Forex News
Commerzbank FX analyst Michael Pfister highlights that the Canadian Dollar’s recent weakness contrasts with a fragile recovery in Canada’s real economy. Labour market data, Gross Domestic Product (GDP) surprises and stronger PMIs point to improving conditions, while CAD remains heavily influenced by Oil prices and relatively unattractive Canadian interest rate expectations versus the US. Commerzbank’s forecasts see EUR/CAD around 1.60–1.62 and USD/CAD easing toward 1.35 by late 2027.
CAD recovery versus oil and US risks
"It has now become a familiar picture: the Canadian dollar is once again among the worst performers of the G10 currencies this year. But the conditions were actually much more favourable this time around. The Bank of Canada had practically exhausted its scope for further interest rate cuts, and the conflict in Iran had driven energy prices significantly higher, which benefits Canadian exports."
"These expectations have since been revised by the market, with expectations for the BoC now falling even behind those for the Bank of Japan. This is one of the main reasons for higher USD/CAD levels: fewer interest rate hikes are expected from the Bank of Canada, while more are priced in for the Fed."
"The performance of the Canadian dollar has understandably been closely linked to the oil price in recent months. This trend is likely to continue unless the Strait of Hormuz is kept open on a sustained basis. Volatility in the oil markets, however, has obscured the fact that the Canadian real economy has begun a fragile recovery in recent months. The relationship with the US remains crucial to this upturn, and thus as well as to the Canadian dollar."
"Leading indicators suggest that this trend is likely to continue. The Purchasing Managers' Index for the manufacturing sector has stabilised firmly in expansionary territory, and exports have also increased recently. In short, even though we only have a few months' worth of data so far, it seems that the Canadian real economy is improving again, at least for the time being."
"We remain fundamentally optimistic that this recovery will be more sustainable this time and that the Canadian dollar will finally start to appreciate again in the coming months. But it will likely be a long road, with setbacks caused by the US President along the way."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- NZD/USD depreciates as the US Dollar receives safe-haven flows stemming from rising US-Iran geopolitical tensions.
- Fed rate hike expectations drop to 35% after weak US labor and inflation data.
- The NZD may gain on expectations of a 25-basis-point RBNZ rate hike next month.
NZD/USD depreciates after two days of losses, trading around 0.5880 during the European hours on Tuesday. The pair depreciates as the US Dollar (USD) holds ground on safe-haven flows amid escalating geopolitical tensions between the US and Iran.
US President Donald Trump stated he has no interest in renewing the expiring agreement with Iran, pointing to the active naval blockade of Iranian ports as leverage and reiterating his intention to declare the vital waterway as total American territory.
However, the Greenback may struggle as hawkish expectations surrounding the Federal Reserve fade. A recent, unexpected decline in July US Nonfarm Payrolls alongside modest consumer price inflation figures has weakened the case for imminent monetary tightening. Consequently, CME FedWatch Tool data shows the probability of a Fed rate hike at the next meeting has fallen to 35%, down from 47% a month ago.
Additionally, the downside of the NZD/USD pair could be restrained as the New Zealand Dollar (NZD) receives support from expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another 25-basis-point rate hike next month, following repeated signals that monetary policy needs to become less accommodative.
However, Commerzbank’s Volkmar Baur highlights that, while New Zealand’s full inflation figures are only released quarterly, there is a useful interim gauge: “Stats NZ publishes a Selected Price Index every month for about half of all prices, which typically reflects the trend in the full inflation figures very well.” He notes that this monthly index “fell to 3.5% year-over-year in July, down from 4.9% in June,” underscoring the recent softening in inflation that underpins expectations for the RBNZ to pause after July’s rate hike, even as the central bank maintains a hawkish tone in light of ongoing Middle East risks.
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.
- DXY recovers further from a two-month low as geopolitical uncertainties boost safe-haven demand.
- Oil-driven inflation fears keep Fed rate hike bets on the table, lending additional support to the USD.
- Traders now look to second-tier US data for some impetus ahead of FOMC Minutes on Wednesday.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, builds on the overnight goodish rebound from the 99.30 area, or the lowest level since June 5, and gains some follow-through traction on Tuesday. The intraday move up lifts the index to a fresh daily high, around the 99.70 region, during the early European session, though it lacks bullish conviction amid the uncertainty over the US Federal Reserve's (Fed) policy path.
Soft US inflation and weak consumer spending data released last week undermined prospects for imminent interest rate hikes by the US central bank. Investors, however, remain worried about inflation risks stemming from higher energy prices, which might force the Fed to adopt a more hawkish stance. Hence, Wednesday's release of FOMC Minutes will be scrutinized closely for more cues about the interest rate trajectory, which, in turn, will play a key role in influencing the near-term trajectory for the DXY.
Analysts at OCBC note that “oil, yields and geopolitics are keeping markets on edge,” but argue that “reduced Fed tightening expectations should keep the USD rangebound and preserve support for carry trades.” They add that this week’s key focus will be the release of the July FOMC minutes, with markets expected to “look for greater clarity on policymakers’ inflation views and the extent of support for keeping rates unchanged, beyond the three regional Fed presidents reportedly favouring higher rates.”
In the meantime, the US-Iran standoff keeps geopolitical risk premium in play, lifting oil prices to an over two-week high and underpinning the safe-haven US Dollar (USD). In fact, US President Donald Trump said that he is not seeking an extension of the Memorandum of Understanding (MoU) with Iran, which expired on Monday. Trump repeated his idea of declaring the Strait of Hormuz as a US territory and warned that he would target Oman if it hindered actions to re-open the strategic waterway.
Meanwhile, a senior Iranian official said that Iran has shifted from a defensive stance to a “fully offensive” one, citing the stalemate with the US on talks. The official further warned that Iran will launch “timely and precise” attacks to break the blockade unless the US implements the June ceasefire deal in a few weeks. Moreover, Iran-backed Houthis in Yemen escalated their campaign against Saudi Arabia, raising the risk of a broader regional conflict and backing the case for a further USD appreciation.
That said, it will still be prudent to wait for strong follow-through buying before confirming that the DXY has bottomed out in the near-term and positioning for any meaningful recovery. Tuesday's economic docket features Building Permits, Housing Starts, Pending Home Sales and Industrial Production data. This, along with comments from influential FOMC members, could provide some impetus to the USD and produce some short-term trading opportunities later during the North American session.
Technical Analysis
The 100-day Simple Moving Average (SMA) at 99.74 could act as an immediate hurdle ahead of the 100.00 psychological mark, which, if conquered, should pave the way for some meaningful gains. On the flip side, immediate support is pegged near the overnight swing low around 99.30 and is closely followed by the 200-day SMA near 99.19. A daily close below the latter will be seen as a fresh trigger for bearish traders and make the DXY vulnerable to decline further.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.11% | 0.18% | -0.06% | 0.03% | 0.43% | -0.00% | |
| EUR | -0.05% | 0.06% | 0.13% | -0.12% | -0.01% | 0.37% | -0.04% | |
| GBP | -0.11% | -0.06% | 0.04% | -0.17% | -0.07% | 0.33% | -0.10% | |
| JPY | -0.18% | -0.13% | -0.04% | -0.23% | -0.14% | 0.26% | -0.16% | |
| CAD | 0.06% | 0.12% | 0.17% | 0.23% | 0.09% | 0.49% | 0.06% | |
| AUD | -0.03% | 0.01% | 0.07% | 0.14% | -0.09% | 0.39% | -0.03% | |
| NZD | -0.43% | -0.37% | -0.33% | -0.26% | -0.49% | -0.39% | -0.41% | |
| CHF | 0.00% | 0.04% | 0.10% | 0.16% | -0.06% | 0.03% | 0.41% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- GBP/JPY extends gains to 216.00 despite mixed UK employment data.
- UK Unemployment rate remained steady at 4.9% in June, against expectations of a decline to 4.8%.
- The Yen has been on its back foot following soft Japanese GDP data released on Monday.
The British Pound (GBP) edges higher against the Japanese Yen (JPY) on Tuesday and extends gains for the third consecutive day, despite the mixed UK employment figures seen earlier on the day. The GBP/JPY pair is trading at 216.00 at the time of writing, with bulls focused on the July 31 high of 216.36.
UK data released earlier on Tuesday revealed that the ILO Unemployment Rate remained steady at 4.9% in the three months to June, against expectations of a slight decline to 4.8%. Employment growth slowed down, but the number of claimants fell unexpectedly, while wage inflation ticked up.
The Yen remains on the back foot after Japanese Gross Domestic Product (GDP) figures, released on Monday, revealed that economic growth slowed down in the second quarter, which will likely hamper the Bank of Japan’s plans to accelerate its monetary tightening cycle.
Technical Analysis: Bulls remain in control, with RSI nearing overbought levels
GBP/JPY trades at 216.05, maintaining a bullish near-term bias after rallying more than 3% from August 2 lows. The Relative Strength Index (14), however, is nearing overbought territory, suggesting that the rally might be overstretched. Beyond that, the Moving Average Convergence Divergence (MACD) indicator has flattened around the zero line, hinting that the latest advance is losing incremental conviction.
On the topside, a breach of the mentioned 216.35 resistance area would expose a previous support between 217.16 (July 29 low) and 217.53 (Jul 21 low), ahead of the July 30 high, near 218.70.
On the downside, a bearish reversal would find support at Monday's low at 215.41, followed by the August 12 low at 214.53 and the August 6 and 7 highs at the 213.230 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.11% | 0.16% | -0.07% | 0.02% | 0.42% | -0.00% | |
| EUR | -0.05% | 0.07% | 0.15% | -0.11% | -0.02% | 0.38% | -0.04% | |
| GBP | -0.11% | -0.07% | 0.04% | -0.17% | -0.10% | 0.32% | -0.11% | |
| JPY | -0.16% | -0.15% | -0.04% | -0.22% | -0.14% | 0.26% | -0.16% | |
| CAD | 0.07% | 0.11% | 0.17% | 0.22% | 0.08% | 0.49% | 0.06% | |
| AUD | -0.02% | 0.02% | 0.10% | 0.14% | -0.08% | 0.40% | -0.01% | |
| NZD | -0.42% | -0.38% | -0.32% | -0.26% | -0.49% | -0.40% | -0.41% | |
| CHF | 0.00% | 0.04% | 0.11% | 0.16% | -0.06% | 0.01% | 0.41% |
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).
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that AUD/USD strength remains intact after a jump to 0.7129, though overbought conditions should confine intraday moves to a 0.7090–0.7130 band. The 1–3 week bias stays to the upside, with the next level to monitor at 0.7150, while strong support is placed at 0.7070.
Australian Dollar stays supported but stretched
"24-HOUR VIEW: AUD soared to a high of 0.7095 last Friday. When it was at 0.7080 yesterday, we indicated that “while further AUD strength is not ruled out, overbought conditions suggest 0.7100 could be just out of reach.” The anticipated AUD strength exceeded our expectation as it popped to a high of 0.7129 before retreating to close at 0.7104 (+0.32%). Despite the retreat, AUD strength appears to be intact. That said, overbought conditions suggest any advance is likely to be contained within a range of 0.7090/0.7130."
"1-3 WEEKS VIEW: We have held the view that “the risk for AUD is on the upside” since early this month. Yesterday (17 Aug, spot at 0.7080), we reiterated our view, indicating that “the risk for AUD remains on the upside but note that AUD must surpass 0.7100 before a move to 0.7120 can be expected.” We did not expect AUD to quickly break above both 0.7100 and 0.7120, as it popped to a high of 0.7129 before retreating. The risk remains on the upside, and the next level to monitor is 0.7150. Overall, only a breach of 0.7070 (‘strong support’ level was at 0.7050 yesterday) would mean that the upside risk has faded."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Indian Rupee rebounds slightly against the US Dollar after hitting a fresh three-week low near 95.85.
- US-Iran ceasefire expiration has boosted oil prices.
- Investors shift their focus to the FOMC minutes.
The Indian Rupee (INR) edges up against the US Dollar (USD) on Tuesday. The USD/INR ticks lower to near 95.67 after refreshing the three-week high at 95.85 in the opening session. The Indian currency has gained slight strength due to potential Reserve Bank of India (RBI) intervention.
According to a Reuters report, the RBI likely intervened in the foreign exchange market for an eighth consecutive session on Tuesday, four traders told Reuters, as elevated oil prices kept up pressure on the South Asian currency. Traders also said that state-run banks were spotted offering dollars, most likely on behalf of the RBI.
Oil prices rally as US-Iran ceasefire expires
In the early session on Tuesday, the MCX Crude Oil contract expiring on August 19 trades 1.1% higher to near Rs. 8,150, the highest level seen in two weeks.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
Energy prices have rallied further as United States (US) President Donald Trump said on Monday that he is not interested in renewing the expiring agreement with Iran, according to a Bloomberg report. This has prompted fears that Iran and the US could restart military attacks against each other, a scenario that could escalate concerns regarding a prolonged energy supply disruption. Trump added that the US still has leverage over Iran, citing the US naval blockade on Iranian seaports.
Markets see downside risks to INR
Financial markets believe that the early closure of the zero-swap facility for foreign currency non-resident (bank), or FCNR (B), deposits by a month, and higher oil prices will remain major headwinds for the Indian Rupee.
Strategists at OCBC note that the Indian Rupee “softened to a two-week low, with USD/INR closing around 95.60, as higher oil prices and the early closure of RBI’s FCNR(B) swap window weighed on sentiment.” They highlight that “the FCNR(B) window will now close on 31 Aug, one month earlier than planned, after the broader FX-inflow measures drew nearly USD57bn, including more than USD52bn via non-resident deposits.”
There is another school of thought that believes the early FCNR closure signifies that the RBI has raised sufficient foreign-currency inflows and now has greater room to support the rupee without continuing to incentivise additional dollar mobilisation, Business Standard reported.
OCBC views “importer USD demand and oil" to remain the key drags, though potential RBI-linked USD sell-flows and a broadly softer USD should help limit disorderly moves in the currency.
US FOMC minutes awaited
Financial markets keenly await the release of the Federal Open Market Committee (FOMC) minutes for the July policy meeting on Wednesday to get fresh cues regarding US inflation and the economic outlook.
Hints regarding the US interest rate outlook are unlikely as Fed Chairman Kevin Warsh remained committed to “no forward guidance” on policy rates.
According to the CME FedWatch tool, traders have scaled back the possibility of a Fed interest rate hike at the September meeting.
USD/INR Technical Analysis
USD/INR trades at 95.67, holding above the 100-day simple moving average (SMA) at 95.0046, keeping the near-term bias moderately bullish as price consolidates near recent highs.
The Relative Strength Index (14) at 52.8 sits just above neutral, hinting at steady but not overstretched upside pressure.
On the downside, the 100-day SMA around 95.00 is a strong demand area. Looking up, the pair needs a decisive break above 96.00 to revisit the all-time high near 97.10.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed Aug 19, 2026 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
ING’s Chris Turner reports a firmer EUR/GBP after UK labour data, with economist James Smith highlighting a cool jobs market and minimal wage pressures, implying little impetus for Bank of England hikes this year. Sterling money markets still price 60bp of BoE tightening into next year, which Turner expects to be gradually priced out, with EUR/GBP biased toward 0.8570/0.8580.
Jobs data temper BoE expectations
"EUR/GBP has opened up a little firmer on the release of the latest jobs data."
"Nothing particularly earth-shattering in the latest UK jobs figures. Payrolled employment is down a touch – though this masks big differences between government (which is still actively hiring), consumer services (where job numbers are consistently falling and the pace of decline is getting worse) and the remaining private sector, which is flatlining."
"The unemployment rate is up a touch, though the ONS has already revealed there are temporary sampling issues with the labour force survey underpinning it (on top of the well-publicised existing problems), so I'd take that data with a pinch of salt."
"Still, the basic story is the same – the jobs market remains cool, and wage pressures are fairly minimal. It suggests little impetus for the Bank of England to hike rates this year."
"The sterling money market curve still prices 60bp of Bank of England hikes into next year. That should slowly be priced out over the next three to six months, although energy prices will have a big say on timing. Next on the UK agenda this week will be tomorrow's July CPI, where a lower year-on-year services number would again slightly favour the position of the BoE doves."
"EUR/GBP looks biased to the 0.8570/80 area."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY extends gains to hit fresh two-week highs at 159.75.
- Soft Japanese GDP data cast doubts about the BoJ's monetary tightening pace.
- Rising geopolitical tensions are providing support for the safe-haven US Dollar this week.
The Japanese Yen (JPY) accelerates its decline as the US Dollar (USD) draws support from a sourer market mood, with investors wary of a re-escalation of tensions in the Middle East. The USD/JPY pair appreciates for the second consecutive day, reaching the 159.75 area and drawing closer to the 160.00 level, considered a line in the sand for Tokyo authorities.
Markets are on a risk-off mood on Tuesday as the Memorandum of Understanding signed by the US and Iran in June expired on Monday, with both parties still far from a durable peace agreement.
Beyond that, Washington and Iran have ramped up their threats. US President Donald Trump threatened to bomb Oman, hitherto an ally, if it “gets in the way” of an agreement with Iran. Iranian authorities, in turn, announced that they would shift to a “fully offensive” military stance, further straining an already fragile ceasefire and hammering investors' appetite for risk.
Soft Japanese data has undermined support for the Yen
In Japan, Gross Domestic Product (GDP) figures released on Monday missed expectations, as economic growth slowed to 0.3% in the second quarter, down from 0.5% in the previous quarter, casting some doubt on the pace of the Bank of Japan’s (BoJ) monetary tightening cycle.
Looking ahead, Analysts at UOB Group observe that the US Dollar's “underlying tone still appears to be firm, and the bias remains tilted to the upside.” UOB, however, expects price action to remain contained in the near-term, judging that “a narrower range of 158.00/160.20 is likely enough to contain the price movements.”
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
OCBC’s Sim Moh Siong and Christopher Wong highlight that still-attractive US Dollar (USD) carry and softer United States (US) data, which have reduced the odds of a September Fed hike, should keep the Dollar rangebound. They argue that as long as long-end US yields do not rise significantly further, risk assets and carry trades should stay supported. Markets now focus on the July FOMC minutes for clarity on Fed inflation views and rate intentions.
Fed expectations and carry trades
"Oil, yields and geopolitics are keeping markets on edge. Still, reduced Fed tightening expectations should keep the USD rangebound and preserve support for carry trades."
"The combination of still-attractive USD carry and a pause in the USD's bullish momentum, following softer US economic data that has reduced the likelihood of a September Fed hike, should keep the greenback rangebound in the near term."
"Provided long-end US yields do not rise significantly further, the broader risk backdrop should remain supportive of carry trades."
"This week's key event is the release of the July FOMC minutes. Markets will look for greater clarity on policymakers' inflation views and the extent of support for keeping rates unchanged, beyond the three regional Fed presidents reportedly favouring higher rates."
"While the minutes have been partly overtaken by softer July labour market and inflation data, they remain important given the Fed's limited forward guidance on interest rates."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver price wobbles near $65.30 with FOMC minutes in focus.
- The impact of receded hawkish Fed bets has been offset by surging oil prices.
- Soft US data forces traders to pare back hawkish Fed bets.
Silver price (XAG/USD) continues to trade in a limited range at around $65.30 during the European trading session on Tuesday. The white metal has been trading sideways in a range between $63.50 and $66.80 for a week, as the impact of traders pricing out hawkish Federal Reserve (Fed) bets has been offset by de-anchored global inflation expectations on the back of disrupted energy supply.
Traders don’t expect the Fed to deliver an interest rate hike in the September policy meeting due to weak United States (US) economic data for July.
Fed hike odds fade, but upside risks linger
BNY Markets’ John Velis notes that “December rate hike expectations continue to recede this past week thanks to well-behaved inflation data and a surprise drop in consumers’ retail spending.” He points out that “current expectations for the end of the year show less than a full chance of a hike, while the very next meeting, September 16, has around 30% priced in, down from over 70% at the beginning of August.” Velis argues that this shift in pricing “reinforces our view of no moves this year,” but cautions that “there’s always a risk geopolitics will heat up further and send energy prices – and headline inflation – higher.” As a result, while BNY “continue to expect no hikes this year,” they “also continue to acknowledge that the risk is to the upside, especially with hawks on the Committee publicly pushing for hikes.”
Meanwhile, a further increase in oil prices due to the non-renewal of the US-Iran ceasefire has prompted further increases in global inflation projections. Higher energy prices prompt fears of interest rate hikes by global central banks, a scenario that diminishes the appeal of non-yielding assets, like Silver.
Going forward, the major trigger for the Silver price will be the Federal Open Market Committee (FOMC) minutes of the July policy meeting, which will be released on Wednesday.
Silver Technical Analysis
XAG/USD trades in a tight range at around $65.26 for a week. The pair holds above the 20-day Exponential Moving Average (EMA) at $62.53, keeping a constructive bullish bias as price extends away from its short-term trend base.
The Relative Strength Index (14) at 59.32 remains in positive territory but shy of overbought conditions, suggesting firm upside momentum without yet signaling exhaustion.
On the downside, immediate support is seen at the lower end of the last week's trading range near $63.50, with stronger underlying demand emerging at the 20-day EMA around $62.53. On the upside, the Silver price would see a fresh upside move towards $70.00 if it manages a decive breakout of the ongoing consolidation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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