Forex News
Japan’s Finance Minister Satsuki Katayama said on Friday that the authorities are always ready to react suitably as needed on foreign exchange.
Meanwhile, Japanese Prime Minister Sanae Takaichi stated that weak Japanese Yen (JPY) has both advantages and disadvantages. She added that the economic policy aims to strengthen Japan's economic capacity and not to manipulate currency.
Key quotes
Will act if currency volatility rises, inflation pressures deepen.
Declines to comment on currency levels.
Always ready to react suitably as needed on forex.
Middle East conflict and oil price shifts also weigh on weak yen.
Markets highly volatile since strait of Hormuz effectively closed.
Joint statement with US enables decisive action on currency when needed.
FX volatility very high with speculative trades driving major yen shifts since Iran war began in February.
Market reaction
As of writing, the USD/JPY pair is down 0.02% on the day at 160.00.
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.
US President Donald Trump said that he would be “honored” to meet Iranian Supreme Leader Ayatollah Mojtaba Khamenei if a deal is reached to end the U.S.-Iran war, CNBC reported on Thursday.
“If we make a deal, it’s possible that I would meet,” said Trump. “I’d be okay with that,” he added.
Meanwhile, Israeli defence minister Israel Katz said on Thursday that Israel will continue operations in Lebanon despite a ceasefire, and Lebanese residents forced to flee will not be able to return.
Israeli forces and Hezbollah fighters launched strikes just hours after Israel and Lebanon agreed to implement a ceasefire, hinging on an end to Hezbollah attacks on Wednesday. Hezbollah is not party to the deal, and the leader of the Iran-backed militant group has rejected the pact.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.08% on the day at $90.85.
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.
- Markets still price BoE hikes even as UK growth signals deteriorate.
- That hawkish premium rests on an energy shock, not domestic strength.
- Friday's NFP and back-to-back Bailey speeches are the near-term tests.
Sterling is standing on a bet that gets harder to justify by the week. Markets still lean toward Bank of England (BoE) rate hikes this year, even as the economy beneath the Pound flashes contraction rather than the overheating that would normally warrant tighter policy. The Pound is holding up, but it is holding up on borrowed conviction, and the lender is the energy market.
Hiking into a contraction signal
The data is not subtle. May's construction Purchasing Managers Index (PMI) printed near 38, deep in contraction territory, the labour market shed roughly 100K jobs in the latest read, the worst since 2020, and yet the Bank Rate sits at 3.75% with the curve still leaning toward more tightening. Wage growth running close to 4.1% gives the hawks something to point at, but raising rates into a shrinking economy is a narrow path, and one the BoE would clearly rather not be walking.
A hawkish premium on loan from Crude Oil
The reason the BoE cannot simply cut is sitting in the energy market. April's Consumer Price Index (CPI) near 2.8% would, in calmer times, have cleared the way for easing. Instead, the Middle East conflict and the threat to Crude Oil supply through the Strait of Hormuz have kept energy costs elevated and headline inflation sticky. Sterling's hawkish premium is effectively borrowed from Crude Oil, and if those supply fears ease, the prop under the Pound goes with them. It is the same imported inflation shock forcing the same awkward hawkishness onto Japan and Australia, which is what ties this Pound story to the broader tape.
The Fed setting the floor under the Dollar
On the other side of the trade, the Federal Reserve (Fed) offers the Pound no help. Thursday's speakers, Schmid, Barkin and Daly among them, all warned that rates may rise if inflation does not ease, and markets now lean toward a hike by year-end rather than a cut. The chart offers no rescue either: GBP/USD is pinned between its 50-day and 200-day Exponential Moving Averages (EMA), with the Stochastic Relative Strength Index (Stoch RSI) sitting near the midpoint. That is a non-committal setup, and a non-committal chart leaves the macro story firmly in charge.
Bailey, then payrolls
Governor Bailey speaks twice into the weekend, late Thursday and again Friday, and any lean toward the growth risks rather than inflation stickiness would knock the hawkish bet straight away. Then comes the main event: Nonfarm Payrolls (NFP) Friday at 12:30 GMT, consensus near 85K after 115K, with unemployment seen at 4.3%. A firm print keeps the Dollar bid and caps the Pound, while a soft one offers some relief. Next week brings UK retail sales early on, then a Friday cluster of Gross Domestic Product (GDP) and production figures that will test the growth picture again.
How to trade the trap
Resistance: the 50-day EMA around 1.3450, then 1.3650 on a sustained Dollar pullback.
Support: the 200-day EMA close to 1.3400, with a loss of that level pointing toward 1.3150.
Bias: rangebound with a soft underside. The Pound holds only as long as its hike premium does, and that premium hangs on elevated Crude Oil and a Fed that stays hawkish. A soft NFP, a dovish lean from Bailey, or easing energy prices would each chip away at it, and two of the three arrive inside 24 hours.
GBP/USD 5-minute chart
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.
- Gold price declines to around $4,470 in Friday’s early Asian session.
- There was no sign of progress in ceasefire talks between the US and Iran, weighing on the Gold price.
- Traders brace for the US May employment report, which is due later on Friday.
Gold price (XAU/USD) edges lower to near $4,470 during the early Asian session on Friday. The precious metal remains volatile amid ongoing geopolitical turmoil. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US May employment report later on Friday.
US President Donald Trump said ceasefire talks are in the “final” stages, while Iran’s Foreign Minister stated that the negotiations had stalled. On Wednesday, Iran fired missiles and drones at Kuwait and Bahrain, killing one person and injuring dozens at Kuwait’s main airport, after the US struck an oil tanker headed to the Islamic Republic.
A lack of progress in ceasefire talks between the US and Iran after the worst burst of violence in weeks continues to fuel concerns over inflation and expectations of elevated interest rates, which weigh on the Gold price, a non-yielding asset.
“Higher inflation expectations, associated with the negative supply shocks, have pushed yields across the curve higher, kept the USD firm, and prompted markets to begin pricing in a Fed hike in late 2026,” said Bart Melek from TD Securities.
The US employment report will take center stage later in the day. The Nonfarm Payrolls (NFP) are expected to show a gain of 85,000 jobs in May, while the Unemployment Rate is projected to remain steady at 4.3% during the same period. Any signs of surprise weakening in the US labor market could undermine the US Dollar (USD) and support the USD-denominated commodity price in the near term.
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.
- A soft Q1 GDP print sits awkwardly against the RBA's hold-or-hike messaging.
- April's trade surplus flatters what looks like weakening domestic demand.
- The Aussie is rangebound ahead of Friday's NFP and the mid-June RBA decision.
The Australian Dollar is going nowhere in a hurry, and the contradiction at its core explains why. The Reserve Bank of Australia (RBA) keeps dangling the prospect of another hike, yet the economy it governs just expanded 0.3% in the first quarter, a clear step down from the prior pace. A central bank threatening to tighten into a visible slowdown is not a recipe for conviction in either direction, and the tape shows it.
Tough talk meets a 0.3% economy
The growth miss was not marginal. First-quarter Gross Domestic Product (GDP) rose just 0.3% on the quarter and 2.5% YoY, both undershooting expectations and decelerating from late last year. Against that, the RBA has held a line that rules cuts out and keeps hikes on the table, justified by inflation that remains sticky near the top of its target band. That posture made sense while growth held up. It gets harder to defend with every soft print, and the market is right to treat the hawkish guidance with a degree of scepticism.
A surplus that flatters
Thursday's trade figures looked strong at a glance: a swing back to surplus with exports up 7.2% MoM. Look underneath and the picture is less flattering. Imports barely moved, rising close to 0.8% after a double-digit gain the month prior, so the surplus owes more to soft import demand than to booming export volumes. A trade beat built on households and businesses buying less is a symptom of a cooling economy, not evidence of strength, and it quietly reinforces the case the GDP print already made.
Pinned to the average, waiting for a cue
On the daily chart the Aussie is hugging its rising 50-day Exponential Moving Average (EMA), wedged between support around 0.7100 and resistance near 0.7150 after sliding from May highs close to 0.7300. The 200-day EMA sits far below around 0.6900, so the broader uptrend is still intact even as near-term momentum stalls, with the Stochastic Relative Strength Index (Stoch RSI) drifting toward oversold. The chart is not picking a side, which fits a pair waiting on outside catalysts rather than its own story.
The hawkish Fed capping the rebound
That catalyst is more likely to come from Washington than Canberra. Thursday delivered a hawkish chorus from the Federal Reserve (Fed), with Schmid, Barkin and Daly all flagging that rates could rise if inflation stays hot, and markets now lean toward a hike by year-end. A firm dollar built on that repricing keeps the high-beta Aussie capped, which is why even decent local data has struggled to spark a sustained rally.
Friday's payrolls and a busy week after
Nonfarm Payrolls (NFP) headline Friday at 12:30 GMT, consensus near 85K versus 115K prior, with unemployment seen at 4.3%. A strong number reinforces the firm-dollar story and pressures the Aussie, while a soft one is the clearest path to a relief bounce. Next week brings Westpac consumer confidence, Chinese trade and inflation data that matter for Australian export demand, and domestic inflation expectations, all of it feeding into the June 15 to 16 RBA meeting.
How to trade the range
Resistance: 0.7150 first, then the May shelf toward 0.7300; reclaiming 0.7150 on a soft NFP would be the bullish trigger.
Support: 0.7100, below which the 200-day EMA region near 0.6900 is the longer-term backstop.
Bias: neutral to mildly soft while growth disappoints and the Dollar stays bid. The asymmetry favours a squeeze higher on a weak NFP rather than a clean breakdown, given the RBA's reluctance to abandon its hawkish stance just yet.
AUD/USD daily chart
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.
- USD/JPY is pinned near its intervention ceiling, capped by Tokyo and supported by the US-Japan rate gap.
- The real drivers are a hawkish Fed and Friday's NFP, not anything happening in Japan.
- The mid-June BoJ and Fed meetings frame a back-to-back policy binary.
The Yen is doing very little, and that stasis is the whole story. USD/JPY sits glued near 160.00 not because Japan has found new strength, but because two outside forces are fighting to a draw over it: a US rate complex that keeps the dollar bid, and a Ministry of Finance (MoF) that refuses to let the line break. Any yen rally from here is borrowed, dependent on a soft US print, a dovish wobble from the Federal Reserve (Fed), or Tokyo's checkbook, none of it Japan's own doing.
A standoff, not a trend
The carry math is unforgiving. With the US policy rate at 3.50% to 3.75% against the Bank of Japan's (BoJ) 0.75%, the gap keeps funding the short-yen trade every day it holds. On the daily chart the pair clings to 160.00, well above its 50-day Exponential Moving Average (EMA) around 158.50 and its 200-day EMA near 155.50, with the Stochastic Relative Strength Index (Stoch RSI) deep in overbought territory. Momentum says stretched, the rate gap says supported, and the result is compression rather than a clean trend.
Tokyo's expensive line in the sand
This is where the MoF earns its reputation. Authorities spent on the order of $70 billion across late April and May leaning against yen weakness, and an earlier intervention close to 160.00 sent the pair tumbling toward 152.00 before it crawled back. The lesson the market took away is that Tokyo cares about the speed of a move more than the level itself. A fast push through 160.00 into Friday's data is precisely the kind of disorderly move that invites a response, which is why the round number behaves like a ceiling even with the fundamentals pointing higher.
The hawkish rotation doing Japan's work
The Yen's best hope is that someone in Washington blinks, and Thursday offered no sign of it. A parade of Fed speakers, with Schmid, Barkin and Daly all on the wires, warned that rates may have to climb if inflation refuses to cool. April's Consumer Price Index (CPI) near 3.8% YoY already chased cut bets out of the picture, and markets now lean toward a hike by year-end rather than an easing. Every basis point of that repricing widens the US-Japan gap and presses the pair harder against Tokyo's line, doing the carry trade's work for it.
What Friday and the weekend throw at it
Nonfarm Payrolls (NFP) lands Friday at 12:30 GMT, consensus near 85K after 115K, with the unemployment rate seen holding at 4.3%. A firm print cements the no-cut, maybe-hike Fed story and shoves USD/JPY into intervention range right as the central banks convene. Closer to home, Japan's Labor Cash Earnings hit late Thursday at 23:30 GMT, seen close to 3.2% YoY, and first-quarter Gross Domestic Product (GDP) arrives Sunday, both feeding the BoJ hike debate ahead of its June 15 to 16 meeting. The Fed follows on June 16 to 17, making the round number the line that defines the whole setup.
How to trade the coil
Topside: a break and hold above 160.00 toward 160.50 is the zone where intervention risk shifts from threat to action, so chasing strength there means fighting the MoF.
Downside: 160.00 losing its grip opens room toward the 50-day EMA around 158.50, then 155.50 on a genuine Dollar unwind.
Bias: Rangebound and headline-driven into Friday. The path of least resistance is still higher on the rate gap, but the asymmetry sits with the downside, where a soft NFP or a ceasefire-driven dollar slip could meet Tokyo's bid and snap the coil hard in the Yen's favour.
USD/JPY daily chart
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.
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