Forex News
On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 7.0749 compared to the previous day's fix of 7.0733 and 7.0751 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.
- NZD/USD loses ground to near 0.5765 in Friday’s early Asian session.
- Markets are anticipating a 25 basis point interest rate cut from the Fed next week.
- Traders brace for the delayed US PCE inflation data on Friday for fresh impetus.
The NZD/USD pair edges lower to around 0.5765 during the early Asian trading hours on Friday, pressured by the rebound in the US Dollar (USD). Nonetheless, the potential downside for the pair might be limited amid rising bets for a rate cut by the Federal Reserve (Fed) next week. Traders will take more cues from the US delayed Personal Consumption Expenditures (PCE) Price Index report for September, which is due later on Friday.
The US central bank is likely to reduce its key interest rate at its December meeting next week after a cooling labor market and dovish remarks from Fed officials like New York Fed President John Williams and Fed Governor Christopher Waller. Fed funds futures traders are now pricing in nearly an 89% chance of a rate reduction next week, up from 71% probability a week ago, according to the CME FedWatch Tool.
On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) decided to cut its Official Cash Rate (OCR) by a quarter percentage point to 2.25% last week, as widely expected. The New Zealand central bank signaled that future rate changes will depend on the economic and inflation outlook, and analysts believe the rate-cutting cycle is likely finished for now. This, in turn, could provide some support to the New Zealand Dollar (NZD) against the Greenback.
The US delayed PCE inflation data will be in the spotlight later in the day, which could give some insight into the US interest rate path. The headline PCE is expected to show an increase of 2.8% YoY in September, while the core PCE is projected to show a rise of 2.9% during the same period. In case of a hotter-than-expected inflation reading, this could boost the USD and create a headwind for the pair in the near term.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- AUD/USD is seen consolidating as bulls pause for a breather ahead of the key US inflation data.
- The divergent Fed-RBA policy expectations might continue to act as a tailwind for spot prices.
- The currency pair remains on track to register strong gains for the second consecutive week.
The AUD/USD pair enters a bullish consolidation phase during the Asian session on Friday and oscillates in a range around the 0.6600 round figure, just below a nearly two-month high, touched the previous day. Meanwhile, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside, though bulls opt to wait for the crucial US inflation report before positioning for an extension of a two-week-old uptrend.
The US Personal Consumption Expenditure (PCE) Price Index for October will be published later today. The core gauge is seen as the US Federal Reserve's (Fed) preferred inflation gauge and will be looked upon for cues about the future rate-cut path. This, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the AUD/USD pair. In the meantime, the divergent Fed-Reserve Bank of Australia (RBA) policy outlooks should continue to act as a tailwind for the currency pair.
The recent US macro data pointed to a gradual cooling of the economy and signs of a softening labor market. Adding to this, comments from several Fed officials suggest that another interest rate cut in December is all but certain. In fact, traders are now pricing in a nearly 90% chance that the US central bank will lower borrowing costs by 25 basis points (bps) next week. This has been a key factor behind the USD's underperformance and should keep a lid on any attempted recovery from its lowest level since late October, though on Thursday.
Meanwhile, RBA Governor Michele Bullock admitted before a parliamentary committee earlier this week that inflation is not yet sustainably back within the central bank's 2% to 3% annual target band. Bullock also warned that the central bank is looking very hard at recent inflation numbers, and if the price pressure turns out to be permanent, it would have implications for the future path of monetary policy. This, in turn, fueled speculations that the RBA might hike interest rates next year, which underpins the Aussie and supports the AUD/USD pair.
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Dec 05, 2025 13:30
Frequency: Monthly
Consensus: 2.9%
Previous: 2.9%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
Japan’s Finance Minister Satsuki Katayama said on Friday that interest rates are shaped by “various factors” and reiterated that the government will closely monitor market developments, pursue appropriate debt-management policies, and craft budgets with fiscal sustainability in mind.
Katayama further stated that the government will continue coordination with the Bank of Japan (BoJ) ahead of its pivotal December policy meeting.
Market reaction
As of writing, the USD/JPY pair is up 0.01% on the day at 155.15.
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.
- Gold price holds steady around $4,205 in Friday’s early Asian session.
- Higher yields and upbeat US jobs data could weigh on Gold price; Rising Fed rate cut bets might cap its losses.
- The US delayed PCE inflation report will take center stage later on Friday.
Gold price (XAU/USD) trades on a flat note near $4,205 during the early Asian trading hours on Friday. Rising US Treasury yields and upbeat US jobs data cap upside for the precious metal. Traders might prefer to wait on the sidelines ahead of the key US inflation data. The US delayed the Personal Consumption Expenditures (PCE) Price Index report for September, which will be published later on Friday.
Higher yields and stronger US jobs data could provide some support to the US Dollar (USD) broadly and weigh on the USD-denominated commodity price. Data released by the US Department of Labour (DOL) on Tuesday showed that US Initial Jobless Claims for the week ending November 29 declined to 191,000, compared to 218,000 in the previous week. This figure came in lower than the market consensus of 220,000.
Traders will closely monitor Friday's US PCE inflation data for more clues on the Federal Reserve's (Fed) policy outlook ahead of its December meeting. Any signs of hotter inflation in the US economy could undermine the Gold price in the near term.
Meanwhile, the Fed is widely anticipated to reduce its key interest rate by 25 basis points (bps) at its December policy meeting next week. This, in turn, could underpin the yellow metal. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
Uncertainty and elevated geopolitical risks could boost the safe-haven flows, benefiting the Gold price. US President Donald Trump said on Wednesday that the path ahead for Ukraine peace talks is unclear. These comments came after Trump called the "reasonably good" talks between Russian President Vladimir Putin and US envoys. Ukrainian President Volodymyr Zelenskiy stated that his team is preparing for meetings in the US and that the dialogue with Trump's representatives will continue.
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.
- GBP/USD fell back below 1.3350 on Wednesday, trimming the top off recent gains.
- Bullish momentum behind the Pound Sterling remains hesitant despite a seven-session slide in the Dollar index.
- Backdated US PCE inflation data due on Friday could hint at the late-year trajectory of US inflation pressures.
GBP/USD flubbed a technical run at the 1.3350 handle on Wednesday, falling back below the key technical level and trimming some of the ground gained during a strong rebound earlier in the week. The Pound Sterling (GBP) has climbed against the US Dollar (USD), but a seven-session backlide in the US Dollar Index (DXY) has not translated into one-to-one gains on the Cable chart.
The key event for December will be the latest interest rate call from the Federal Reserve (Fed) slated for December 10. Markets remain fully committed to expecting a third straight interest rate trim from the Fed on December 10. According to the CME’s FedWatch Tool, rate traders are pricing in nearly 90% odds of a quarter-point rate cut next week. Official datasets are still lagging well behind the curve as federal agencies struggle to play catchup following the longest US federal government shutdown in history. Recent private datasets have teased that the US labor market could be crumbling further heading into the year’s end, keeping trader expectations of further rate cuts on the high side.
Before the Fed can gather to deliberate on interest rates, the latest Personal Consumption Expenditures Price Index (PCE) inflation report will drop on Friday. The figures are from September, and are far too backdated to be immediately relevant to the Fed’s deliberations for a December interest rate cut. However, a hard upswing, even in old data, could throw a wrench in the works for a third straight interest rate trim.
GBP/USD daily 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.
- USD/JPY softens to around 155.05 in Friday’s early Asian session.
- The US Fed is anticipated to cut rates at its December meeting next week.
- BoJ is likely to raise rates in December, said Reuters.
The USD/JPY pair remains weak near 155.05 during the early Asian session on Friday. Rising bets for a rate cut by the US Federal Reserve (Fed) next week and weaker US economic data weigh on the US Dollar (USD) against the Japanese Yen (JPY). All eyes will be on the US delayed Personal Consumption Expenditures (PCE) Price Index inflation data for September later on Friday.
Traders widely expect a rate reduction when the Fed meets next week and will closely monitor signals on the policy path ahead. Financial markets are currently pricing in nearly a 90% probability of a quarter-point rate cut next week, according to the LSEG data.
"Traders are doubling down on bets the Fed will cut rates and stop short of delivering an overtly-hawkish message at next week’s meeting," said Karl Schamotta, chief market strategist at Corpay.
Expectations that the Bank of Japan (BoJ) will raise interest rates when it meets in December provide some support to the Japanese Yen (JPY) and create a headwind for the pair. Three government officials told Reuters that the BoJ is likely to raise its policy rate to 0.75% from 0.5% after hawkish remarks from Governor Kazuo Ueda.
Ueda said earlier on Monday that the Japanese central bank will consider the "pros and cons" of raising rates this month, signaling a strong chance of a hike at the December 18-19 meeting. This would be the first hike since January.
The upbeat US jobs data released on Thursday might help limit the Greenback’s losses in the near term. The US Initial Jobless Claims declined to 191,000 for the week ending November 29, compared to 218,000 the previous week, the US Department of Labour (DOL) showed. This figure came in lower than the market consensus of 220,000.
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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