Forex News
- WTI price gains ground near $61.45 in Tuesday’s early Asian session.
- OPEC+ announced its decision to raise oil output by 137,000 barrels per day.
- IEA projects the global oil market is headed for a record surplus next year of 3.33 million bpd.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.45 during the Asian trading hours on Tuesday. The WTI drifts higher after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a smaller-than-expected hike in its crude production levels. Traders await the release of the American Petroleum Institute (API) weekly crude oil stock report later on Tuesday.
WTI price received some support as OPEC+ will raise oil output from November by 137,000 barrels per day (bpd), below market expectations of as much as a 500,000 bpd boost to production. The group has increased its oil output targets by more than 2.7 million bpd this year, accounting for over 2.5% of world demand.
"The price jump has primarily been boosted by OPEC+'s decision for a lower-than-expected production hike next month as the group intended to buffer the recent slump in oil markets," said independent analyst Tina Teng.
The ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies and supporting the black gold. The US proposed that the G7 allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.
On the other hand, IEA projected the global oil market is headed for a record surplus next year of 3.33 million bpd, about 360,000 bpd more than they forecast a month ago, as OPEC+ continues to revive production. This, in turn, might cap the upside for the WTI price in the near term.
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.
- Gold price attracts some buyers to near $3,970 in Tuesday’s early Asian session.
- Global uncertainty boosts demand for the safe-haven metal.
- Imminent US rate cuts underpin the Gold price, with two more Fed rate reductions expected this year.
Gold price (XAU/USD) extends its rally to around $3,970 during the early Asian session on Tuesday. The precious metal edges higher on political uncertainty across the globe and the expectation of a US interest rate cut. Gold prices broke the $3,000 psychological level for the first time in March and $3,900 on Monday.
Economic and political uncertainty in the US, France and Japan boost the safe-haven flows, benefiting the Gold price. Sanae Takaichi’s surprise victory in the Liberal Democratic Party (LDP) leadership election marks an important turning point for Japan’s policy and market outlook and pushes back the likely timing of the Bank of Japan’s (BoJ) next rate hike.
In France, new Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after taking office, deepening the country’s political crisis. Meanwhile, the US government shutdown entered its sixth day, with the US President Donald Trump administration warning it was moving forward with plans to slash the federal workforce.
“A slew of political and economic concerns around the world, such as the resignation of France’s new prime minister, rising yields in Japan and an ongoing US government shutdown, is all contributing to gold’s latest rally,” said Edward Meir, an analyst at Marex.
Furthermore, the prospect of an interest rate cut by the US Federal Reserve (Fed) might contribute to the yellow metal’s upside. Investors are currently pricing in nearly a 25 basis points (bps) reduction at the Fed meeting this month, with an additional 25 bps cut expected in the December policy meeting, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
Traders will keep an eye on the Fedspeak later on Tuesday. Fed’s Raphael Bostic, Michelle Bowman, Stephen Miran and Neel Kashkari are scheduled to speak. Any hawkish remarks from Fed policymakers could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.
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.
- USD/JPY gains ground around 150.35 in Tuesday’s early Asian session.
- Takaichi's policies may delay the BoJ's rate hike plans.
- Traders brace for signs that the US government will reopen as Congress is unable to pass a bill to continue funding operations.
The USD/JPY pair edges higher to near 150.35, the highest since August 1, during the early Asian session on Tuesday. The Japanese Yen (JPY) weakens against the US Dollar (USD) on political stability concerns after Japan's ruling Liberal Democratic Party (LDP) elected a new leader. Traders will keep an eye on the Fedspeak later on Tuesday.
Japan's ruling party has elected Sanae Takaichi as its new leader on Saturday, positioning the 64-year-old to be Japan's first female Prime Minister. Her victory caused traders to reduce bets that the Bank of Japan (BoJ) will hike interest rates this month, weighing on the JPY and creating a tailwind for the pair.
“Sanae Takaichi’s surprise victory in the LDP leadership election marks an important turning point for Japan’s policy and market outlook,” Societe Generale strategists wrote in a note, pushing back the likely timing of the BOJ’s next rate hike to December from October.
Markets reduce their bets of a Bank of Japan (BoJ) rate hike at its October meeting. Overnight index swaps are currently priced in nearly a 25% chance of an increase, down from a 60% possibility before the LDP’s leadership vote.
The US government shutdown entered its second week on Monday, with lawmakers unable to make progress on a deal to restart funding. Additionally, the US President Donald Trump administration warned it was moving forward with plans to slash the federal workforce.
Traders await signs that the US federal government will reopen as the shutdown is leaving a void of US economic data, with last Friday's Nonfarm Payrolls (NFP) report for September delayed along with other key releases until the government reopens. Concerns over a prolonged US government shutdown could undermine the Greenback against the JPY in the near term.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- Kiwi buyers target a close above the 200-day SMA at 0.5848 to trigger a bullish extension.
- Failure to reclaim the level may invite renewed selling pressure toward 0.5810 and the 0.5750 swing low.
- Momentum remains neutral-to-bearish, suggesting hesitation among buyers ahead of Tuesday’s trading session.
The New Zealand Dollar advances on Monday and trades near its daily close at around 0.5840 as Tuesday’s Asian session begins. Yesterday, the pair gained 0.20% but key resistance lies overhead with the 200-day Simple Moving Average (SMA) at 0.5848.
NZD/USD Price Forecast: Technical outlook
The technical picture shows the pair is neutral to downward biased, but a daily close above the 200-day SMA could open the door for further upside. If cleared, the next resistance would be the 20-day SMA at 0.5867 followed by the 50-day SMA at 0.5886 and the 100-day SMA at 0.5947.
Conversely, if NZD/USD stays below the 200-day SMA and bears drive prices lower, they would face key support at the October 6 low of 0.5810. A breach of the latter will expose the 0.5800 mark, followed by the September 26 swing low of 0.5754.
NZD/USD Price Chart – Daily
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- France’s PM Sebastien Lecomu resigns, unsettling investors and renewing concerns over Eurozone political stability.
- US government shutdown enters sixth day; Trump warns layoffs possible if Senate vote fails to end standoff.
- Eurozone data mixed: Retail Sales slow while Sentix sentiment shows slight recovery from September pessimism.
EUR/USD retreats during the North American session sponsored by political turmoil in France and US Dollar strength, amid the sixth day of government shutdown in the US. The pair trades at 1.1714, down 0.24%.
Euro weakens toward 1.17 as Lecomu’s resignation and prolonged US fiscal gridlock bolster safe-haven demand for the Greenback
Market mood remains positive, as portrayed by Wall Street, but the shared currency depreciates on news that the French Prime Minister Sebastien Lecomu submitted his resignation. The lack of news about negotiations regarding the re-opening of the US government leaves traders leaning on economic data from Europe and speeches by central bank officials.
The US economic docket will feature the University of Michigan (UoM) Consumer Sentiment survey on Friday. This and the tone of discussions between the White House and Democrats, could set the stage to the release of delayed data in the US.
Recently, US President Donald Trump said that layoffs could be triggered if the Senate vote on the shutdown fails, adds negotiations are ongoing with Democrats.
The Financial Times reported that the European Commission intends to propose tariffs of 50% on steel imports worldwide above a quota set at 2013 levels.
Earlier, economic data in the Eurozone revealed that Retail Sales slowed in August on year-over-year figures. At the same time, the Eurozone Sentix index in October improved slightly, compared to September’s excessive pessimism.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.03% | -0.06% | -0.00% | -0.00% | 0.05% | -0.09% | |
| EUR | -0.03% | 0.02% | -0.05% | -0.02% | -0.00% | 0.04% | 0.02% | |
| GBP | -0.03% | -0.02% | -0.06% | -0.04% | 0.02% | -0.02% | -0.01% | |
| JPY | 0.06% | 0.05% | 0.06% | 0.05% | 0.06% | -0.01% | -0.09% | |
| CAD | 0.00% | 0.02% | 0.04% | -0.05% | -0.02% | 0.00% | 0.03% | |
| AUD | 0.00% | 0.00% | -0.02% | -0.06% | 0.02% | -0.11% | -0.03% | |
| NZD | -0.05% | -0.04% | 0.02% | 0.00% | -0.01% | 0.11% | -0.07% | |
| CHF | 0.09% | -0.02% | 0.00% | 0.09% | -0.03% | 0.03% | 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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: The Euro hovers around 1.1700
- As of writing, the Kansas City Fed President Jeffrey Schmid said that the Fed must maintain inflation credibility and that inflation is too high. He added that monetary policy is appropriately calibrated.
- Eurozone Retail Sales in August rose by 1% YoY down from 2.2% in July yet mostly aligned with estimates of the previous twelve months. On a monthly basis, figures rose as expected 0.1%, up from August’s -0.5% MoM contraction.
- The Sentix Index in EZ improved from -9.2 to -5.4, better than the expected -8.5
- Money markets are fully pricing a 25-basis-point Fed cut at the October 29 meeting, with odds standing at 94%, according to Prime Market Terminal’s interest rate probability tool.
Technical outlook: EUR/USD holds firm waiting for a fresh catalyst
The EUR/USD remains subdued at around the 1.1700 mark for the sixth consecutive day, capped on the upside by the 20-day Simple Moving Average (SMA) at 1.1745 and on the downside by the 50-day SMA at 1.1683. Nevertheless, it should be noted that for two straight trading days, the pair achieved successive series of lower highs and hit a two-week low of 1.1651.
For a bullish continuation, the EUR/USD must clear 1.1760 before testing 1.1800. Once cleared the next resistance would be the July 1 high of 1.1830 ahead of testing the yearly peak at 1.1918.
Contrarily, the EUR/USD first support would be 1.1700, the 50-day SMA and the 100-day SMA at 1.1625.
Euro FAQs
The Euro is the currency for the 19 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.
The President of the Kansas City Federal Reserve Bank Jeffrey Schmid crossed the newswires on October 6. He delivered hawkish remarks, saying that the Fed must maintain its inflation credibility and stressed that inflation is too high. He added that monetary policy is appropriately calibrated.
Key takeaways:
In balancing its goals, the Fed must maintain inflation credibility.
Inflation is too high. It's worrying that price increases are becoming more widespread.
Monetary policy is appropriately calibrated.
Labor market is cooling and remains healthy.
Monetary policy only slightly restrictive.
Aggressively boosting demand could raise risk of outsized increase in prices.
I'm monitoring alternative labor market and price data closely.
I expect tariffs to have muted effect on inflation.
Hard to Determine If Stablecoin is Anything Different from Venmo on Steroids.
Trump administration working to maximize public service
Sees AI and other innovations as key for obtaining reliable government data
Current interest rates may be lower than usual due to Fed's MBS purchases
Hard to understand how US Dollar would not be the world's reserve currency for a long, long time
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.
Forex Market News
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