Forex News
United States Trade Representative (USTR), Jamieson Greer, said that managing and controlling economic relationship with China are the key to meeting US domestic objectives, Reuters reported on Friday. Greer added that keeping the Strait of Hormuz open is crucial for China.
Key quotes
China is meeting its commitments on soybean buying.
We are attempting to handle disputes on rare earths rather than intensify them.
Significant shipments of Chinese yttrium have arrived in U.S. over recent weeks.
China understands there will be some U.S. tariffs on Chinese products.
Unable to pledge specific tariff rate on Chinese products.
We want to prioritize items for buying from and selling to China.
Acquisitions will be a sovereign choice for China.
China could view U.S. lead in AI chips as risk to local manufacturing.
Chip export controls not discussed at meeting.
U.S. export restrictions on chips were not a key focus of talks.
Chinese rules on supply chain moving out of China a significant worry.
Taiwan issue unlikely to impact board of trade talks.
Managing and controlling economic ties with China key to meeting US domestic objectives.
Keeping the Strait of Hormuz open is crucial for China.
On Chinese involvement with Iran, our view is that China is acting very pragmatically.
Market reaction
As of writing, the AUD/USD pair is down 0.12% on the day at 0.7212.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
- EUR/USD softens to around 1.1660 in Friday’s early Asian session.
- Hotter-than-expected US inflation reports have prompted markets to price out rate cuts for the remainder of 2026.
- Trump said Chinese leader Xi offered to help broker peace with Iran.
The EUR/USD pair trades in negative territory near 1.1660 during the early Asian session on Friday. The US Dollar (USD) edges higher against the Euro (EUR) as surging US inflation, linked to Middle East tensions, reinforces expectations that the US Federal Reserve (Fed) will keep interest rates higher for longer or potentially hike them.
US economic data released this week showed US Producer Price Index (PPI) inflation accelerated to the fastest pace since 2022 in April, while the Consumer Price Index (CPI) rose the most since 2023. Hotter-than-expected US inflation data have reinforced a "higher-for-longer" US interest rate outlook, supporting the Greenback and acting as a headwind for the major pair.
Markets are now pricing in nearly a 36.9% chance that the US central bank will raise the interest rate by at least 25 basis points (bps) at the December meeting, up from 22.5% a week ago, according to the CME FedWatch tool.
Nonetheless, positive developments surrounding the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing could lift a riskier asset, such as the shared currency.
Trump said on Thursday that he hoped the relationship between the US and China would be "stronger and better than ever before," adding that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran. Xi also wants to see the critical Strait of Hormuz reopened.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US President Donald Trump said that he hoped the relationship between the US and China would be "stronger and better than ever before" ahead of a second day of talks with Chinese President Xi Jinping in Beijing, the Wall Street Journal reported on Thursday.
“They look forward to trade and doing business. It’s going to be totally reciprocal on our behalf,” said Trump in opening remarks during his meeting with Chinese leader.
Trump added in his Truth Social post that Xi had congratulated him on "so many tremendous successes," including the US' relationship with Venezuela, its job market as well as its military.
On Iran, Trump said that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran. Xi also wants to see the critical Strait of Hormuz reopened.
Market reaction
As of writing, the AUD/USD pair is up 0.01% on the day at 0.7220.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Federal Reserve (Fed) Governor Michael Barr said that lowering liquidity rules to get the central bank’s balance sheet smaller is a bad idea and could undermine the safety of the financial system, Reuters reported on Thursday.
Key quotes
Easing liquidity regulations to reduce Fed balance sheet not advisable.
Reducing liquidity requirements would just heighten stability risks.
Reduced balance sheet may boost funds to Fed liquidity facilities.
Reduced Fed balance sheet would probably boost Fed interventions.
Fed working to shift balance sheet duration to align with broader Treasury market.
Doubtful liquidity coverage ratio adjustment will significantly impact reserve demand.
Monetary policy toolkit has been effective for a long time.
Effective monetary policy execution revolves around rate management.
Generating reserves doesn't cost the Fed.
Liquidity requirement should increase, not decrease.
Returning to limited reserves would involve significant trade-offs.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading around 98.95, up 0.07% on the day.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Gold price drifts higher to near $4,660 in Friday’s early Asian session.
- Trump reported that Xi pledged not to provide military equipment to Iran.
- A war-driven surge in US inflation fuels expectations for higher US interest rates.
Gold price (XAU/USD) recovers some lost ground around $4,660 during the early Asian session on Friday. However, the potential upside for the precious metal might be limited as the prospects of US rate cuts have largely faded. Traders will closely monitor US President Donald Trump's meeting with Chinese President Xi Jinping in Beijing.
Trump and Xi called for a better US-China relationship on Thursday as they began a two-day summit likely to cover issues ranging from tariffs to artificial intelligence. Xi reportedly told the US business leaders their companies could be “deeply involved in China's reform and opening up” and that “China's door will only open wider.”
Trump said after Thursday’s meetings that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran. Xi also wants to see the critical Strait of Hormuz reopened.
“The market is trying to decipher the likelihood of a potential end to hostilities in the Middle East and the Strait of Hormuz reopening fully,” said Nicholas Frappell, global head of institutional markets at ABC Refinery. “Gold will get a boost from a softer dollar and less aggressive policy tightening from central banks if the Strait reopens,” Frappell added.
US data released this week showed the US Producer Price Index (PPI) inflation accelerated to the fastest pace since 2022 in April, while the Consumer Price Index (CPI) rose the most since 2023. These reports have reinforced market expectations that the Federal Reserve (Fed) will maintain elevated interest rates to combat persistent inflationary pressures. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
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.
- Cabinet resignations and calls from Labour MPs for Keir Starmer to step down weighed on the Pound Sterling.
- UK Q1 GDP rose 0.6% QoQ and 1.1% YoY while March Manufacturing Production jumped 1.2% MoM against a -0.2% consensus.
- US Retail Sales matched at 0.5% MoM while Initial Jobless Claims climbed to 211K against a 205K consensus.
GBP/USD fell 0.9% on Thursday, breaking below 1.3500 in a sharp staircase decline from session highs to a low close to 1.3395. The move extended a multi-week downtrend from the early-March peak, with bearish momentum building through the European afternoon. The daily candle closed near session lows.
The Pound Sterling came under heavy pressure on Thursday as the political crisis around Prime Minister Keir Starmer deepened. After Labour's heavy losses in the 7 May local elections, four cabinet ministers resigned this week, including Safeguarding Minister Jess Phillips, and close to 100 Labour MPs publicly called on Starmer to resign or set a departure timeline. Health Secretary Wes Streeting was reported to be weighing a leadership challenge, although Starmer remained defiant after 111 MPs signed a statement of support. Stronger UK data failed to lift the currency: Q1 GDP rose 0.6% QoQ in line with consensus and 1.1% YoY against a 0.8% forecast, while March Manufacturing Production jumped 1.2% MoM against a -0.2% consensus. UK Claimant Count Change, Employment Change, and Average Earnings prints land next Tuesday.
On the US Dollar side, April Retail Sales matched consensus at 0.5% MoM while ex-autos topped expectations at 0.7%, and Initial Jobless Claims edged up to 211K against a 205K consensus. Four Fed officials including New York Fed President John Williams crossed the wires Thursday. The week ahead carries heavy US event risk with the FOMC Minutes on Wednesday, S&P Global Purchasing Managers Index (PMI) prints Thursday, and Friday's University of Michigan (UoM) consumer sentiment and inflation expectations releases.
GBP/USD 5-minute chart
Technical Analysis
In the five-minute chart, GBP/USD trades at 1.3406, holding in a bearish near-term stance after slipping well below the day’s open at 1.3527, which now acts as overhead resistance. The elevated Stochastic RSI near 96 suggests the latest bounce is occurring in overbought territory within a broader intraday decline, hinting that upside attempts could remain capped while the pair trades under the early-session high ground.
On the topside, the day’s open around 1.3527 is the first meaningful resistance to watch, as a recovery above this area would be needed to ease immediate downside pressure. With no nearby structural supports identified on this micro timeframe, price action remains vulnerable to further weakness as long as sellers defend the area north of 1.35.
In the daily chart, GBP/USD trades at 1.3406, keeping a bearish near-term bias as spot holds beneath the 50-day exponential moving average (EMA) at 1.3481. The pair has retreated from recent highs and is now trading back under this key dynamic barrier, suggesting rallies are likely to face selling interest, while the Stochastic RSI easing towards the mid-40s hints that upside momentum is fading rather than rebuilding.
On the topside, immediate resistance is located at the 50-day EMA around 1.3481, and a decisive break above this level would be needed to ease the current downside pressure and open the way for a more constructive recovery. Until that occurs, short-term risks remain skewed lower, with traders likely to sell into rebounds while momentum stays soft and price action fails to reclaim the aforementioned moving average.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
John Williams, President of the Federal Reserve (Fed) of New York, spoke on Thursday and said that the job market has stabilized, acknowledging that he is not surprised to see near-term inflation expectations rise.
Key takeaways:
FED INDEPENDENCE DELIVERS BETTER ECONOMIC OUTCOMES
NOT TIME TO WORRY ABOUT FED INDEPENDENCE, STAFF FOCUSED ON MISSION
CONTEXT MATTERS FOR INFLATION GIVEN PERSISTENCE ABOVE TARGET
TARIFFS APPEAR TO HAVE MOSTLY WORKED THROUGH ECONOMY
JOB MARKET IS NOT DRIVING INFLATION PRESSURES, JOB MARKET IS NOT TIGHT
NOT SURPRISED TO SEE NEAR TERM INFLATION EXPECTATIONS RISE
IS SEEING PRETTY STABLE LONGER TERM INFLATION EXPECTATIONS
THERE ARE EMERGING ISSUES WITH SUPPLY CHAIN PRESSURES
WE ARE NOT SEEING SIGNS OF PROBLEMS WITH INFLATION EXPECTATIONS
IS NOT YET SEEING MAJOR SECOND ROUND IMPACT ON INFLATION
THERE'S A LOT OF UNCERTAINTY AROUND ENERGY PRICE OUTLOOK
THE JOB MARKET HAS BEEN SHOWING SIGNS OF STABILIZATION
THE JOB MARKET IS NOT 'HOT' BUT ALSO NOT SLOWING DRAMATICALLY
WEIGHS ALL MEASURES WHEN TAKING STOCK OF INFLATION
FED AMPLE RESERVE SYSTEM HAS WORKED VERY WELL
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.35% | 0.92% | 0.33% | 0.06% | 0.53% | 0.40% | 0.22% | |
| EUR | -0.35% | 0.55% | -0.06% | -0.30% | 0.15% | 0.01% | -0.14% | |
| GBP | -0.92% | -0.55% | -0.62% | -0.86% | -0.39% | -0.52% | -0.66% | |
| JPY | -0.33% | 0.06% | 0.62% | -0.26% | 0.20% | 0.06% | -0.12% | |
| CAD | -0.06% | 0.30% | 0.86% | 0.26% | 0.45% | 0.31% | 0.20% | |
| AUD | -0.53% | -0.15% | 0.39% | -0.20% | -0.45% | -0.12% | -0.24% | |
| NZD | -0.40% | -0.01% | 0.52% | -0.06% | -0.31% | 0.12% | -0.14% | |
| CHF | -0.22% | 0.14% | 0.66% | 0.12% | -0.20% | 0.24% | 0.14% |
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).
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