Here’s what you need to know on Tuesday, December 30:
Action in financial markets became subdued early Tuesday as trading conditions remained weak heading into the New Year holiday. In the second half of the day, the US economic calendar will contain housing data and the Federal Reserve will release the minutes of its December monetary policy meeting.
The price of the US dollar this month
The table below shows the percentage change in the price of the US Dollar (USD) against the major currencies listed this month. The US dollar was weakest against the Australian dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -1.46% | -1.96% | -0.06% | -2.08% | -2.44% | -1.41% | -1.77% | |
| euro | 1.46% | -0.51% | 1.41% | -0.63% | -0.99% | 0.05% | -0.32% | |
| GBP | 1.96% | 0.51% | 2.19% | -0.12% | -0.49% | 0.56% | 0.18% | |
| JPY | 0.06% | -1.41% | -2.19% | -2.05% | -2.40% | -1.36% | -1.75% | |
| Canadian | 2.08% | 0.63% | 0.12% | 2.05% | -0.41% | 0.69% | 0.29% | |
| Australian dollar | 2.44% | 0.99% | 0.49% | 2.40% | 0.41% | 1.06% | 0.67% | |
| New Zealand dollar | 1.41% | -0.05% | -0.56% | 1.36% | -0.69% | -1.06% | -0.38% | |
| Swiss franc | 1.77% | 0.32% | -0.18% | 1.75% | -0.29% | -0.67% | 0.38% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select USD 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).
Data released from the United States on Monday showed that pending home sales rose by 3.3% in November. Additionally, the Dallas Fed reported that the Dallas Fed Manufacturing Index fell to -10.9 in December from -10.4 in November. These numbers failed to provoke a noticeable reaction in the market US Dollar (USD) The index settled at 98.00. The US Dollar Index remains calm in the European morning on Tuesday and continues to move sideways.
After a record-breaking career gold The index saw a sharp correction on Monday and lost over 4% on a daily basis. The XAU/USD pair is recovering on Tuesday but is still below $4,400.
Similarly, silver (XAG/USD) fell nearly 9% on Monday after hitting an all-time high of $84 at the start of the week. The pair is gaining momentum on Tuesday and is rising towards $75, up more than 3% on the day.
EUR/USD It failed to make a decisive move in either direction on Monday and closed the day virtually unchanged. The pair extends its sideways move above 1.1750 in the European morning on Tuesday.
GBP/USD It posted marginal gains on Monday but struggled to gather momentum. The pair stabilizes around the 1.3500 level to begin the European session.
USD/JPY It fell over 0.3% on Monday as a hawkish tone seen in the Bank of Japan’s opinion summary supported the Japanese yen. The pair stabilizes at around 156.00 early Tuesday.
Frequently asked questions about gold
Gold has played a major role in human history as it has been widely used as a store of value and a medium of exchange. Currently, apart from its luster and use in jewellery, the precious metal is widely viewed as a safe haven asset, meaning it is a good investment during turbulent times. Gold is also widely viewed as a hedge against inflation and currency depreciation because it is not dependent on any specific issuer or government.
Central banks are the largest holders of gold. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and purchase gold to improve the perceived strength of the economy and the currency. High gold reserves can be a source of confidence for a country’s solvency. Central banks added 1,136 tons of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest annual purchase since records began. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are major reserve assets and safe havens. When the value of the dollar declines, 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 rise in the stock market tends to weaken the price of gold, while a sell-off in riskier markets tends to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession could cause the price of gold to rise rapidly due to its safe-haven status. As a lower-yielding asset, gold tends to rise as interest rates fall, while a higher cost of money usually negatively impacts the yellow metal. However, most of the moves depend on how the US Dollar (USD) behaves as the asset is priced in Dollars (XAU/USD). A stronger dollar tends to keep the price of gold in check, while a weaker dollar is likely to push gold prices higher.
