Forex News
- USD/CAD softens to near 1.3835 in Wednesday’s early Asian session.
- Trump agreed to suspend attacks on Iran for two weeks.
- The FOMC Minutes will be the highlight later on Wednesday.
The USD/CAD pair declines to around 1.3835 during the early Asian trading hours on Wednesday. The US Dollar (USD) weakens against the Canadian Dollar (CAD) after Iran agrees to a two-week ceasefire with the United States (US).
An Iranian official said late Tuesday that it has accepted a two-week ceasefire, with negotiations to begin on Friday in Pakistan’s Islamabad. This action came after US President Donald Trump stated that he would suspend attacks, subject to Tehran agreeing to fully reopen the Strait of Hormuz.
Iran’s Foreign Minister Abbas Araghchi said safe passage through the key waterway will be possible for a period of two weeks via coordination with Iranian armed forces. The Greenback attracts some sellers following these headlines.
Traders await the release of the Federal Open Market Committee (FOMC) Minutes later on Wednesday. The report could offer some insights into how officials view the recent energy shock caused by conflicts in the Middle East. Any hawkish remarks from Federal Reserve (Fed) officials could help limit the USD’s losses in the near term.
Meanwhile, crude oil prices plunge below $100 as Iran agrees to allow safe passage through the Strait of Hormuz during the ceasefire. This could weigh on the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and lower crude oil prices generally have a negative impact on the CAD.
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.
Despite the United States (US) and Iran agreeing to a ceasefire for two weeks, Iranian attacks continue in the Middle East and on Israel as missile alerts keep sounding.
The Israeli military said it has identified missiles launched from Iran towards Israel.
Qatar Defence Ministry confirmed that armed forces intercepted the missile attack targeting Qatar.
Market reaction
Investors shrug off these headlines and rejoice the truce, with the US Dollar Index (DXY) and Oil price crashing, while Gold and global stocks are through the roof.
- Silver catches aggressive bids on Wednesday and draws support from a combination of factors.
- Trump suspends Iran strikes for two weeks, weighing on the USD and supporting the XAU/USD.
- Tumbling Oil prices ease inflation fears and temper rate hike bets, benefiting the white metal.
Silver (XAG/USD) rallies to a fresh weekly high during the Asian session on Wednesday, with bulls now looking to build on the momentum beyond the $77.00 mark amid a broad-based US Dollar (USD) selloff.
US President Donald Trump announced last Tuesday that he would suspend planned military strikes against Iran for two weeks, subject to Tehran agreeing to fully reopen the Strait of Hormuz. In response, Iran stated that it has accepted a two-week ceasefire, with negotiations set to begin on Friday in Islamabad, Pakistan. The optimism boosts investors' confidence and weighs heavily on the Greenback, which, in turn, is seen benefiting the USD-denominated commodities, including Silver.
Meanwhile, Iran’s foreign minister added that safe passage through the key waterway will be possible for a period of two weeks, triggering a steep decline in Crude Oil prices. This helps ease inflationary concerns and tempers Federal Reserve (Fed) rate hike bets, exerting additional pressure on the USD and further benefiting the non-yielding white metal. However, the lack of follow-through buying warrants some caution for the XAG/USD bulls before positioning for further gains.
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 Reserve Bank of New Zealand is set to hold the key interest rate at 2.25% for a second straight meeting on Wednesday.
- The RBNZ’s Monetary Policy Review and Governor Breman’s words will be closely scrutinized for policy guidance.
- The New Zealand Dollar is expected to rock in reaction to the RBNZ policy announcements.
The Reserve Bank of New Zealand (RBNZ) is set to extend the pause on its current interest rate-cutting cycle for the second consecutive meeting on Wednesday, leaving the Official Cash Rate (OCR) unadjusted at 2.25%, as the Iran war adds uncertainty to the economic and inflation outlook.
The decision is widely expected and will be announced at 02:00 GMT, accompanied by the Monetary Policy Review (MPR) and the Minutes of the meeting. RBNZ Governor Dr. Anna Breman will hold the post-monetary policy meeting press conference at 03:00 GMT.
The New Zealand Dollar (NZD) could experience intense volatility on either a probable hawkish pivot from the RBNZ or its wait-and-see stance.
What to expect from the RBNZ interest rate decision?
With a rate on-hold decision fully baked in, markets will dissect the RBNZ MPR and Governor Breman’s commentary for any hints on a likely rate hike this year in the wake of the energy shock-driven higher inflation projections.
During the press conference, Breman is expected to stick to the script delivered in her recent speech on March 23.
Back then, Breman said that the Bank is “looking for second-round effects” and “if inflation expectations shift, (it) will act. “
“[We] do not want to react too soon to inflationary pressures,” she added, safeguarding against premature tightening of financial conditions.
New Zealand’s annual inflation rate stood at 3.1% in the quarter ending December 2025, slightly above the RBNZ’s target range of 1% to 3%.
The Minutes of the meeting will also hold some relevance as these could provide insights about a probable debate among policymakers over the likelihood of second-round persistent inflation, potentially offering policy guidance.
“Like the Governor's speech last week, the Bank's communication is likely to reaffirm the Bank's reluctance to respond impulsively to the supply shock, especially when the economy is operating below capacity, Analysts at TD Securities (TDS) said. “This should challenge the market's pricing of more than 75bps of hikes this year.”
How will the RBNZ interest rate decision impact the New Zealand Dollar?
The NZD/USD pair hovers near the five-month lows of 0.5681 in the lead-up to the RBNZ showdown. Will the RBNZ’s hawkish pivot rescue the Kiwi bulls?
If the RBNZ surprises with hints on a potential shift toward interest-rate hikes later this year, the NZD could embark upon a sustained recovery against the US Dollar (USD).
On the contrary, if the central bank dismisses concerns over the near-term inflation shock and sticks to a wait-and-see stance, the Kiwi Dollar could resume its bearish trend.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“The Kiwi remains vulnerable, despite the dead cat bounce. The 14-day Relative Strength Index (RSI) holds well below the midline, while a Bear Cross is playing out. The 21-day Simple Moving Average (SMA) closed below the 100-day SMA on April 1, confirming the bearish bias.”
“The immediate resistance is seen at the 0.5750 psychological level on the road to recovery. The next topside hurdles align at the 0.5800 round figure and the 100-day SMA at 0.5840. On the flip side, strong support is seen at the 0.5600 threshold, below which the November 2025 low of 0.5580 will be at risk. The line in the sand for NZD bulls is at the 0.5550 mark,” Dhwani adds.
Economic Indicator
RBNZ Monetary Policy Review
At each of the Reserve Bank of New Zealand (RBNZ) seven meetings, the RBNZ’s Monetary Policy Committee (MPC) publishes the Monetary Policy Review (MPR), which gives an interim update on the monetary policy outlook and settings. The review may influence the volatility of the New Zealand Dollar (NZD) and determine a short-term positive or negative trend. A hawkish view is considered bullish for NZD, whereas a dovish view is considered bearish.
Read more.Next release: Wed Apr 08, 2026 02:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby’s press conference.
- Gold price jumps to around $4,815 in Wednesday’s early Asian session.
- Trump delays bombing for two weeks.
- Shifting interest rate expectations might cap the upside for the yellow metal.
Gold price (XAU/USD) rises to near $4,815 during the early Asian session on Wednesday. The precious metal attracts some buyers after US President Donald Trump agrees to suspend Iran bombing for two weeks.
Trump revealed in a post on Truth Social late Tuesday that he’d agreed to a two-week ceasefire with Iran on the condition that Iran agree to reopen the critical Strait of Hormuz. A White House official said that Israel has also agreed to the ceasefire.
This action came after Pakistan, a mediator between the US and Iran, requested that Trump grant a two-week ceasefire and extension to a deadline he imposed on Iran to end its blockade of Gulf oil.
An Iranian official stated that negotiations with the US will be held in Islamabad, Pakistan, to finalize details, aiming to confirm Iran’s battlefield achievements politically within a maximum of 15 days. Iran added that the meeting will begin on Friday and may be extended if both sides agree.
Oil prices have surged since the Iran conflict intensified, raising supply concerns. Higher energy costs feed into inflation, leaving central banks with little leeway to cut interest rates. Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
Traders will keep an eye on the minutes from the Federal Reserve’s (Fed) meeting in March, which will be released on Wednesday.
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.
- GBP/USD jumped to a session high near 1.3400 after Trump announced a two-week suspension of military operations against Iran.
- UK services PMI was revised sharply lower to 50.5, the weakest reading in eleven months, as the war in the Middle East crushed business optimism.
- The Bank of England (BoE) meets on April 30 with rate expectations in flux, markets had been pricing hikes before the ceasefire shifted the calculus.
- FOMC Minutes, Core Personal Consumption Expenditures (PCE), and US Consumer Price Index (CPI) data all land this week and could dictate the next leg.
GBP/USD ripped higher on Tuesday as the US Dollar buckled under a wave of risk-on positioning triggered by President Trump's announcement of a two-week ceasefire with Iran. The pair surged from the low 1.3200s into the upper 1.3300s, reclaiming ground above both the 50 and 200-period hourly moving averages in the process.
The move was almost entirely a Dollar story. WTI Crude Oil cratered from above $106 to below $90 per barrel as traders, who had already been fading Trump's deadline rhetoric throughout the session, piled into the selloff once the Truth Social post confirmed the pause. S&P 500 futures jumped over 1%, and the US Dollar Index (DXY) slid back toward 100.00 as the haven bid that had propped up the Greenback for weeks started to unwind.
Can the Pound actually hold these levels?
That is the uncomfortable question. Sterling's rally on Tuesday was a function of Dollar weakness, not Pound strength. The UK's own fundamentals look increasingly fragile. Final March services Purchasing Managers Index (PMI) data released earlier on Tuesday came in at 50.5, revised down from a flash estimate of 51.2 and a sharp drop from February's 53.9. The composite reading fell to 50.3. S&P Global flagged the slowest services expansion in eleven months, with new work declining for the first time since November 2025 and input cost inflation hitting an eleven-month high on surging fuel and transportation bills.
In short, the UK is flashing stagflation signals. Growth is stalling while costs are accelerating, and the Middle East conflict is the primary driver of both trends.
The BoE's impossible trade-off just got more complicated
The BoE has held rates at 3.75% since December 2025, voting unanimously to stay put at the March meeting. Before the Iran war erupted, markets were pricing two to three cuts in 2026. That expectation was obliterated by the energy shock. By late March, swaps markets had flipped to pricing four quarter-point hikes by year-end, reflecting the passthrough of surging Oil and gas prices into UK inflation.
Tuesday's ceasefire throws a wrench into that repricing. If the pause holds and Oil continues to slide, the inflationary impulse weakens and the BoE gets room to resume easing. JP Morgan's Allan Monks had flagged the April 30 meeting as the natural window for a hike if inflation continued to be validated by incoming data, but a sustained drop in energy prices would undercut that thesis. ING's James Smith had already noted that rapid de-escalation could bring the next cut forward to April.
The problem is that this is Trump's fourth deadline extension. Markets sold Oil aggressively on each of the prior three pauses, only to buy it all back when diplomacy collapsed. Iran publicly rejected the temporary ceasefire just hours before Trump's announcement and has been demanding a permanent end to hostilities plus sanctions relief. The gap between the two sides remains wide, and Polymarket odds as of Monday put the probability of a lasting ceasefire by end of April at just 22.5%.
What to watch this week
Wednesday brings the Federal Open Market Committee (FOMC) Minutes from the March meeting (18:00 GMT), along with remarks from Fed officials Daly and Waller. Traders will be parsing the minutes for any discussion of how the Iran conflict is shaping the Federal Reserve's (Fed) inflation outlook. Thursday delivers Core PCE for February (12:30 GMT), the Fed's preferred inflation gauge, alongside Gross Domestic Product (GDP) revisions and initial jobless claims. Friday is the big one: March CPI lands at 12:30 GMT with consensus at 3.3% YoY, down from the prior 2.4% reading. Core CPI is expected at 2.7% YoY versus 2.5% prior.
On the UK side, Halifax House Prices and the construction PMI on Wednesday, followed by the BoE Credit Conditions Survey on Thursday, will offer a read on how the domestic economy is absorbing the energy shock. The RICS Housing Price Balance is also due Wednesday night, with consensus at -18% suggesting continued pressure on the property market.
The technical picture
GBP/USD is trading near 1.3400 after Tuesday's surge, reclaiming territory it last held in late March. The pair is well above the 200-period EMA at 1.3261 and the Stochastic RSI has room to run before hitting overbought territory. Resistance sits at the recent swing high near 1.3480, while a failure to hold above 1.3300 would suggest the ceasefire rally is fading. The broader range since late March has been defined by the 1.3160 low and the 1.3480 high, and which side breaks first will likely depend on whether this two-week pause produces anything different from the last four.
The bottom line
GBP/USD is riding a ceasefire wave, but the pair is caught between a weakening Dollar and a UK economy that is barely growing. If this pause collapses like the others, the haven bid returns, Oil spikes, and the pair gives back Tuesday's gains in a hurry. If it holds, the BoE gets breathing room, the energy premium unwinds further, and Cable has a genuine shot at retesting 1.3480 and beyond. The next 48 hours of data, starting with the FOMC Minutes and ending with CPI, will tell traders whether the macro backdrop supports a sustained move or whether this is just another head-fake in the ceasefire cycle.
GBP/USD 1-hour chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Iran’s Foreign Minister, Abbas Araghchi, said on Tuesday that safe passage of Hormuz will be possible for two weeks. This statement came after US President Donald Trump agreed to a two-week ceasefire with Iran.
Key quotes
If attacks are halted, forces will stop actions.
Safe passage of Hormuz will be possible for 2 weeks.
Iran will halt attacks provided attacks against it cease.
Market reaction
Crude oil prices attract some sellers following this headline. At the time of writing, the West Texas Intermediate (WTI) is down 14.15% on the day at $88.85
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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