Forex News
- The House passed a $1 trillion spending package by a 217-214 vote, ending the partial government shutdown that began Saturday.
- Walmart became the first traditional retailer to reach a $1 trillion market capitalization, joining an elite club dominated by technology giants.
- PayPal plunged nearly 19% after missing earnings estimates and announcing CEO Alex Chriss would be replaced by HP chief Enrique Lores.
- Software stocks extended their brutal selloff as AI disruption fears intensified, with names like Salesforce, ServiceNow, and IBM dragging on markets.
The Dow Jones Industrial Average (DJIA) traded in mixed territory on Tuesday, dipping around 166 points, or 0.3%, after briefly touching a new intraday record of 49,653.13 earlier in the session. The S&P 500 fell 0.8% as investors dumped technology stocks, while the Nasdaq Composite shed 1.4%. Despite strength in defensive sectors and select earnings winners, a deepening selloff in enterprise software stocks and a sharp decline in PayPal Holdings Inc. (PYPL) weighed heavily on sentiment. Markets shrugged off political uncertainty as Congress moved to end the partial government shutdown.
House passes $1 trillion spending package, ends shutdown
The House voted 217-214 on Tuesday to approve a more than $1 trillion spending package, bringing an end to the partial government shutdown that began after midnight on Saturday. Twenty-one Democrats joined Republicans in support of the measure, which funds the Pentagon, the Department of Health and Human Services, the Department of Transportation, the Education Department, and Housing and Urban Development through the end of the fiscal year in September.
The legislation separated funding for the Department of Homeland Security, which will receive only a two-week extension through February 13 as lawmakers negotiate Democratic demands for reforms to Immigration and Customs Enforcement operations. President Trump endorsed the plan and is expected to sign the bill into law. Markets largely brushed off the shutdown's end, having already priced in a swift resolution.
Software stocks extend brutal selloff on AI disruption fears
Enterprise software stocks extended a punishing decline on Tuesday as investors continued to reassess the sector's long-term growth prospects amid rising concerns that artificial intelligence could disrupt traditional business models. International Business Machines Corporation (IBM) sank 9%, dragging the Dow lower as a price-weighted index, while Salesforce Inc. (CRM) and ServiceNow Inc. (NOW) each fell around 7%.
The iShares Expanded Tech-Software Sector ETF dropped 5%, pushing the software industry deeper into bear-market territory with a decline of more than 22% from recent highs. The selloff accelerated after Anthropic's automation tools heightened concerns that AI could eat into software companies' core businesses, prompting investors to slash exposure to names once considered defensive growth plays.
Walmart becomes first traditional retailer to reach $1 trillion
Walmart Inc. (WMT) rose as much as 1.6% to hit an intraday record of $126 per share, pushing its market capitalization past $1 trillion for the first time. The Arkansas-based retail giant became only the tenth US company to reach this milestone, joining an exclusive club previously dominated by technology firms including Nvidia Corporation (NVDA), Alphabet Inc. (GOOG), and Apple Inc. (AAPL).
The achievement caps a remarkable two-year rally in which Walmart shares have more than doubled, fueled by robust e-commerce growth, expansion of its Walmart+ membership program to 28.4 million members, and market-share gains as budget-conscious consumers continue to seek value. The milestone arrived during the first week under new CEO John Furner, who succeeded Doug McMillon after more than a decade at the helm.
PayPal plunges on CEO exit and disappointing outlook
PayPal Holdings Inc. (PYPL) tumbled nearly 19% after the payments company reported fourth-quarter earnings and revenue that missed expectations while simultaneously announcing that CEO Alex Chriss would be replaced by HP Inc. (HPQ) CEO Enrique Lores, effective March 1. PayPal posted adjusted earnings of $1.23 per share on revenue of $8.68 billion, falling short of estimates for $1.28 and $8.80 billion, respectively. The board stated that the pace of change and execution under Chriss was not in line with expectations.
PayPal's weak 2026 profit outlook, projecting flat to slightly declining earnings, further rattled investors already concerned about market share losses in branded checkout to rivals, including Apple Pay, Google Pay, and newer fintech competitors.
Palantir surges on blockbuster earnings beat
Palantir Technologies Inc. (PLTR) jumped 7% after reporting fourth-quarter results that crushed analyst expectations across the board. The Denver-based software company posted adjusted earnings of 25 cents per share on revenue of $1.41 billion, handily beating estimates of 23 cents and $1.33 billion, respectively. Revenue surged 70% year-over-year, with US commercial revenue jumping 137% as demand for AI-powered data analytics tools accelerated.
CEO Alex Karp called the results "indisputably the best results in tech in the last decade." The company's fiscal 2026 revenue guidance of $7.18 billion to $7.20 billion came in well above Wall Street's $6.22 billion estimate, implying 61% growth and underscoring Palantir's dominant position in enterprise AI software.
Gold and Silver rebound after historic selloff
Gold and Silver prices staged a sharp recovery on Tuesday following last week's brutal selloff that saw Silver post its worst single-day decline since 1980. Spot Gold climbed more than 5% to around $4,900 per ounce, while Silver surged roughly 10% to approximately $87 per ounce.
The preceding collapse was triggered by a stronger US Dollar following President Trump's nomination of Kevin Warsh as the next Federal Reserve chair, combined with margin requirement increases at the CME. Analysts at Deutsche Bank and JPMorgan maintained bullish outlooks, with Deutsche Bank reiterating its $6,000 Gold price target and noting that Gold's thematic drivers remain positive. Mining stocks rallied in sympathy, with London-listed producers Fresnillo and Anglo American both posting gains.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
• The Canadian Dollar found fresh footing on Tuesday, keeping USD/CAD bids below 1.3700.
• Soft Canadian GDP data and falling oil prices weighed on the Loonie, while the Greenback recovered from Fed uncertainty.
• the US House passed $1 trillion spending deal to end partial US shutdown.
The Canadian Dollar (CAD) slowed its recent tumble against the US Dollar (USD) on Tuesday, too weak to push through near-term levels but also not strong enough to break through on the other side. The Loonie has shed ground for three of the last four trading sessions as softer domestic growth signals and renewed US Dollar strength reversed part of January's rally.
Recent Canadian data showed real Gross Domestic Product (GDP) flat in November, with a third contraction in four months across goods-producing industries led by a deepening slump in manufacturing. The manufacturing sector fell 1.3% month-over-month, with motor vehicles and parts output plunging 6.4% amid a global semiconductor shortage. This underlying weakness underscores that economic momentum remains fragile even as services provide only a limited offset.
House passes spending deal, ends partial shutdown
The US House of Representatives passed a more than $1 trillion spending package on Tuesday by a vote of 217 to 214, bringing an end to the partial government shutdown that began on January 31. The legislation, which had already passed the Senate on Friday, funds several of the government's largest departments through the end of the fiscal year in September, including the Pentagon, the Department of Health and Human Services, the Department of Transportation, the Department of Education, and the Department of Housing and Urban Development. President Trump endorsed the plan and is expected to sign it immediately.
The deal includes a two-week continuing resolution for the Department of Homeland Security, giving lawmakers more time to negotiate over guardrails on the Trump administration's immigration enforcement operations. Democratic appropriators praised the final package for staving off deep funding cuts the Trump administration had requested, including a proposed 50% slash to Centers for Disease Control and Prevention funding that was rejected. The resolution of the shutdown removes a source of near-term political uncertainty, though markets remain focused on broader fiscal concerns and upcoming economic data.
Daily digest market movers: CAD retreats as USD rebounds on shutdown resolution
• CAD weakened past 1.36 per USD on Tuesday, extending losses from 16-month highs near
1.35.
• Canadian GDP was flat in November, with manufacturing down 1.3% MoM; Q4 growth likely
contracted 0.1%.
• House passed $1 trillion spending deal (217-214) to end partial shutdown; DHS funded for two
more weeks.
• BoC held rates at 2.25% on January 28, citing elevated uncertainty around CUSMA
renegotiations.
• US ISM Manufacturing PMI surged to 52.6 in January, the first expansion in 12 months.
• DXY climbed toward 97.7 after Trump nominated Kevin Warsh as next Fed chair.
• WTI Crude Oil fell to $62/barrel as US-Iran talks eased geopolitical risk premium.
Canadian Dollar price forecast
USD/CAD opened near 1.3670 on Tuesday, rebounding from the recent low near 1.3490 touched late last week. The pair has recovered sharply after testing sixteen-month lows, with the bounce gaining momentum as the Greenback finds renewed support. Price action has pushed back above the 50-day Exponential Moving Average (EMA), which sits near 1.37, signaling a potential shift in short-term momentum.
Support at 1.35, resistance at 1.39
The 200-day EMA at approximately 1.39 represents the next key resistance level, with a sustained break above this threshold needed to suggest a more meaningful reversal of the recent downtrend. On the downside, support is seen near the recent lows around 1.3490-1.3500, with a break below opening the door toward 1.3400. The Relative Strength Index (RSI) has rebounded from oversold territory and sits in the mid-40s, indicating neutral conditions with room for the pair to move in either direction.
Near-term bias tilts modestly higher
With Canadian fundamentals remaining soft and the US Dollar regaining traction on Fed uncertainty and strong economic data, the near-term bias for USD/CAD tilts modestly higher. The resolution of the partial US government shutdown removes one source of uncertainty, though markets remain focused on the upcoming CUSMA renegotiations and US labor market data. A sustained move above 1.3775-1.3800 would confirm renewed bullish momentum, while a failure to hold above the 50-day EMA could see the pair drift back toward multi-month lows.
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
The January BoK MPC minutes reveal a shift towards a more hawkish stance, indicating increased market sensitivity to potential tightening. Despite mixed signals, including a lower USD/KRW and rising property prices, the current data does not decisively sway the Committee's views. Kiyong Seong from Societe Generale provides insights into the evolving dynamics.
BoK shifts towards hawkish stance
"January BoK MPC minutes indicate that the Committee has shifted in a more hawkish direction, helping explain the market’s heightened sensitivity to the risk of additional tightening. The key question now is whether forthcoming developments will be sufficient to sway the currently dovish or neutral members toward a more restrictive stance."
"At present, the signals are mixed: USD/KRW has moved lower, although the currency remains unstable, while property prices continue to rise. As such, the current data flow does not appear decisive enough to materially alter the existing distribution of views within the Committee."
"Two market variables stand out as potential catalysts: a recovering KRW — remembering that around the 15 January MPC date, USD/KRW..."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Here is what you need to know on Wednesday, February 4:
The Reserve Bank of Australia (RBA) raised its interest rate by 25 basis points to 3.85%, aligning with market expectations. The RBA's hawkish tone indicates that inflation pressures are likely to persist, suggesting further policy tightening may be on the horizon. The market is currently pricing in another rate hike by the end of the year
Iran's president, Masoud Pezeshkian, said Tehran will resume nuclear negotiations with the US, which could help ease regional tensions and support the US Dollar (USD).
On the other side of the pond, the Bureau of Labor Statistics (BLS) announced on Monday that the January United States (US) jobs report, which is scheduled for release on Friday, will be delayed due to the ongoing partial government shutdown. As a result, investors will need to rely on private-sector indicators, such as the ADP Employment Change report, which is scheduled for release on Wednesday.
The US Dollar Index (DXY) is trading near the 97.40 level, with little movement, as an ongoing partial US government shutdown keeps the US Dollar in line.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.08% | 0.08% | -0.11% | -0.65% | -0.54% | -0.50% | |
| EUR | 0.14% | 0.06% | 0.20% | 0.03% | -0.51% | -0.40% | -0.36% | |
| GBP | 0.08% | -0.06% | 0.17% | -0.03% | -0.57% | -0.46% | -0.42% | |
| JPY | -0.08% | -0.20% | -0.17% | -0.17% | -0.71% | -0.57% | -0.56% | |
| CAD | 0.11% | -0.03% | 0.03% | 0.17% | -0.54% | -0.42% | -0.39% | |
| AUD | 0.65% | 0.51% | 0.57% | 0.71% | 0.54% | 0.11% | 0.16% | |
| NZD | 0.54% | 0.40% | 0.46% | 0.57% | 0.42% | -0.11% | 0.04% | |
| CHF | 0.50% | 0.36% | 0.42% | 0.56% | 0.39% | -0.16% | -0.04% |
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).
EUR/USD is trading near the 1.1820 price zone ahead of the European Central Bank (ECB) monetary policy decision on Thursday.
GBP/USD is trading near 1.3690, moving upward slowly as a depreciating USD gives the Great British Pound (GBP) the upper hand.
USD/CAD is trading near the 1.3650 level, losing almost all its intraday gains. Last week, the Bank of Canada (BoC) left the overnight rate unchanged at 2.25% at its January policy meeting.
AUD/USD is trading at the 0.7000 price zone after the RBA rate hike.
USD/JPY is trading near a weekly high close to the 155.80 price region.
Gold is trading near the $4,910 price zone, recovering almost all of Monday’s losses.
What’s next in the docket:
Wednesday, February 4:
- Eurozone January Harmonized Index of Consumer Prices (HICP).
- US January ADP Employment Change.
- US January ISM Services Purchasing Managers Index (PMI).
- Australian December Trade Balance.
Thursday, February 5:
- Eurozone December Retail Sales.
- Bank of England (BoE) monetary policy decision.
- European Central Bank (ECB) monetary policy decision.
Friday, February 6 :
- Canada January Net Change in Employment.
- US February Michigan Consumer Sentiment Index.
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.
TD Securities' report by Alex Loo discusses the outlook for the Chinese Yuan (CNY) in 2026. The report highlights that while the CNY is significantly undervalued, expectations for a sizable revaluation may be misplaced. The People's Bank of China (PBoC) is likely to maintain a stable approach to the CNY, with a projected USDCNY target of 6.7 by the end of 2026.
Expectations for CNY gains in 2026
"If Beijing was open to a sizable revaluation (>10% in CNY gains), the broad USD sell-off in recent weeks would have been an opportune moment to show its intentions. However, PBoC's daily fixings and the weakness in the CFETS reflect the opposite."
"We think a push in USDCNY to the low 6s is a tad too far and Beijing likely won't endorse such a sizable revaluation. Since the shocked devaluation in 2015, our historical analysis of past annual returns of USDCNY vs the broad USD show that CNY gains have not outpaced the drop in the broad USD since 2014."
"Thus, we forecast a more rational move in USDCNY to reach 6.7 by end-2026, coherent with President Xi's 'Mighty Yuan' goal and his call for exchange rate stability."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver posts strong gains on Tuesday as buyers take advantage of the recent pullback to re-enter the market.
- The macroeconomic backdrop remains supportive for precious metals despite renewed firmness in the US Dollar.
- A relative easing in geopolitical tensions could, however, cap near-term upside momentum.
Silver (XAG/USD) rebounds sharply on Tuesday and trades around $85.30, up roughly 6.50% on the day at the time of writing. The white metal recovers part of the ground lost during last week’s violent correction, as investors gradually return to the precious metals space amid prices seen as more attractive.
The recent pullback in Silver was largely driven by technical factors, including position unwinding and margin-related liquidations, rather than a clear deterioration in fundamentals. The ongoing rebound highlights an environment still marked by elevated volatility, while demand for real assets remains well supported.
From a macroeconomic perspective, expectations of monetary easing continue to play a key role. Markets are still pricing in the prospect of further rate cuts by the Federal Reserve (Fed), which structurally weighs on real yields and supports the appeal of non-yielding assets such as Silver. The nomination of Kevin Warsh as the next head of the US central bank has provided temporary support to the US Dollar (USD), but this effect is fading as investors refocus on rate cut bets.
Meanwhile, US Dollar dynamics remain a key driver for Silver. The US Dollar Index (DXY) holds near recent short-term highs, which could restrain the white metal’s upside momentum. A firmer Greenback tends to make Silver more expensive for international investors, potentially limiting buying interest.
On the geopolitical front, signs of easing tensions between the United States (US) and Iran, along with the announcement of a trade deal between the US and India, have helped improve market sentiment. This relative de-escalation reduces immediate safe-haven demand and could encourage Silver to enter a consolidation phase following its strong rebound.
Finally, the slowdown in the flow of US economic data, linked to the partial federal government shutdown, keeps uncertainty elevated around the near-term economic outlook. In this context, movements in the US Dollar and expectations surrounding US monetary policy are likely to continue steering the trajectory of Silver in the coming days.
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.
- The Australian Dollar strengthens after the RBA delivers a widely expected 25 bps rate hike.
- Markets price further RBA tightening amid persistent inflation pressure.
- Dovish Fed expectations add upside bias to AUD/USD.
The Australian Dollar (AUD) trades on the front foot against the US Dollar (USD) on Tuesday, after the Reserve Bank of Australia (RBA) delivered a widely expected interest rate hike, lifting the Aussie broadly across the board.
AUD/USD is trading around 0.7011, hovering just below its intraday high of 0.7050 and up about 0.88% at the time of writing.
The RBA raised the cash rate by 25 basis points (bps) to 3.85% in a unanimous vote, marking its first rate increase since 2023, as policymakers responded to elevated inflation pressure.
In its monetary policy statement, the central bank said that “while inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025,” adding that the Board judges part of the recent rise in inflation reflects stronger capacity pressures. As a result, the policymakers consider that inflation is likely to remain above the 2-3% target for some time.
The central bank also noted that, while part of the recent pick-up in inflation reflects temporary factors, private demand is growing faster than expected, capacity pressures are higher than previously assessed, and labour market conditions remain slightly tight.
Meanwhile, Governor Michele Bullock said the Board will not provide forward guidance and will remain firmly focused on incoming data, stressing that policymakers do not yet know whether this move marks the start of a tightening cycle.
She added that the Bank “cannot allow inflation to get away from us”, noting that while the economy is in a good position, it remains constrained on the supply side.
According to a BHH report, the swaps market is now pricing in an around 80% probability of another 25 bps rate hike in May, and about 60 bps of total tightening over the next twelve months.
Looking ahead, monetary policy divergence between the RBA and the Federal Reserve (Fed) is likely to keep AUD/USD tilted to the upside, with markets pricing in around 50 basis points of Fed rate cuts by the end of the year.
Attention now turns to Australian employment data and the Services Purchasing Managers Index (PMI), both due on Wednesday, which could provide the next near-term catalyst for the Aussie.
In the United States, the Nonfarm Payrolls (NFP) report, originally scheduled for Friday, has been delayed due to the ongoing partial government shutdown, leaving investors to rely more heavily on private labour indicators, including ADP Employment Change. The US economic calendar will also feature the Services PMI on Wednesday.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
The Japanese Yen (JPY) experienced significant volatility at the start of 2026, trading between 153 and 159 before finishing the month slightly stronger. National Bank of Canada (NAB) analysts Stéfane Marion and Kyle Dahms expect yen appreciation in the second half of 2026, driven by broader USD dynamics and potential interest rate increases by the Bank of Japan.
Yen shows resilience amid market stress
"While we remain cautious over the next six months, we still expect yen appreciation in the second half of 2026, driven by broader U.S. dollar dynamics and the possibility that a strengthening renminbi gives the Bank of Japan scope to raise interest rates."
"Taken together, the latest developments suggest that the recent Yen appreciation in January reflected stabilization efforts and market adjustment rather than renewed confidence in Japan’s fundamentals."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Standard Chartered's report indicates that China's Producer Price Index (PPI) deflation likely eased to 1.5% year-on-year in January, driven by month-on-month increases in metal and energy prices. The report also notes that CPI inflation may have moderated due to base effects, while core CPI likely rose due to gold prices and seasonal factors. The official manufacturing PMI showed a slight decline, suggesting a cautious outlook amid geopolitical risks.
PPI and CPI trends in focus
"PPI deflation may have eased to 1.5% y/y in January on m/m increases in metal and energy prices."
"CPI inflation likely edged down 0.2ppt to 0.6% y/y in January on base effects."
"We estimate that PPI rose 0.3% m/m on higher metal and energy prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD advances on Tuesday, benefiting from a pullback in the US Dollar after two days of gains.
- The New Zealand Dollar is supported by expectations of monetary tightening by the RBNZ later this year.
- US Treasury yields remain elevated, which could nevertheless limit the extent of the pair’s rebound.
NZD/USD recovers and trades around 0.6050 on Tuesday at the time of writing, up 0.75% on the day, after two consecutive days of decline. The rebound mainly reflects a pause in the appreciation of the US Dollar (USD), which is giving back part of its recent gains against major currencies.
The Greenback remains supported in the background by elevated US Bond yields. The yield on the 10-year US Treasury note hovers around 4.27%, following a sharp rise in the previous day. This upward pressure on yields is driven by US macroeconomic data seen as solid and by cautious monetary policy expectations from the Federal Reserve (Fed), which could cap a deeper pullback in the US Dollar in the near term.
In the United States (US), the latest manufacturing data surprised to the upside. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) rose sharply, signaling a return to expansion territory and highlighting the resilience of the US economy. These figures support the view that the Fed can afford to keep policy restrictive for longer, despite recent comments from some officials arguing for monetary easing.
On the New Zealand side, the local currency remains broadly supported despite mixed domestic data. Building permits released by Statistics New Zealand fell in December, reversing the increase seen in the previous month and underscoring ongoing fragility in the housing sector. These figures, however, have not had a lasting negative impact on the New Zealand Dollar (NZD).
The main support for the Kiwi comes from monetary policy expectations. Investors believe the Reserve Bank of New Zealand (RBNZ) could begin raising interest rates later in the year. The first policy meeting under the leadership of the new Governor, Anna Breman, is being closely watched, as markets look for clear guidance on the central bank’s future policy stance.
Sentiment around the NZD is also helped by a more favorable external backdrop. Encouraging indicators from China, New Zealand’s largest trading partner, point to an improvement in manufacturing activity, reinforcing the outlook for growth-sensitive currencies.
Market participants are now turning their attention to upcoming New Zealand labor market data due later in the day. The fourth-quarter Unemployment Rate is expected to remain steady at 5.3%, while employment is forecast to increase modestly. These figures could play a key role in shaping short-term NZD/USD dynamics by refining expectations for the RBNZ’s policy path.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.20% | 0.09% | -0.17% | -0.83% | -0.63% | -0.57% | |
| EUR | 0.22% | 0.01% | 0.31% | 0.05% | -0.61% | -0.41% | -0.35% | |
| GBP | 0.20% | -0.01% | 0.32% | 0.04% | -0.62% | -0.42% | -0.35% | |
| JPY | -0.09% | -0.31% | -0.32% | -0.26% | -0.92% | -0.73% | -0.65% | |
| CAD | 0.17% | -0.05% | -0.04% | 0.26% | -0.67% | -0.46% | -0.39% | |
| AUD | 0.83% | 0.61% | 0.62% | 0.92% | 0.67% | 0.20% | 0.28% | |
| NZD | 0.63% | 0.41% | 0.42% | 0.73% | 0.46% | -0.20% | 0.07% | |
| CHF | 0.57% | 0.35% | 0.35% | 0.65% | 0.39% | -0.28% | -0.07% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
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