Forex News
- Gold recovers further from a multi-week low, though the upside potential seems limited.
- Fed rate hike bets and inflation risk keep US bond yields elevated, supporting the USD.
- Geopolitical risks further underpin the safe-haven buck, which should cap the bullion.
Gold (XAU/USD) attracts some dip-buyers near the $4,284-$4,283 region during the Asian session on Tuesday and moves away from an over one-month low, touched the previous day. Any meaningful appreciation, however, seems elusive amid a bearish fundamental backdrop and ahead of the crucial two-day FOMC policy meeting, starting later today.
The US Federal Reserve (Fed) is scheduled to announce its decision on Wednesday, and the latest US inflation figures, released last week, lifted bets for an imminent interest rate hike. The focus, however, will be on updated economic projections, including the so-called dot plot, and Fed Chair Kevin Warsh's comments during the post-meeting press conference. Investors will look for more cues about the Fed's future policy path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding Gold.
Heading into the key central bank event, inflation risks stemming from higher energy prices underpin prospects for further Fed policy tightening. Adding to this, a surge in public and corporate borrowing contributed to an extended global bond selloff. This, in turn, lifted the yield on the benchmark 10-year US Treasury bond above the 5% threshold for the first time since 2023. Adding to this, persistent geopolitical uncertainties keep the safe-haven USD close to a nearly two-week high, touched on Monday, and should cap any further gains for Gold.
In the latest developments surrounding the Middle East crisis, Iran-backed Houthis in Yemen carried out a large-scale missile and drone attack on a Saudi air base in Khamis Mushait on Monday. Moreover, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met. This dampens hopes for a diplomatic solution to end the war, favoring USD bulls and warranting caution before positioning for any further upside for the Gold price.
XAU/USD daily chart
Technical Analysis
The XAU/USD pair holds a slight neutral-to-capped tone as it sits just under the 50.0% retracement level of the June-August upswing, while still trading above the 50-day Simple Moving Average (SMA), suggesting consolidation rather than a clear trend. Moreover, the Relative Strength Index (RSI) hovers around 45, hinting at subdued momentum. However, the Moving Average Convergence Divergence (MACD) remains in negative territory with a depressed histogram, reinforcing the idea that rallies may struggle unless buyers reclaim overhead Fibonacci resistance.
Meanwhile, a move above the 50.0% retracement around $4,323 could face a strong barrier at the 38.2% Fibo. retracement near $4,412 and then the 23.6% level close to $4,522 if upside pressure builds. On the downside, immediate support is provided by the 50-day SMA at about $4,275, ahead of the 61.8% Fibo. retracement around $4,234. A convincing break below this zone would expose the deeper structural supports at the 78.6% retracement near $4,108 and the prior anchor area around $3,947.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US 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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.11% | 0.22% | 0.10% | 0.29% | 0.44% | 0.10% | |
| EUR | -0.11% | 0.00% | 0.09% | -0.01% | 0.17% | 0.32% | -0.01% | |
| GBP | -0.11% | -0.01% | 0.08% | -0.03% | 0.19% | 0.29% | -0.01% | |
| JPY | -0.22% | -0.09% | -0.08% | -0.12% | 0.07% | 0.21% | -0.12% | |
| CAD | -0.10% | 0.01% | 0.03% | 0.12% | 0.19% | 0.33% | 0.00% | |
| AUD | -0.29% | -0.17% | -0.19% | -0.07% | -0.19% | 0.14% | -0.20% | |
| NZD | -0.44% | -0.32% | -0.29% | -0.21% | -0.33% | -0.14% | -0.32% | |
| CHF | -0.10% | 0.00% | 0.01% | 0.12% | -0.00% | 0.20% | 0.32% |
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).
- EUR/JPY may test support at the lower boundary of its descending channel near 177.60.
- The 14-day Relative Strength Index at 29.84 signals ongoing downside pressure.
- The initial barrier is the nine-day EMA at 179.73.
EUR/JPY gains ground for the second consecutive day, trading around 178.70 during Asian hours on Tuesday. Technical analysis of the daily chart indicates the currency cross remains within the descending channel pattern, signalling an ongoing bearish bias.
The EUR/JPY cross is keeping a bearish near-term tone as it holds below both the nine-day and 50-day Exponential Moving Averages (EMAs). The structure suggests rallies are likely to be sold while price stays capped by these averages, and the 14-day Relative Strength Index (RSI) at 29.84 hovers near oversold territory, hinting that downside pressure persists but could become stretched on further declines.
The EUR/JPY cross may find its primary support at the lower boundary of the descending channel around 177.60. A break below the channel would strengthen the bearish bias and put downward pressure on the cross as it navigates the region around the 10-month low of 175.70, recorded in November 2025.
On the upside, the EUR/JPY cross could rise toward the nine-day EMA of 179.73, followed by the 50-day EMA of 183.14. Further resistance lies at the upper boundary of the descending channel around 185.30, followed by the all-time high of 187.95 set on April 17.
Yen underperforms as markets look past sentiment to BoJ decision
Strategists at Scotiabank observe that the Yen’s underperformance versus the USD and its G10 peers appears to reflect more than just shifting risk appetite. They note that “the relative performance suggests a focus on factors beyond sentiment, as market participants eye Friday’s BoJ and its widely anticipated and fully priced hike,” with investors positioning ahead of the policy decision and upcoming Japanese data.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.08% | 0.23% | 0.08% | 0.17% | 0.41% | 0.08% | |
| EUR | -0.08% | 0.00% | 0.12% | -0.01% | 0.08% | 0.31% | -0.00% | |
| GBP | -0.08% | 0.00% | 0.15% | -0.02% | 0.09% | 0.30% | -0.00% | |
| JPY | -0.23% | -0.12% | -0.15% | -0.15% | -0.06% | 0.17% | -0.15% | |
| CAD | -0.08% | 0.00% | 0.02% | 0.15% | 0.10% | 0.32% | 0.00% | |
| AUD | -0.17% | -0.08% | -0.09% | 0.06% | -0.10% | 0.23% | -0.10% | |
| NZD | -0.41% | -0.31% | -0.30% | -0.17% | -0.32% | -0.23% | -0.31% | |
| CHF | -0.08% | 0.00% | 0.00% | 0.15% | -0.00% | 0.10% | 0.31% |
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).
- The Swiss Franc trades lower against the US Dollar ahead of the Fed’s policy decision on Wednesday.
- The Fed is widely anticipated to hike interest rates.
- Financial markets expect the SNB to hold interest rates at 0% later this month.
The Swiss Franc (CHF) is down against the US Dollar (USD) on Tuesday, with the USD/CHF pair trading slightly higher at around 0.8178 in the Asian session. The Swiss Franc pair remains higher as the US Dollar outperforms amid firm expectations that the Federal Reserve (Fed) will hike interest rates in the policy meeting on Wednesday.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 99.58.
FOMC set for first hike since 2023 as market eyes Warsh’s guidance
Strategists at Brown Brothers Harriman (BBH) expect the FOMC to break its streak of five consecutive holds, noting that “the FOMC is poised to deliver a 25bps hike to a target range of 3.75%-4.00% on Wednesday, marking its first hike since July 2023.” BBH argues that “persistently above target US inflation and a stable labor market justify a rate increase,” and points out that positioning is already heavily skewed toward such an outcome, with “Fed funds futures price in roughly 90% odds of a hike this week.”
As the Fed is widely anticipated to tighten monetary conditions, market experts view monetary policy statement and Fed Chairman Kevin Warsh’s press conference as key trigger for the US Dollar’s next move.
Against that backdrop, BBH also said that “the vote split, updated Summary of Economic Projections (SEP), and Fed Chair Kevin Warsh’s press conference will guide the market reaction,” as investors parse the decision for signals on the policy path ahead.
On the Swiss Franc front, financial markets expect the Swiss National Bank (SNB) to continue on its monetary easing path and leave interest rates at 0% in the policy meeting later this month.
Nomura sees SNB on hold at zero
Analysts at Nomura argue that the Swiss policy stance is likely to remain unchanged, noting that “in Switzerland, we expect no change in rates for the foreseeable future, as inflation is low, but the policy rate is 0.00% and the SNB has expressed caution about unwanted side effects of a negative policy rate.” Against this backdrop, they see little impetus for the SNB to adjust its current setting, with subdued price pressures and concerns over the costs of re-entering negative territory reinforcing a steady policy bias.
USD/CHF Technical Analysis
In the daily chart, USD/CHF trades at 0.8179. The pair holds above the 20-day exponential moving average (EMA) at 0.8111, keeping the short-term structure supported and hinting at a constructive bias while price consolidates over this dynamic floor. The Relative Strength Index (RSI) at about 63 remains in positive territory without yet signaling overbought conditions, suggesting that bullish momentum is intact but not overstretched.
On the downside, the 20-day EMA at 0.8111 is the first key support, and a daily close below this level would weaken the current constructive tone and expose a deeper pullback toward prior lows. As long as the pair holds above this moving average and RSI stays in the upper half of its range, dips are likely to find buyers, leaving the broader near-term bias tilted to the upside despite the absence of clearly defined overhead resistance levels nearby.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
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.
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.
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.
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.
- US Dollar Index strengthens to around 99.60 in Tuesday’s Asian session.
- Expectations of a Fed rate hike rise after recent hot inflation data and rallying oil prices.
- Traders await the Fed interest rate decision later on Wednesday.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.60 in the Asian trading hours on Tuesday. The DXY edges higher on expectations of a US Federal Reserve (Fed) interest rate hike on Wednesday.
Markets are increasingly convinced that the Fed will hike interest rates at its September policy meeting on Wednesday in response to the jump in energy prices that has pushed underlying inflation higher than expected in August.
According to the CME FedWatch tool, money markets pointed to a roughly 92.4% chance of a rate increase, up from around 60% a week ago.
“Markets are now fully pricing in a Fed rate hike following last week’s CPI data. At the same time, the renewed rise in oil prices could reinforce inflation concerns and keep the Fed on a hawkish footing,” said UBS analyst Giovanni Staunovo.
Traders will closely monitor Fed Chairman Kevin Warsh’s press conference following the rate decision as it might offer some hints about the US interest rate outlook. An unchanged decision from the Fed or a dovish hike could weigh on the DXY. On the other hand, hawkish remarks from Fed policymakers could lift the US Dollar in the near term.
Ongoing tensions in the Middle East could boost a safe-haven currency such as the US Dollar. Yemen’s Houthis on Monday claimed to have carried out a large-scale missile and drone attack on a Saudi air base in the southern city of Khamis Mushait.
USD outlook hinges on Fed tone as markets brace for FOMC decision
Strategists at Scotiabank caution that the balance of risks for the USD around this week’s FOMC meeting is skewed to the downside if the Fed underwhelms market expectations. They argue that “an unchanged decision from the Fed would be a shock for markets and a clear negative for the USD,” given how firmly a move is now priced. Even if policymakers do deliver a hike, Scotiabank warns that a “dovish” hike which does not obviously commit to additional moves would also likely weigh on the USD, as investors reassess the durability of any policy-driven support for the currency.
Technical Analysis: US Dollar Index maintains a negative outlook below the 100-day SMA
In the daily chart, the near-term bias of Dollar Index Spot remains mildly bearish as price holds below the 100-day simple moving average (SMA) and the upper Bollinger Band, suggesting the broader recovery is still capped by overhead supply. The Relative Strength Index (14) around 53 hints at stabilizing momentum after earlier weakness, but this improvement alone has yet to shift the structure back into a clear bullish stance while the index trades under its key trend average.
On the topside, immediate resistance appears at the upper Bollinger Band around 99.75, followed by the 100-day SMA near 99.80, where a daily close above would be needed to ease the current bearish tone and open the way toward higher levels. On the downside, initial support is seen at the Bollinger middle band, the 20-day SMA, around 99.15, with further demand expected near the lower Bollinger Band around 98.55, where a break would reinforce downside pressure and signal scope for a deeper pullback.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- China’s August Retail Sales rose 0.4% YoY, missing expectations of 0.8% and down from July’s 0.6%.
- CME FedWatch Tool indicates the odds for a Fed rate hike surged above 92%, driven by August's CPI inflation data.
- US 10-year Treasury yields approached 5%, placing heavy pressure on non-yielding metals like Silver.
NZD/USD extends its losses for the second successive day, trading around 0.5760 during Asian hours on Tuesday. The pair remains as the New Zealand Dollar (NZD) holds losses following the release of key economic data from China, New Zealand’s close trading partner.
China’s Retail Sales rose 0.4% year-over-year (YoY) in August vs. a rise of 0.8% expected and a 0.6% growth in July. Industrial Production climbed 5.2% YoY in the same period, compared to the 4.8% forecast and 4.5% seen previously. Meanwhile, Fixed Asset Investment came in at -7.2% year-to-date (YTD) YoY in August, in line with the expected decrease of 7.2%. The July reading was a decline of 6.7%.
Moreover, the NZD/USD pair loses ground as the US Dollar (USD) receives support from rising expectations for a US Federal Reserve interest rate hike this week. Rising energy costs have intensified inflation concerns, placing greater pressure on the Fed to tighten monetary policy. As a result, money markets surged on Monday to reflect over a 92% chance of a rate hike, a sharp increase from roughly 60% just a week prior, based on data from the CME FedWatch tool.
Friday's economic data revealed that the US Consumer Price Index (CPI) rose in August, with core inflation recording its largest gain in four months. Moreover, the US 10-year Treasury yield surged toward 5% due to broader inflation and fiscal worries.
Economic Indicator
Retail Sales (YoY)
The Retail Sales data, released by the National Bureau of Statistics of China on a monthly basis, measures the value of goods sold by retailers in China. 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 YoY reading comparing sales values in the reference month with the same month a year earlier. Generally, a high reading is seen as bullish for the Renminbi (CNY), while a low reading is seen as bearish.
Read more.Last release: Tue Sep 15, 2026 02:00
Frequency: Monthly
Actual: 0.4%
Consensus: 0.8%
Previous: 0.6%
Source: National Bureau of Statistics of China
- AUD/USD attracts some sellers for the second straight day amid a broadly firmer USD.
- China’s mixed macro data does little to impress Aussie bulls or influence spot prices.
- Traders keenly await the crucial FOMC decision on Wednesday for a fresh impetus.
The AUD/USD pair struggles to capitalize on the previous day's modest bounce from the 0.7100 neighborhood, or an over three-week low, and trades with a negative bias for the second straight day on Tuesday. Spot prices react little to China's mixed macro data and remain depressed near the 0.7130 region through the Asian session.
China's National Bureau of Statistics (NBS) reported that Retail Sales rose 0.4% YoY in August vs. a rise of 0.8% expected and a 0.6% growth recorded in the previous month. Adding to this, Fixed Asset Investment came in at -7.2% year-to-date (YTD) in August, down from -6.7% in July. Meanwhile, China's Industrial Production climbed 5.2% YoY during the reported month, up from 4.5% seen in July and surpassing consensus estimates for a reading of 4.8%.
The data, however, fails to provide any meaningful impetus to the China-proxy Australian Dollar (AUD), with a broadly firmer US Dollar (USD) turning out to be an exclusive driver of the AUD/USD pair's momentum. The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands firm near a two-week high, touched on Monday, and continues to act as a headwind for the currency pair ahead of the crucial two-day FOMC meeting.
The growing acceptance that the US Federal Reserve (Fed) will hike interest rates on Wednesday, along with oil-inflation risks, remains supportive of elevated US bond yields. Apart from this, persistent geopolitical uncertainties stemming from the Middle East crisis further benefit the safe-haven Greenback. However, expectations that the Reserve Bank of Australia (RBA) will raise interest rates later this month could help limit losses for the AUD/USD pair.
AUD/USD daily chart
Technical Analysis
The AUD/USD pair is pressing just under the 23.6% Fibonacci retracement at 0.7147, which acts as the immediate upside hurdle. Spot prices, however, hold a constructive near-term bias above the 50-day Simple Moving Average (SMA) at 0.7074. The 50.0% retracement at 0.7049 could act as the next relevant support if selling pressure extends.
On the topside, a break above the 23.6% retracement at 0.7147 would open the way toward the recent swing high region around 0.7234, where stronger resistance is expected to emerge.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
China’s Retail Sales rose 0.4% year-over-year (YoY) in August vs. a rise of 0.8% expected and a 0.6% growth in July, the latest data released by the National Bureau of Statistics (NBS) showed Tuesday.
Chinese Industrial Production climbed 5.2% YoY in the same period, compared to the 4.8% forecast and 4.5% seen previously.
Meanwhile, the Fixed Asset Investment came in at -7.2% year-to-date (YTD) YoY in August, in line with the expected decrease of 7.2%. The July reading was a decline of 6.7%.
Market reaction
The mixed Chinese data have little to no impact on the China-proxy Australian Dollar (AUD). At the time of writing, the AUD/USD pair is trading 0.10% lower on the day at 0.7132.
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.
- GBP/USD softens to near 1.3490 in Tuesday’s early Asian session.
- Fed is likely to raise interest rates by 25 bps at its policy meeting on Wednesday.
- BoE is expected to keep rates steady at 3.75% on Thursday.
The GBP/USD pair loses momentum to around 1.3490 during Asian trading hours on Tuesday. Expectations of a US Federal Reserve (Fed) interest rate hike on Wednesday provide some support to the US Dollar (USD) against the British Pound (GBP). The UK jobs report is due on Tuesday. Attention will shift to the Bank of England (BoE) interest rate decision on Thursday.
After the US inflation report on Friday, which showed core Consumer Price Index (CPI) rose by a higher-than-expected 0.3% in August, traders are more convinced the Fed will raise interest rates to address sticky inflation.
Traders are now pricing in about a 92.4% chance of a rate hike at the central bank’s September policy meeting, up from about 67% before the CPI data last week, according to the CME FedWatch Tool.
Fed Chairman Kevin Warsh will hold a press conference following the conclusion of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday. Any dovish remarks from policymakers could drag the Greenback lower and act as a tailwind for the major pair. On the other hand, hawkish comments from Fed officials could lift the USD in the near term.
On the other hand, the BoE is set to keep interest rates steady on Thursday despite surging oil prices. Governor Andrew Bailey said last week the central bank had no "secret plan" to raise interest rates this year, unless the ongoing climb in oil prices driven by the war in the Middle East translated into more lasting domestic price pressures.
Financial markets are pricing in a 30% probability of a quarter-point rate hike on Thursday, according to LSEG data on Monday, up from less than 10% at the start of last week, and almost fully pricing in a November move.
UK data-heavy week underpins Pound as UK-US yield spreads climb
Strategists at Scotiabank highlight that the coming days bring a “relatively heavy” UK data calendar, with “Tuesday’s jobs and Wednesday’s CPI ahead of the central bank decision, followed by retail sales on Friday.” They argue that “fundamentals remain supportive as we note the clear uptrend in UK-US yield spreads since early July,” underscoring that this widening spread continues to back the Pound’s performance.
According to Scotiabank, “political developments have been limited despite high profile coverage of UK plans for potentially higher taxes on banks,” with the main “medium-term risk event” identified as the fall budget “scheduled for October 28.”
Technical Analysis: GBP/USD retains a neutral outlook in the near term
In the daily chart, GBP/USD holds a neutral near-term tone as it trades between the 20-day Bollinger middle band as overhead resistance and a cluster of supports formed by the 20-day lower band and the 100-day moving average. The Relative Strength Index (14) hovers just below the 50 line, hinting at subdued directional momentum while price consolidates within the Bollinger envelope.
On the topside, a clear move above the Bollinger middle band at 1.3557 would expose the upper band near 1.3660 as the next resistance hurdle. On the downside, initial support is seen just under the market around 1.3455 at the lower Bollinger band, followed by the 100-day moving average at 1.3445; a break below this zone would tilt the bias back toward the bears.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- Silver loses as elevated oil prices and rising inflation fuel expectations for an upcoming US Fed rate hike.
- CME FedWatch Tool indicates the odds for a Fed rate hike surged above 92%, driven by August's CPI inflation data.
- US 10-year Treasury yields approached 5%, placing heavy pressure on non-yielding metals like Silver.
Silver price (XAG/USD) falls for the second successive day, trading around $63.20 per troy ounce during Asian hours on Tuesday. Silver could face further depreciation as elevated oil prices heighten expectations for a US Federal Reserve interest rate hike.
Rising energy costs have intensified inflation concerns, placing greater pressure on the Fed to tighten monetary policy. As a result, money markets surged on Monday to reflect over a 92% chance of a rate hike, a sharp increase from roughly 60% just a week prior, based on data from the CME FedWatch tool.
Compounding these rate hike expectations, Friday's economic data revealed that the US Consumer Price Index (CPI) rose in August, with core inflation recording its largest gain in four months. Moreover, the US 10-year Treasury yield surged toward 5% due to broader inflation and fiscal worries, placing additional downward pressure on non-yielding precious metals like Silver.
TD Securities maps cta reactions across Silver scenarios
According to TD Securities, their latest CTA tracker highlights that trend-following funds currently hold a "CTA positioning est., Silver" that is consistent with only a modest long, leaving room for adjustment as price action evolves. The bank’s scenario work explicitly differentiates between a "big downtape CTA positioning est., Silver," a more moderate "downtape CTA positioning est., Silver," and a "CTA positioning est., Silver, flat tape," underscoring how systematic flows could vary materially depending on whether the metal sells off sharply, drifts lower, or trades broadly sideways in the months ahead.
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.
- EUR/USD remains depressed for the fourth consecutive day amid sustained USD buying.
- Fed rate hike bets, elevated US bond yields, and Middle East tensions benefit the buck.
- Traders keenly await the crucial FOMC decision on Wednesday before placing fresh bets.
The EUR/USD pair attracts some sellers for the fourth straight day and trades below mid-1.1500s during the Asian session on Tuesday, just above a one-month low touched the previous day. Moreover, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside.
The US Dollar (USD) retains its bullish bias ahead of the two-day FOMC policy meeting, starting later today, amid a combination of supporting factors and continues to weigh on the EUR/USD pair. Against the backdrop of firming US Federal Reserve (Fed) rate hike expectations, inflation risks stemming from higher energy prices keep US bond yields near multi-year highs. This, along with escalating US-Iran tensions, underpins the safe-haven buck.
US Treasury yields edge toward key 5% threshold
ING’s Padhraic Garvey warns that the Fed will be keenly aware of mounting pressure along the curve, noting that the 10-year US Treasury yield is “looking for an excuse to mark at 5%.” He points out that the benchmark, “now at 4.9%, it’s been bullied up there partly by high inflation readings, and more worryingly, a more recent slow ratchet higher in inflation expectations.” While he stresses that these expectations “are not at sinister levels,” Garvey argues they “could do with some treatment from the Fed in order to at least help contain them.”
In the latest developments surrounding the Middle East crisis, Iran-backed Houthi forces in Yemen claimed to have carried out a large-scale missile and drone attack on a Saudi air base in the southern city of Khamis Mushait on Monday. Moreover, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met.
This comes on top of the continued clashes in the Strait of Hormuz and keeps the geopolitical risk premium in play, supporting crude oil prices and the Greenback. Traders, however, might wait for the crucial Fed rate decision on Wednesday before placing fresh bullish bets on the USD. Adding to this, the European Central Bank's (ECB) hawkish outlook could offer some support to the Euro and help limit deeper losses for the EUR/USD pair.
EUR/USD daily chart
Technical Analysis
The EUR/USD pair keeps a bearish tone below the 100-day and the 200-day SMAs. However, sellers may need a clean break of the 50.0% Fibonacci retracement at about 1.1533 of the latest swing to extend the decline to the 61.8% retracement near 1.1491. Deeper cushions are seen at the 78.6% level at 1.1430 and the prior swing low region around 1.1353.
On the topside, immediate resistance emerges at the 100-day SMA around 1.1555, ahead of the 38.2% retracement at 1.1575. However, a more substantial cap is seen into the 23.6% level at 1.1628 and the 200-day SMA close to 1.1633, which together define a dense barrier that would need to be reclaimed to ease the current bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.74% | 0.38% | 0.23% | 0.67% | 1.21% | 1.96% | 1.04% | |
| EUR | -0.74% | -0.33% | -0.48% | -0.06% | 0.51% | 1.21% | 0.32% | |
| GBP | -0.38% | 0.33% | -0.17% | 0.30% | 0.84% | 1.64% | 0.65% | |
| JPY | -0.23% | 0.48% | 0.17% | 0.45% | 0.96% | 1.63% | 0.82% | |
| CAD | -0.67% | 0.06% | -0.30% | -0.45% | 0.54% | 1.16% | 0.36% | |
| AUD | -1.21% | -0.51% | -0.84% | -0.96% | -0.54% | 0.76% | -0.18% | |
| NZD | -1.96% | -1.21% | -1.64% | -1.63% | -1.16% | -0.76% | -0.97% | |
| CHF | -1.04% | -0.32% | -0.65% | -0.82% | -0.36% | 0.18% | 0.97% |
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).
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