Forex News
Bank of England (BoE) policymaker Alan Taylor said in a summit at National University of Singapore that he expects interest rates to fall to their neutral levels soon.
Additional remarks
I expect monetary policy to normalise at neutral sooner rather than later.
At-target inflation from mid-2026 is likely to be sustainable.
Market reaction
GBP/USD faces mild selling pressure after BoE Taylor's comments, but is still 0.14% higher near 1.3440 as of writing.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- Gold recorded a record high of $4,639.77 on Wednesday.
- The non-interest-bearing Gold attracts buyers as softer US inflation fuels growing bets on Fed rate cuts.
- The XAU/USD gains ground as geopolitical risks favor safe-haven demand.
Gold (XAU/USD) reaches the fresh record high of $4,639.77 during the Asian hours on Wednesday. Precious metals, including Gold, attract buyers amid growing bets on Federal Reserve (Fed) rate cuts following the softer inflation in the United States (US).
US inflation data for December signaled easing underlying US inflation, strengthening views that price pressures are gradually cooling. Rate futures showed investors divided between expectations of two or three Fed rate cuts this year, well above policymakers’ median projection of one.
Gold prices found support as safe-haven demand strengthened amid renewed concerns over the Fed’s independence after US prosecutors opened a criminal probe linked to Chair Powell’s June testimony. Geopolitical risks also remained elevated, with markets closely watching the possibility of US involvement in Iran’s political unrest following repeated warnings of potential military action.
Daily Digest Market Movers: Gold remains stronger as US Dollar steadies
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is edging lower after registering modest gains in the previous session. The DXY is trading around 99.10 at the time of writing, supporting dollar-denominated Gold by boosting demand from foreign-currency buyers.
- US Core Consumer Price Index (CPI), excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held at 2.6%, matching a four-year low. The data provided a clearer sign of easing inflation after earlier releases were skewed by shutdown effects. Meanwhile, CPI increased by 0.3% month-over-month in December 2025, matching market expectations and repeating the rise seen in September. The annual inflation remains at 2.7% increase as expected.
- The US-based HRANA rights group reported on Wednesday that the death toll from Iran’s protests has reached 2,571. US President Donald Trump has urged Iranians to continue protesting, pledging that help is on the way, per Reuters.
- President Trump said on Monday that he would impose 25% tariffs on goods from any country doing business with Iran, stepping up pressure on Tehran amid widespread domestic protests. He added that the measure would take effect immediately, without providing further details. Trump warned on Sunday that action may be required before any meeting, even as he said Iran’s leadership had reached out seeking “to negotiate” after his military threats.
- US federal prosecutors threatened to indict Fed Chair Jerome Powell over his comments to Congress regarding a building renovation project, raising questions about the central bank’s independence. The Trump administration has been pressuring the Fed to cut interest rates, with Powell calling the threat a “pretext” to influence policy.
- US Nonfarm Payrolls (NFP) rose by 50,000 in December, falling short of November's 56,000 (revised from 64,000) and came in weaker than the market expectation of 60,000. However, the Unemployment Rate ticked lower to 4.4% in December from 4.6% in November, while the Average Hourly Earnings climbed to 3.8% YoY in December from 3.6% in the previous reading.
- Richmond Fed President Tom Barkin said the decline in the unemployment rate was welcome and described job growth as modest but stable. Barkin added that it is difficult to find firms outside healthcare or AI that are hiring and said it remains unclear whether the labor market will tilt toward more hiring or more firing.
Gold technical setup warns potential bearish reversal as ascending wedge emerges
Gold (XAU/USD) is trading around $4,620 on Wednesday. The technical analysis of the daily chart suggests the XAU/USD pair remains within an emerging ascending wedge pattern, signaling weakening upside momentum and warning of a potential bearish reversal if the price breaks below the lower trendline with strong volume.
The nine-day Exponential Moving Average (EMA) stands above the 50-day EMA, confirming a well-defined bullish bias. Gold price holds above the faster average, and the 50-day slope continues to advance, underscoring medium-term upside pressure. The 14-day Relative Strength Index (RSI) at 71.39 is overbought, flagging stretched momentum even as the trend stays intact.
The immediate resistance appears at the record highs near the upper boundary of the ascending wedge around $4,650. A break above this confluence resistance zone would lead the XAU/USD pair to target $4,650 level. On the downside, the initial support lies at the nine-day EMA of $4,520.01, followed by the lower ascending wedge boundary around $4,470.00.
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.
(The technical analysis of this story was written with the help of an AI tool.)
- AUD/USD rebounded toward the ascending channel.
- The 14-day Relative Strength Index at 56.32 signals improving momentum.
- The pair is hovering around the nine-day EMA of 0.6698.
The AUD/USD pair is recovering its recent losses registered in the previous session, trading around 0.6700 during the European hours on Wednesday. The daily chart’s technical analysis indicated a weakening bullish bias as the pair is positioned slightly below the ascending channel pattern.
The 14-day Relative Strength Index (RSI) at 56.32 is neutral and firming, confirming improving momentum. As long as RSI holds above 50, the pair could maintain the uptrend. Additionally, the AUD/USD pair holds above the rising 50-day Exponential Moving Average (EMA). The nine-day EMA is trending higher, keeping the near-term bias positive.
On the upside, a rebound within the ascending channel would improve the bullish bias and help the AUD/USD pair to target 0.6766, its highest level since October 2024. A decisive break could open a continuation higher toward the upper boundary of the ascending channel near 0.6880.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6698. A close below the short-term average would undermine the tone and expose the mentioned support at the 50-day EMA at 0.6636. Further losses would open the downside toward 0.6414, the lowest since June 2025.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.06% | 0.05% | 0.04% | -0.17% | -0.10% | 0.04% | |
| EUR | -0.00% | -0.06% | 0.02% | 0.04% | -0.17% | -0.10% | 0.04% | |
| GBP | 0.06% | 0.06% | 0.11% | 0.10% | -0.10% | -0.05% | 0.10% | |
| JPY | -0.05% | -0.02% | -0.11% | 0.00% | -0.20% | -0.14% | 0.01% | |
| CAD | -0.04% | -0.04% | -0.10% | -0.01% | -0.21% | -0.14% | 0.00% | |
| AUD | 0.17% | 0.17% | 0.10% | 0.20% | 0.21% | 0.07% | 0.21% | |
| NZD | 0.10% | 0.10% | 0.05% | 0.14% | 0.14% | -0.07% | 0.14% | |
| CHF | -0.04% | -0.04% | -0.10% | -0.01% | -0.01% | -0.21% | -0.14% |
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).
(The technical analysis of this story was written with the help of an AI tool.)
- EUR/JPY rises as the Japanese Yen weakens amid growing fiscal and monetary policy concerns in Japan.
- BoJ’s Ueda said rate hikes remain possible if economic conditions, wages, and prices rise in line with forecasts.
- The Euro gains support as signs suggest the ECB is nearing the end of its rate-cutting cycle.
EUR/JPY extends its winning streak for the fourth successive session and reaches fresh all-time highs, trading around 185.40 during the early European hours on Wednesday. The currency cross appreciates as the Japanese Yen (JPY) weakens amid mounting concerns over the country’s fiscal health and monetary policy concerns.
Bloomberg reported on Wednesday that Bank of Japan (BoJ) Governor Kazuo Ueda said he remains prepared to raise interest rates if economic and price developments align with forecasts and wages and prices continue to rise moderately.
However, a private survey showed manufacturing activity slowing due to trade frictions, while tourism-related disruptions are weighing on services, constraining the Bank of Japan’s scope for rate hikes.
The JPY remains under pressure amid speculation that Japanese Prime Minister Sanae Takaichi may call a snap election next month to consolidate power and push expansionary fiscal policies, with reports suggesting a Lower House election on February 8.
Finance Minister Satsuki Katayama said earlier this week that she and US Treasury Secretary Scott Bessent voiced concern over the yen’s “one-sided depreciation” during a bilateral meeting held on the sidelines of a multilateral finance ministers’ gathering.
The EUR/JPY cross may further advance as the Euro (EUR) gains support from signs that the European Central Bank (ECB) is nearing the end of its rate-cutting cycle amid easing inflation. Eurozone headline inflation slowed to 2.0% in December, a four-month low and in line with the ECB’s target, while core inflation eased to 2.3%, coming in slightly below forecasts.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- The Indian Rupee rises against the US Dollar as hopes of a US-India trade deal have improved.
- India’s External Affairs Minister Jaishankar said that trade talks with US Secretary of State Rubio were good.
- Investors await India-US wholesale inflation data.
The Indian Rupee (INR) trades higher against the US Dollar in the opening session on Wednesday. The USD/INR pair drops to near 90.30 as the Indian Rupee gains on the outcome of trade talks between the United States (US) and India on Tuesday.
India’s External Affairs Minister Subrahmanyam Jaishankar stated in a post on X, formerly known as Twitter, that trade discussions with US Secretary of State Marco Rubio were good and will continue discussing issues. ”Just concluded a good conversation with @SecRubio. Discussed trade, critical minerals, nuclear cooperation, defence, and energy. Agreed to remain in touch on these and other issues,” Jaishankar posted.
In response, US Ambassador to India, Sergio Gor, stated in a post on X that it was a “positive call” and the next meeting is very likely to be in February.
Easing trade frictions between the US and India is favorable for the Indian Rupee, which turned out to be Asia’s worst-performing currency in 2025 due to the steepest tariffs by Washington on imports from New Delhi. The US raised tariffs on India to 50%, added 25% punitive tariffs for buying oil from Russia.
Meanwhile, foreign investors continue to dump their stake in the Indian stock market amid a trade stalemate between the US and India. So far in January, Foreign Institutional Investors (FIIs) have remained net sellers in eight out of nine trading days, and have offloaded their stake worth Rs. 16,925.03 crore.
In Wednesday’s session, investors will focus on the WPI Inflation data for December, which will be published at 12:00 PM IST (06:30 GMT). Inflation at the wholesale level is expected to have grown by 0.3% after declining at a similar pace in November.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.12% | 0.03% | 0.00% | -0.28% | -0.14% | -0.03% | |
| EUR | 0.03% | -0.10% | 0.06% | 0.06% | -0.26% | -0.11% | 0.02% | |
| GBP | 0.12% | 0.10% | 0.17% | 0.14% | -0.16% | -0.04% | 0.11% | |
| JPY | -0.03% | -0.06% | -0.17% | -0.02% | -0.31% | -0.14% | -0.04% | |
| CAD | -0.00% | -0.06% | -0.14% | 0.02% | -0.29% | -0.13% | -0.02% | |
| AUD | 0.28% | 0.26% | 0.16% | 0.31% | 0.29% | 0.16% | 0.27% | |
| INR | 0.14% | 0.11% | 0.04% | 0.14% | 0.13% | -0.16% | 0.12% | |
| CHF | 0.03% | -0.02% | -0.11% | 0.04% | 0.02% | -0.27% | -0.12% |
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 Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Daily digest market movers: Steady inflation data boosts US Dollar's appeal
- The Indian Rupee rises against the US Dollar, even as the latter trades firmly against its other peers, following the release of the US Consumer Price Index (CPI) data for December. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near a monthly high around 99.25.
- On Tuesday, US Bureau of Labor Statistics (BLS) showed that inflationary pressures remained steady, keeping hopes for the Federal Reserve (Fed) to maintain interest rates at their current levels intact. On an annualized basis, the US headline and core CPI came in at 2.7% and 2.6%, respectively.
- Richmond Federal Reserve President Tom Barkin called December’s inflation data "encouraging," adding that he expects price pressures to remain at modest levels in the next couple of months, Reuters reported.
- US President Donald Trump welcomed steady inflation figures and extended its force on Fed Chair Jerome Powell to reduce interest rates further. We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut," Trump told reporters at Detroit, Reuters reported.
- Meanwhile, Fed’s Powell is facing criminal charges for cost overruns in the renovation of the Fed's Washington headquarters, which he called a “pretext” for not taking monetary decisions as per the president’s preferences. The event has raised concerns over the Fed’s independence.
- In response, chiefs from global central banks have shown support for Fed’s Powell, citing that “independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve.”
- In Wednesday’s session, investors will focus on the US Producer Price Index (PPI) data for October and November, and Retail Sales data for November, which will be published at 13:30 GMT.
Technical Analysis: USD/INR remains sideways around 91.50
USD/INR trades lower near 90.3810 as of writing. Price holds above the 20-day Exponential Moving Average (EMA) at 90.29, sustaining a short-term upward bias. The 20-day EMA is edging higher, supporting the path of least resistance to the upside.
The 14-day Relative Strength Index (RSI) at 53 (neutral) has eased from prior readings, confirming moderated momentum.
As long as the pair holds above the rising 20-day EMA, the bias stays positive and dips remain supported, while a daily close below that gauge could open room for a deeper retracement. RSI hovering near the midline suggests balanced conditions; a further fade in momentum would favor consolidation, whereas a pickup could underpin an extension of the advance.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Last release: Tue Jan 13, 2026 13:30
Frequency: Monthly
Actual: 2.7%
Consensus: 2.7%
Previous: 2.7%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Japan Chief Cabinet Secretary Seiji Kihara said during European trading hours on Wednesday that the government could intervene due to one-way excessive moves against the Japanese Yen (JPY).
Additional remarks
Will take appropriate action against excessive moves.
Important for currencies to move in stable manner reflecting fundamentals.
I won't comment on forex.
Market reaction
There seems to be no significant impact of Japan Kihara’s comments on the Japanese Yen. As of writing, USD/JPY trades close to one-and-a-half-year high of 159.45.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.12% | 0.02% | 0.00% | -0.27% | -0.17% | -0.02% | |
| EUR | 0.04% | -0.08% | 0.04% | 0.04% | -0.24% | -0.13% | 0.02% | |
| GBP | 0.12% | 0.08% | 0.13% | 0.12% | -0.16% | -0.06% | 0.09% | |
| JPY | -0.02% | -0.04% | -0.13% | 0.00% | -0.28% | -0.19% | -0.02% | |
| CAD | -0.00% | -0.04% | -0.12% | -0.00% | -0.28% | -0.18% | -0.03% | |
| AUD | 0.27% | 0.24% | 0.16% | 0.28% | 0.28% | 0.10% | 0.27% | |
| NZD | 0.17% | 0.13% | 0.06% | 0.19% | 0.18% | -0.10% | 0.15% | |
| CHF | 0.02% | -0.02% | -0.09% | 0.02% | 0.03% | -0.27% | -0.15% |
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).
- The United States Census Bureau will release Retail Sales data for November.
- US Retail Sales are expected to have increased by 0.4% in the month.
- The US Dollar is weak ahead of the announcement, affected by geopolitical turmoil.
The United States (US) Census Bureau will publish November Retail Sales on Wednesday. The delayed data is expected to show that sales rose a modest 0.4% in the month, following no change in October. The report was delayed by the government shutdown, which diminishes its potential impact on the US Dollar (USD). The Retail Sales report is a key indicator of consumer spending and consumer demand, which are major drivers of the US economy.
Retail Sales Control Group, a smoother reading that excludes automobiles, gasoline, building materials, and food services, surged 0.8% in October after an unrevised 0.1% dip in September. The figure is relevant as it corresponds most closely with the consumer spending component of Gross Domestic Product (GDP).
The US economy kick-started the last quarter of 2025 on a strong footing, yet with mounting inflationary pressure that took its toll on consumption, particularly affecting lower and middle-income households.
Market participants do not seem worried about the latest economic developments, as real GDP increased at an annual rate of 4.3% in the three months to September, reflecting “increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment,” according to the Bureau of Economic Analysis (BEA) official report.
But what will happen with the last quarter of 2025? Not only did the government shut down, dragging consumption lower, but also inflation remained stubbornly high. In the meantime, the Federal Reserve (Fed) delivered modest interest rate cuts and had to deal with US President Donald Trump's anger over the matter.
What to expect from the November US Retail Sales report?
As previously noted, sales are likely to show a modest 0.4% increase, while market players will be paying close attention to the core reading outcome after the 0.8% advance posted in the previous month.
In the meantime, the US published the December Consumer Price Index (CPI) data. The annual inflation rate was reported at 2.7% by the CPI, while the monthly reading was 0.3%, matching expectations. The core annual CPI increased by 2.6% while the monthly advance was 0.2%, slightly below expectations but matching November’s readings. The USD came under modest selling pressure with the news, but given that the data was pretty much in line with expectations, the FX board showed no relevant reaction.
With that in mind, deviations between the actual Retail Sales figure and expectations will be critical for the USD direction. A much weaker than anticipated report could put pressure on the Greenback, while much stronger-than-expected data should boost the American currency.
Still, the reaction is likely to be limited to the near term, as investors maintain their eyes elsewhere: US President Trump has been quite busy at the start of 2026, generating geopolitical noise. Not only did Trump conduct a military operation in Venezuela and capture former President Nicolás Maduro and his wife, but he also escalated threats to annex Greenland, a Danish territory rich in rare earth elements. But it did not end there: early on Tuesday, Trump announced a 25% new tariff on those countries doing business with the Islamic Republic of Iran.
When will US Retail Sales data be released, and how can it affect EUR/USD?
The US December Retail Sales data is due at 13:30 GMT, and as previously stated, the market reaction will be directly linked to the degree of deviation from expectations on the headline and the result of the Retail Sales Control Group reading.
Ahead of the announcement, the EUR/USD pair is trapped between 1.1600 and 1.1700, with the risk skewed to the downside yet without any directional momentum.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair consolidates around 1.1650 and is technically neutral. The bearish case could become stronger if the pair falls through 1.1590, a strong static support level. Bulls, on the contrary, will likely prefer to jump in once the 1.1740 resistance area is cleared. In between, choppy trading is likely to persist by the hands of sentiment.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Jan 14, 2026 13:30
Frequency: Monthly
Consensus: 0.4%
Previous: 0%
Source: US Census Bureau
Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.
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.
Bank of Japan (BoJ) Governor Kazuo Ueda said that he still intends to lift interest rates if economic and price development are in line with the forecast, wages and prices rise moderately, Bloomberg reported on Wednesday.
Key quotes
We will keep raising rates and adjust the degree of monetary easing in line with the improvement in the economy and inflation if our outlook materializes.
Wages and inflation are likely to keep rising gradually.
An appropriate adjustment of monetary easing will usher in the smooth achievement of our price target and longer-term growth in our economy.
Market reaction
As of writing, the USD/JPY pair is up 0.06% on the day at 159.20.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- US Dollar Index moves little ahead of the US Retail Sales and PPI data later on Wednesday.
- US CPI broadly met expectations, reinforcing views that the Fed will likely keep policy unchanged this month.
- Market sentiment remains cautious after President Trump urged Iranians to keep protesting, pledging that help is on the way.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is inching lower after registering modest gains in the previous session. The DXY hovers around 99.10 during the Asian hours on Wednesday. Traders brace for the US Retail Sales and Producer Price Index (PPI) data later in the North American session.
The Greenback may further appreciate as the US Consumer Price Index (CPI) broadly met expectations, reinforcing views that the Federal Reserve (Fed) will likely hold policy steady this month, even as underlying price pressures showed signs of easing.
US Consumer Price Index rose by 0.3% month-over-month in December 2025, matching market expectations. The headline inflation remains at 2.7% increase year-over-year (YoY) as expected. Meanwhile, Core CPI, excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held at 2.6%, matching a four-year low.
The US CPI data provided a clearer sign of easing inflation after earlier releases were skewed by shutdown effects. However, last Friday’s strong Nonfarm Payrolls report, a dip in the Unemployment Rate, and a solid four-week average ADP Employment Change point to a resilient labor market.
The upside impact of inflation data on the US Dollar could be offset by concerns over Fed independence. US federal prosecutors have threatened to indict Fed Chair Jerome Powell over his congressional comments on a building renovation project, raising questions about the central bank’s autonomy. The Trump administration has been pressuring the Fed to cut interest rates, with Powell describing the threat as a “pretext” to influence policy.
Traders remain cautious amid escalating geopolitical tensions. Reuters, citing the US-based HRANA rights group, reported on Wednesday that the death toll from Iran’s protests has reached 2,571. US President Donald Trump has urged Iranians to continue protesting, pledging that help is on the way.
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.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
