Forex News
- China and Hong Kong registered inflows in Gold ETFs during April, with the latter seeing record-high numbers.
- Chinese demand for Gold ETFs remains strong, driven by institutional purchases and lower yields.
- Increasing ETF demand tends to support spot prices, which have been hovering between $4,400 and $4,900 since late March.
China continued to lead Asia’s push into Gold buying via Exchange-Traded Funds (ETFs) in April, with Hong Kong registering its highest inflows ever, as Gold prices stabilized after a major pullback in March.
China’s Gold ETFs registered inflows of $498 million in April, according to data from the World Gold Council (WGC). Asia’s largest economy contributed significantly to the rebound in global Gold ETF inflows, particularly when adding Hong Kong’s $732 million record high.
The surge in ETF inflows in Hong Kong was due to the debut of the CSOP Gold ETF, with about $720 million in assets under management, making it Hong Kong’s largest local physical-gold ETF.
Besides the one-off from Hong Kong, “Gold ETFs in Mainland China continued to draw inflows amid elevated geopolitical tensions, falling yields, and continued official-sector gold buying announcement,” the World Gold Council said.
Looking at the broader region, Gold ETFs in Asia extended their inflow streak to eight months, adding $1.8 billion in April, with positive contributions also from India. Globally, Gold ETFs recorded inflows of $6.6 billion in the month, partly reversing March’s outflows, with the largest inflows coming from the United Kingdom (UK) with $2.1 billion.
Positive flows via ETFs are a bellwether for spot prices as investor demand via ETFs tends to directly impact the physical market.
Gold prices have traded broadly rangebound since the end of March, within a band of between $4,400 and $4,900. While geopolitics keeps the precious’ metal safe-haven appeal intact, the quick hawkish repricing of global central banks’ rate outlook is also capping gains.
April’s ETF rebound shows that Gold has somewhat regained its safe-haven appeal. While investor demand through ETFs could keep providing a solid floor for the precious metal, any significant gains would need a decline in energy prices and messages from central banks that the current plans to keep interest rates at high levels are no longer on the table.
Gold FAQs
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.
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.
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.
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.
- Silver price climbs to around $81.50 in Monday’s early Asian session, adding 1.45% on the day.
- Demand from rising industrial applications and investment underpins the Silver price.
- The US and Iran rejected each other’s latest peace proposals to end the 10-week conflict.
Silver price (XAG/USD) rises to near $81.50 during the early Asian trading hours on Monday. The white metal extends the rally amid rising demand from industrial applications. Traders will closely monitor the developments surrounding the US-Iran peace deal for fresh impetus.
Silver’s demand is driven by photovoltaics, electromobility, semiconductors, and AI infrastructure. Several analysts expect industrial demand to exceed supply in 2026 as well. Additionally, investment demand also remains robust.
According to the latest World Silver Survey data, global physical investment demand in 2025/early 2026 was at a multi-year high. This was mostly due to Indian investors and a significant change in European precious metals trading toward silver.
On the other hand, concerns that major central banks might maintain their restrictive course longer in light of rising energy prices could weigh on the precious metals. It’s worth noting that Silver is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
US President Donald Trump rejected new Iran peace proposals to end the war as "totally unacceptable." Tasnim news agency said Tehran's proposal included an immediate end to the war on all fronts, a halt to a US naval blockade, and guarantees of no further attacks on Iran.
Silver FAQs
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.
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.
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.
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.
- USD/CAD trades with positive bias for the fourth straight day amid a broadly firmer USD.
- Iran tensions and hawkish Fed expectations turn out to be key factors supporting the USD.
- Rising Crude Oil prices could underpin the Loonie and cap further upside for spot prices.
The USD/CAD pair attracts some dip-buying following Friday's late pullback from the vicinity of the 100-day Simple Moving Average (SMA) and climbs back closer to the 1.3700 during the Asian session on Monday. This marks the fourth straight day of a positive move – also the sixth in the previous seven – and is sponsored by a modest US Dollar (USD) strength.
The recent optimism over a potential US-Iran peace deal and the de-escalation of conflict faded rather quickly in the wake of renewed hostilities in the Strait of Hormuz. Adding to this, US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz amid major disagreements over Iran's nuclear program. This keeps geopolitical risks in play and benefits the safe-haven USD, offering some support to the USD/CAD pair.
Meanwhile, persistent geopolitical uncertainties trigger a fresh leg up in Crude Oil prices, reviving inflationary fears. Adding to this, the upbeat US Nonfarm Payrolls (NFP) report, released on Friday, fuelled expectations for a more hawkish US Federal Reserve (Fed) and turned out to be another factor underpinning the Greenback. The Canadian Dollar (CAD), on the other hand, is weighed down by the disappointing monthly employment details, which showed that the Unemployment Rate rose to 6.9% in April.
That said, rising Crude Oil prices might hold back traders from placing aggressive bearish bets around the commodity-linked Loonie and cap any further upside for the USD/CAD pair. Even from a technical perspective, Friday's failure ahead of the 100-day SMA makes it prudent to wait for a sustained strength above the said barrier before positioning for any further gains. In the absence of any relevant market-moving economic data, spot prices remain at the mercy of USD/Oil price dynamics.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- AUD/USD weakened as the US Dollar strengthened amid rising market risk aversion.
- China’s CPI rose 1.2% YoY in April, above March’s 1.0% increase and the 0.8% forecast.
- US Nonfarm Payrolls rose by 115K in April, beating forecasts despite slowing from March’s 185K increase.
AUD/USD gains ground after opening at a bearish gap but still remains in the negative territory, trading around 0.7240 during the Asian hours on Monday. The pair moves little despite stronger-than-expected China’s Consumer Price Index (CPI) data. Any change in the Chinese economy could impact the Australian Dollar (AUD) as China and Australia are close trading partners.
China’s Consumer Price Index (CPI) rose 1.2% YoY in April, accelerating from March’s 1.0% increase and beating the 0.8% forecast. CPI inflation arrived at 0.3% MoM in April, versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline. Producer Price Index (PPI) rose 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise.
The AUD/USD pair came under pressure as the US Dollar (USD) strengthened amid growing risk aversion after US President Donald Trump and Iran dismissed each other’s latest peace initiatives aimed at ending the Middle East conflict.
According to Bloomberg on Sunday, Trump turned down Iran’s latest peace proposal, describing it as “totally unacceptable.” Iranian state television reported that an Iranian official said Tehran’s response emphasized ending the conflict across all fronts, particularly in Lebanon, while also addressing the security of shipping routes through the strait, though no details were provided regarding how or when the key waterway could reopen.
An extended Middle East conflict and the fragile ceasefire between the US and Iran may continue to support safe-haven demand for the Greenback, potentially weighing on the major currency pair in the near term.
The US Bureau of Labor Statistics released data on Friday indicating that Nonfarm Payrolls (NFP) increased by 115K in April, down from March’s 185K reading but still exceeding the market forecast of 62K. At the same time, the Unemployment Rate remained unchanged at 4.3% in April, matching analysts’ expectations.
Australian Dollar FAQs
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.
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.
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.
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.
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.
- NZD/USD softens to around 0.5950 in Monday’s early Asian session.
- China’s April CPI and PPI came in hotter than expected as the Iran war drives energy costs higher.
- China and the US will hold trade talks later this week.
The NZD/USD pair trades in negative territory near 0.5950 during the early Asian trading hours on Monday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) after the release of the Chinese inflation report. The US Existing Home Sales data for April is due later on Monday.
Data released by the National Bureau of Statistics of China on Monday showed that the country’s Consumer Price Index (CPI) climbed 1.2% in April, compared to a rise of 1.0% in March. This figure came in hotter than the expectations of 0.8%. On a monthly basis, Chinese CPI inflation arrived at 0.3% MoM in April, versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline.
Furthermore, the Producer Price Index (PPI) jumped 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise. However, the Chinese inflation data have little to no impact on the China-proxy Kiwi.
Chinese President Xi Jinping is set to host US President Donald Trump later this week, as both countries seek to stabilize a relationship strained by tensions over trade, export controls, Taiwan, and the Iran war.
Trump on Sunday dismissed Iran's response to US proposals to end the war as "totally unacceptable.” The Tasnim news agency said that Iran's proposal included an immediate end to the war on all fronts, a halt to a US naval blockade, and guarantees of no further attacks on Iran. Signs of prolonged war in the Middle East could boost the Greenback as a safe-haven currency in the near term.
New Zealand Dollar FAQs
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.
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.
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.
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.
- WTI gained after Trump rejected Iran’s proposal, keeping the Strait of Hormuz effectively closed.
- Drone strikes hit a cargo ship near Qatar, while the UAE and Kuwait intercepted hostile drones.
- Kpler data showed two crude tankers crossed the Strait of Hormuz last week with trackers switched off.
West Texas Intermediate (WTI) oil price advances after registering nearly 3% losses in the previous trading day, hovering around $95.70 during the Asian hours on Monday. Crude oil prices moved higher after US President Donald Trump rejected Iran’s latest response to his proposal to end the 10-week conflict, keeping the Strait of Hormuz effectively shut.
Trump described in a post on Truth Social that Tehran’s reply as “TOTALLY UNACCEPTABLE,” following reports that Iran proposed moving part of its highly enriched uranium stockpile to a third country while refusing to dismantle its nuclear facilities. According to US officials, Trump is set to arrive in Beijing on Wednesday and is expected to discuss Iran, among other issues, with Chinese President Xi Jinping.
Meanwhile, drone strikes targeted a cargo ship near Qatar in the Persian Gulf, while the UAE and Kuwait reported intercepting hostile drones, intensifying concerns that the fragile ceasefire established in early April could unravel.
Saudi Aramco CEO Amin Nasser stated on Sunday that the world has lost nearly 1 billion barrels of oil over the past two months, adding that energy markets would require time to stabilize even if supply flows resume.
Kpler shipping data also showed that two additional crude-laden tankers passed through the Strait of Hormuz last week with tracking systems turned off to avoid potential Iranian attacks.
The prolonged closure of the Strait of Hormuz has significantly disrupted global supplies of crude oil, natural gas, and refined fuels, causing what the International Energy Agency (IEA) called the largest supply shock ever recorded.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 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.
- USD/JPY attracts some dip-buyers as Iran tensions and hawkish Fed bets revive the USD demand.
- Reviving inflationary concerns act as a tailwind for the US bond yields, also underpinning the USD.
- Intervention fears and expectations for a BoJ rate hike in June should help limit deeper JPY losses.
The USD/JPY pair reverses a modest Asian session dip to the 156.50-156.45 area on Monday as the safe-haven US Dollar (USD) draws support from persistent geopolitical uncertainties. Spot prices reclaim the 157.00 mark, though any meaningful upside still seems elusive in the wake of speculations that Japanese authorities might step in to prop up the domestic currency.
US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz amid major disagreements over Iran's nuclear program. In fact, the Wall Street Journal reported that Iran has rejected US demands to dismantle its nuclear facilities and suspend uranium enrichment for 20 years. US President Donald Trump quickly lashed out at the Iranian response, calling it "totally unacceptable." This comes on top of renewed hostilities in the Strait of Hormuz and keeps geopolitical risks in play, underpinning the USD's reserve currency status and offering some support to the USD/JPY pair.
Meanwhile, the US-Iran standoff triggers a fresh leg up in Crude Oil prices and revives inflationary concerns. Apart from this, the upbeat US Nonfarm Payrolls (NFP) report released on Friday reaffirms hawkish US Federal Reserve (Fed) expectations and acts as a tailwind for the US Treasury bond yields. This turns out to be another factor benefiting the USD and contributing to the bid tone surrounding the USD/JPY pair. Meanwhile, reports last week that officials intervened in the FX market during holidays in early May might hold back traders from placing aggressive bearish bets around the Japanese Yen (JPY) and cap further gains for the currency pair.
Moreover, Japan's top currency diplomat, Atsushi Mimura, had said on Thursday that Japan faces no constraints on how often it can intervene on currency markets and is in daily contact with US authorities. This reinforces that Japan remains committed to stemming speculative JPY moves. Adding to this, the Bank of Japan's (BoJ) upward revision of inflation forecasts and the 6-3 hawkish vote split lifted bets for a potential rate increase as soon as June. This favors the JPY bulls, warranting caution before positioning for further USD/JPY gains.
Japanese Yen FAQs
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.
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 BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, 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 supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
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.
China’s Consumer Price Index (CPI) climbed 1.2% in April from a year ago after arriving at a rise of 1.0% in March, the National Bureau of Statistics of China reported on Monday. The market consensus was for 0.8% in the reported period.
Chinese CPI inflation arrived at 0.3% MoM in April versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline.
China’s Producer Price Index (PPI) rose 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise.
Market reaction to China’s CPI, PPI data
The China’s CPI and PPI data have little to no impact to the China-proxy Australian Dollar (AUD). At the press time, the AUD/USD pair is down 0.14% on the day to trade at 0.7235.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.25% | 0.17% | 0.06% | 0.15% | 0.23% | 0.21% | |
| EUR | -0.15% | 0.10% | 0.00% | -0.12% | 0.00% | 0.08% | 0.06% | |
| GBP | -0.25% | -0.10% | -0.09% | -0.22% | -0.10% | -0.02% | -0.05% | |
| JPY | -0.17% | 0.00% | 0.09% | -0.12% | 0.00% | 0.07% | 0.04% | |
| CAD | -0.06% | 0.12% | 0.22% | 0.12% | 0.13% | 0.14% | 0.15% | |
| AUD | -0.15% | -0.01% | 0.10% | -0.01% | -0.13% | 0.06% | 0.05% | |
| NZD | -0.23% | -0.08% | 0.02% | -0.07% | -0.14% | -0.06% | 0.00% | |
| CHF | -0.21% | -0.06% | 0.05% | -0.04% | -0.15% | -0.05% | -0.00% |
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).
This section was published on May 10 at 23:13 GMT as a preview of China’s CPI, PPI data.
China’s CPI, PPI Overview
The National Bureau of Statistics of China (NBS) will publish its data for April at 01.30 GMT. The Consumer Price Index (CPI) is expected to show an increase of 0.8% YoY in April, compared to 1.0% in March. The Producer Price Index (PPI) is projected to show a rise of 1.5% in March versus an increase of 0.5% prior.
The CPI is a key indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to the same month a year earlier. Meanwhile, the PPI is a measurement of the rate of inflation experienced by producers.
How could the China’s CPI, PPI affect AUD/USD?
AUD/USD trades on a negative note on the day in the lead up to China’s CPI, PPI data. The pair edges lower as the US Dollar (USD) strengthens amid cautious sentiment after US President Donald Trump and Iran rejected each other’s latest peace proposals to end the 10-week conflict
If data comes in better than expected, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the May 6 high of 0.7277. The next resistance level emerges at the 0.7300 psychological level. The additional upside filter to watch is the March 4 high of 0.7380.
To the downside, the May 8 low and a round figure of 0.7200 will offer some comfort to buyers. Extended losses could see a drop to the May 4 low of 0.7153, followed by the April 30 low of 0.7110.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
