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Forex News Timeline
10:10 ECB’s de Guindos: We will have more information in December than in October
European Central Bank (ECB) Vice President Luis de Guindos said on Friday, “we will have more information in December than in October.” “We have left the door totally open,” he said.
.fxs-major-currency-prices-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left}.fxs-major-currency-prices-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-major-currency-prices-content{color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:8px 16px}table.fxs-major-currency-prices-currency-prices-table{width:100%;text-align:center;border-collapse:collapse;font-size:1.8svh}table.fxs-major-currency-prices-currency-prices-table th{background-color:#f2f2f2}table.fxs-major-currency-prices-currency-prices-table td{color:#fff}table.fxs-major-currency-prices-currency-prices-table td.green{background-color:#9cd6cd}table.fxs-major-currency-prices-currency-prices-table td.red{background-color:#faafb5}table.fxs-major-currency-prices-currency-prices-table td.blue-grey{background-color:#888a93}.fxs-major-currency-prices-currency-prices-legend{font-size:11px;margin:8px;color:#49494f}@media (min-width:680px){.fxs-major-currency-prices-content{font-size:16px;line-height:21.6px}.fxs-major-currency-prices-title{font-size:19.2px;line-height:27.2px}}.fxs-major-currency-prices-currency-price td.dark-green{background-color:#39ad9a}.fxs-major-currency-prices-currency-price td.light-green{background-color:#9cd6cd}.fxs-major-currency-prices-currency-price td.gray{background-color:#888a93}.fxs-major-currency-prices-currency-price td.light-red{background-color:#faafb5}.fxs-major-currency-prices-currency-price td.strong-red{background-color:#f55e6a}European Central Bank (ECB) Vice President Luis de Guindos said on Friday, “we will have more information in December than in October.”
“We have left the door totally open,” he said.
Market reaction
At the press time, EUR/USD is grinding higher to near 1.1180, up 0.16% on the day.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen. USD EUR GBP JPY CAD AUD NZD CHF USD -0.17% -0.40% 0.20% 0.00% -0.10% -0.25% -0.15% EUR 0.17% -0.25% 0.37% 0.15% 0.06% -0.07% 0.02% GBP 0.40% 0.25% 0.61% 0.43% 0.33% 0.18% 0.29% JPY -0.20% -0.37% -0.61% -0.17% -0.29% -0.43% -0.30% CAD -0.01% -0.15% -0.43% 0.17% -0.12% -0.24% -0.14% AUD 0.10% -0.06% -0.33% 0.29% 0.12% -0.12% -0.01% NZD 0.25% 0.07% -0.18% 0.43% 0.24% 0.12% 0.10% CHF 0.15% -0.02% -0.29% 0.30% 0.14% 0.01% -0.10%
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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
10:09 EUR/JPY jumps to two-week highs near 160.00 after BoJ rate decision, eyes on ECB’s Lagarde speech
The EUR/JPY cross gains momentum around 160.00 during the early European session on Friday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}EUR/JPY recovers to near 160.00 in Friday’s early European session, gaining 0.45% on the day. BoJ’s Ueda said central bank will keep adjusting the degree of easing if our economic, price outlooks are to be realised. Investors await the ECB’s Lagarde speech for fresh impetus. The EUR/JPY cross gains momentum around 160.00 during the early European session on Friday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as widely expected. However, the uncertain outlook of the BoJ monetary policy is likely to cap the upside of the Japanese Yen (JPY) for the time being.
The BoJ kept its benchmark interest rate steady at around 0.25%, the highest level since 2008, at the conclusion of a two-day meeting on Friday. “The central bank is expected to hike rates in October, and “further dial back monetary support this year despite a poor run of economic data,” noted Stefan Angrick, associate director at Moody’s Analytics.
BoJ Governor Kazuo Ueda said during the press conference that the Japanese central bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized." Ueda added that uncertainties surrounding Japan's economy and prices remain high, and he will monitor the economy and market trends with an extremely high sense of urgency.
However, he affirmed there is no change to his thinking that the BoJ will keep raising rates if the economy moves in line with the outlook. The rising expectation that the BoJ will raise the interest rate later this year could lift the JPY against the Euro (EUR).
On the other hand, the European Central Bank (ECB) reduced its interest rates last week during its September meeting. Investors will take more cues from ECB President Christine Lagarde's speech later on Friday. Any dovish remarks from Lagarde could weigh on the shared currency in the near term, while the hawkish tone might lift the EUR. Bank of Japan FAQs What is the Bank of Japan? The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. What has been the Bank of Japan’s policy? The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. How do Bank of Japan’s decisions influence the Japanese Yen? The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen. Is the Bank of Japan’s ultra-loose policy likely to change soon? A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
The BoJ kept its benchmark interest rate steady at around 0.25%, the highest level since 2008, at the conclusion of a two-day meeting on Friday. “The central bank is expected to hike rates in October, and “further dial back monetary support this year despite a poor run of economic data,” noted Stefan Angrick, associate director at Moody’s Analytics.
BoJ Governor Kazuo Ueda said during the press conference that the Japanese central bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized." Ueda added that uncertainties surrounding Japan's economy and prices remain high, and he will monitor the economy and market trends with an extremely high sense of urgency.
However, he affirmed there is no change to his thinking that the BoJ will keep raising rates if the economy moves in line with the outlook. The rising expectation that the BoJ will raise the interest rate later this year could lift the JPY against the Euro (EUR).
On the other hand, the European Central Bank (ECB) reduced its interest rates last week during its September meeting. Investors will take more cues from ECB President Christine Lagarde's speech later on Friday. Any dovish remarks from Lagarde could weigh on the shared currency in the near term, while the hawkish tone might lift the EUR. Bank of Japan FAQs What is the Bank of Japan? The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. What has been the Bank of Japan’s policy? The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. How do Bank of Japan’s decisions influence the Japanese Yen? The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen. Is the Bank of Japan’s ultra-loose policy likely to change soon? A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
10:09 Pound Sterling gains on upbeat UK Retail Sales
The Pound Sterling (GBP) performs strongly against its major peers on Friday.
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The report showed that households spent heavily on textile clothing and footwear stores and food stores, while sales receipts at other non-food stores declined. Signs of robust demand for durable items could further fuel price pressures, a potential concern after core inflation already came in hotter-than-expected in August. The persistence of high price growth in certain parts of the economy guided the Bank of England (BoE) to leave interest rates unchanged at 5% in Thursday’s policy meeting.
The BoE kept its borrowing rates steady, with an 8-1 vote split. BoE external policy member Swati Dhingra was the only one among the Monetary Policy Committee who voted to cut interest rates by 25 basis points (bps) for the second time in a row. Investors were expecting that Deputy Governor Dave Ramsden would also vote for a cut, but he didn't.
Also, BoE members unanimously voted to trim their government bonds holdings by 100 billion pounds over the coming 12 months.
Daily digest market movers: Pound Sterling strengthens against US Dollar on dovish Fed bets The Pound Sterling refreshes a two-year high above the crucial resistance of 1.3300 against the US Dollar (USD) in Friday’s London session. The GBP/USD pair strengthens as the US Dollar faces severe selling pressure amid growing speculation that the Federal Reserve’s (Fed) policy-easing cycle will continue in the last quarter of the year. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, slides below the crucial support of 100.50 and is declining towards a year-to-date low of 100.21. The Fed kicked off its policy easing cycle on Wednesday with a larger-than-usual rate cut of 50 basis points (bps), pushing borrowing rates lower to 4.75%-5.00%. This bumper rate cut from the Fed was a clear signal that policymakers are more focused on restoring labor market health and are confident about inflation returning to the bank’s target of 2%. According to the CME FedWatch tool, the Fed is expected to cut borrowing rates further by 75 bps in the remaining two meetings this year, suggesting that there will be one more 50 bps rate cut. The tool also shows that the likelihood of the Fed reducing interest rates by 50 bps in November is at 43%, higher than the 37% recorded on Thursday. On the contrary, Fed policymakers see the federal fund rates heading to 4.4% by the year-end, a smaller reduction than the one that markets are pricing in. Going forward, the next trigger for the Pound Sterling and the US Dollar will be preliminary S&P Global PMI data for September, which will be published on Monday.
Technical Analysis: Pound Sterling rises above 1.3300The Pound Sterling aims to gain firm-footing above 1.3300 against the US Dollar in European trading hours. The near-term outlook of the GBP/USD pair remains firm as it holds above the 20-day Exponential Moving Average (EMA) near 1.3150. Earlier, the Cable strengthened after recovering from a corrective move to near the trendline plotted from the December 28, 2023, high of 1.2828, from where it delivered a sharp increase after a breakout on August 21.
The 14-day Relative Strength Index (RSI) shifts above 60.00, suggesting an active bullish momentum
Looking up, the Cable will face resistance near the psychological level of 1.3500. On the downside, the psychological level of 1.3000 emerges as crucial support.
Pound Sterling FAQs What is the Pound Sterling?
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling?
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound?
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound?
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
10:01 Turkey Consumer Confidence increased to 78.2 in September from previous 76.4
Turkey Consumer Confidence increased to 78.2 in September from previous 76.4
09:45 France Business Climate in Manufacturing in line with expectations (99) in September
France Business Climate in Manufacturing in line with expectations (99) in September
09:36 BoJ's Ueda: Will keep adjusting degree of easing if our economic, price outlooks are to be realized
Speaking at the post-policy meeting press conference on Friday, Bank of Japan (BoJ) Governor Kazuo Ueda said that the Bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized.” The BoJ left the benchmark interest rate at 0.15%-0.25% following its September policy meeting.
Speaking at the post-policy meeting press conference on Friday, Bank of Japan (BoJ) Governor Kazuo Ueda said that the Bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized.”
The BoJ left the benchmark interest rate at 0.15%-0.25% following its September policy meeting.
Additional quotes
Japan's economy is recovering moderately, although some weakness has been seen.
Uncertainties surrounding Japan's economy, prices remain high.
Must pay due attention to financial, FX markets, impact on Japan's economy, prices.
Outlook of overseas economies, including the US economy, markets remain unstable.
Markets remain unstable, when asked about deputy governor uchida's remarks.
Will monitor economy, market trends with extremely high sense of urgency.
Important to check overseas economic trends including the US when making policy decisions.
Risks of inflation overshoot have diminished to some extent.developing story ...Market reactionUSD/JPY is little changed following these comments. The pair was last seen trading 0.13% lower on the day at 142.48.
09:26 EUR/GBP breaks below 0.8400 following UK Retail Sales data
EUR/GBP continues to lose ground, trading around 0.8390 during Friday’s Asian hours, following the release of UK Retail Sales data for August.
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The Pound Sterling (GBP) received support from the Bank of England’s (BoE) decision to maintain its interest rate at 5% on Thursday, as widely anticipated. The BoE had previously signaled the possibility of rate cuts earlier in the summer with a quarter-point reduction at the last meeting, but this move may have been premature.
Out of the nine Monetary Policy Committee (MPC) members, BoE external member Swati Dhingra voted for cutting interest rates for the second consecutive time, while the remaining members supported maintaining rates at their current levels. Investors had anticipated that two MPC members would back a dovish policy decision.
On the euro side, Germany's Producer Price Index (PPI) showed a consistent month-over-month increase of 0.2%. However, the annual PPI declined by 0.8%, lower than the expected 1.0%. Traders are likely to focus on European Central Bank (ECB) President Christine Lagarde’s speech at the Michel Camdessus Central Banking Lecture in Washington, DC, on Friday.
European Central Bank (ECB) policymakers are divided on the pace of policy easing due to differing views on the inflation outlook. ECB Governing Council member Peter Kazimir and Deutsche Bundesbank President Joachim Nagel have expressed a desire to see more evidence that inflation will return to the levels the bank aims for, according to Reuters.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish. Read more. Last release: Fri Sep 20, 2024 06:00 Frequency: MonthlyActual: 1%Consensus: 0.4%Previous: 0.5%Source: Office for National Statistics
09:18 FX option expiries for Sept 20 NY cut
FX option expiries for Sept 20 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
FX option expiries for Sept 20 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
EUR/USD: EUR amounts 1.1000 776m 1.1100 2.7b 1.1150 3.1b 1.1175 1.4b 1.1200 2b 1.1225 1.2b
GBP/USD: GBP amounts 1.3150 890m 1.3250 1.7b 1.3300 859m
USD/JPY: USD amounts 141.00 890m 142.00 665m
USD/CHF: USD amounts 0.8475 1.3b
AUD/USD: AUD amounts 0.6675 550m 0.6790 851m
USD/CAD: USD amounts 1.3400 1.4b 1.3580 1.1b 1.3590 954m
NZD/USD: NZD amounts 0.6105 520m
EUR/GBP: EUR amounts 0.8375 700m 0.8425 850m
09:15 Forex Today: BoJ maintains status quo to wrap up big central bank week
Here is what you need to know on Friday, September 20: Investors digest the latest central bank announcements to start the last trading day of a critical week for markets.
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Here is what you need to know on Friday, September 20:
Investors digest the latest central bank announcements to start the last trading day of a critical week for markets. In the second half of the day, the European Commission will release the preliminary Consumer Confidence data for September and Statistics Canada will publish Retail Sales figures for July. Ahead of the weekend, market participants will also pay close attention to comments from central bank officials.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Australian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.87% -1.48% 0.95% -0.30% -1.75% -1.52% -0.18% EUR 0.87% -0.68% 1.81% 0.53% -0.95% -0.67% 0.65% GBP 1.48% 0.68% 2.40% 1.21% -0.26% -0.02% 1.34% JPY -0.95% -1.81% -2.40% -1.24% -2.62% -2.42% -1.19% CAD 0.30% -0.53% -1.21% 1.24% -1.54% -1.22% 0.02% AUD 1.75% 0.95% 0.26% 2.62% 1.54% 0.25% 1.60% NZD 1.52% 0.67% 0.02% 2.42% 1.22% -0.25% 1.37% CHF 0.18% -0.65% -1.34% 1.19% -0.02% -1.60% -1.37%
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).
The Bank of Japan (BoJ) announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as expected. In its policy statement, the BoJ noted that it expect inflation to be at a level generally consistent with the BoJ’s price target in the second half of the 3-year projection period, through the fiscal year 2026. USD/JPY edged slightly lower with the immediate reaction and was last seen trading slightly above 142.00.
Meanwhile, the People’s Bank of China (PBOC), China's central bank, left its Loan Prime Rates (LPRs) unchanged on Friday. With this decision, the one-year and five-year LPRs stood at 3.35% and 3.85%, respectively. Following Thursday's upsurge, AUD/USD stays relatively quiet on Friday and consolidates its weekly gains above 0.6800.
On Thursday, the Bank of England (BoE) maintained its bank rate at 5% as forecast. Early Friday, the UK's Office for National Statistics reported that Retail Sales rose 1% on a monthly basis in August. This reading followed the 0.5% increase recorded in July and came in better than the market expectation of 0.4%. After closing in positive territory on Thursday, GBP/USD continues to push higher in the European morning and was last seen trading at its highest level since March 2022 above 1.3300.
Following a recovery attempt in the early American session on Thursday, the US Dollar (USD) Index turned south and closed deep in negative territory as risk flows dominated the action in financial markets. Early Friday, the USD Index edges lower and was last seen fluctuating near 100.50. Federal Reserve Bank of Philadelphia President Patrick Harker is scheduled to deliver a speech later in the day.EUR/USD gathered bullish momentum in the late American session and registered gains on Thursday. The pair holds steady and trades in a narrow channel above 1.1150.
After making a technical correction, Gold gained traction and closed above $2,580 on Thursday. XAU/USD continues to push higher early Friday and was last seen trading within a touching distance of the all-time high it set at $2,600 on Wednesday.
Central banks FAQs What does a central bank do?
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%. What does a central bank do when inflation undershoots or overshoots its projected target?
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing. Who decides on monetary policy and interest rates?
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%. Is there a president or head of a central bank?
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
09:02 United Kingdom Retail Sales (YoY) above forecasts (1.4%) in August: Actual (2.5%)
United Kingdom Retail Sales (YoY) above forecasts (1.4%) in August: Actual (2.5%)
09:01 USD/CHF weakens below 0.8500 amid bearish US Dollar
The USD/CHF pair trades on a softer note around 0.8465 on Friday during the early European session.
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The Fed decided to cut its key lending rate by 50 basis points (bps) on Wednesday, the first reduction since the COVID-19 pandemic. Fed Chair Jerome Powell noted after the rate announcement that the US central bank "It is time to recalibrate our policy to something that is more appropriate given the progress on inflation, and on employment moving to a more sustainable level.”
The Fed officials also penciled in an additional half-point of cuts before the end of this year. This, in turn, might exert some selling pressure on the US Dollar (USD).
On the Swiss front, Switzerland's trade surplus came in at 4.578 billion Swiss Francs in August, according to the Federal Customs Office on Thursday. Additionally, the country’s Exports fell to 20.491 billion Swiss Francs in August and Imports declined to 15.912 billion Swiss Francs in the same reported period.
Israeli warplanes and artillery attacked Hezbollah in southern Lebanon on Thursday. The action came after the militia's pagers and walkie-talkies exploded last week, killing scores and injuring thousands across Lebanon, according to CNBC. Any signs of escalating geopolitical risks in the region could boost the safe-haven flows, benefiting the Swiss Franc (CHF). Swiss Franc FAQs What key factors drive the Swiss Franc? 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. Why is the Swiss Franc considered a safe-haven currency? 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. How do decisions of the Swiss National Bank impact the Swiss Franc? 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. How does economic data influence the value of the Swiss Franc? 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. How does the Eurozone monetary policy affect the Swiss Franc? 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.
The Fed decided to cut its key lending rate by 50 basis points (bps) on Wednesday, the first reduction since the COVID-19 pandemic. Fed Chair Jerome Powell noted after the rate announcement that the US central bank "It is time to recalibrate our policy to something that is more appropriate given the progress on inflation, and on employment moving to a more sustainable level.”
The Fed officials also penciled in an additional half-point of cuts before the end of this year. This, in turn, might exert some selling pressure on the US Dollar (USD).
On the Swiss front, Switzerland's trade surplus came in at 4.578 billion Swiss Francs in August, according to the Federal Customs Office on Thursday. Additionally, the country’s Exports fell to 20.491 billion Swiss Francs in August and Imports declined to 15.912 billion Swiss Francs in the same reported period.
Israeli warplanes and artillery attacked Hezbollah in southern Lebanon on Thursday. The action came after the militia's pagers and walkie-talkies exploded last week, killing scores and injuring thousands across Lebanon, according to CNBC. Any signs of escalating geopolitical risks in the region could boost the safe-haven flows, benefiting the Swiss Franc (CHF). Swiss Franc FAQs What key factors drive the Swiss Franc? 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. Why is the Swiss Franc considered a safe-haven currency? 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. How do decisions of the Swiss National Bank impact the Swiss Franc? 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. How does economic data influence the value of the Swiss Franc? 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. How does the Eurozone monetary policy affect the Swiss Franc? 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.
09:01 United Kingdom Public Sector Net Borrowing came in at £13.734B, above expectations (£-12.3B) in August
United Kingdom Public Sector Net Borrowing came in at £13.734B, above expectations (£-12.3B) in August
09:01 Germany Producer Price Index (YoY) above forecasts (-1%) in August: Actual (-0.8%)
Germany Producer Price Index (YoY) above forecasts (-1%) in August: Actual (-0.8%)
09:01 UK Retail Sales rise 1.0% MoM in August vs. 0.4% expected
The United Kingdom (UK) Retail Sales increased 1.0% over the month in August after rebounding 0.5% in July, the latest data published by the Office for National Statistics (ONS) showed Friday.
.fxs-major-currency-prices-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left}.fxs-major-currency-prices-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-major-currency-prices-content{color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:8px 16px}table.fxs-major-currency-prices-currency-prices-table{width:100%;text-align:center;border-collapse:collapse;font-size:1.8svh}table.fxs-major-currency-prices-currency-prices-table th{background-color:#f2f2f2}table.fxs-major-currency-prices-currency-prices-table td{color:#fff}table.fxs-major-currency-prices-currency-prices-table td.green{background-color:#9cd6cd}table.fxs-major-currency-prices-currency-prices-table td.red{background-color:#faafb5}table.fxs-major-currency-prices-currency-prices-table td.blue-grey{background-color:#888a93}.fxs-major-currency-prices-currency-prices-legend{font-size:11px;margin:8px;color:#49494f}@media (min-width:680px){.fxs-major-currency-prices-content{font-size:16px;line-height:21.6px}.fxs-major-currency-prices-title{font-size:19.2px;line-height:27.2px}}.fxs-major-currency-prices-currency-price td.dark-green{background-color:#39ad9a}.fxs-major-currency-prices-currency-price td.light-green{background-color:#9cd6cd}.fxs-major-currency-prices-currency-price td.gray{background-color:#888a93}.fxs-major-currency-prices-currency-price td.light-red{background-color:#faafb5}.fxs-major-currency-prices-currency-price td.strong-red{background-color:#f55e6a}The UK Retail Sales rose 1.0% MoM in August, beat estimates.Monthly Core Retail Sales for the UK advanced 1.1% in August.GBP/USD regains 1.3300 after upbeat UK data.The United Kingdom (UK) Retail Sales increased 1.0% over the month in August after rebounding 0.5% in July, the latest data published by the Office for National Statistics (ONS) showed Friday. Markets expected a 0.4% growth in the reported month.
The Core Retail Sales, stripping the auto motor fuel sales, rose 1.1% MoM, against the previous jump of 0.7% and the forecast of 0.5%.
The annual Retail Sales in the UK edged higher by 2.5% in August versus July’s 1.5% rise while the Core Retail Sales advanced 2.3% in the same month versus 1.4% previous. Both figures outpaced market expectations.
Market reaction to UK Retail Sales reportGBP/USD is picking up fresh bids following the encouraging UK data release, 0.18% higher on the day near 1.3310, as of writing.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.05% -0.17% -0.31% 0.00% -0.04% -0.12% -0.20% EUR 0.05% -0.13% -0.24% 0.04% -0.00% -0.06% -0.15% GBP 0.17% 0.13% -0.09% 0.20% 0.15% 0.08% 0.00% JPY 0.31% 0.24% 0.09% 0.32% 0.26% 0.18% 0.12% CAD -0.01% -0.04% -0.20% -0.32% -0.06% -0.12% -0.19% AUD 0.04% 0.00% -0.15% -0.26% 0.06% -0.05% -0.13% NZD 0.12% 0.06% -0.08% -0.18% 0.12% 0.05% -0.07% CHF 0.20% 0.15% -0.01% -0.12% 0.19% 0.13% 0.07%
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
09:00 Germany Producer Price Index (MoM) registered at 0.2% above expectations (0%) in August
Germany Producer Price Index (MoM) registered at 0.2% above expectations (0%) in August
09:00 United Kingdom Retail Sales (MoM) registered at 1% above expectations (0.4%) in August
United Kingdom Retail Sales (MoM) registered at 1% above expectations (0.4%) in August
09:00 United Kingdom Retail Sales ex-Fuel (YoY) came in at 2.3%, above expectations (1.1%) in August
United Kingdom Retail Sales ex-Fuel (YoY) came in at 2.3%, above expectations (1.1%) in August
09:00 United Kingdom Retail Sales ex-Fuel (MoM) came in at 1.1%, above expectations (0.5%) in August
United Kingdom Retail Sales ex-Fuel (MoM) came in at 1.1%, above expectations (0.5%) in August
08:12 EUR/USD Price Forecast: The constructive outlook prevails above 1.1150
The EUR/USD pair trades in positive for the third consecutive day near 1.1165 during the Asian trading hours on Friday.
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The bullish outlook of EUR/USD remains intact as the major pair is well supported above the key 100-period Exponential Moving Averages (EMA) on the 4-hour chart. Furthermore, the upward momentum is reinforced by the Relative Strength Index (RSI), which is above the midline near 67.45, suggesting the further upside looks favorable.
A decisive break above the upper boundary of Bollinger Band of 1.1172 could see a rally to the 1.1190-1.1200 region. The mentioned level is the confluence of the psychological mark and the high of September 18. Further north, the next hurdle emerges at 1.1240, the high of July 19.
In the bearish event, the low of September 19 near 1.1130 acts as an initial support level for the major pair. Any follow-through selling below this level will see a drop to the 1.1100 psychological figure. The additional downside filter to watch is 1.1088, the 100-period EMA. EUR/USD 4-hour chartEuro FAQs What is the Euro? The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro? The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro? Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro? Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro? Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The bullish outlook of EUR/USD remains intact as the major pair is well supported above the key 100-period Exponential Moving Averages (EMA) on the 4-hour chart. Furthermore, the upward momentum is reinforced by the Relative Strength Index (RSI), which is above the midline near 67.45, suggesting the further upside looks favorable.
A decisive break above the upper boundary of Bollinger Band of 1.1172 could see a rally to the 1.1190-1.1200 region. The mentioned level is the confluence of the psychological mark and the high of September 18. Further north, the next hurdle emerges at 1.1240, the high of July 19.
In the bearish event, the low of September 19 near 1.1130 acts as an initial support level for the major pair. Any follow-through selling below this level will see a drop to the 1.1100 psychological figure. The additional downside filter to watch is 1.1088, the 100-period EMA. EUR/USD 4-hour chartEuro FAQs What is the Euro? The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro? The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro? Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro? Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro? Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
08:03 Silver Price Forecast: XAG/USD maintains position near $31.00 near two-month highs
Silver price (XAG/USD) extends its gains for the second successive day, trading around $31.10 per troy ounce on Friday.
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Additionally, increasing expectations for further rate cuts by the US Federal Reserve by the end of 2024 are putting pressure on Silver demand. The latest dot plot projections indicate a gradual easing cycle, with the median rate for 2024 revised down to 4.375% from the previous forecast of 5.125% in June.
As a non-yielding commodity asset, the precious metal becomes more appealing to investors in a lower interest rate environment, as the opportunity cost of holding it decreases. This can make Silver potentially offer better returns compared to other assets.
Meanwhile, the People’s Bank of China (PBoC) decided to keep its one-year Loan Prime Rate (LPR) unchanged at 3.35%, while the Bank of Japan (BoJ) maintained its interest rate at 0.15% on Friday. Additionally, on Thursday, the Bank of England (BoE) opted to hold its interest rate at 5%, as widely expected.
The safe-haven demand for Silver was bolstered by escalating tensions in the Middle East, as Israeli warplanes conducted their most intense strikes on southern Lebanon in nearly a year of conflict late Thursday. The White House stated that a diplomatic solution was both achievable and urgent, while Britain called for an immediate ceasefire between Israel and Hezbollah, according to Reuters.
Silver FAQs Why do people invest in Silver?
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices?
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices?
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves?
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
07:36 India Gold price today: Gold rises, according to FXStreet data
Gold prices rose in India on Friday, according to data compiled by FXStreet.
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FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, 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 rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up. (An automation tool was used in creating this post.)
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, 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 rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up. (An automation tool was used in creating this post.)
07:34 USD/CAD struggles near 1.3555 area, just above two-week low amid bearish USD
The USD/CAD pair struggles to gain any meaningful traction during the Asian session on Friday and currently trades around the 1.3555 region, well within the striking distance of a nearly two-week low touched the previous day.
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The US Dollar (USD) remains under some selling pressure for the second straight day and languishes near its lowest level since July 2023 touched in reaction to the Federal Reserve's (Fed) oversized interest rate cut on Wednesday. Moreover, Fed members projected another 50 basis points fall in borrowing costs by the end of this year, which, along with the prevalent risk-on mood, weighs on the safe-haven Greenback and acts as a headwind for the USD/CAD pair.
Meanwhile, Crude Oil prices consolidate the recent strong move up to over a two-week high and remain on track to register gains for the second straight week amid worries about declining global stockpiles. Apart from this, rising tensions in the Middle East offer some support to the black liquid, which underpins the commodity-linked Loonie and contributes to capping the USD/CAD pair, though dovish Bank of Canada (BoC) expectations help limit the downside.
The markets started pricing in the possibility of a larger, 50 bps BoC rate cut move next month after data published this week showed that Canada's CPI posted its smallest increase since February 2021 and the core measures fell to the lowest level in 40 months. This, in turn, is holding back bulls from placing aggressive bets around the Canadian Dollar (CAD) and lending some support to the USD/CAD pair ahead of Friday's release of Retail Sales data from Canada.
Apart from this, traders will take cues from BoC Governor Tiff Macklem's speech later during the early North American session, which, along with Oil price dynamics, should influence the CAD. Furthermore, Philadelphia Fed President Patrick Harker's remarks and the broader risk sentiment will drive the USD demand, which should provide some impetus to the USD/CAD pair. Nevertheless, spot prices seem poised to register losses for the first week in the previous three.
Fed FAQs What does the Federal Reserve do, how does it impact the US Dollar?
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. How often does the Fed hold monetary policy meetings?
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis. What is Quantitative Easing (QE) and how does it impact USD?
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar. What is Quantitative Tightening (QT) and how does it impact the US Dollar?
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
07:30 Netherlands, The Consumer Confidence Adj increased to -21 in September from previous -24
Netherlands, The Consumer Confidence Adj increased to -21 in September from previous -24
07:19 AUD/JPY attracts some sellers to near 97.00 as BoJ maintains rates steady
The AUD/JPY cross loses ground around 97.05, snapping the four-day winning streak during the Asian trading hours on Friday.
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As widely anticipated, the BoJ decided to keep the short-term rate target in the range of 0.15%-0.25% after the conclusion of its two-day monetary policy review meeting on Friday. The Japanese BoJ remains cautious about hiking further as it could harm economic activity and hinder the demand-driven inflation that it tries to support.
However, Japanese officials will meet again in October and December, leaving the door open for more rate hikes after recent economic data revealed that inflation in Japan has come hotter than estimated. The rising speculation that the Japanese central bank will raise the interest rate again by the end of this year provides some support to the Japanese Yen (JPY) and acts as a headwind for AUD/JPY.
Data released by the Japan Statistics Bureau showed on Friday that the National Consumer Price Index (CPI) rose 3.0% YoY in August, compared to 2.8% in July. Meanwhile, the core CPI, which excludes volatile fresh food costs, climbed 2.8% YoY in August versus 2.7% prior, matching the market expectation of 2.8%.
On the Aussie front, Commonwealth Bank of Australia (CBA) analysts moved their expected timing of the first RBA rate cut from November 2024 to December 2024, with a 25 basis points (bps) rate cut expected. This, in turn, might weigh the Australian Dollar (AUD) against the JPY in the near term. Bank of Japan FAQs What is the Bank of Japan? The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. What has been the Bank of Japan’s policy? The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. How do Bank of Japan’s decisions influence the Japanese Yen? The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen. Is the Bank of Japan’s ultra-loose policy likely to change soon? A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
As widely anticipated, the BoJ decided to keep the short-term rate target in the range of 0.15%-0.25% after the conclusion of its two-day monetary policy review meeting on Friday. The Japanese BoJ remains cautious about hiking further as it could harm economic activity and hinder the demand-driven inflation that it tries to support.
However, Japanese officials will meet again in October and December, leaving the door open for more rate hikes after recent economic data revealed that inflation in Japan has come hotter than estimated. The rising speculation that the Japanese central bank will raise the interest rate again by the end of this year provides some support to the Japanese Yen (JPY) and acts as a headwind for AUD/JPY.
Data released by the Japan Statistics Bureau showed on Friday that the National Consumer Price Index (CPI) rose 3.0% YoY in August, compared to 2.8% in July. Meanwhile, the core CPI, which excludes volatile fresh food costs, climbed 2.8% YoY in August versus 2.7% prior, matching the market expectation of 2.8%.
On the Aussie front, Commonwealth Bank of Australia (CBA) analysts moved their expected timing of the first RBA rate cut from November 2024 to December 2024, with a 25 basis points (bps) rate cut expected. This, in turn, might weigh the Australian Dollar (AUD) against the JPY in the near term. Bank of Japan FAQs What is the Bank of Japan? The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. What has been the Bank of Japan’s policy? The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. How do Bank of Japan’s decisions influence the Japanese Yen? The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen. Is the Bank of Japan’s ultra-loose policy likely to change soon? A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
06:59 GBP/JPY falls to near 189.00 following the BoJ interest rates decision
GBP/JPY breaks its four-day winning streak, trading around 189.00 during the Asian session on Friday.
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Additionally, Japan's Consumer Price Index (CPI) increased to 3.0% year-on-year in August, up from 2.8% previously, marking the highest level since October 2023. Additionally, the Core National CPI, excluding fresh food, reached a six-month high of 2.8%, rising for the fourth consecutive month and in line with market expectations.
Japan’s Finance Minister Shunichi Suzuki stated on Friday that he “will continue to monitor and analyze the impact of the latest US rate cut on the Japanese economy and financial markets.” Suzuki added that the Federal Reserve Bank’s (FRB) perspective on the US economy aligns with the Japanese government's view that the US economy is likely to expand.
In the United Kingdom (UK), the Bank of England (BoE) decided to maintain its interest rate at 5% on Thursday, as widely anticipated. The BoE had previously signaled the possibility of rate cuts earlier in the summer with a quarter-point reduction at the last meeting, but this move may have been premature.
Policymakers are now awaiting further developments in the UK economy before considering additional rate adjustments. On Friday, UK Retail Sales data for August will be closely watched, with expectations for the monthly rate to decline to 0.4% from 0.5%, while the annualized figure is anticipated to remain steady at 1.4%.
Out of the nine Monetary Policy Committee (MPC) members, BoE external member Swati Dhingra voted for cutting interest rates for the second consecutive time, while the remaining members supported maintaining rates at their current levels. Investors had anticipated that two MPC members would back a dovish policy decision.
Economic Indicator
BoJ Interest Rate Decision
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY. Read more. Last release: Fri Sep 20, 2024 02:52 Frequency: IrregularActual: 0.15%Consensus: -Previous: 0.15%Source: Bank of Japan
06:54 GBP/USD Price Forecast: Bulls retain control near 1.3300 mark, highest since March 2022
The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.
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The British Pound (GBP) continues to draw support from the Bank of England's (BoE) decision on Thursday to keep interest rates unchanged and run down its stock of government bonds by another £100 billion over the coming 12 months. In contrast, the US Dollar (USD) languishes near its lowest level since July 2023 amid bets for more interest rate cuts by the Federal Reserve (Fed) and turns out to be a key factor acting as a tailwind for the GBP/USD pair.
From a technical perspective, the overnight sustained breakout through a short-term descending trend-line extending from the late August swing high was seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart are holding in positive territory and suggest that the path of least resistance for the GBP/USD pair is to the upside. That said, the Relative Strength Index (RSI) on the daily chart is flashing slightly overbought conditions.
This makes it prudent to wait for some intraday consolidation or a modest pullback before traders start positioning for the next leg of a positive move. Nevertheless, the GBP/USD pair seems poised to climb further towards the next relevant hurdle near the 1.3365 region before aiming to reclaim the 1.3400 mark and test the March 2022 swing high, around the 1.3435-1.3440 region.
On the flip side, the 1.3265-1.3260 area, or the previous YTD peak, now seems to protect the immediate downside. Any further decline is more likely to attract fresh buyers and remain cushioned near the aforementioned descending trend-line resistance, now turned support near the 1.3200 mark. The latter should act as a key pivotal point, which if broken decisively could accelerate the corrective decline towards testing the 1.3150 strong horizontal support.
GBP/USD 4-hour chartUS 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 Canadian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.03% -0.06% -0.33% 0.00% -0.07% -0.09% -0.21% EUR 0.03% -0.04% -0.27% 0.01% -0.05% -0.05% -0.18% GBP 0.06% 0.04% -0.23% 0.08% 0.01% -0.00% -0.12% JPY 0.33% 0.27% 0.23% 0.32% 0.23% 0.22% 0.12% CAD -0.00% -0.01% -0.08% -0.32% -0.08% -0.08% -0.20% AUD 0.07% 0.05% -0.01% -0.23% 0.08% 0.01% -0.10% NZD 0.09% 0.05% 0.00% -0.22% 0.08% -0.01% -0.11% CHF 0.21% 0.18% 0.12% -0.12% 0.20% 0.10% 0.11%
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).
06:14 Australian Dollar recovers losses following PBoC interest rates decision
The Australian Dollar (AUD) recovers its daily losses and extends its winning streak against the US Dollar (USD) following the interest rate decision by the People’s Bank of China (PBoC) on Friday.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Australian Dollar receives support against the US Dollar on central banks’ policy divergence.The PBoC decided to keep its one-year and five-year Loan Prime Rates unchanged at 3.35% and 3.85%, respectively.The US Dollar struggles amid the rising likelihood of further rate cuts by the Federal Reserve in 2024.The Australian Dollar (AUD) recovers its daily losses and extends its winning streak against the US Dollar (USD) following the interest rate decision by the People’s Bank of China (PBoC) on Friday. The PBoC opted to keep its one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.35% and 3.85%, respectively. As close trade partners, any developments in the Chinese economy can significantly impact Australian markets.The AUD/USD pair received support following Thursday’s labor market report and the Federal Reserve’s (Fed) 50 basis points (bps) interest rate cut on Wednesday. The divergence in monetary policy between the Reserve Bank of Australia’s (RBA) commitment to maintaining higher rates for longer and the Fed’s easing cycle is expected to impact the pair’s movement in the near term.
The US Dollar faces challenges amid growing expectations for further rate cuts by the US Federal Reserve by the end of 2024. The latest dot plot projections suggest a gradual easing cycle, with the median rate for 2024 revised down to 4.375% from the 5.125% forecast in June.
Fed Chair Jerome Powell commented on the aggressive rate cut, saying, “This decision reflects our growing confidence that, with the appropriate adjustments to our policy, we can maintain a strong labor market, support moderate economic growth, and bring inflation down to a sustainable 2% level.”
Daily Digest Market Movers: Australian Dollar rises against US Dollar on central banks’ policy divergence US Treasury Secretary Janet Yellen stated on Friday that the recent interest rate cut by the Federal Reserve is a very positive indicator for the US economy. According to Yellen, it demonstrates the Fed's confidence that inflation has significantly decreased and is moving toward the 2% target. Meanwhile, the job market continues to show strength. Australian Employment Change came in at 47.5K in August, down from 58.2K in July, but well above the consensus forecast of 25.0K. The Unemployment Rate remained steady at 4.2% in August, in line with both expectations and the previous month's figure, according to data released by the Australian Bureau of Statistics (ABS). The Federal Open Market Committee (FOMC) lowered the federal funds rate to a range of 4.75% to 5.0%, marking the Fed’s first rate cut in over four years. This move signals the Fed’s commitment to safeguarding the labor market and steering the economy away from any signs of recession. Fed policymakers updated their quarterly economic forecasts, increasing the median projection for unemployment to 4.4% by the end of 2024, up from the 4% estimate made in June. They also raised their long-term forecast for the federal funds rate from 2.8% to 2.9%. Economists at Goldman Sachs and Citi have lowered their 2024 GDP growth forecasts for China to 4.7%, below Beijing's target of approximately 5.0%. SocGen describes the scenario as a "downward spiral," while Barclays refers to it as "from bad to worse" and a "vicious cycle." Morgan Stanley has also warned that "things could get worse before they get better," according to a Reuters report. China's economy showed signs of weakness in August, characterized by a continued slowdown in industrial activity and falling real estate prices. This situation has prompted increasing pressure on Beijing to enhance spending to stimulate demand, as reported by the National Bureau of Statistics on Saturday, according to Business Standard. Reserve Bank of Australia (RBA) Governor Michele Bullock emphasized that it is premature to consider rate cuts given the persistently high inflation. Additionally, RBA Assistant Governor Sarah Hunter noted that while the labor market remains tight, wage growth seems to have peaked and is expected to slow further.
Technical Analysis: Australian Dollar holds a position within the rising wedge near 0.6800
The AUD/USD pair trades near 0.6810 on Friday. Technical analysis of the daily chart shows that the pair is moving upward within the rising wedge pattern, signaling a strengthening of a bullish bias. Additionally, the 14-day Relative Strength Index (RSI) moves toward the 70 mark, indicating an ongoing bullish trend for the pair.
Regarding the upside, the AUD/USD pair may explore the region around the upper boundary of the rising wedge at the 0.6870 level. A breakthrough above the rising wedge could support the pair to test the psychological level of 0.6900.
On the downside, the AUD/USD pair is testing the lower boundary of the rising wedge around the level of 0.6800. A break below this level could pressure the pair to test the nine-day Exponential Moving Average (EMA) at 0.6760, with the next support at the psychological level of 0.6700.
AUD/USD: Daily ChartAustralian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Canadian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.03% -0.05% -0.31% 0.00% -0.04% -0.08% -0.16% EUR 0.03% -0.03% -0.27% 0.01% -0.02% -0.04% -0.13% GBP 0.05% 0.03% -0.25% 0.07% 0.03% -0.01% -0.08% JPY 0.31% 0.27% 0.25% 0.31% 0.25% 0.22% 0.16% CAD -0.01% -0.01% -0.07% -0.31% -0.05% -0.08% -0.15% AUD 0.04% 0.02% -0.03% -0.25% 0.05% -0.01% -0.12% NZD 0.08% 0.04% 0.00% -0.22% 0.08% 0.01% -0.07% CHF 0.16% 0.13% 0.08% -0.16% 0.15% 0.12% 0.07%
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs What key factors drive the Australian Dollar?
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar?
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar?
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar?
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
06:12 EUR/JPY slides to mid-158.00s after BoJ policy decision, lacks follow-through
The EUR/JPY cross ticks lower after the Bank of Japan (BoJ) announced its policy decision this Friday and moves away from over a two-week high, around the 160.00 psychological mark touched the previous day.
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As was widely anticipated, the Japanese central bank maintained the short-term interest rate target in the range of 0.15%-0.25% at the end of a two-day monetary policy review meeting. In the accompanying policy statement, the BoJ noted that Japan's economy will achieve growth above potential and that inflation is likely to be at a level generally consistent with the price target. This, however, fails to provide any meaningful impetus to the Japanese Yen (JPY), though hawkish BoJ expectations continue to act as a headwind for the EUR/JPY cross.
In fact, the recent comments by a slew of BoJ officials suggested that the Japanese central bank will hike interest rates again by the end of this year. The bets were reaffirmed by the latest consumer inflation figures released earlier this Friday, which showed that Japan's headline CPI rose from 2.8% in the prior month to the 3% YoY rate in August, hitting a 10-month high. Adding to this, the Core CPI, which excludes volatile fresh food prices, edged higher to 2.8%, or a 10-month high amid a sustained pick-up in consumption on the back of higher wages.
In contrast, the European Central Bank (ECB) last week indicated a declining path for borrowing costs in the months ahead after cutting interest rates for the second time this cycle. However, reports that the ECB policymakers see an interest rate cut in October as unlikely, barring a major deterioration in the outlook for growth, along with a bearish US Dollar (USD), lends some support to the shared currency. This, in turn, should limit losses for the EUR/JPY cross, which remains on track to register weekly gains for the first time in the previous three.
Economic Indicator
BoJ Interest Rate Decision
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY. Read more. Last release: Fri Sep 20, 2024 02:52 Frequency: IrregularActual: 0.15%Consensus: -Previous: 0.15%Source: Bank of Japan
05:53 Japan BoJ Interest Rate Decision unchanged at 0.15%
Japan BoJ Interest Rate Decision unchanged at 0.15%
05:52 NZD/USD flat lines around 0.6235-6240 area, remains close to monthly top set on Thursday
The NZD/USD pair seesaws between tepid gains/minor losses through the Asian session on Friday and currently trades around the 0.6235-0.6240 region, well within the striking distance of the monthly peak touched the previous day.
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The US Dollar (USD) struggles to attract buyers and languishes near the YTD low touched on Wednesday amid bets for more interest rate cuts by the Federal Reserve (Fed), which, in turn, is seen lending some support to the NZD/USD pair. In fact, Fed members forecasted another 50 basis points fall in borrowing costs by the end of this year and projected the benchmark rates to fall to 3.4% in 2025, down from a prior forecast of 4.1%, before declining to 2.9% in 2026.
Apart from this, the risk-on rally across the global equity markets turns out to be another factor undermining demand for the safe-haven Greenback and benefiting the risk-sensitive Kiwi. That said, persistent worries about an economic slowdown in China act as a headwind for antipodean currencies, including the New Zealand Dollar (NZD). That said, hopes for additional stimulus should continue to lend support to the NZD/USD pair and limit any meaningful decline.
The National Development and Reform Commission of the People's Republic of China (NDRC), during a news conference on Thursday, promised that it will roll out a batch of incremental measures with good effects in a timely manner. China's state planner sounded confident of achieving full-year economic and social development goals. This, however, failed to impress bulls, warranting caution before positioning for an extension of the NZD/USD pair's one-week-old uptrend.
There isn't any relevant market-moving economic data due for release from the US on Friday. That said, a scheduled speech by Philadelphia Fed President Patrick Harker might influence the USD price dynamics. Apart from this, the broader risk sentiment should contribute to producing short-term trading opportunities around the NZD/USD pair. Nevertheless, spot prices remain on track to register strong weekly gains for the first time in the previous three.
New Zealand Dollar FAQs What key factors drive the New Zealand Dollar?
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD. How do decisions of the RBNZ impact the New Zealand Dollar?
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair. How does economic data influence the value of the New Zealand Dollar?
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate. How does broader risk sentiment impact the New Zealand Dollar?
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
05:31 Japan’s Suzuki: Will continue to monitor, analyze impact of US rate cut on Japanese economy, financial markets
Japan’s Finance Minister Shunichi Suzuki said on Friday that he “will continue to monitor and analyse impact of latest US rate cut on Japanese economy and financial markets.” “FRB’s view on US economy in line with Japanese government's view that the US economy is likely to expand,” he added.
Japan’s Finance Minister Shunichi Suzuki said on Friday that he “will continue to monitor and analyze the impact of the latest US rate cut on the Japanese economy and financial markets.”
“Federal Reserve Bank’s (FRB) view on the US economy is in line with the Japanese government's view that the US economy is likely to expand,” he added.
Market reactionUSD/JPY was last seen trading 0.13% lower on the day at 142.45, awaiting the Bank of Japan (BoJ) policy decision.
05:22 USD/INR weakens as likely inflows boost Indian Rupee
The Indian Rupee (INR) extends its upside on the weaker US Dollar (USD) on Friday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}Indian Rupee gains traction in Friday’s Asian session. Softer USD and portfolio inflows support the INR, while higher crude oil prices might cap its upside. Investors await the Fed’s Harker speech on Friday. The Indian Rupee (INR) extends its upside on the weaker US Dollar (USD) on Friday. The INR trades near the two-month highs, bolstered by likely portfolio inflows and an appreciation in the Chinese Yuan after the US Federal Reserve (Fed) began its easing cycle with an unexpected 50 basis point rate cut at its September meeting. Additionally, the USD sales likely from large foreign banks on behalf of custodial clients contribute to the local currency’s upside.
However, the further rise in crude oil prices might limit the upside for the INR as India is the third-largest oil consumer after the United States (US) and China. The Fed Philadelphia President Patrick Harker is scheduled to speak later on Friday. Daily Digest Market Movers: Indian Rupee trades firmer amid favorable economic factors According to the Reserve Bank of India (RBI), the foreign exchange reserves have grown by USD 66 billion in 2024, reaching a total of USD 689.235 billion. “The rupee’s recent rally reflects favorable domestic conditions and the impact of global monetary policy shifts. As the Fed's decisions continue to sway markets, all eyes will be on the Reserve Bank of India’s response and whether the rupee can maintain its upward trajectory. For now, 84 will serve as a strong resistance level, while 83.50 will act as robust support,” said Amit Pabari, managing director at CR Forex. The US weekly Initial Jobless Claims came in at 219K for the week ending September 14, the US Department of Labor (DoL) showed Thursday. This figure was below the market consensus of 230K and lower than the previous week of 231K (revised from 230K). US Existing Home Sales dropped 2.5% MoM in August to 3.86 million from 3.96 million in July. The Philadelphia Fed Manufacturing index unexpectedly rose to 1.7 in September, compared to a fall of 7 in the previous reading, better than the estimation of -1. Technical Analysis: USD/INR resumes its broader bearish trend The Indian Rupee trades stronger on the day. The downtrend of the USD/INR pair resumes as the pair broke below the rectangle and the key 100-day Exponential Moving Average (EMA) on the daily chart. The downward momentum is supported by the 14-day Relative Strength Index (RSI), which stands below the midline near 32.40, supporting the sellers for the time being.
The initial support level for the pair emerges at 83.50, the low of July 17. Sustained bearish momentum could pave the way to 83.31, the low of June 18. The next cushion level is seen at the 83.00 psychological mark.
On the bright side, the 100-day EMA at 83.64 will be the immediate resistance level for USD/INR, followed by 83.75, the lower limit of the rectangle. The key upside barrier to watch is the 83.90-84.00 zone. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
However, the further rise in crude oil prices might limit the upside for the INR as India is the third-largest oil consumer after the United States (US) and China. The Fed Philadelphia President Patrick Harker is scheduled to speak later on Friday. Daily Digest Market Movers: Indian Rupee trades firmer amid favorable economic factors According to the Reserve Bank of India (RBI), the foreign exchange reserves have grown by USD 66 billion in 2024, reaching a total of USD 689.235 billion. “The rupee’s recent rally reflects favorable domestic conditions and the impact of global monetary policy shifts. As the Fed's decisions continue to sway markets, all eyes will be on the Reserve Bank of India’s response and whether the rupee can maintain its upward trajectory. For now, 84 will serve as a strong resistance level, while 83.50 will act as robust support,” said Amit Pabari, managing director at CR Forex. The US weekly Initial Jobless Claims came in at 219K for the week ending September 14, the US Department of Labor (DoL) showed Thursday. This figure was below the market consensus of 230K and lower than the previous week of 231K (revised from 230K). US Existing Home Sales dropped 2.5% MoM in August to 3.86 million from 3.96 million in July. The Philadelphia Fed Manufacturing index unexpectedly rose to 1.7 in September, compared to a fall of 7 in the previous reading, better than the estimation of -1. Technical Analysis: USD/INR resumes its broader bearish trend The Indian Rupee trades stronger on the day. The downtrend of the USD/INR pair resumes as the pair broke below the rectangle and the key 100-day Exponential Moving Average (EMA) on the daily chart. The downward momentum is supported by the 14-day Relative Strength Index (RSI), which stands below the midline near 32.40, supporting the sellers for the time being.
The initial support level for the pair emerges at 83.50, the low of July 17. Sustained bearish momentum could pave the way to 83.31, the low of June 18. The next cushion level is seen at the 83.00 psychological mark.
On the bright side, the 100-day EMA at 83.64 will be the immediate resistance level for USD/INR, followed by 83.75, the lower limit of the rectangle. The key upside barrier to watch is the 83.90-84.00 zone. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
05:18 Gold price consolidates near record high, bullish potential seems intact
Gold price (XAU/USD) regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's (Fed) decision to start the policy easing cycle with an oversized rate cut.
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Apart from this, concerns over a slowdown in the United States (US) and China – the world's two largest economies – and persistent geopolitical risks provided an additional boost to the Gold price. That said, the risk-on rally across the global equity markets keeps a lid on any further upside for the safe-haven XAU/USD and leads to subdued range-bound price action during the Asian session on Friday.
Nevertheless, Gold price, at current levels, remains on track to end in the green for the second straight week. Moreover, the fundamental backdrop seems tilted in favor of bullish traders and supports prospects for an extension of the commodity's well-established uptrend. Traders now look to the crucial Bank of Japan (BoJ) policy update, which might infuse volatility and provide some impetus to the XAU/USD.
Daily Digest Market Movers: Gold price draws support from bearish USD and persistent geopolitical risks The Federal Reserve's jumbo rate cut on Wednesday and forecast for another 50 basis points fall in borrowing costs by the end of this year failed to assist the US Dollar to capitalize on the post-FOMC recovery from the YTD low. Moreover, Fed policymakers projected rates falling to 3.4% in 2025, down from a prior forecast of 4.1%, and declining to 2.9% in 2026, down from a prior forecast of 3.1%, which revived demand for the Gold price on Thursday. The USD bulls seem unimpressed by the upbeat US macro data, showing that Weekly Initial Jobless Claims fell to 219K in the week ending September 14, marking the lowest since May and pointing to a resilient labor market. Adding to this, the Philadelphia Fed's survey revealed that the current general activity index for manufacturing jumped from a seven-month low of -7.0 in August to 1.7 in September, surpassing consensus estimates. Meanwhile, the Fed's oversized rate cut fueled concerns over economic growth, which, along with persistent worries about a slowdown in China, turned out to be another factor that benefited the safe-haven XAU/USD. Furthermore, geopolitical risks stemming from tensions in the Middle East and the Russia-Ukraine war act as a tailwind for the precious metal amid the US political uncertainty ahead of the November presidential election. Apart from this, the fact that several Asian central banks and Russia are buying gold to reduce their reliance on the USD favors bullish traders and supports prospects for a further near-term appreciating move.
Technical Outlook: Gold price might confront resistance near the top end of a short-term ascending channel
From a technical perspective, the $2,600 round-figure mark, or the all-time peak set on Wednesday could offer some resistance ahead of the $2,613-2,615 region. The latter represents the top boundary of a short-term ascending trend channel extending from June and should act as a key pivotal point. With oscillators on the daily chart holding comfortably in positive territory and still far from being in the overbought zone, a sustained strength beyond the said barrier will be seen as a fresh trigger for bulls and pave the way for a further near-term appreciating move for the Gold price.
On the flip side, the $2,551-2,550 area now seems to protect the immediate downside ahead of the $2,532-2,530 horizontal resistance breakpoint. Some follow-through selling might expose the $2,500 psychological mark, below which Gold price could accelerate the slide towards the $2,476 confluence – comprising the 50-day Simple Moving Average (SMA) and the lower boundary of the channel. A convincing break below will suggest that the XAU/USD has topped out in the near term, setting the stage for a slide to the 100-day SMA, around the $2,412 region, en route to the $2,400 mark.
Gold FAQs Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, 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 rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
04:42 Japanese Yen holds gains ahead of the BoJ interest rate decision
The Japanese Yen (JPY) edges lower against the US Dollar (USD) following the National Consumer Price Index (CPI) data released on Friday.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Japanese Yen appreciates as traders expect the BoJ to keep interest rates unchanged on Friday.Japan's Consumer Price Index rose to 3.0% YoY in August, reaching its highest level since October 2023.The US Dollar faces challenges due to rising odds for additional Fed rate cuts in 2024.The Japanese Yen (JPY) edges lower against the US Dollar (USD) following the National Consumer Price Index (CPI) data released on Friday. Traders are now focusing on the Bank of Japan (BoJ) policy decision later in the day, with expectations of keeping its short-term interest rate target between 0.15% and 0.25%.
Japan's Consumer Price Index (CPI) increased to 3.0% year-on-year in August, up from 2.8% previously, marking the highest level since October 2023. Additionally, the Core National CPI, excluding fresh food, reached a six-month high of 2.8%, rising for the fourth consecutive month and in line with market expectations.
The downside of the USD/JPY pair is supported by a weaker US Dollar (USD) as expectations grow for additional rate cuts by the US Federal Reserve (Fed) by the end of 2024. The latest dot plot projections indicate a gradual easing cycle, with the 2024 median rate revised to 4.375%, down from the 5.125% forecast in June.
However, Federal Reserve Chair Jerome Powell stated in the post-meeting press conference that the Fed is not in a hurry to ease policy and emphasized that half-percentage point rate cuts are not the "new pace."
Daily Digest Market Movers: Japanese Yen appreciates due to hawkish BoJ US Treasury Secretary Janet Yellen stated on Friday that the recent interest rate cut by the Federal Reserve is a very positive indicator for the US economy. According to Yellen, it demonstrates the Fed's confidence that inflation has significantly decreased and is moving toward the 2% target. Meanwhile, the job market continues to show strength. The Federal Open Market Committee (FOMC) lowered the federal funds rate to a range of 4.75% to 5.0%, marking the Fed’s first rate cut in over four years. Fed policymakers updated their quarterly economic forecasts, increasing the median projection for unemployment to 4.4% by the end of 2024, up from the 4.0% estimate made in June. They also raised their long-term projection for the federal funds rate from 2.8% to 2.9%. Federal Reserve Chair Jerome Powell commented on the aggressive 50 basis point rate cut, saying, “This decision reflects our increased confidence that, with the right adjustments to our policy approach, we can maintain a strong labor market, achieve moderate economic growth, and bring inflation down to a sustainable 2% level.” Japan’s Merchandise Trade Balance Total recorded a larger trade deficit of ¥695.30 billion in August, up from ¥628.70 billion the previous month, but well below market expectations of a ¥1,380.0 billion shortfall. Exports increased by 5.6% year-over-year, marking the ninth consecutive month of growth, but fell short of the anticipated 10.0%. Imports rose by just 2.3%, the slowest pace in five months, significantly underperforming the projected 13.4% rise. Japanese Finance Minister Shunichi Suzuki stated on Tuesday that rapid foreign exchange (FX) fluctuations are undesirable. Suzuki emphasized that officials will closely monitor how FX movements affect the Japanese economy and people's livelihoods. The government will continue to assess the impact of a stronger Japanese Yen and respond accordingly, according to Reuters. Commerzbank FX analyst Volkmar Baur anticipated that the Bank of Japan will remain on the sidelines this week. Baur noted that the Federal Reserve's actions are likely to have a greater impact on the USD/JPY pair, suggesting that the JPY could have a strong chance of falling below 140.00 per USD even without a rate hike from the BoJ.
Technical Analysis: USD/JPY falls toward 142.00; further downside seems possible due to bearish bias
USD/JPY trades around 142.30 on Friday. Analysis of the daily chart indicates that the pair is consolidating within a descending channel, which supports a bearish bias. However, the 14-day Relative Strength Index (RSI) remains below the 50 level, confirming an ongoing bearish outlook.
On the downside, the USD/JPY pair might find immediate support at 139.58, which is the lowest level since June 2023, followed by the lower boundary of the descending channel near 137.50.
On the resistance side, the 21-day Exponential Moving Average (EMA) at the 143.56 level acts as an initial barrier, followed by the upper boundary of the descending channel around the 144.80 level.
USD/JPY: Daily ChartJapanese Yen PRICE Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD 0.02% 0.05% -0.16% 0.06% 0.17% 0.12% -0.13% EUR -0.02% 0.02% -0.17% 0.02% 0.15% 0.10% -0.16% GBP -0.05% -0.02% -0.19% 0.03% 0.14% 0.08% -0.15% JPY 0.16% 0.17% 0.19% 0.24% 0.34% 0.29% 0.06% CAD -0.06% -0.02% -0.03% -0.24% 0.10% 0.07% -0.17% AUD -0.17% -0.15% -0.14% -0.34% -0.10% -0.02% -0.27% NZD -0.12% -0.10% -0.08% -0.29% -0.07% 0.02% -0.25% CHF 0.13% 0.16% 0.15% -0.06% 0.17% 0.27% 0.25%
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Japanese Yen FAQs What key factors drive the Japanese Yen?
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen?
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. How does the differential between Japanese and US bond yields impact the Japanese Yen?
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen. How does broader risk sentiment impact the Japanese Yen?
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
04:16 PBOC sets USD/CNY reference rate at 7.0644 vs. 7.0983 previous
On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.0644, as compared to the previous day's fix of 7.0983 and 7.0637 Reuters estimates.
On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.0644, as compared to the previous day's fix of 7.0983 and 7.0637 Reuters estimates.
04:10 WTI softens below $71.00, ongoing geopolitical tensions might cap its downside
West Texas Intermediate (WTI), the US crude Oil benchmark, is trading around $70.80 on Friday.
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Israeli warplanes and artillery attacked Hezbollah in southern Lebanon on Thursday. The action came after the militia's pagers and walkie-talkies exploded last week, killing scores and injuring thousands across Lebanon, according to CNBC. “We continue to highlight Lebanon as the main pathway to oil disruption through direct Iranian involvement in a wider regional war,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
The US Fed decided to cut its interest rates by half a percentage point at its September meeting on Wednesday. The new "dot plots" suggest a gradual easing cycle, with the 2024 median revised to 4.375% versus the 5.125% projection in June. Lower interest rates generally support the WTI price as it reduces the cost of borrowing, which can boost economic activity and oil demand.
Declining US crude stockpiles might support oil prices in the near term. According to the US Energy Information Administration (EIA), crude oil stockpiles in the United States for the week ending September 13 decreased by 1.63 million barrels, compared to a decline of 0.833 million barrels in the previous week. The market consensus estimated that stocks would decline by just 0.1 million barrels.
On the other hand, the concerns about weaker oil demand and the economic slowdown in China might cap the black gold’s upside. Statistics Bureau data showed Chinese Industrial Production growth slowed to a five-month low in August and Retail Sales weakened further.
WTI Oil FAQs What is WTI Oil? 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. What factors drive the price of WTI Oil? 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. How does inventory data impact the price of WTI Oil 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. How does OPEC influence the price of WTI Oil? 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.
Israeli warplanes and artillery attacked Hezbollah in southern Lebanon on Thursday. The action came after the militia's pagers and walkie-talkies exploded last week, killing scores and injuring thousands across Lebanon, according to CNBC. “We continue to highlight Lebanon as the main pathway to oil disruption through direct Iranian involvement in a wider regional war,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
The US Fed decided to cut its interest rates by half a percentage point at its September meeting on Wednesday. The new "dot plots" suggest a gradual easing cycle, with the 2024 median revised to 4.375% versus the 5.125% projection in June. Lower interest rates generally support the WTI price as it reduces the cost of borrowing, which can boost economic activity and oil demand.
Declining US crude stockpiles might support oil prices in the near term. According to the US Energy Information Administration (EIA), crude oil stockpiles in the United States for the week ending September 13 decreased by 1.63 million barrels, compared to a decline of 0.833 million barrels in the previous week. The market consensus estimated that stocks would decline by just 0.1 million barrels.
On the other hand, the concerns about weaker oil demand and the economic slowdown in China might cap the black gold’s upside. Statistics Bureau data showed Chinese Industrial Production growth slowed to a five-month low in August and Retail Sales weakened further.
WTI Oil FAQs What is WTI Oil? 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. What factors drive the price of WTI Oil? 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. How does inventory data impact the price of WTI Oil 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. How does OPEC influence the price of WTI Oil? 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.
04:06 PBOC leaves Loan Prime Rates unchanged in September
The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Friday.
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The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Friday. The one-year and five-year LPRs were at 3.35% and 3.85%, respectively.
Market reaction
At the time of writing, AUD/USD is holding lower ground near 0.6803, down 0.15% on the day.
Australian Dollar FAQs What key factors drive the Australian Dollar?
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar?
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar?
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar?
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
04:02 China PBoC Interest Rate Decision in line with forecasts (3.35%)
China PBoC Interest Rate Decision in line with forecasts (3.35%)
03:12 AUD/USD strengthens above 0.6800 on RBA-Fed policy divergence, eyes on PBoC rate decision
The AUD/USD pair trades on a stronger note near 0.6810 during the early Asian session on Friday.
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The divergence of monetary policy between the Reserve Bank of Australia’s (RBA) higher for longer rate narrative and the Fed’s easing cycle is likely to influence the major pair in the near term. The two-day Fed meeting ended with an unexpected 50 basis points (bps) rate cut. The new dot-plots suggest a gradual easing cycle, with the 2024 median revised to 4.375% versus the 5.125% projection in June. Market expectations of the Fed rate cut might continue to undermine the Greenback and act as a tailwind for AUD/USD for the time being.
On the other hand, investors see the RBA keep its Official Cash Rate (OCR) unchanged at the upcoming meeting, but expect the rate cut later this year. Commonwealth Bank of Australia (CBA) analysts moved their expected timing of the first RBA rate cut from November 2024 to December 2024, with 25bp cut expected. “Recent strength in employment growth coupled with still relatively hawkish rhetoric from the RBA Governor means we now see December as the more likely month for the start of normalising the cash rate,” said CBA analysts.
The People’s Bank of China’s (PBoC) will announce its interest rate decision on Friday. Meanwhile, any development surrounding the weakness in the Chinese economy could weigh on the China-proxy Australian Dollar (AUD) as China is Australia's largest trading partner. Australian Dollar FAQs What key factors drive the Australian Dollar? One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar? China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar? Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar? The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The divergence of monetary policy between the Reserve Bank of Australia’s (RBA) higher for longer rate narrative and the Fed’s easing cycle is likely to influence the major pair in the near term. The two-day Fed meeting ended with an unexpected 50 basis points (bps) rate cut. The new dot-plots suggest a gradual easing cycle, with the 2024 median revised to 4.375% versus the 5.125% projection in June. Market expectations of the Fed rate cut might continue to undermine the Greenback and act as a tailwind for AUD/USD for the time being.
On the other hand, investors see the RBA keep its Official Cash Rate (OCR) unchanged at the upcoming meeting, but expect the rate cut later this year. Commonwealth Bank of Australia (CBA) analysts moved their expected timing of the first RBA rate cut from November 2024 to December 2024, with 25bp cut expected. “Recent strength in employment growth coupled with still relatively hawkish rhetoric from the RBA Governor means we now see December as the more likely month for the start of normalising the cash rate,” said CBA analysts.
The People’s Bank of China’s (PBoC) will announce its interest rate decision on Friday. Meanwhile, any development surrounding the weakness in the Chinese economy could weigh on the China-proxy Australian Dollar (AUD) as China is Australia's largest trading partner. Australian Dollar FAQs What key factors drive the Australian Dollar? One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar? China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar? Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar? The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
02:50 Japan Foreign Investment in Japan Stocks: ¥-3005.8B (September 13) vs previous ¥-902.3B
Japan Foreign Investment in Japan Stocks: ¥-3005.8B (September 13) vs previous ¥-902.3B
02:32 EUR/USD grapples with higher ground as Fed cuts weigh on Greenback
EUR/USD found the high end on Thursday, holding fast to the 1.1150 level, though most of the pair’s bullish momentum comes from a broad-market selloff in the Greenback rather than any particular bullish fix in the Euro.
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The economic data docket has been particularly light on the European side of things this week. All that remains of moderate note to EUR traders is a scheduled appearance from European Central Bank (ECB) President Christine Lagarde on Friday. Still, even that will be happening during US market hours. ECB President Lagarde will be speaking at the Michel Camdessus Central Banking Lecture in Washington DC.Forex Today: Will the BoJ surprise markets?On the US side of things, Initial Jobless Claims eased back to 219K for the week ended September 13, down from the previous week’s revised 231K and under the median market forecast of 230K. The Philadelphia Fed Manufacturing Survey for September also printed well above expectations, with the spread index of manufacturing conditions improving to 1.7 from the previous seven-month low of -7.0 and handily beating the expected print of -1.0.
Fed Chair Jerome Powell convinced markets that the Fed’s outsized jumbo cut of 50 bps this week wasn’t a snap response to deteriorating economic conditions but rather an attempt to get ahead of the curve and bolster the US labor market. Powell successfully floated a rebranding of an entire half-percentage-point cut as a “recalibration,” and investors rewarded the Fed’s latest narrative pivot by pulling out of the Greenback across the board and plowing cash into higher-yielding assets.
EUR/USD price forecast
Despite this week’s Fed-fueled rally, EUR/USD continues to churn just north of the 1.1100 handle. The post-Fed rally has kept Fiber even-keeled in the midweek, but meaningful momentum has yet to materialize and the pair could be poised for an exhaustion play. However, EUR/USD is still cycling chart paper on the high end of recent momentum, and short pressure will have a difficult time staging a full pullback to the 50-day Exponential Moving Average (EMA) near 1.1000.
EUR/USD daily chartEuro FAQs What is the Euro?
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
02:32 Japan’s National CPI climbs 3.0% YoY in August, Core CPI rises as expected
Japan’s National Consumer Price Index (CPI) climbed 3.0% YoY in August, compared to the previous reading of 2.8%, according to the latest data released by the Japan Statistics Bureau on Friday, Further details unveil that the National CPI ex Fresh food arrived at 2.8% YoY in August versus 2.7% prior.
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Japan’s National Consumer Price Index (CPI) climbed 3.0% YoY in August, compared to the previous reading of 2.8%, according to the latest data released by the Japan Statistics Bureau on Friday,
Further details unveil that the National CPI ex Fresh food arrived at 2.8% YoY in August versus 2.7% prior. The figure was in line with the market consensus of 2.8%. CPI ex Fresh Food, Energy increased 2.0% YoY in August, compared to the previous reading of 1.9% rise. Market reaction to Japan’s National CPI data Following the Japan’s CPI inflation data, the USD/JPY pair is up 0.08% on the day at 142.72. Japanese Yen FAQs What key factors drive the Japanese Yen? The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen? One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. How does the differential between Japanese and US bond yields impact the Japanese Yen? The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen. How does broader risk sentiment impact the Japanese Yen? The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Further details unveil that the National CPI ex Fresh food arrived at 2.8% YoY in August versus 2.7% prior. The figure was in line with the market consensus of 2.8%. CPI ex Fresh Food, Energy increased 2.0% YoY in August, compared to the previous reading of 1.9% rise. Market reaction to Japan’s National CPI data Following the Japan’s CPI inflation data, the USD/JPY pair is up 0.08% on the day at 142.72. Japanese Yen FAQs What key factors drive the Japanese Yen? The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen? One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. How does the differential between Japanese and US bond yields impact the Japanese Yen? The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen. How does broader risk sentiment impact the Japanese Yen? The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
02:31 Japan National CPI ex Food, Energy (YoY) climbed from previous 1.9% to 2% in August
Japan National CPI ex Food, Energy (YoY) climbed from previous 1.9% to 2% in August
02:30 Japan National Consumer Price Index (YoY) climbed from previous 2.8% to 3% in August
Japan National Consumer Price Index (YoY) climbed from previous 2.8% to 3% in August
02:30 Japan National CPI ex Fresh Food (YoY) meets forecasts (2.8%) in August
Japan National CPI ex Fresh Food (YoY) meets forecasts (2.8%) in August
02:12 US Treasury Sec. Yellen: The Fed rate cut is very positive sign for the economy
US Treasury Secretary Janet Yellen said on Friday that the US Federal Reserve (Fed) rate cut is very positive sign for the US economy.
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US Treasury Secretary Janet Yellen said on Friday that the US Federal Reserve (Fed) rate cut is very positive sign for the US economy.
Key quotes
It reflects confidence on the part of the Fed that inflation has come way down and is on the path back to the two percent target, and that the risks with respect to inflation have really meaningfully diminished.
At the same time, we have a job market that remains strong. Market reaction The US Dollar Index showed no reaction to these comments and was last seen gaining 0.03% on the day at 100.67. Interest rates FAQs What are interest rates? Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation. How do interest rates impact currencies? Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money. How do interest rates influence the price of Gold? Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold. What is the Fed Funds rate? The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
At the same time, we have a job market that remains strong. Market reaction The US Dollar Index showed no reaction to these comments and was last seen gaining 0.03% on the day at 100.67. Interest rates FAQs What are interest rates? Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation. How do interest rates impact currencies? Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money. How do interest rates influence the price of Gold? Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold. What is the Fed Funds rate? The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
02:03 GBP/USD tests 1.33 as Greenback weakness prevails
GBP/USD found a fresh 30-month high bid on Thursday, with a broad-market selloff in the US Dollar sparking a risk bid in Cable and bolstering the Pound Sterling.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}GBP/USD continues to test fresh 30-month highs.Fed rate cut sparks broadbase Greenback selloff.BoE held rates despite early summer cut, UK Retail Sales in the pipe.GBP/USD found a fresh 30-month high bid on Thursday, with a broad-market selloff in the US Dollar sparking a risk bid in Cable and bolstering the Pound Sterling. The Federal Reserve’s (Fed) 50 bps cut this week helped galvanized global markets into a risk-on stance, while the Bank of England’s (BoE) fearful rate hold did little to spark further strength under the GBP.
The only datapoint of note on Friday will be UK Retail Sales for August, though not much momentum is likely to come of it with investors exhausted after a double-header of central banks between the Fed and the BoE. UK MoM Retail Sales in August are expected to tick down to 0.4% from the previous 0.5%, while the annualized figure is expected to hold steady at 1.4%.
The BoE held interest rates steady at 5.0% early Thursday, with the Monetary Policy Committee (MPC) voting seven-to-one for another rate hold. The BoE initially opened the gates to rate cuts earlier in the summer with a quarter-point cut at the last meeting, but the move may have proved to be premature. BoE policymakers are waiting to see how the UK economy unfolds before making further rate adjustments.
On the US data side, Initial Jobless Claims eased back to 219K for the week ended September 13, down from the previous week’s revised 231K and under the median market forecast of 230K. The Philadelphia Fed Manufacturing Survey for September also printed well above expectations, with the spread index of manufacturing conditions improving to 1.7 from the previous seven-month low of -7.0 and handily beating the expected print of -1.0.
Fed Chair Jerome Powell convinced markets that the Fed’s outsized jumbo cut of 50 bps this week wasn’t a snap response to deteriorating economic conditions but rather an attempt to get ahead of the curve and bolster the US labor market. Powell successfully floated a rebranding of an entire half-percentage-point cut as a “recalibration,” and investors rewarded the Fed’s latest narrative pivot by plowing cash into risk assets across the board and yanking the rug out from beneath the safe-haven US Dollar.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish. Read more. Next release: Fri Sep 20, 2024 06:00 Frequency: MonthlyConsensus: 0.4%Previous: 0.5%Source: Office for National Statistics GBP/USD price forecast
Despite clipping into a fresh 30-month high on Thursday and crossing the 1.3300 handle, Cable bidders have struggled to push price action deep into bull country, and markets will enter the Friday wrapup with prices hovering near the key psychological level. A firm bullish trend is still baked into daily candlesticks with the pair climbing above the 50–day Exponential Moving Average (EMA) near 1.3000.
GBP/USD daily chartPound Sterling FAQs What is the Pound Sterling?
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling?
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound?
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound?
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
02:01 USD/CAD softens near 1.3550 on bearish US Dollar, investors await BoC’s Macklem speech
The USD/CAD pair attracts some sellers near 1.3560, snapping the two-day winning streak during the early Asian session on Friday.
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The Fed surprised the financial markets with a 50 basis points (bps) rate cut on Wednesday, bringing its target range to 4.75% to 5.00%. Fed Chair Jerome Powell said the move was "strong" but that it was needed as price rises ease and job market concerns grow. The dovish stance of the US Fed and the expectation of additional rate cuts this year could further weigh on the US dollar (USD) in the near term.
Data released by the US Department of Labor (DoL) on Thursday showed that the US weekly Initial Jobless Claims slid to the lowest since May, signaling the labor market remains healthy despite a slowdown in hiring. US citizens that newly applied for unemployment insurance benefits came in at 219K for the week ending September 14. This figure was below the market consensus of 230K and lower than the previous week of 231K (revised from 230K).
On the other hand, the rise in crude oil prices provides some support to the commodity-linked Canadian Dollar (CAD). It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value. Canadian Dollar FAQs What key factors drive the Canadian Dollar? 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. How do the decisions of the Bank of Canada impact 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. How does the price of Oil impact the Canadian Dollar? 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. How does inflation data impact the value of the Canadian Dollar? 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. How does economic data influence the value of 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.
The Fed surprised the financial markets with a 50 basis points (bps) rate cut on Wednesday, bringing its target range to 4.75% to 5.00%. Fed Chair Jerome Powell said the move was "strong" but that it was needed as price rises ease and job market concerns grow. The dovish stance of the US Fed and the expectation of additional rate cuts this year could further weigh on the US dollar (USD) in the near term.
Data released by the US Department of Labor (DoL) on Thursday showed that the US weekly Initial Jobless Claims slid to the lowest since May, signaling the labor market remains healthy despite a slowdown in hiring. US citizens that newly applied for unemployment insurance benefits came in at 219K for the week ending September 14. This figure was below the market consensus of 230K and lower than the previous week of 231K (revised from 230K).
On the other hand, the rise in crude oil prices provides some support to the commodity-linked Canadian Dollar (CAD). It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value. Canadian Dollar FAQs What key factors drive the Canadian Dollar? 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. How do the decisions of the Bank of Canada impact 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. How does the price of Oil impact the Canadian Dollar? 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. How does inflation data impact the value of the Canadian Dollar? 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. How does economic data influence the value of 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.
02:01 United Kingdom GfK Consumer Confidence came in at -20, below expectations (-13) in September
United Kingdom GfK Consumer Confidence came in at -20, below expectations (-13) in September
02:00 Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan (BoJ) is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Bank of Japan is anticipated to maintain its policy rate unchanged.Investors’ focus should remain on the bank’s rate path for the next few months.BoJ Governor Kazuo Ueda is seen sticking to the recent hawkish narrative.The Bank of Japan (BoJ) is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review.
The decision is set to be announced during the early Asian session. Notably, in March, the BoJ raised interest rates for the first time in 17 years, ending the negative interest rate policy that had been in place since 2016. On July 31, the central bank further surprised markets by hiking its policy rate by 15 basis points to 0.25%.
What can we expect from the BoJ interest rate decision?
As the meeting approaches, most expect a steady policy stance, but market participants will be closely watching for any shifts in the policy statement that might offer clues about when the bank plans to raise rates next.
Currently, money markets are anticipating an increase of about 25 basis points by the end of the year, which would bring the bank's policy rate to a maximum of 0.50% at the December 19 meeting.
On the consumer front, real wage growth saw a positive turn in June (1.1% YoY) and July (0.4% YoY), which could encourage more spending and potentially push inflation higher. For now, inflation remains above the 2% target.
These factors make it tricky for the central bank to decide when to raise interest rates. If rising prices driven by cost pressures start to weigh on consumer spending, it could hinder the demand-driven inflation the Bank of Japan aims for before it can consider scaling back its stimulus measures.Sanae Takaichi, a potential successor to Japanese Prime Minister Fumio Kishida, has suggested that the BoJ should avoid raising interest rates further, as it could dampen consumer sentiment and hinder capital expenditure.
From the BoJ, policymaker Naoki Tamura believed that the central bank must increase interest rates to at least 1% by the second half of the next fiscal year, highlighting the bank's commitment to steady monetary tightening. In addition, board member Junko Nakagawa argued that the BoJ would continue raising interest rates if inflation aligns with its forecast, but emphasized the need to consider market movements' effects on the broader economic and price outlook before deciding to increase rates. Furthermore, his colleague Hajime Takata cautioned that interest rate hikes should be cautious to avoid significant harm to businesses.
In the meantime, it is worth recalling that BoJ Governor Kazuo Ueda spoke before the Japanese Parliament in late August. In his testimony, he reaffirmed his commitment to raising interest rates if inflation continues to move toward the 2% target, indicating that recent market volatility would not disrupt the BoJ’s long-term plan for rate hikes. However, Ueda cautioned that markets remain unstable, which could influence the central bank’s inflation forecasts.
Ueda’s comments suggested that the central bank might take longer than initially anticipated to decide on its next rate hike, but remained on track to gradually raise borrowing costs from the current ultra-low levels.
According to a Reuters poll published last week, economists unanimously agreed that the BoJ will not raise interest rates at its September policy meeting, though a majority still anticipated an increase at some point by year-end.
As we get closer to the interest rate decision, analysts at Standard Chartered Global Research noted: “We now expect the Bank of Japan (BoJ) to hike the base rate by 25 bps in December (from 15 bps in Q2 and 10 bps in Q3-2025 prior) to 0.50% by end-2024 (0.25% prior) on stronger-than-expected inflation that has stayed above its 2% target for the past 21 months. Wages grew in real terms in June for the first time since March 2022, adding to concerns over demand-side inflation. The BoJ may hike earlier to avoid losing an opportunity to normalise policy before dovish pressures kick in from possible Fed rate cuts of 75 bps by end-2024, risk of a global recession, and China’s slowdown.”
How could the Bank of Japan interest rate decision affect USD/JPY?
The BoJ is largely expected to refrain from acting on the policy rate. However, Governor Ueda is seen sticking to his hawkish narrative, leaving the door open to the continuation of the “normalization” of the monetary policy in the next few months.
A glimpse at the broader picture shows that Fed-BoJ policy divergence remains at center stage. Following the recent 50 basis points rate cut by the Federal Reserve (Fed) in September and prospects of an additional 50 basis points of easing in the latter part of the year, a further downside in USD/JPY does appear as the most favourable scenario for the time being.
Looking at the techs surrounding USD/JPY, Senior Analyst at FXStreet Pablo Piovano suggests that “the resumption of the bid bias in the Japanese yen carries the potential to drag the pair to its 2024 bottom of 139.57 (September 16). A deeper retracement could see the spot revisit the July 2023 low of 137.23 (July 14) ahead of the March 2023 low of 129.63 (March 24)”.
On the upside, “there are initial barriers at the September peak of 147.20 (September 3), and the weekly high of 149.39 (August 15)”, Pablo adds.
Economic Indicator
BoJ Interest Rate Decision
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY. Read more. Last release: Wed Jul 31, 2024 03:55 Frequency: IrregularActual: 0.15%Consensus: 0%Previous: 0%Source: Bank of Japan Bank of Japan FAQs What is the Bank of Japan?
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%. What has been the Bank of Japan’s policy?
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. How do Bank of Japan’s decisions influence the Japanese Yen?
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen. Is the Bank of Japan’s ultra-loose policy likely to change soon?
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.
01:14 Silver Price Forecast: XAG/USD surges as Fed rate cut spurs rally toward $31.00
Silver climbed sharply during Thursday’s North American session, printing solid gains of over 2%, and closed at around $30.77.
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XAG/USD Price Forecast: Technical outlook
Silver price is threatening to decisively clear a downslope resistance trendline drawn from May 20 highs passing through $30.67. If this trendline is broken decisively, it will open the way to challenging $31.00.
In that outcome, XAG/USD next resistance will be the July 11 swing high at $31.75, followed by the May 29 peak at $32.29. On further strength, the year-to-date (YTD) high at $32.51 will be up for grabs.
Conversely, bears would need to push the grey’s metal price below the September 18 swing low of $29.71, ahead of testing the 100-day moving average (DMA) at $29.43
XAG/USD Price Action – Daily ChartSilver FAQs Why do people invest in Silver?
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices?
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices?
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves?
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
00:53 NZD/USD Price Analysis: Bulls attempt to retake the 20-day SMA, outlook promising
On Thursday, the NZD/USD pair rose to 0.6239, above the 20-day Simple Moving Average (SMA) which served as a strong resistance in the last sessions.
The NZD/USD pair has been choppy between 0.6159-0.6260 in the past sessions.The RSI shows rising buying pressure, whereas the MACD suggests a potential reversal in the bearish momentum.On Thursday, the NZD/USD pair rose to 0.6239, above the 20-day Simple Moving Average (SMA) which served as a strong resistance in the last sessions. Indicators meanwhile look promising.
The Relative Strength Index (RSI) is at 59, in positive territory with a rising slope, signaling rising buying pressure. Conversely, the Moving Average Convergence Divergence (MACD) histogram is red and falling, suggesting that selling pressure may be declining. This presents a mixed outlook for the pair.
NZD/USD daily chartKey support levels include 0.6150, 0.6120, and 0.6100, while resistance levels are 0.6190, 0.6200, and 0.6230. A close above the 20-day SMA, currently at 0.6200, could signal further upward movement with the next target being at early September highs near 0.6300.
00:00 New Zealand Westpac Consumer Survey climbed from previous 82.2 to 90.8 in 3Q
New Zealand Westpac Consumer Survey climbed from previous 82.2 to 90.8 in 3Q
