Forex News
- Silver price plummets to near $61.00 as oil prices find support.
- Iran’s attack on commercial ships transiting through Hormuz has supported oil prices.
- Investors await the FOMC Minutes of the June policy meeting.
Silver price (XAG/USD) is down 1.35% to near $61.00 during the Asian trading session on Tuesday. The white metal extends its correction as oil prices see some buying interest, following headlines that Iran fired at least two missiles at commercial ships transiting through the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply.
Iran’s attack on commercial ships has renewed fears of energy supply disruption, whose impact on global inflation has already been witnessed by market participants in the past few months amid the war between the United States (US)-Israel and Iran.
The Silver price underperformed during the Middle East war, as the increase in inflationary pressures due to rising energy prices prompted fears of interest rate hikes by global central banks.
Higher interest rates bode poorly for non-yielding assets, such as Silver.
Going forward, the major trigger for the Silver price will be the release of the Federal Open Market Committee (FOMC) minutes of the June policy meeting on Wednesday. Investors will pay close attention to FOMC minutes to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
In the June policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75% and signaled that the central bank will refrain from delivering forward-looking remarks on policy rates at the current policy juncture.
Silver technical analysis
XAG/USD trades lower at around $61.50, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at $63.35. The downside tone is reinforced by the Relative Strength Index (RSI) hovering near 41, which suggests persistent but not extreme selling pressure as rebounds continue to be capped by the nearby EMA barrier.
On the topside, immediate resistance is located at the 20-day EMA at $63.35, and a sustained break above this level would be needed to ease the current bearish pressure and open the way for a more constructive recovery phase. Looking down, the psychological level of $60.00 will be the key support zone; below that, the Silver price could revisit the seven-month low of $55.63.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- USD/JPY drifts lower during the Asian session, though the downside potential seems limited.
- The wide US-Japan rate differential might continue to weigh on the JPY and support the pair.
- Economic risks due to Hormuz tensions further warrant some caution for aggressive JPY bulls.
The USD/JPY pair extends the previous day's late pullback from the vicinity of mid-162.00s and attracts some follow-through sellers during the Asian session on Tuesday. Spot prices drop to the 161.70-161.65 region in the last hour, though the downside remains cushioned in the absence of any intervention by Japanese authorities and a supportive fundamental backdrop.
Reports last week suggested that Japanese officials are abandoning their traditional habit of telegraphing intervention risks and are starting to focus on targeting speculators. The immediate market reaction, however, seems to have faded as no action has been taken yet. Moreover, the wide gap in borrowing costs between Japan and other major economies, including the US, keeps the so-called carry trade in play and continues to undermine the Japanese Yen (JPY) amid economic risks stemming from Middle East tensions.
In fact, a maritime agency reported that an oil tanker was struck by an unidentified projectile while transiting through the critical Strait of Hormuz. This comes on top of the US-Iran standoff over the idea of Iran charging vessels for using the strait and adds to worries that Japan's economy will remain under strain due to the continued disruption of energy supplies. Moreover, concerns about the sustainability of the fragile US-Iran peace deal benefit the US Dollar's (USD) relative safe-haven status and support the USD/JPY pair.
On the economic data front, Japan's nominal wages - or total cash earnings - rose 3.2% in May, slightly slower than a revised 3.6% gain in the previous month. Meanwhile, real wages rose 1.4% from a year earlier to mark a fifth consecutive month of increases, though the growth rate slowed amid re-accelerating consumer inflation. Furthermore, Household Spending in Japan fell for the sixth straight month, by 0.4% YoY in May. This might complicate the BoJ's policy tightening path and backs the case for further JPY depreciation.
Meanwhile, reduced bets for interest rate hikes by the US Federal Reserve (Fed) act as a headwind for the USD and might keep a lid on any meaningful upside for the USD/JPY pair. Nevertheless, the aforementioned fundamental backdrop suggests that any corrective pullback might still be seen as a buying opportunity and remain limited. Hence, it will be prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near-term, as traders now look to FOMC Minutes on Wednesday.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.04% | -0.16% | 0.04% | -0.04% | -0.07% | -0.01% | |
| EUR | 0.03% | -0.03% | -0.15% | 0.05% | 0.00% | -0.03% | 0.01% | |
| GBP | 0.04% | 0.03% | -0.11% | 0.09% | 0.04% | -0.00% | 0.05% | |
| JPY | 0.16% | 0.15% | 0.11% | 0.20% | 0.13% | 0.09% | 0.15% | |
| CAD | -0.04% | -0.05% | -0.09% | -0.20% | -0.08% | -0.09% | -0.05% | |
| AUD | 0.04% | -0.00% | -0.04% | -0.13% | 0.08% | -0.04% | 0.02% | |
| NZD | 0.07% | 0.03% | 0.00% | -0.09% | 0.09% | 0.04% | 0.05% | |
| CHF | 0.00% | -0.01% | -0.05% | -0.15% | 0.05% | -0.02% | -0.05% |
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).
- WTI gains ground following renewed geopolitical tensions in the Strait of Hormuz.
- Iran fired at least two missiles at commercial vessels transiting the strategic waterway on Monday.
- Saudi Aramco cut its Arab Light crude price for Asian buyers by $11 to a $1.50 regional benchmark discount.
West Texas Intermediate (WTI) oil price gains ground after registering modest losses in the previous day, trading around $69.20 per barrel during the Asian hours on Tuesday. Crude oil prices receive a temporary boost following renewed geopolitical tensions in the Strait of Hormuz.
According to a Bloomberg report citing a United States (US) official, Iran fired at least two missiles at commercial vessels transiting the strategic waterway late Monday. While two ships sustained significant damage, no casualties were reported. Separately, the UK Maritime Trade Operations (UKMTO) confirmed that a southbound tanker was struck on its port side by an unknown projectile, which ignited a fire on board.
Despite these security risks, West Texas Intermediate (WTI) price remained anchored near a four-month low, weighed down by indications of expanding global supply. Defusing some of the immediate supply anxiety, vessel traffic through the Strait of Hormuz has already begun to recover. Recent data showed at least eight Japan-linked vessels, including five supertankers capable of carrying two million barrels of crude each, successfully exited the waterway via a route near Iran.
Compounding the bearish market outlook, Saudi Aramco aggressively cut the price of its flagship Arab Light crude for Asian buyers by $11 a barrel, placing it at a $1.50 discount against the regional benchmark. This drastic pricing maneuver reflects increasingly soft market conditions, marking a strategy Saudi Arabia has only deployed twice before during the oil price wars of 2015 and 2020. This steep discount followed a weekend OPEC+ agreement to raise production quotas for next month, reinforcing expectations of a heavily supplied global market.
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.
Minoru Kiuchi, Minister of State for Economic and Fiscal Policy of Japan, said on Tuesday that “Tokyo is not easing fiscal discipline, presenting it clearly in the economic plan.”
Additional comments
Government blueprint’s mention of monetary policy aligns with prior stance.
Not considering altering the language of the economic blueprint.
Market reaction
USD/JPY is losing 0.07% on the day at 161.95, as of writing, with the Japanese Yen (JPY) finding little help from these comments.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.05% | -0.15% | 0.04% | -0.04% | -0.08% | -0.01% | |
| EUR | 0.03% | -0.04% | -0.13% | 0.05% | 0.00% | -0.03% | 0.01% | |
| GBP | 0.05% | 0.04% | -0.07% | 0.10% | 0.04% | 0.00% | 0.05% | |
| JPY | 0.15% | 0.13% | 0.07% | 0.20% | 0.13% | 0.09% | 0.15% | |
| CAD | -0.04% | -0.05% | -0.10% | -0.20% | -0.08% | -0.09% | -0.04% | |
| AUD | 0.04% | -0.00% | -0.04% | -0.13% | 0.08% | -0.04% | 0.02% | |
| NZD | 0.08% | 0.03% | -0.00% | -0.09% | 0.09% | 0.04% | 0.05% | |
| CHF | 0.01% | -0.01% | -0.05% | -0.15% | 0.04% | -0.02% | -0.05% |
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).
Bloomberg carried a story by an Axios reporter late Monday, citing a US official, that Iran fired at least two missiles at commercial ships transiting through the Strait of Hormuz.
Two commercial ships were hit and suffered significant damage, but no casualties were reported, the Axios reporter said.
The UK Maritime Trade Operations (UKMTO) also reported that a tanker was reportedly hit by an unknown projectile on the port side, causing a fire, whilst travelling southbound.
Market reaction
WTI, the US oil benchmark, is drawing support from renewed tensions in the Strait of Hormuz, up 0.73% on the day to intraday highs near $69.20 at the time of writing.
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.
- GBP/USD rises as the US Dollar struggles after soft US data prompts markets to scale back Fed rate hike bets.
- Fed policy outlook softens as a cooling employment report and dropping crude oil prices ease inflationary pressures.
- The British Pound may face headwinds as markets slash expectations from two interest rate hikes down to just a 70% chance of one.
GBP/USD continues its winning streak for the ninth consecutive day, trading around 1.3390 during the Asian hours on Tuesday. The currency pair rises as the US Dollar (USD) faces headwinds as market participants scale back expectations for Federal Reserve (Fed) rate hikes this month and in September. This shift in sentiment followed a cooling employment report that revealed fewer jobs added across April, May, and June than Wall Street had anticipated.
Furthermore, a recent drop in crude oil prices, driven by an OPEC+ production boost and a US-Iran peace deal, has alleviated broader inflationary pressures, softening the urgency for an aggressive Fed policy outlook.
The Greenback could find baseline support from hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller and resilient domestic economic data.
Waller underscores flexible forward guidance and firm 2% inflation pledge
Fed’s Waller delivers a moderately stronger-than-usual performance, with a 7.1/10 FXS Speechtracker score compared to the established baseline of 6.4/10, emphasizing both the usefulness and the pitfalls of forward guidance. The focus on forward guidance as a “valuable tool” that can accelerate policy transmission, yet becomes a hindrance when too rigid or when facing multiple plausible economic paths, signals a preference for more flexible communication and reinforces the importance of a well-understood reaction function. Waller’s insistence on the credibility of the 2% inflation pledge, rejection of keeping rates low to aid deficit financing, and preference for an inflation target range (without changing the current target) collectively lean hawkish for the Dollar, even without explicit comments on the near-term outlook.
The FXS Fed Sentiment Index rose by 1.83 points to 125.72, confirming a move further into hawkish territory relative to the neutral 100 benchmark. This upward shift, aligned with the above-baseline FXS Speechtracker score, suggests markets will read Waller’s remarks as reinforcing the Fed’s anti-inflation stance and limiting expectations for policy accommodation, a backdrop that tends to support the Dollar against other major currencies.
Although business activity in the United States (US) services sector cooled slightly, it remained firmly in expansionary territory, with the June ISM Services Purchasing Managers’ Index (PMI) printing at 54.0 in line with consensus estimates. Within the sub-components of the report, the Prices Index dipped from 71.3 to 67.7, while the Employment Index saw a notable improvement, climbing out of contractionary territory from 47.9 to 51.2.
On the other side of the equation, the British Pound (GBP) could face its own pressures as markets lowered expectations for Bank of England (BoE) tightening. Investors are now pricing in just a 70% chance of a single rate hike this year, a sharp decline from the two increases anticipated just a few weeks ago.
While BoE Governor Andrew Bailey recently confirmed that inflation remains on track to hit the bank's 2% target, he acknowledged it would take longer than previously forecast and firmly ruled out any imminent rate cuts.
This cautious approach follows the BoE's June 18 monetary policy meeting, where officials voted 7-2 to hold the benchmark interest rate at 3.75%. Although the status quo is maintained, the hawkish camp has doubled since April, with two dissenting voters pushing for an immediate hike to 4.00%.
While UK inflation currently sits at 2.8%, the central bank's internal projections indicate it could bounce back above 3% by autumn due to delayed war-era energy cost pass-throughs, leading major sell-side institutions to forecast the next rate hike around late 2026.
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.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 6.8054 compared to the previous day's fix of 6.8066 and 6.7838 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.
- EUR/USD continues with its struggle to gain any meaningful traction amid mixed cues.
- Hormuz risks support the safe-haven USD, capping the pair amid cooling ECB hike bets.
- Diminishing odds for Fed rate hikes act as a headwind for the buck and support the pair.
The EUR/USD pair extends its sideways consolidative price move during the Asian session on Tuesday, though it manages to hold comfortably above the 1.1400 mark. Moreover, spot prices remain well within striking distance of a nearly two-week high, touched last Thursday.
A 60-day US-Iran ceasefire is under strain amid rising tensions in the critical Strait of Hormuz, which lends some support to the US Dollar (USD) and acts as a headwind for the EUR/USD pair. In fact, a maritime agency reported that an oil tanker was struck by an unidentified projectile while transiting through the critical waterway. This keeps geopolitical risks in play and helps limit the downside for the safe-haven Greenback.
Meanwhile, the recent downfall in Crude Oil prices eased inflation concerns and reduced pressure on central banks to tighten monetary policy aggressively. Adding to this, the soft US jobs data, released last Thursday, tempered market bets for interest rate hikes by the US Federal Reserve (Fed). This holds back the USD bulls from placing aggressive bets, backing the case for some meaningful upside for the EUR/USD pair.
That said, European Central Bank (ECB) rate hike bets cooled in the wake of an unexpected fall in the Eurozone inflation, which, in turn, warrants some caution before positioning for any appreciating move for the shared currency. Hence, it will be prudent to wait for strong follow-through buying before confirming that the EUR/USD pair has bottomed out near the 1.1325 region, or the lowest since May 2025, touched in June.
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.
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