Forex News
- The Indian Rupee trades calmly against the US Dollar at open in a thin trading volume day.
- FIIs turned out to be net sellers in 17 out of 20 trading days so far this month.
- Investors await FOMC minutes for fresh cues on the US interest rate outlook.
The Indian Rupee (INR) trades almost flat against the US Dollar (USD) at the open on Tuesday. The USD/INR pair wobbles around 90.30 as trading volume gets squeezed in the final stretch of the year, with near-term bias remaining bullish due to consistent outflow of foreign funds from the Indian stock market.
On Monday, Foreign Institutional Investors (FIIs) offloaded their stake worth Rs. 2,759.89 crore in the Indian equity market. So far this month, FIIs have remained net sellers in 17 out of 20 trading days and have pared their stake worth Rs. 26,908.22 crore.
Overseas investors have been keeping a distance from the Indian secondary market amid the trade stalemate between the United States (US) and India. Negotiators from both nations have expressed several times that they are close to reaching a trade deal, but have not announced so far, due to which Washington is charging 50% tariffs on imports from New Delhi, the highest among all its trading partners.
In Tuesday’s session, investors will focus on the Trade Deficit – RBI (Q3), which will be published at 17:00 GMT. The data will demonstrate the change in the total amount of goods and services exported from and imported by India.
Daily Digest Market Movers: USD/INR trades stably ahead of FOMC minutes
- Another reason behind the sideways move in the USD/INR pair is the steady US Dollar ahead of the release of Federal Open Market Committee (FOMC) minutes of the December meeting in the late New York session.
- During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 98.00.
- Investors will pay close attention to FOMC minutes to get fresh cues on the monetary policy outlook for 2026.
- In the policy meeting, the Fed decided to cut interest rates by 25 basis points (bps) to 3.50%-3.75%. This was the third interest rate cut by the Fed in a row. Fed policymakers signaled that monetary policy conditions needed to loosen further to support deteriorating job market conditions.
- After the policy outcome, San Francisco Fed Bank President Mary Daly also stated that she favored interest rate cuts in the policy meeting, as the job market is getting softer, and added that policymakers cannot let the labor market falter.
- In the policy announcement, the Fed’s Economic Projections report showed that policymakers collectively see the Federal Funds Rate heading to 3.4% by the end of 2026, indicating that there will be only one interest rate cut in the entire next year.
- Contrary to the Fed’s projections, the CME FedWatch tool shows that the Fed will cut borrowing rates by at least 50 bps in 2026.
- Next year, the major highlight will be the announcement of Fed Chair Jerome Powell’s successor by the White House. United States (US) President Donald Trump said on Monday that he plans to announce his pick for “the next chair sometime in January”. Latest comments from Trump have signaled that former Fed Chair Kevin Warsh, White House Economic Adviser Kevin Hassett, current Fed Governors Christopher Waller and Michelle Bowman are leading contenders for the post of the Fed’s next Chairman.
Technical Analysis: USD/INR wobbles near 20-day EMA
USD/INR trades flat near 90.30 in the opening trade on Tuesday. The 20-day Exponential Moving Average is rising at 90.20, with price holding above it and preserving a mild bullish bias. The 20-day EMA has been edging higher for several sessions, underscoring steady demand.
The 14-day Relative Strength Index (RSI) at 54 (neutral) reflects balanced momentum after easing from prior overbought readings.
Price action continues to respect the ascending 20-day EMA, which acts as immediate support at 90.20. A sustained close above this average keeps the trend profile positive and could encourage further upside toward the all-time high of 91.55, while a break below it would tilt the bias toward consolidation.
(The technical analysis of this story was written with the help of an AI tool.)
Indian Rupee FAQs
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.
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.
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.
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.
- USD/CHF depreciates as safe-haven demand increases amid the uncertain Ukraine–Russia situation.
- The US Dollar may face challenges due to growing odds of two more Fed rate cuts in 2026.
- Traders await the FOMC December Meeting Minutes to gain insights into the Fed’s 2026 outlook.
USD/CHF loses ground after two days of gains, trading around 0.7880 during the Asian hours on Tuesday. The Swiss KOF Leading Indicator will be eyed later, which could offer future trends of the overall economic activity.
The Swiss Franc (CHF) potentially receives support from increased safe-haven demand, which could be attributed to the uncertain Ukraine-Russia situation. Russia’s foreign minister said Moscow’s negotiating stance would shift following alleged strikes on President Vladimir Putin’s residence.
Additionally, Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” with the United States (US), Europe, and Israel have raised fears of broader instability, with Trump warning of further strikes if Iran resumes rebuilding its nuclear programme.
The USD/CHF pair also struggles as the US Dollar (USD) faces challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
Traders adopt caution ahead of the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day, which could offer insights into the Federal Reserve’s (Fed) 2026 outlook. Focus will be shifted toward the US Initial Jobless Claims data scheduled to be released on Wednesday.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- Gold price trades in positive territory in Tuesday’s early European session.
- Traders could book their profits and rebalance their portfolios ahead of the New Year holidays.
- Growing expectations of further US rate cuts next year and safe-haven flows might help limit Gold’s losses.
Gold price (XAU/USD) edges higher above $4,350 during the early European trading hours on Tuesday. The precious metal recovers some lost ground after falling 4.5% in the previous session, which was gold's largest single-day loss since October. Increased margin requirements on gold and silver futures by the Chicago Mercantile Exchange (CME) Group, one of the world’s largest trading floors for commodities, prompted widespread profit-taking and portfolio rebalancing.
Nonetheless, the potential downside for the yellow metal might be limited amid the prospect of Fed rate cuts in 2026. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. Furthermore, persistent global economic uncertainty and geopolitical tensions could boost traditional assets such as Gold.
Trading volumes are expected to remain thin ahead of the New Year holidays. Traders brace for the release of the Federal Open Market Committee (FOMC) Minutes later on Tuesday for fresh impetus.
Daily Digest Market Movers: Gold rebounds on Fed rate cuts bets in 2026 and geopolitical turmoil
- Russia accused Ukraine of launching a drone strike on the Russian presidential residence in northern Russia, prompting Moscow to reconsider its stance in peace negotiations, Reuters reported on Monday. Ukraine dismissed Russian statements about the drone attack, and its foreign minister said Moscow was seeking "false justifications" for further strikes against its neighbor.
- The CME raised margin requirements for gold, silver, and other metals in a notice posted to the exchange's website on Friday. These notices require traders to put up more cash on their bets in order to insure against the possibility that the trader will default when they take delivery of the contract.
- The US Pending Home Sales rose 3.3% MoM in November after an upwardly revised 2.4% gain in October, according to the National Association of Realtors on Monday. This figure came in stronger than the estimations of 1.0% and registered its highest level since February 2023.
- US President Donald Trump said last week that he expects the next Fed Chairman to keep interest rates low and never “disagree” with him. The comments are likely to heighten concerns among investors and policymakers about Federal Reserve independence.
- Financial markets are pricing in nearly a 16.1% probability that the Fed will cut interest rates at its next meeting in January, according to the CME FedWatch tool.
Gold maintains a bullish bias, RSI suggests near-term consolidation
Gold trades on a positive note on the day. The constructive outlook of the precious metal prevails as the price remains above the key 100-day Exponential Moving Average (EMA) on the daily chart, while the Bollinger Bands widen.
Nonetheless, further consolidation or temporary sell-off cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the midline. This suggests the neutral momentum in the near term.
The immediate resistance level to watch is the upper boundary of the Bollinger Band of $4,520. A decisive break above this level would likely trigger a retest of the all-time high of $4,550, en route to the $4,600 psychological mark.
On the flip side, the initial support level for XAU/USD emerges in the $4,305-$4,300 zone, representing the December 29 low and round figure. Any follow-through selling below the mentioned level would signal that the correction has more room to run and could target the December 16 low of $4,271.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- GBP/USD gathers strength near 1.3510 in Tuesday’s Asian session.
- Expectations that the BoE will follow a gradual monetary easing path in 2026 support the Pound Sterling.
- The first upside barrier emerges at 1.3550; the first support level to watch is 1.3410.
The GBP/USD pair trades with mild gains around 1.3510 during the early European session on Tuesday. The Pound Sterling (GBP) strengthens against the US Dollar (USD) as the Bank of England (BoE) guided that monetary policy will remain on a gradual downward path.
The UK central bank cut its benchmark interest rate by 25 basis points (bps) to 3.75% at its December meeting. Governor Andrew Bailey said during the press conference that rates are likely to continue on a gradual downward path, but "how much further we go becomes a closer call" with each cut. Money markets believe the BoE will deliver at least one rate cut in the first half of the year and are pricing in nearly a 50% probability of a second before the year-end, according to Reuters.
Traders continue to price in the prospect of further rate cuts by the Federal Reserve (Fed) in 2026, following a quarter-point reduction delivered at the December meeting. The Federal Open Market Committee (FOMC) Minutes will be published later on Tuesday. Trading volumes are expected to remain thin ahead of the New Year holidays.
Technical Analysis:
In the daily chart, GBP/USD holds well above the rising 100-day EMA at 1.3335, preserving a bullish profile. It also remains north of the 20-day average, underscoring trend support. RSI (14) sits at 69.87 near overbought. The upper Bollinger Band at 1.3550 caps the immediate advance. A daily close above that barrier would extend the climb, while the bias stays bullish above the EMA.
Bollinger Bands have narrowed modestly as price holds just beneath the upper band, signaling reduced volatility alongside persistent buying pressure. Initial support aligns with the 20-day middle band at 1.3410, followed by the lower band at 1.3270. A pullback into the mid-band would meet buyers, while a break lower could expose the lower boundary and slow the uptrend’s momentum.
(The technical analysis of this story was written with the help of an AI tool)
Pound Sterling FAQs
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, also known as ‘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).
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.
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.
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.
- EUR/USD moves little as traders adopt caution ahead of the FOMC December Meeting Minutes.
- Traders remain uncertain about an end to the Ukraine–Russia war following alleged strikes on Putin’s residence.
- The US Dollar may face challenges due to growing odds of two more Fed rate cuts in 2026.
EUR/USD holds ground after four days of little losses, trading around 1.1770 during the Asian hours on Tuesday. The pair remains steady as US Dollar (USD) moves little amid market caution ahead of the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day, which could offer insights into the Federal Reserve’s (Fed) 2026 outlook.
The EUR/USD pair may gain ground as the Greenback faces challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
The US central bank lowered interest rates by 25 basis points (bps) at the December meeting, bringing the target range to 3.50%–3.75%. The Fed delivered a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.
The Euro (EUR) may face challenges as risk sentiment increases due to the uncertain Ukraine-Russia situation. Russia’s foreign minister said Moscow’s negotiating stance would shift following alleged strikes on President Vladimir Putin’s residence.
However, the downside of the Euro could be restrained as markets reflect diverging policy paths between the European Central Bank (ECB) and the US Federal Reserve. The ECB held rates steady in December and signaled they are likely to remain unchanged for some time, with President Christine Lagarde noting that elevated uncertainty makes forward guidance on future rate moves difficult.
Euro FAQs
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%).
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.
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.
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.
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.
Gold prices rose in India on Tuesday, according to data compiled by FXStreet.
The price for Gold stood at 12,621.25 Indian Rupees (INR) per gram, up compared with the INR 12,535.40 it cost on Monday.
The price for Gold increased to INR 147,211.80 per tola from INR 146,210.40 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,621.25 |
10 Grams | 126,212.50 |
Tola | 147,211.80 |
Troy Ounce | 392,580.30 |
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
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.
(An automation tool was used in creating this post.)
- US Dollar Index moves little as traders adopt caution ahead of the FOMC December Meeting Minutes.
- The Greenback may struggle due to the odds of two more Fed rate cuts in 2026.
- Risk sentiment increases amid the uncertain Ukraine–Russia situation and Middle East tensions.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining steady and trading around 98.00 during the Asian hours on Tuesday. Traders are likely to focus on the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day, for insight into the Fed’s 2026 outlook.
The Greenback could face challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
The US central bank lowered interest rates by 25 basis points (bps) at the December meeting, bringing the target range to 3.50%–3.75%. The Fed delivered a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.
Risk sentiment sours amid persistent geopolitical risks. Uncertainty also returned over efforts to end the war in Ukraine, with Russia’s foreign minister saying Moscow’s negotiating stance would shift following alleged strikes on President Putin’s residence.
In the Middle East, Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” with the United States (US), Europe, and Israel have raised fears of broader instability, with Trump warning of further strikes if Iran resumes rebuilding its nuclear programme.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Australian Dollar rebounds toward a 14-month high of 0.6727.
- The RBA board is prepared to tighten policy should inflation not moderate as anticipated.
- FOMC December Meeting Minutes will be eyed on Tuesday for insight into the Fed’s 2026 outlook.
The Australian Dollar (AUD) inches higher against the US Dollar (USD), rebounding toward the 14-month high of 0.6727 on Tuesday. The AUD finds support amid growing expectations of interest rate hikes from the Reserve Bank of Australia (RBA). Volumes are expected to be thin due to the New Year's holiday in Australia.
The Reserve Bank of Australia’s (RBA) December Meeting Minutes signaled growing uncertainty among board members about whether monetary policy remains sufficiently restrictive. The policymakers indicated they stand ready to tighten policy if inflation fails to ease as expected, placing increased focus on the Q4 CPI report due January 28. Analysts note that a stronger-than-expected Q4 core inflation reading could trigger a rate hike at the RBA’s February 3 meeting.
The AUD/USD pair could rise as the US Dollar (USD) could face challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. Traders are likely to focus on the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day.
US Dollar holds ground despite Fed rate cut bets
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is gaining ground and trading around 98.00 at the time of writing.
- The Fed lowered interest rates by 25 basis points (bps) at the December meeting, bringing the target range to 3.50%–3.75%. The Fed delivered a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.
- The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
- US Initial Jobless Claims declined to 214K from 224K in the prior week, beating the 223K market forecast. Meanwhile, Continuing Jobless Claims rose to 1.923 million from 1.885 million, while the four-week average of Initial Claims edged lower to 216.75K from 217.5K.
- The US Bureau of Economic Analysis (BEA) released delayed data showing that preliminary US Gross Domestic Product (GDP) Annualized expanded 4.3% in the July–September period. The reading exceeded market expectations of a 3.3% increase and surpassed the 3.8% growth recorded in the previous quarter.
- Bloomberg reported Sunday that China’s Ministry of Finance plans to expand targeted investment in priority sectors, including advanced manufacturing, technological innovation, and human capital development. The announcement followed a year-end meeting outlining next year’s fiscal policy priorities. Any impact on China’s economy could affect the AUD, given Australia’s close trade ties with China.
- Australia’s headline inflation rose to 3.8% in October 2025 from 3.6% in September, remaining above the RBA’s 2–3% target range. As a result, markets are increasingly pricing in a rate hike as early as February 2026, with both the Commonwealth Bank of Australia and National Australia Bank projecting a rise to 3.85% at the RBA’s first policy meeting of the year.
- Australia’s Consumer Inflation Expectations rose to 4.7% in December from November’s three-month low of 4.5%, supporting the Reserve Bank of Australia’s (RBA) hawkish stance.
Australian Dollar tests 0.6700 barrier after rebounding from nine-day EMA
AUD/USD is trading around 0.6690 on Tuesday. The technical analysis of the daily chart indicates that the pair remains within the ascending channel pattern, suggesting a persistent bullish bias. The pair holds above a rising nine-day Exponential Moving Average (EMA), preserving the short-term uptrend. The average continues to advance, keeping a bullish bias in place. The 14-day Relative Strength Index (RSI) at 64.22 signals strong momentum.
After rebounding from a nine-day EMA support, the AUD/USD pair is testing the immediate resistance at the psychological level of 0.6700, followed by the 0.6727, the highest level since October 2024, reached on December 29. The daily tone stays positive above the moving average, which could support the pair to break above the latter and explore the region around the upper boundary of the ascending channel at 0.6840.
On the downside, a break below the nine-day EMA at 0.6681, followed by the lower ascending channel boundary around 0.6670, would open the door for the AUD/USD pair to navigate the region around the six-month low near 0.6414, marked on August 21.
Australian 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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.02% | 0.09% | -0.07% | -0.23% | -0.07% | -0.13% | |
| EUR | 0.03% | 0.00% | 0.13% | -0.05% | -0.20% | -0.05% | -0.10% | |
| GBP | 0.02% | -0.01% | 0.13% | -0.05% | -0.19% | -0.05% | -0.11% | |
| JPY | -0.09% | -0.13% | -0.13% | -0.18% | -0.33% | -0.19% | -0.19% | |
| CAD | 0.07% | 0.05% | 0.05% | 0.18% | -0.14% | -0.00% | -0.06% | |
| AUD | 0.23% | 0.20% | 0.19% | 0.33% | 0.14% | 0.15% | 0.09% | |
| NZD | 0.07% | 0.05% | 0.05% | 0.19% | 0.00% | -0.15% | -0.06% | |
| CHF | 0.13% | 0.10% | 0.11% | 0.19% | 0.06% | -0.09% | 0.06% |
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).
Central banks FAQs
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%.
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.
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%.
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.
- USD/JPY rises to near 156.30 ahead of the release of FOMC minutes.
- The BoJ’ SoP signals more interest rate hikes in 2026.
- Fed officials see only one interest rate cut next year.
The USD/JPY pair trades 0.17% higher to near 156.30 during the Asian trading session on Tuesday. The pair gains as the Japanese Yen (JPY) is slightly under pressure, even as the Bank of Japan (BoJ) Summary of Opinions (SOP) for the December meeting, released on Monday, showed that policymakers advocated remaining on the monetary tightening path in 2026.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.01% | 0.16% | -0.06% | -0.18% | -0.04% | -0.07% | |
| EUR | 0.02% | 0.03% | 0.18% | -0.04% | -0.16% | -0.02% | -0.05% | |
| GBP | -0.01% | -0.03% | 0.17% | -0.05% | -0.19% | -0.05% | -0.09% | |
| JPY | -0.16% | -0.18% | -0.17% | -0.21% | -0.33% | -0.20% | -0.18% | |
| CAD | 0.06% | 0.04% | 0.05% | 0.21% | -0.11% | 0.02% | -0.02% | |
| AUD | 0.18% | 0.16% | 0.19% | 0.33% | 0.11% | 0.14% | 0.10% | |
| NZD | 0.04% | 0.02% | 0.05% | 0.20% | -0.02% | -0.14% | -0.04% | |
| CHF | 0.07% | 0.05% | 0.09% | 0.18% | 0.02% | -0.10% | 0.04% |
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).
“There is still considerable distance to levels deemed neutral," a BoJ member said, adding the central bank should raise rates "with intervals of a few months in mind for the time being", Reuters reported. A few BoJ members also stated that more interest rate hikes are necessary to strengthen the Yen.
In the policy meeting, the BoJ raised interest rates by 25 basis points (bps) to 0.75%, as expected.
Last week, BoJ Governor Kazuo Ueda also stressed on the need of additional interest rate hikes, citing that labor market conditions have tightened as wage and price-setting behaviour by firms have changed, and price pressures seems sustainably returned to the 2% target.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 98.00 at the press time, ahead of the release of Federal Open Market Committee (FOMC) minutes of the December meeting in late New York session.
In the policy meeting, the Fed reduced interest rates by 25 basis points (bps) to 3.50%-3.75% and signaled there will be only one in 2026. In 2025, the Fed delivered three interest rate cuts of quarter-to-a-percent.
Bank of Japan FAQs
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%.
The Bank of Japan embarked in an ultra-loose monetary policy in 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. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- Silver prices steadied after plunging more than 7% in the previous session.
- Traders took aggressive profits after XAG/USD hit a record high of 85.87 on Monday.
- Safe-haven demand for Silver remains strong amid persistent Ukraine–Russia and Middle East tensions.
Silver price (XAG/USD) holds ground after registering a steep drop of more than 7% in the previous session, trading around $73.50 per troy ounce during the Asian hours on Tuesday. Traders engaged in aggressive profit-taking after the XAG/USD pair hit a record high of 85.87 on Monday.
Silver prices faced challenges after the CME decided to raise margin requirements on Silver futures, forcing leveraged traders to cut exposure as prices became technically overstretched. Analysts said the pullback reflected position unwinding rather than weakening underlying demand.
Despite near-term volatility, Silver continues to draw support from structural supply constraints and robust industrial demand, particularly from the solar, electronics, and data-center sectors. Silver’s rally has also been fueled by a surge in speculative demand in China, driving premiums on the Shanghai Futures Exchange to record highs. These elevated premiums point to acute local demand and have tightened global supply chains, echoing earlier inventory squeezes in London and New York vaults.
Safe-haven demand for Silver remains strong amid persistent geopolitical risks. Uncertainty has resurfaced around efforts to end the war in Ukraine following alleged strikes on President Putin’s residence. In the Middle East, Saudi air strikes in Yemen and Iran’s declaration of a “full-scale war” with the United States (US), Europe, and Israel have raised fears of broader instability, with Trump warning of further strikes if Iran resumes rebuilding its nuclear programme.
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.
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