early Monday, gaining nearly 4% on the day.
Following a bearish opening, GBP/USD gathered recovery momentum and was last seen trading marginally higher on the day at around 1.3400.
USD/JPY rebounds toward 158.00 after falling below 157.50 at the weekly opening. The data from Japan showed earlier in the day that Industrial Production contracted by 2.7% on a monthly basis in November.
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.
(This story was corrected on January 19 at 08:10 GMT to fix the misspelling of the name Martin Luther King Jr.)
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.
