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On Thursday, the People’s Bank of China (PBoC) sets the USD/CNY central rate for the trading session ahead at 7.1087 as compared to the previous day’s fix of 7.1055 and 7.1667 Reuters estimates.
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The Swiss Franc (CHF) weakens against the Pound Sterling (GBP) for the seventh day in a row on Wednesday as the Governor of the Bank of England (BoE), Andrew Bailey, testifies before members of Parliament at the UK Treasury Select Committee.
Overall market sentiment is positive, with the Dow Jones Industrial Average and S&P 500 both edging higher at the time of writing. This marginally aids the Pound more than the safe-haven Swiss Franc.
GBP/CHF – the number of Swiss Francs (CHF) that one Pound Sterling (GBP) can buy – rises for the seventh consecutive day, extending the short-term recovery rally.
The pair is in no clear trend on any time frame, however, and despite the recovery rally entering its seventh day, even the short-term trend is debatable.
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Pound Sterling vs Swiss Franc: 4-hour Chart
Analyzing GBP/CHF’s short-term trend using the 4-hour chart gives a mixed picture. Whilst the peaks and troughs are rising in a month-long series of higher highs and lows ever since the late November lows, the pair still has not broken above the critical 1.0900 level (last key lower high of the prior downtrend), which would provide more confidence that the trend had flipped from down to up.
The Relative Strength Index (RSI) is rising in line with price, suggesting the uptrend retains underlying strength. It has not entered the overbought region, which would indicate a growing risk of a pullback.
A further indication of strength is that it has broken above the 50 and 100 four-hour Simple Moving Averages (SMA).
That said, the speed of the move higher since the November lows has been rather slow when compared to the down move that preceded it – a sign this recovery could merely be a pullback within a broader downtrend.
A break below 1.0794 would suggest a recapitulation and the beginning of a new leg lower. A break above the day’s highs would suggest a continuation higher to just below the key 1.0900 level. A break above that would confirm a change in trend and more upside.
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
Oil prices are going nowhere despite quite a few bullish elements to take into account this Wednesday. The overnight publication from the American Petroleum Institute (API) revealed a massive draw down of 5.2 million barrels from last week. Meanwhile the US Energy Information Administration (EIA) has released a forecast that demand is to exceed the current Oil supply in 2024 by roughly 120,000 barrels per day on average – and would grow substantially even more should OPEC+ issue more production cuts.
Meanwhile, the DXY US Dollar Index, a key factor driving Oil valuations, is holding ground at 102.00 despite some selling pressure overnight. Traders are keeping the Greenback steady ahead of the main event for this week, the US Consumer Price Index (CPI) on Thursday. The print could be a gamechanger for 2024. Lower CPI would mean quicker interest rate cuts from the US Federal Reserve and a weaker US Dollar (bullish for Oil prices).
At the same time, given Oil is a key component in inflation, and since Oil prices came down substantially in the second half of last year, this could further help abate inflation pressures in the US.
Crude Oil (WTI) trades at $71.90 per barrel, and Brent Oil trades at $77.97 per barrel at the time of writing.
Oil prices are not moving on the back of the massive drawdown that was reported overnight by the API. The main reason for this was that the chunky drawdown in crude barrels was paired by large builds in both gasoline and distillates. Should the overnight EIA data reveal a draw down on all fronts, expect a bullish move in Oil prices.
On the upside, $74 is still holding importance, although the level has become very chopped up. Once back above this, $80 comes into the picture. Still far off, $84 is next on the topside once Oil sees a few daily closes above the $80 level.
Below $74, the $67 level could still come into play as the next support to trade at, as it aligns with a triple bottom from June. Should that triple bottom break, a new low for 2023 could be close at $64.35 – the low of May and March – as the last line of defence. Although still quite far off, $57.45 is worth mentioning as the next level to keep an eye on if prices fall sharply.
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US WTI Crude Oil: Daily Chart
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
ImmutableX price has been following a short-term downtrend since the last week of 2023, and this downtrend is now transforming into a potential bullish reversal. However, the broader market conditions might not let this bullish outcome succeed since the crypto market is close to a spot Bitcoin ETF approval.
ImmutableX price can be seen trading at $1.93 at the time of writing, nearing a breakout from the falling wedge pattern that can be observed on the 4-hour chart. This pattern is characterized by a contracting range between two trendlines. It is considered a bullish reversal pattern and is typically formed during a downtrend.
The falling wedge pattern is identified by two trendlines – one descending trendline that connects the lower highs and another ascending trendline that connects the lower lows.
The falling wedge is interpreted as a bullish signal since it indicates that the sellers are losing strength and the buyers may be gaining control. It hints at the downtrend losing momentum and a reversal or a significant upward move being imminent. Generally, a breach above the breakout point leads to the asset marking a rally similar to the height of the initial point of the falling wedge pattern.
In the case of IMX, this target price is set at $2.26, marking an almost 16% increase above the breakout point. Since the support zone is established at $1.85, ImmutableX price has another shot at a breakout even if it fails this time around.
IMX/USD 4-hour chart
Price indicators are exhibiting mixed signals since the Relative Strength Index (RSI) is suggesting a bearish outcome as it sits below the neutral line of 50.0. On the other hand, the Moving Average Convergence Divergence (MACD) highlights bullishness on the charts, evinced by the rising green bars on the histogram.
ImmutableX RSI and MACD
However, considering the fact that the spot Bitcoin ETF approval is around the corner despite the SEC’s X account being compromised earlier today, the potential 16% rally could be easily decimated since, following the approval, most of the investors’ funds will flow into Bitcoin.
This could invalidate the bullish thesis, and the falling wedge pattern might fail, resulting in ImmutableX price losing the support of $1.85 and falling to $1.70 and lower.
The Australian Dollar (AUD) retraces its recent losses despite a softer-than-expected Aussie consumer inflation data released on Wednesday. However, the AUD/USD pair registered losses in the previous session as the US Dollar (USD) improved on risk-off sentiment.
Australia’s economic indicators are providing a mixed picture, with the Monthly Consumer Price Index (YoY) for November showing a slight reduction to 4.3%, falling slightly short of the market expectation of 4.4% from the previous figure of 4.9%. This indicates a modest easing in year-on-year inflationary pressures in the country.
Aussie Retail Sales (MoM) showed a rise on Tuesday, signaling increased consumer spending. Additionally, the monthly Building Permits data grew, contrary to the expected decline. These positive trends in retail sales and building permits suggest some resilience in the domestic economy.
Thursday’s release of Australian Trade Balance data for December is anticipated to show an increase from 7,129 million to 7,500 million. A higher trade balance could indicate improved export performance, contributing positively to the overall economic outlook.
The US Dollar Index (DXY) displays a sideways movement after experiencing gains despite weaker US Treasury yields on Tuesday. However, the risk-on sentiment triggered by the Federal Reserve’s (Fed) members’ remarks speculating interest rate cuts by the end of 2024 might have capped the profits of the US Dollar.
Traders are eagerly awaiting the release of December’s Consumer Price Index (CPI) data from the United States on Thursday. This economic indicator is crucial for gauging inflationary pressures and can significantly influence market expectations regarding the Fed’s monetary policy stance.
The Australian Dollar trades near 0.6690 on Wednesday below a psychological resistance level of 0.6700 followed by the seven-day Exponential Moving Average (EMA) of 0.6724. A break above the latter could approach the major level at the 0.6750 level. On the downside, the 0.6650 level could act as a major support followed by the 38.2% Fibonacci retracement level at 0.6637. A collapse below the level could lead the AUD/USD pair to explore the region around the psychological level at 0.6600.
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The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.01% | 0.03% | -0.06% | -0.25% | 0.28% | -0.03% | -0.02% | |
| EUR | 0.01% | 0.05% | -0.06% | -0.22% | 0.30% | -0.02% | 0.02% | |
| GBP | -0.04% | -0.05% | -0.10% | -0.27% | 0.24% | -0.05% | -0.03% | |
| CAD | 0.06% | 0.05% | 0.10% | -0.17% | 0.37% | 0.04% | 0.08% | |
| AUD | 0.23% | 0.22% | 0.25% | 0.15% | 0.50% | 0.20% | 0.22% | |
| JPY | -0.29% | -0.29% | -0.24% | -0.38% | -0.53% | -0.33% | -0.29% | |
| NZD | 0.01% | 0.01% | 0.06% | -0.07% | -0.21% | 0.31% | 0.01% | |
| CHF | 0.00% | 0.00% | 0.06% | -0.06% | -0.22% | 0.31% | -0.01% |
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).
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
After the July victory in the Ripple versus SEC case, sentiment has shifted for XRP. This can be seen not only in the chatter on crypto-related social media but also moves by institutions like Grayscale, among others, showing confidence in the regulatory clarity surrounding the payments token.
Also Read: XRP price hit a three-year low against Bitcoin as fears of Spot BTC ETF rejection span the market
Ripple (XRP) price continues to falter, losing strength despite broader market cheer ahead of possible spot BTC ETF approvals. The gloom comes despite XRP accounting for nearly $10 million (2.39%) of the Grayscale Digital Large Cap (GDLC) index fund of $400 million.
GDLC index fund
It comes after Grayscale re-added XRP to its index fund following a two-year pause. Notably, the asset management firm had plucked out XRP from its fund in 2020 when the SEC filed a lawsuit against Ripple. With the re-addition, the asset manager effectively acknowledges regulatory clarity surrounding XRP, coming on the back of US District Judge Analisa Torres declaring XRP “only a security when sold to institutional customers” in July 2023.
Ripple (XRP) price continues to consolidate below the critical level of $0.5784, formerly an important support. With this level acting as a resistance, the payment token is sitting on robust support due to the lower band of the Bollinger indicator at $0.5512 and the horizontal line at $0.5442.
The trajectory of the Relative Strength Index (RSI) moving south points to a falling momentum, which coupled with the red histogram bars of the Awesome Oscillator (AO) in negative territory accentuates the bearish thesis.
Increased selling pressure could see XRP price descend further to test the $0.5442 support before a potential bounce in favor of the north. A break and close below this level could see Ripple price retest the Fair Value Gap (FVG) extending between $0.4927 and $0.5111.
XRP/USDT 1-day chart
On the other hand, if investors seize the opportunity to buy XRP on the dip, Ripple price could push north, flipping the $0.5784 blockade into a support floor. Further north, the remittance token’s market value could confront the centerline of the Bollinger indicator at $0.6065.
In a highly bullish case, the gains could extend for XRP price to overcome the resistance due to the descending trendline and tag the upper band of the Bollinger indicator at $0.6617. This would set the pace for Ripple price to collect the sell-side liquidity residing above as it jolts to the $0.7000 psychological level. A decisive move above $0.6500 would invalidate the bearish thesis.
The fact that Ripple price tagged the aforementioned FVG during the January 2 crash suggests that there is no effective downward pull on XRP, also accentuating the bullish supposition.
The Canadian Dollar (CAD) extended declines on Tuesday, slipping to a new low for the week as market sentiment recoils in the last quarter of the trading day. Markets pulled back into the US Dollar (USD), pushing the CAD even lower as Canadian economic figures broadly miss the mark.
Canada’s International Merchandise Trade in November fell back after October’s 14-month high, and Canadian Building Permits in November fell by nearly 4%.
Crude Oil is looking for a rebound from Monday’s downside slump, but topside momentum remains limited, leaving Crude Oil largely flat on the week as barrel bids struggle to recover.
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.16% | 0.24% | 0.30% | 0.45% | 0.12% | 0.20% | 0.42% | |
| EUR | -0.16% | 0.08% | 0.14% | 0.27% | -0.05% | 0.04% | 0.25% | |
| GBP | -0.25% | -0.08% | 0.05% | 0.16% | -0.13% | -0.05% | 0.18% | |
| CAD | -0.30% | -0.14% | -0.05% | 0.13% | -0.19% | -0.11% | 0.12% | |
| AUD | -0.44% | -0.26% | -0.17% | -0.11% | -0.30% | -0.22% | -0.01% | |
| JPY | -0.12% | 0.07% | 0.13% | 0.19% | 0.32% | 0.07% | 0.31% | |
| NZD | -0.19% | -0.04% | 0.05% | 0.10% | 0.24% | -0.08% | 0.23% | |
| CHF | -0.42% | -0.26% | -0.18% | -0.12% | 0.01% | -0.30% | -0.23% |
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).
The Canadian Dollar (CAD) slid to a new multi-week low against the US Dollar on Tuesday, sending the USD/CAD pair briefly back over the 1.3400 price level before intraday price action got hung up on the major handle. Near-term USD/CAD momentum has largely been a consolidation story with the pair grinding out higher lows through 2024’s early trading.
Daily candlesticks show the USD/CAD pushing steadily higher in choppy trading as the pair grinds back toward the 200-day Simple Moving Average (SMA) near the 1.3500 handle. Bullish momentum is set to see a fresh technical ceiling from an impending bearish crossover of the 50-day and 200-day SMAs.
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
USD/CAD has nudged a bit higher on the session. Economists at Scotiabank analyze the pair’s outlook.
USD/CAD perks up a bit reflecting the upward trend in funds that has developed since the turn of the year.
Trend momentum is weak and the USD/CAD pair has struggled to better resistance around 1.3390/1.3400 over the past few sessions. Still, broader technical trends suggest developing pressure for a correction in the late 2023 USD decline and a retracement towards the 1.35 area.
Gains through 1.3390/1.3400 will bolster near-term upside momentum.
Support is 1.3340.
The Japanese Yen (JPY) surrenders its intraday gains against the US Dollar (USD) and lifts the USD/JPY pair to a fresh daily peak, around the 144.30 area during the first half of the European session on Tuesday. Government stimulus measures in the wake of a devastating New Year’s Day earthquake in Japan might have already delayed the Bank of Japan’s (BoJ) plan to pivot away from its ultra-dovish stance. Adding to this, falling rates of inflation in Tokyo – Japan’s capital city – reaffirmed bets that the BoJ will not exit the negative interest rates policy in January. This, along with a stable performance around the equity markets, is seen undermining the safe-haven JPY.
The USD, on the other hand, is underpinned by a fresh leg up in the US Treasury bond yields, bolstered by diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed). This turns out to be another factor contributing to the USD/JPY pair’s goodish intraday recovery of around 90 pips from the vicinity of a technically significant 200-day Simple Moving Average (SMA). That said, a fall in US Consumer Inflation Expectations reaffirmed market bets that the Fed will start cutting interest rates as early as March. This might hold back the USD bulls from placing aggressive bets ahead of the latest US consumer inflation figures, due for release on Thursday.
From a technical perspective, some follow-through buying beyond the 144.30 area could trigger a short-covering rally and lift the USD/JPY pair to the 145.00 psychological mark. The subsequent move up might shift the bias back in favour of bullish traders and allow spot prices to make a fresh attempt to conquer the 146.00 mark with some intermediate barrier near mid-145.00s.
On the flip side, weakness back below the 144.00 mark now seems to find support near the 143.70 area, or the 38.2% Fibonacci retracement level of the recent strong recovery from a multi-month low touched in December. A convincing break below the latter will expose the 200-day SMA support, currently near the 143.25 region, before the USD/JPY pair drops to the 143.25 region, en route to the 143.00 mark, or the 50% Fibo. level.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.08% | -0.11% | -0.01% | -0.13% | -0.47% | -0.11% | -0.15% | |
| EUR | 0.09% | -0.02% | 0.08% | -0.08% | -0.41% | -0.03% | -0.09% | |
| GBP | 0.11% | 0.03% | 0.10% | -0.04% | -0.36% | 0.00% | -0.04% | |
| CAD | 0.01% | -0.07% | -0.09% | -0.13% | -0.46% | -0.10% | -0.14% | |
| AUD | 0.14% | 0.08% | 0.06% | 0.17% | -0.34% | 0.05% | -0.02% | |
| JPY | 0.50% | 0.42% | 0.41% | 0.50% | 0.36% | 0.40% | 0.36% | |
| NZD | 0.11% | 0.03% | 0.02% | 0.11% | -0.05% | -0.39% | -0.04% | |
| CHF | 0.17% | 0.08% | 0.06% | 0.15% | 0.02% | -0.30% | 0.05% |
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).
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.