Forex News
- AUD/JPY attracts heavy selling for the second straight day amid a combination of factors.
- The AUD adds to the post-RBA losses following the release of rather unimpressive CPI data.
- Intervention fears and BoJ rate hike bets underpin the JPY, further weighing on spot prices.
The AUD/JPY cross remains under heavy selling pressure for the second consecutive day, falling to a six-month low during the Asian session on Wednesday following the release of Australian consumer inflation figures. Bears now await a sustained break and acceptance below the 109.00 mark before positioning for any further losses.
The Australian Bureau of Statistics (ABS) reported that the headline Consumer Price Index (CPI) rose 0.4% in August, down from 1% recorded in the previous month. Meanwhile, the yearly rate accelerated from 3.5% in July to 4%, and the Trimmed Mean CPI held steady at 3.6% YoY during the reported month. Meanwhile, the data does little to revive bets for another interest rate hike by the Reserve Bank of Australia (RBA) against the backdrop of a mild-dovish tilt by Governor Bullock at the post-meeting press conference on Tuesday. This, in turn, undermines the Australian Dollar (AUD) and continues to exert downward pressure on the AUD/JPY cross.
Meanwhile, Aussie bulls shrugged off China's official PMIs, which showed that business activity in both manufacturing and services sectors recorded growth in September. The Japanese Yen (JPY), on the other hand, draws support from looming intervention fears and hawkish Bank of Japan (BoJ) bets. Japan's top currency diplomat Atsushi Mimura and Finance Minister Satsuki Katayama warned markets to take joint US-Japan messaging on FX depreciation seriously. This follows after US President Donald Trump conveyed his concerns about the JPY's depreciation to Prime Minister Sanae Takaichi on the sidelines of the United Nations General Assembly.
Furthermore, Minutes from the BoJ's July monetary policy meeting, released on Monday, revealed that policymakers debated the need for faster interest rate hikes amid growing concern over mounting inflation risks. This lifted expectations that the BoJ will hike again as soon as October or December. This, in turn, favors JPY bulls and backs the case for a further depreciating move for the AUD/JPY cross.
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Wed Sep 30, 2026 01:30
Frequency: Monthly
Actual: 4%
Consensus: 4%
Previous: 3.5%
Source: Australian Bureau of Statistics
China's Manufacturing Purchasing Managers' Index (PMI) climbed to 52.1 in September from 51.5 in August, the latest data published by RatingDog showed on Wednesday. The market forecast was for a 51.6 print.
China’s RatingDog Services PMI ticked higher to 51.6 in September, against the 51.4 previous figure and 51.1 expected.
Market reaction to China’s RatingDog PMIs
The China-proxy Australian Dollar (AUD) remained deep in the red following PMI data. At the press time, the AUD/USD pair is losing 0.40% on the day to trade at 0.6960.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.02% | -0.33% | 0.06% | 0.30% | 0.00% | -0.00% | |
| EUR | -0.05% | -0.00% | -0.37% | 0.00% | 0.24% | -0.04% | -0.05% | |
| GBP | -0.02% | 0.00% | -0.37% | 0.03% | 0.24% | -0.02% | -0.02% | |
| JPY | 0.33% | 0.37% | 0.37% | 0.37% | 0.63% | 0.32% | 0.35% | |
| CAD | -0.06% | -0.00% | -0.03% | -0.37% | 0.25% | -0.05% | -0.03% | |
| AUD | -0.30% | -0.24% | -0.24% | -0.63% | -0.25% | -0.29% | -0.28% | |
| NZD | -0.01% | 0.04% | 0.02% | -0.32% | 0.05% | 0.29% | 0.00% | |
| CHF | 0.00% | 0.05% | 0.02% | -0.35% | 0.03% | 0.28% | -0.01% |
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).
Australia’s Consumer Price Index (CPI) rose by 4.0% year-over-year (YoY) in August, compared to a 3.5% growth reported in July, the latest data published by the Australian Bureau of Statistics (ABS) showed on Wednesday.
The market forecast was a 4.0% print for the reported period.
The monthly Consumer Price Index climbed by 0.4% in August, compared to the previous reading of a rise of 1.0%, in line with the market consensus.
Meanwhile, the Trimmed Mean CPI increased 0.2% MoM in August. Annually, the Trimmed Mean CPI advanced 3.6% YoY during the same period.
AUD/USD reaction to Australia's Consumer Price Index data
The Australian Dollar (AUD) attracts some sellers following Australia's CPI report. The AUD/USD pair is down 0.25% on the day to trade at 0.6970 at the press time.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.01% | -0.33% | 0.01% | 0.29% | -0.03% | -0.07% | |
| EUR | 0.01% | 0.03% | -0.32% | 0.02% | 0.28% | -0.02% | -0.06% | |
| GBP | 0.01% | -0.03% | -0.37% | 0.02% | 0.26% | -0.02% | -0.06% | |
| JPY | 0.33% | 0.32% | 0.37% | 0.34% | 0.64% | 0.29% | 0.29% | |
| CAD | -0.01% | -0.02% | -0.02% | -0.34% | 0.28% | -0.05% | -0.06% | |
| AUD | -0.29% | -0.28% | -0.26% | -0.64% | -0.28% | -0.31% | -0.34% | |
| NZD | 0.03% | 0.02% | 0.02% | -0.29% | 0.05% | 0.31% | -0.03% | |
| CHF | 0.07% | 0.06% | 0.06% | -0.29% | 0.06% | 0.34% | 0.03% |
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).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
China’s Manufacturing Purchasing Managers' Index (PMI) rose to 50.1 in September from 49.8 in August, China’s National Bureau of Statistics (NBS) reported on Wednesday.
The reading aligned with the market forecast of 50.1 in the reported month.
Additionally, the NBS Non-Manufacturing PMI jumped to 50.2 in September from 49.0 in August, up from 49.3 expected.
Market reaction
Mixed China PMI data is having limited impact on the China-proxy Australian Dollar (AUD). At press time, the AUD/USD pair is down 0.30% to 0.6968, as the AUD is largely hurt by the Australian Inflation data.
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 struggles to register any meaningful recovery from a two-month low, set on Tuesday.
- Fed hike bets and geopolitical risks underpin the safe-haven USD, capping the upside for the pair.
- Traders look to the US PCE Price Index and the final Q2 GDP print for some meaningful impetus.
The GBP/USD pair enters a bearish consolidation phase during the Asian session on Wednesday, trading just above a two-month low, around the 1.3200 mark, touched the previous day. The fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though bears opt to wait for important US macro releases before placing fresh bets.
The US Personal Consumption Expenditures (PCE) Price Index – the Federal Reserve's (Fed) preferred inflation gauge – will be published later today, along with the final Q2 GDP report. The crucial data will influence market expectations about the Fed policy path, which, in turn, will play a key role in driving the US Dollar (USD) and provide some meaningful impetus to the GBP/USD pair. In the meantime, the bullish USD undertone might continue to act as a headwind for the currency pair and keep a lid on any attempted recovery.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, shot to a fresh high since July 28 on Tuesday amid bets for another Fed rate hike in October. This, along with inflationary concerns, has been pushing US bond yields to multi-year highs and lending support to the Greenback. Apart from this, persistent geopolitical uncertainties stemming from the US-Iran standoff might continue to benefit the safe-haven buck, validating the negative outlook for the GBP/USD pair and backing the case for further losses.
Hopes for a diplomatic solution to end the seven-month-old US-Iran war faded after US President Donald Trump turned down a seven-day ceasefire proposal from Iran. Moreover, Qatari efforts to broker a US-Iran breakthrough made little progress this week. In further developments, US officials think Trump could order a return to major combat after the midterms. This keeps the geopolitical risk premium firmly in play, which favors USD bulls and suggests that the path of least resistance for the GBP/USD pair remains to the downside.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair keeps a bearish near-term tone and a break below the 1.3200 mark will set the stage for a fall towards retesting the year-to-date low, around the 1.3140 region, touched in June. This is followed by the 1.3100 round figure, which, if broken, will set the stage for an extension of the recent downtrend witnessed over the past month or so.
On the top side, any attempted recovery is more likely to confront stiff resistance ahead of the 1.3300 mark. A sustained strength beyond, however, could trigger a short-covering move and lift the GBP/USD pair back to the 200-day Simple Moving Average (SMA) at 1.3448.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Wed Sep 30, 2026 12:30
Frequency: Monthly
Consensus: 3.3%
Previous: 3.3%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7351 compared to the previous day's fix of 6.7411 and 6.7025 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- Middle East crude exports rebounded to 17.5 million barrels daily, reaching 98% of pre-war levels.
- US SPR releases of up to 40 million barrels and rising inventories helped ease immediate supply fears.
- Benchmark oil prices remain on track for monthly gains driven by ongoing US-Iran conflict disruptions.
West Texas Intermediate (WTI) oil price edges higher after registering nearly 4.5% losses in the previous day, trading around $88.50 per barrel during Asian hours on Wednesday. Crude oil prices eased as energy flows from the Middle East showed clear signs of improvement.
Analysts noted that the 10-day average of crude exports from the region recovered to 17.5 million barrels per day, reaching 98% of pre-war levels. This recovery comes as Saudi Arabia resumed crude exports through its East-West pipeline at roughly half its capacity, complemented by a steady stream of covert shipping continuing through the Strait of Hormuz.
Adding to the downward pressure on prices, another major release of emergency reserves in the US helped alleviate lingering supply concerns. The US government plans to tap the Strategic Petroleum Reserve (SPR) for up to 40 million barrels to combat soaring fuel costs at home. Furthering this bearish sentiment, industry data indicated that US crude inventories rose by 1 million barrels last week.
Despite these recent pullbacks, the US oil benchmark remains on track for a third consecutive monthly gain. Ongoing support for prices continues to be driven by the prolonged US-Iran conflict and widespread disruptions to global supply.
Oil stays in focus as US-Iran tensions underpin latest gains
Strategists at Scotiabank stress that “the market’s primary focus remains centered on oil prices,” with the latest advance in crude attributed to “the renewed deterioration in US/Iran negotiations and President Trump’s rejection of last week’s Iranian proposal to reopen the Strait of Hormuz.” They note that these geopolitical developments are reinforcing the recent upswing in energy markets and keeping oil firmly at the forefront of investors’ attention.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- EUR/USD edges lower to near 1.3335 in Wednesday’s early Asian session.
- ECB’s Lagarde leaned against market bets for an October rate hike.
- Markets currently see a 68% odds of a Fed rate hike in October.
The EUR/USD pair declines to around 1.3335 during the early Asian trading hours on Wednesday. The Euro (EUR) softens against the US Dollar (USD) after European Central Bank (ECB) President Christine Lagarde's dovish tilt. Germany’s August Retail Sales data is due later on Wednesday.
ECB’s Lagarde said on Tuesday that rising bond yields will curb economic expansion and limit the transfer of elevated energy costs to inflation. She added that the central bank should adopt a “measured response as appropriate to keep inflation in check” with second-round effects so far absent.
Traders pared monetary-tightening bets and now see a less than 40% chance of a hike by the ECB in the October policy meeting, according to Bloomberg.
"Her remarks confirm our suspicion that if one central bank hikes in October, it will be the Fed, and not the ECB," says Francesco Pesole, FX Strategist at ING.
Across the pond, the heightened expectations for more Federal Reserve (Fed) rate hikes are keeping the Greenback up. Traders will closely monitor the release of the US jobs data for September on Friday.
Economists expect the US Nonfarm Payrolls (NFP) to show an increase of 90,000 job additions in September, while the Unemployment Rate is projected to remain unchanged at 4.1%.
Markets are now pricing in nearly a 68% probability of a Fed rate hike in October and a 95% chance of an increase in December, according to the CME's FedWatch Tool.
Euro holds firm as ECB tones down October hike expectations
Analysts at ING note that the Euro “held up relatively well yesterday considering the slew of dovish-leaning comments by ECB President Lagarde,” even as those remarks “favoured a widening in the SOFR-ESTR 2yr swap to beyond 155bp.” They highlight that the spread is “now not far from the 163bp max width reached in early July,” underscoring how rate differentials have moved further in favour of the US.
According to ING, Lagarde “seemed willing to tone down some market enthusiasm about an October hike,” arguing that “tight financial conditions are limiting the pass-through of energy costs to the broader economy.” She also “stressed that the ECB should adopt a ‘measured response’ given no evidence of second-round effects,” reinforcing the impression of a more cautious policy stance.
ING writes that her remarks “confirm our suspicion that if one central bank hikes in October, it will be the Fed, and not the ECB,” with current market “pricing… now 17bp and 9bp, respectively.” Even so, the bank’s macro team “thinks both will wait until December, hence our baseline view for a higher EUR/USD by year-end.”
Technical Analysis: EUR/USD retains a negative outlook under the 100-day SMA
In the daily chart, EUR/USD maintains a bearish near-term bias as spot holds beneath the 100-day simple moving average (SMA) and the Bollinger Bands 20-period middle SMA. Price is pressed toward the lower end of the recent range, with the Bollinger lower band offering the nearest technical floor, while the Relative Strength Index (14) at 23.7 sits in oversold territory, hinting that downside momentum is stretched but not yet reversed.
On the topside, initial resistance appears at the Bollinger 20-period middle SMA around 1.1500, followed by the 100-day SMA near 1.1520, with the upper Bollinger band further up, near 1.1705, reinforcing a wider supply zone should a corrective bounce unfold. On the downside, immediate support is aligned with the Bollinger lower band at 1.1290; a decisive break below this level would open the door to additional losses, while holding above it would keep the pair in a oversold consolidation under heavy overhead resistance.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Mediators are making a renewed push to advance an agreement between the United States (US) and Iran, the Financial Times reported on Tuesday. This move came after US President Donald Trump said he had rejected an Iranian proposal to reopen the Strait of Hormuz and restart talks on ending the war.
"We are exchanging messages between the parties, and we're working towards establishing a common ground in order to get into a deal that would save all of us from the repercussions of the conflict," said Qatari Foreign Ministry spokesperson Majed al-Ansari.
Any further talks are expected to focus on the latest amended draft of a proposed interim agreement to Iran last week on the sidelines of the United Nations General Assembly, an official briefed on the negotiations said.
Under the terms of the deal, which mediators hope will revive talks on a final settlement to end the war, Iran would allow the reopening of the Strait of Hormuz and Washington would lift its blockade on Iranian ports in response.
US President Donald Trump repeated his position that Iran must not obtain a nuclear weapon and that the war would be over soon.
Iranian authorities reportedly sent a tank, drones, and dozens of security vehicles into the southeastern city of Iranshahr on Tuesday amid clashes with unidentified gunmen.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.38% on the day at $88.40.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- Gold price recovers some lost ground to around $4,180 in Wednesday’s early Asian session.
- The US 30-Year Treasury Yield climbed to the highest level since 2002.
- Traders brace for key US economic data this week, including the PCE inflation data due on Wednesday and NFP report on Friday.
Gold price (XAU/USD) rebounds from an eight-week low to near $4,180 during the early Asian session on Wednesday. However, the potential upside for the precious metal might be limited as oil-driven inflation reinforced expectations of tighter monetary policy by the US Federal Reserve (Fed).
Traders looked for clues on whether the US central bank will continue raising the interest rate to rein in inflation. Meanwhile, a stronger US Dollar (USD), higher US Treasury yields, rising energy prices, and inflationary concerns boosted the case for a rate hike.
The US 30-Year Treasury Yield surpassed 5.61% on Tuesday to touch a level last seen in 2002. The two-year yield, more sensitive than longer maturities to changes in the Fed outlook, declined as much as five basis points (bps) before settling around 4.88%.
Higher energy prices can fuel inflation by raising costs across the economy. Gold is widely viewed as a hedge against inflation, but a high interest rate environment increases the opportunity cost of holding the non-yielding metal.
"The heightened expectations for more Fed rate hikes are keeping the dollar up, yields remain elevated. I think the upside might be somewhat limited today and market's going to stay focused on the PCE inflation data tomorrow and the jobs data on Friday," Grant said.
Traders await the US August Personal Consumption Expenditures (PCE) Price Index data on Wednesday for fresh impetus ahead of the Nonfarm Payrolls (NFP) report. Any signs of weakening in the US labor market could weigh on the Greenback and lift the USD-denominated commodity price in the near term.
Gold slides to 7-week low as oil and yields keep downside pressure intact
Strategists at OCBC highlight that gold has "extended its decline, falling to a 7-week low" as the recent rise in oil prices has "reinforced inflation concerns and expectations for further Fed tightening." They note that "higher US Treasury yields and a firm USD added to the pressure," with the "break below 4200 likely exacerbated technical selling." Near term, OCBC sees "oil and the corresponding rates response" as "the key swing factors," adding that "softer US data (such as core PCE, NFP) or some easing in yields could help gold stabilise, while another leg higher in oil and yields would keep downside pressure intact."
Technical Analysis: Gold keeps a bearish vibe under the 100-day SMA
In the daily chart, XAU/USD remains under near-term pressure as it holds below the 100-day simple moving average (SMA) and the Bollinger Bands’ middle line, keeping the broader tone capped despite the recent bounce from sub-$4,100 levels. The Relative Strength Index (RSI) at 40.11 stays in bearish territory but off oversold extremes, hinting at lingering downside risk while suggesting that selling momentum has cooled modestly.
On the topside, initial resistance emerges at the 100-day SMA at $4,295, followed by the Bollinger midpoint at $4,325, with the upper Bollinger band far above at $4,490 reinforcing a wider cap on the upside. On the downside, immediate support is aligned with the lower Bollinger band at $4,165, where a break would expose fresh weakness and open the door to a deeper corrective leg in the near term.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
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