Forex News

• The New Zealand Dollar retreats against a US Dollar supported by rising Treasury yields.
• Markets now see an 87% chance of a new RBNZ rate hike in October, sharply up from just 20% earlier this month.
• Higher Oil prices are fueling inflation risks and strengthening expectations of further monetary tightening in New Zealand.

NZD/USD trades around 0.5655 at the time of writing on Thursday, down 0.30% on the day. However, the pair limits its losses as the New Zealand Dollar (NZD) benefits from a sharp increase in expectations of further monetary tightening by the Reserve Bank of New Zealand (RBNZ).

Markets now price in around an 87% chance of a third RBNZ rate hike in October, compared with just 20% earlier this month. This rapid repricing of the monetary policy outlook provides support to the Kiwi, even as the broader market environment remains favorable to the US Dollar (USD).

Expectations of further tightening in New Zealand strengthened following comments from RBNZ Governor Anna Breman. The central bank chief warned that a sustained rise in Oil prices could push near-term inflation above the RBNZ's latest projections, increasing the need to maintain restrictive monetary policy.

NZD/USD nevertheless remains under pressure from the strength of the US Dollar. US Treasury yields extend their sharp rise, with the 10-year yield climbing to around 5.16%, its highest level since 2007, while the rate-sensitive two-year yield trades near 4.91%.

The rise in yields follows robust US activity data. The S&P Global Composite Purchasing Managers Index (PMI) unexpectedly climbed to 58.4 in September, its highest level in five years, reinforcing the view that the US economy remains strong enough to give the Federal Reserve (Fed) room to continue its fight against inflation.

The latest US labor-market data also support this scenario. Initial Jobless Claims edged slightly higher to 197K in the week ending September 19 from 196K previously, but remained below market expectations of 201K.

Against this backdrop, investors have increased bets on another Fed rate hike in October after the central bank delivered a 25-basis-point increase last week. According to the CME FedWatch tool, the chances of another rate increase stand at around 68%, up from 55% a week earlier.

Several Fed officials also maintain a firm stance on persistent inflation. Philadelphia Fed President Anna Paulson said on Thursday that the US central bank may need to raise interest rates again to bring inflation back toward its 2% target, while also highlighting the resilience of the economy.

NZD/USD therefore remains caught between opposing forces. A strong US Dollar and elevated US Treasury yields weigh on the pair, while the sharp increase in expectations of further monetary tightening in New Zealand helps limit the Kiwi's decline.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5657, extending a bearish tone as it holds below the 100-period simple moving average (SMA) at 0.5707 and the 200-period SMA at 0.5727. The pair remains capped by nearby horizontal resistance at 0.5686, while the Relative Strength Index (14) slipping toward the oversold area around 29 reinforces persistent downside pressure rather than a sustained recovery attempt.

On the downside, immediate support is seen at 0.5649, ahead of a lower horizontal floor at 0.5626, which would come into focus on a fresh wave of selling. On the topside, a break above 0.5686 would be needed to ease the immediate pressure, with the 100-period SMA at 0.5707 and the 200-period SMA at 0.5727 forming a dense resistance band before the next barrier at 0.5735.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Gold slides to a one-week low as a stronger US Dollar and rising US Treasury yields weigh on the metal.
• Strong US business activity data and hawkish Fed signals strengthen expectations of another interest-rate increase.
• XAU/USD slips below the 50-day and 100-day SMAs, keeping the near-term technical bias bearish.

Gold (XAU/USD) slides to a one-week low on Thursday as rising US Treasury yields and a stronger US Dollar (USD) reflect an increasingly hawkish Federal Reserve (Fed) outlook. At the time of writing, XAU/USD trades around $4,250, down nearly 0.85% on the day.

The 10-year US Treasury yield extends its sharp rise to around 5.16% after jumping 15.2 bps on Wednesday, reaching its highest level since 2007. The rate-sensitive two-year yield trades near 4.91%, close to Wednesday’s peak of 4.94%, its highest level since 2004.

A strong batch of US S&P Global Purchasing Managers’ Index (PMI) data drove the move. The Composite PMI unexpectedly rose to a five-year high of 58.4 in September, pointing to resilient economic growth and giving the Fed more room to tackle stubborn inflation.

US labour-market data released on Thursday also supported the hawkish outlook. Initial Jobless Claims rose to 197K in the week ending September 19 from 196K previously, but came in below market expectations of 201K.

The strong figures strengthened expectations that the US central bank could raise interest rates again in October after delivering a 25 bps hike last week. The CME FedWatch Tool places the probability of a rate increase at around 75%, up from 55% a day earlier. Higher borrowing costs weigh on Gold by increasing the attractiveness of interest-bearing assets.

The shift also keeps the US Dollar in strong demand. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.37, its highest level in two months. A stronger US Dollar makes Gold more expensive for overseas buyers.

Recent remarks from Fed officials have kept the door open to additional rate hikes, with policymakers stressing the need to bring inflation back to the 2% target. New York Fed President John Williams said, “We need to get inflation back to target in a timely manner,” adding that it is “reasonable to see another rate hike by end of the year.” Cleveland Fed President Beth Hammack also warned that “the longer inflation remains high, the harder it is to bring it back to target.”

Meanwhile, elevated Oil prices linked to the war in the Middle East keep inflation risks tilted to the upside, reinforcing expectations of tighter monetary policy across major economies.

The United States and Iran held talks on the sidelines of the United Nations General Assembly earlier this week, but the two sides are still far apart on how to end the war. Reuters reported, citing a senior Iranian official, that Tehran is reviewing Washington’s response to its peace proposals, which prioritise lifting the US naval blockade on Iranian ports and reopening the Strait of Hormuz.

Technical Analysis: Sellers remain in control below key daily SMAs

XAU/USD remains bearish in the near term as it slips below key Simple Moving Averages (SMAs). Spot gold is capped below the 50-day SMA at $4,311 and the 100-day SMA at $4,308, forming a nearby resistance cluster that hints at downside risk. Momentum indicators reinforce this softer tone, with the Relative Strength Index (RSI) on the daily chart hovering near a neutral 42 and the Moving Average Convergence Divergence (MACD) indicator in negative territory, suggesting sellers still control the short-term swings.

On the downside, initial support is seen at the horizontal level near $4,150, where a break would expose the next bearish target around $4,000. On the topside, bulls would need to reclaim the clustered 50- and 100-day SMAs around $4,310 to ease immediate pressure, with further resistance then located at the 200-day SMA at $4,541 and the more distant structural barrier at $4,700. Until these overhead levels are overcome, rallies are likely to struggle and risk fading back towards the underlying support band.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Standard Chartered argues that Europe’s political balance could shift to the right in 2027, with key elections in France, Spain, Italy and Poland. The bank highlights France’s presidential race as most critical, warning an RN victory would be market negative. It also notes potential conservative and populist-right gains could reshape EU institutions and constrain climate, migration and trade policy.

EU institutions face rightward pressure

"Next year has the potential to deliver a material shift rightwards in the EU’s political centre of gravity."

"Given its political and economic weight in Europe, the stakes are highest in France where presidential elections (April 2027) could deliver a victory for the far-right Rassemblement National (RN)."

"The most visible impact of a pivot to the right would be in the European Council, where a culture of consensus-building would create room for far-right leaders to shape negotiations and threaten to use national vetoes on areas requiring unanimity."

"In the Parliament, this could increase pressure on the centre-right European People’s Party (EPP) to work more closely with far-right groups, while at the Commission level, a more right-wing Council could limit what President von der Leyen views as politically achievable."

"Right-wing and far-right governments will not necessarily agree on what to implement or change from a policy perspective, so their impact may be more acutely felt in terms of their capacity to block or dilute the pre-existing EU agenda, creating political paralysis in certain areas."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CAD extends its rally as Fed-BoC monetary policy divergence favours the US Dollar.
• Canadian Retail Sales fall in July, adding to pressure on the Canadian Dollar.
• Resilient US data and hawkish Fed comments keep another interest-rate hike on the table.

USD/CAD extends its advance on Thursday, climbing to its highest level since mid-July. The pair has posted only one daily decline over the past 12 trading days, reflecting the diverging monetary policy outlooks of the Federal Reserve (Fed) and the Bank of Canada (BoC). At the time of writing, USD/CAD trades around 1.4113, up nearly 2% so far this month.

Canadian Dollar struggles as US-Canada yield gap widens

Canadian Retail Sales data offered little support to the Canadian Dollar (CAD). Headline sales fell 0.7% MoM in July, slightly better than the 0.8% drop expected, while sales excluding automobiles also declined 0.7%

The recent USD/CAD rally is largely driven by the widening gap between short-term US and Canadian bond yields. The two-year US Treasury yield trades around 4.89%, slightly below Wednesday’s peak of 4.94%, its highest level since 2004. By comparison, Canada’s two-year government bond yield stands near 3.40%, leaving a gap of almost 150 basis points in favour of the US Dollar (USD).

US Treasury yields are rising across the curve as traders see a growing chance that the Fed will raise interest rates again later this year. The central bank delivered a 25-basis-point (bps) increase last week, lifting the federal funds rate to 3.75%-4.00%.

The hawkish shift has fuelled broad demand for the Greenback. The US Dollar Index (DXY), which tracks the currency against a basket of six major peers, trades around 101.37, its highest level since July 29.

Recent US economic data has strengthened the case for additional tightening. Initial Jobless Claims rose slightly to 197K from 196K but came in below the 201K forecast, pointing to limited layoffs. The S&P Global Composite Purchasing Managers’ Index (PMI) also climbed to a five-year high of 58.4 in September from 56.0 in August.

Fed officials have kept another rate hike on the table as inflation stays above the central bank’s 2% target. New York Fed President John Williams said, “We need to get inflation back to target in a timely manner,” adding that it is “reasonable to see another rate hike by the end of the year.” The CME FedWatch Tool places the probability of an October rate increase at around 65%, up from 55% a week ago.

Steady BoC policy outweighs support from higher Oil prices

In contrast, the BoC kept its policy rate unchanged at 2.25% for a seventh consecutive meeting earlier this month. The central bank noted that there was little evidence of higher energy prices spreading into broader inflation, with inflation excluding gasoline at 2.2% and core measures close to 2% in July.

The BoC acknowledged that upside inflation risks have increased but also warned that new US tariffs cloud the growth outlook. Interest-rate expectations are also outweighing the support that the commodity-linked Canadian Dollar would typically receive from higher Oil prices. West Texas Intermediate (WTI) Oil trades around $95, up nearly 11% so far this month.

Commerzbank’s Chief Economist Dr. Jörg Krämer notes that leading indicators such as the Ifo business climate index and PMIs have surprised to the upside, showing the German economy’s resilience to high energy prices and the Iran War. Nevertheless, he forecasts only a moderate recovery, with German GDP growth of 1.2% in 2026, constrained by weak corporate investment and exports.

Resilience offsets energy and trade shocks

"The ifo business climate index has risen surprisingly sharply (from 88.8 to 89.9), just like yesterday’s purchasing managers’ index. Apparently, companies have shaken off the recent massive surge in energy prices. The German economy is more resilient than expected."

"However, we expect only a moderate recovery (1.2% for 2026). Due to the lack of far-reaching reforms, the battered competitiveness of Germany is not improving decisively, which is why companies will remain reluctant to invest domestically. In addition, exports are suffering from weak exports to China and from Trump’s tariffs."

"Not only the ifo business climate index, but also other leading indicators such as the PMIs and incoming orders have delivered positive surprises in recent months. It is mainly for this reason that two weeks ago we raised our 2026 growth forecast for Germany from 1.0% to 1.2%."

"However, we still expect a weak recovery. Since early 2024, when German GDP passed its trough, corporate investment has declined. The absence of profound reforms to improve Germany’s battered competitiveness argues against corporate investment rebounding strongly, as is usually the case in upswings."

"As a result, the economic recovery depends far more than usual on rising government spending on consumption (increasing public-sector employment, healthcare) and investment (including defence). The German economy is still a long way from a self-sustaining upswing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CNH rises for a third session to an early-September high as Xi visits the White House.
• Xi offers no tariff news, and the trade truce now runs only to January 10.

China's paramount leader Xi Jinping's remarks at the White House ran to 21 lines on the wires, covering friendship, artificial intelligence (AI), counter-narcotics work and fair treatment for Chinese firms, and none of them mentioned tariffs. The only figure in them was 100K young Americans invited to visit China, over a longer stretch than the trade truce now covers.

US Treasury Secretary Bessent said on Wednesday that the truce struck in Busan, due to lapse on November 10, now runs to January 10, short of the six months or more many had expected. The truce keeps tariffs on Chinese goods from going back up, so a two-month extension gives exporters holding Dollars less reason to switch them into Yuan before January.

The People's Bank of China (PBoC) has also stopped firming its daily midpoint, the rate the onshore Yuan can trade 2% either side of, after ten sessions in a row. The Dollar is at its highest in nearly two months on bets the Fed raises rates again.

USD/CNH has risen three sessions in a row from the lows near 6.6900 on Monday and Tuesday, where the Yuan was at its strongest in three and a half years. Wednesday's bar, on the truce extension, was the largest of the three. The pair has taken back all of the slide that began on September 17 and reached 6.7200, its highest since early September. It's still below its 50-day Exponential Moving Average (EMA), near 6.7300, which it has traded under since the second week of July. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, has been flat just above the middle of its range since mid-September and hasn't turned up with price.

Xi Jingping highlights

• Happy to visit a 'beautiful' US
• On behalf of Chinese people, I express my greetings to US 250th founding anniversary
• China, US are both great countries, great peoples
• I'm here to pass on friendship, expand cooperation
• China, US shoulder responsibility to promote human progress
• Willing to work with Trump to steer the ship of China-US ties
• We should strengthen communication
• Candid, in-depth, sustained dialogue can promote understanding, mutual trust
• We encourage exchanges on diplomacy, trade and economy, law enforcement
• Trump and I have built personal rapport
• We should work together in good faith
• There is broad space for cooperation
• China's door is open, welcomes US firms to invest in China
• China, US are both AI powers
• Willing to step up counter-narcotics, law enforcement cooperation
• Hope Chinese firms are treated fairly in US
• We have capability, responsibility to develop, manage AI for good
• We need to co-exist peacefully
• Competition should be positive, with boundaries
• Two militaries should maintain regular dialogue
• China to invite 100,000 US youth to visit China in next 5 years

ING’s James Knightley and Coco Zhang argue that US manufacturing is finally reviving after years of stagnation, helped by reshoring narratives, AI-driven investment and defence spending. They forecast US manufacturing volume growth of 1.5–2% per year over the next three years, but stress a growing split: advanced, highly automated sectors expand, while traditional, labour‑intensive industries continue to shrink.

Advanced sectors drive uneven recovery

"Nonetheless, the sector has shown genuine signs of a revival over the past year. The ISM production index has moved from sub-50 contraction territory to signalling robust growth ahead. Below, we look at what is driving this turnaround and how it could evolve."

"Business surveys point to strong order books, and we see this supporting manufacturing’s ongoing revival. Our volume growth forecast for US manufacturing of 1.5-2% per year over the next three years may not seem like much, but it should be seen in the context of the sluggish activity experienced over the past 20 years. This headline forecast also masks increased bifurcation, with advanced manufacturing growing rapidly while more traditional sectors look set to retrench further."

"Highly automated, high-value-added sectors at the forefront of the AI/technology revolution are seen as national champions by the government and are able to absorb the relatively high wages on offer in the US. The desire to incorporate AI advances should, in theory, drive advances in productivity-enhancing initiatives that further support innovation. As such, pharma, tech, transport & aerospace, electrical and power-related sectors should continue to grow robustly."

"Lower value-added production, where labour costs make up a greater share of the overall cost base of production, will continue to struggle unless it can garner a 'made in America' premium. Heavy industry, such as steel, is likely to be somewhere in the middle. While costs have risen, they have risen more elsewhere."

"Tariffs and energy security do boost the attractiveness of manufacturing in the US. But so does US economic growth continuing to outperform other key markets. Between 2023 and 2026, the US economy has grown an average of 2.5% year-on-year in volume terms versus 0.9% in Europe."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that the Dollar is advancing broadly as a hawkish Federal Reserve stance combines with strong US economic outperformance. September PMI data significantly beat other major economies, while higher real Treasury yields reflect robust private sector growth. BBH also notes extended US-China trade truce, keeping geopolitical risk in focus for USD performance.

Fed hawkishness and growth back USD

"USD is powering forward against most major currencies. A hawkish Fed and widening US economic growth outperformance suggest USD can keep flexing its muscle. Yesterday, Fed Governor Michael Barr’s warned that “further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.”"

"Today, New York Fed President John Williams highlighted the US economy shows “remarkable resilience”, inflation remains the “big challenge”, and “another rate hike may be appropriate by the end of the year.” Barr and Williams’ comments strengthen the case for additional Fed funds rate hikes."

"In parallel, the US September PMI surprised to the upside, outpacing the Eurozone, UK, and Japan. The US composite PMI increased to a 62-month high at 58.4 (consensus: 55.3) vs. 56.0 in August. The details showed services growth quickened to a 59-month high, manufacturing rose to a 53-month high, and price pressures intensified."

"The same forces lifting USD are driving Treasury yields higher and contributing to the global bond market selloff. US 10-year Treasury yields surged to 5.14%, the highest level since July 2007. The breakdown shows 10-year breakeven inflation rates edged up a bit on firmer crude oil prices."

"The geopolitical focus is on the one-day summit between Chinese President Xi Jinping and President Donald Trump. Treasury Secretary Scott Bessent confirmed yesterday that both countries agreed to extend their trade war truce, which was set to expire on November 10, until January 10. Still, Bessent questioned whether a bigger trade deal with China can be done."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Philadelphia Federal Reserve (Fed) President Anna Paulson crossed the wires on Thursday, signaling that further rate hikes may be needed to lower inflation. She acknowledged that the rate hike in September helped to “move policy to a better inflation-fighting posture.”

Paulson, who began her stint as the new Philadelphia Fed President in July 2025, leaned dovish but later shifted her stance, saying, “I will support doing what's needed to get inflation back to 2%.”

Key highlights:

The US central bank may need to raise interest rates again to lower inflation

 September rate hike helped move policy to better inflation-fighting posture

I will support doing what's needed to get inflation back to 2%

The best you can say about inflation is that it has not gotten worse

The inflation balance of risks shifted ahead of the September policy meeting

The AI buildout is helping drive inflation pressures

Underlying inflation remains stubbornly high

The economy is resilient, and showing signs of increased momentum

• EUR/USD hovers near a two-month low as hawkish Fed expectations favour the US Dollar.
• Markets raise bets on an October Fed rate hike after resilient US economic data.
• The Euro struggles despite upbeat German Ifo figures and expectations of more ECB tightening.

EUR/USD hovers near a two-month low on Thursday as expectations of another Federal Reserve (Fed) interest-rate hike keep the US Dollar (USD) firmly supported. At the time of writing, the pair trades around 1.1372, remaining on the back foot for a fourth consecutive day.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.27 after touching an intraday high of 101.35, its highest level since July 29.

Markets see a growing chance that the Fed will raise interest rates again in October after delivering a 25-basis-point (bps) increase last week. Wednesday’s strong US PMI data and hawkish remarks from Fed officials have strengthened these expectations, with the CME FedWatch Tool placing the probability of a rate hike at around 65%, up from 55% a week ago.

US labour-market figures released on Thursday showed that Initial Jobless Claims edged higher to 197K from 196K previously but came in below market expectations of 201K.

Cleveland Fed President Beth Hammack reinforced the focus on inflation, saying, “Price stability is the responsibility of central banks.” She noted that “supply shocks are a notable challenge for Fed policy right now” and warned that “the longer inflation remains high, the harder it is to bring it back to target.”

The hawkish repricing, combined with higher inflation expectations linked to elevated Oil prices, has pushed US Treasury yields to multi-year highs. The benchmark 10-year yield trades around 5.10%, after hitting 5.15%, its highest level since 2007. Elevated yields support the US Dollar by increasing the appeal of US-denominated assets.

Across the Atlantic, stronger-than-expected German Ifo data released earlier on Thursday lends some support to the Euro (EUR), but broad US Dollar strength keeps the currency under pressure even as markets expect additional European Central Bank (ECB) rate hikes.

ECB Policymaker Dimitar Radev said the central bank should give its previous decisions time to work and stressed that the latest rate increase “doesn’t put us on a predetermined path.” He added that policymakers are “not seeing broad-based second-round effects,” although inflation risks are tilted to the upside and growth risks to the downside.