Forex News
A report released by the Bank of Japan (BoJ) on Thursday revealed that the impact of weak Japanese Yen shock on inflation bigger than that from oil shock. The weakening of the JPY pushes up prices for wide range of goods services, thereby gives bigger boost to consumer inflation excluding fresh food, energy.
Key quotes
Impact of weak Yen shock on inflation bigger than that from oil shock.
Weak Yen pushes up prices for wide range of goods services, thereby gives bigger boost to consumer inflation excluding fresh food, energy.
Oil price rises put fairly big upward pressure on smaller number of goods related to energy, which means impact on CPI excluding fresh food, energy isn't very big.
Weak Yen shock expands wage, profit margin and leads to increase in GDP deflater, while energy shock squeezes wage, profit margin and leads to decrease in GDP deflater.
Under risk scenario projecting elevated oil prices, weaker Yen, stock falls, real GDP forecasts will be -0.1% point to 0.2% point lower in fiscal 2026-2028 than BoJ's median baseline projections.
Under risk scenario, core consumer inflation will overshoot significantly from BoJ's median baseline projections, could hover around 3% in fiscal 2026, 2027.
Such overshoot of inflation could heighten medium-, long-term inflation expectations.
If there is big supply chain disruption, real GDP could undershoot sharply while bottlenecks could lead to non-linear rise in inflation.
BoJ will scrutinise various risk factors more than ever as growth, price developments could sharply deviate from its baseline projections depending on Middle East developments.
Market reaction
As of writing, the USD/JPY pair is up 0.02% on the day at 160.48.
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.
- NZD/USD struggles to capitalize on a modest intraday uptick to the 200-day SMA support breakpoint.
- The Fed’s hawkish tilt and the US-Iran stalemate continue to underpin the USD, capping spot prices.
- Traders now look to the Advance US Q1 GDP report and the US PCE Price Index for a fresh impetus.
The NZD/USD pair attracts fresh sellers following a modest Asian session move up to the 0.5845 area on Thursday and slides back closer to a two-and-a-half week low, touched the previous day. Spot prices currently trade around the 0.5825 region, nearly unchanged for the day, and seem vulnerable to this week's retracement slide from the 0.5920-0.5925 horizontal barrier amid a bullish US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, gains positive traction for the third consecutive day and touches a fresh high since April 13 amid a combination of supporting factors. The global risk sentiment remains fragile in the wake of stalled US-Iran peace talks. Furthermore, the US Federal Reserve’s (Fed) relatively hawkish tilt on Wednesday lends additional support to the safe-haven USD, which, in turn, is seen weighing on the NZD/USD pair.
US President Donald Trump rejected Iran's new proposal to end the two-month conflict and reiterated that there will be no peace deal with the Islamic Republic unless they agree to give up the nuclear program. Trump further said that the naval blockade of Iranian ports will continue. The continued disruptions of energy supplies through the Strait of Hormuz remain supportive of elevated Crude Oil prices, fueling inflationary concerns and reaffirming hawkish Fed expectations.
As was widely expected, the US central bank held its key policy rate unchanged at 3.50%-3.75%. Notably, the decision saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the policy statement. Traders sharply reduced bets on any further Fed policy easing and are now pricing in over a 10% chance of a rate increase by year-end. This favors the USD bulls and validates the negative outlook for the NZD/USD pair.
The aforementioned factors offset expectations that the Reserve Bank of New Zealand (RBNZ) would maintain a cautious stance or consider tightening to bring inflation back to the 2% midpoint. This, along with an intraday failure near a technically significant 200-day Simple Moving Average (SMA) support-turned-resistance, suggests that the path of least resistance for the NZD/USD pair is to the downside. Traders now look to important US macro data for a fresh impetus.
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 Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.09% | 0.06% | 0.00% | -0.01% | 0.00% | 0.05% | |
| EUR | -0.15% | -0.02% | -0.07% | -0.14% | -0.15% | -0.12% | -0.07% | |
| GBP | -0.09% | 0.02% | -0.04% | -0.12% | -0.11% | -0.09% | -0.05% | |
| JPY | -0.06% | 0.07% | 0.04% | -0.07% | -0.08% | -0.11% | -0.04% | |
| CAD | -0.01% | 0.14% | 0.12% | 0.07% | -0.03% | -0.02% | 0.05% | |
| AUD | 0.01% | 0.15% | 0.11% | 0.08% | 0.03% | 0.03% | 0.09% | |
| NZD | -0.00% | 0.12% | 0.09% | 0.11% | 0.02% | -0.03% | 0.05% | |
| CHF | -0.05% | 0.07% | 0.05% | 0.04% | -0.05% | -0.09% | -0.05% |
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/JPY weakens as the Euro struggles amid rising risk aversion driven by Middle East tensions.
- The European Central Bank is broadly expected to keep interest rates steady on Thursday.
- The currency cross may rebound as the Yen weakens amid growing short positions.
EUR/JPY edges lower after four days of gains, trading around 187.20 during the Asian hours on Thursday. The currency cross depreciates as the risk-sensitive Euro (EUR) struggles amid increased risk aversion, which could be attributed to the geopolitical tensions in the Middle East.
US President Donald Trump said the naval blockade on Iran will continue until a nuclear deal is secured, dismissing calls to reopen key routes and favoring economic pressure over military action. Iran warned of retaliation, accusing Washington of using coercion and destabilization tactics to force compliance.
The European Central Bank (ECB) is widely expected to leave interest rates unchanged on Thursday, in line with many global peers this week, while signaling that a rate hike, possibly as early as June, may be necessary to counter an energy-driven surge in consumer prices.
Any delay in tightening is likely to be brief, with investors anticipating a move in June followed by two additional hikes later this year, as fading prospects for peace in Iran keep oil prices elevated and nearing levels outlined in the ECB’s “adverse” scenario, according to Reuters.
Meanwhile, downside pressure on EUR/JPY may be limited as the Japanese Yen (JPY) remains under strain, with traders increasingly building short positions on expectations that neither further rate hikes nor official intervention will offer meaningful near-term support.
Bank of Japan (BoJ) Governor Kazuo Ueda reaffirmed the central bank’s gradual tightening stance, though the yen continued to weaken. Verbal interventions from policymakers have also had limited impact, with Finance Minister Satsuki Katayama stating that authorities remain ready to step into foreign exchange markets at any time to stabilize the currency.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
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 European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Gold prices remained broadly unchanged in India on Thursday, according to data compiled by FXStreet.
The price for Gold stood at 13,965.84 Indian Rupees (INR) per gram, broadly stable compared with the INR 13,974.89 it cost on Wednesday.
The price for Gold was broadly steady at INR 162,894.80 per tola from INR 162,999.50 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,965.84 |
10 Grams | 139,660.70 |
Tola | 162,894.80 |
Troy Ounce | 434,394.00 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- Gold attracts some buyers on Thursday as the USD is seen consolidating the post-FOMC gains.
- Elevated Crude Oil prices continue to fuel inflationary concerns and hawkish Fed expectations.
- Moreover, the US-Iran stalemate favors the USD bulls and should keep a lid on the commodity.
Gold (XAU/USD) clings to modest intraday gains through the Asian session on Thursday, albeit the lack of follow-through buying warrants caution before positioning for any meaningful recovery from a fresh monthly low set the previous day. The US Dollar (USD) enters a bullish consolidation phase following Wednesday's relatively hawkish Federal Reserve (Fed)-inspired rise to a two-and-a-half-week high and is seen as a key factor acting as a tailwind for the commodity.
As was widely expected, the US central bank held its key policy rate unchanged at 3.50%-3.75%. Notably, the decision saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the policy statement. In the post-meeting press conference, the outgoing Fed Chair Jerome Powell clarified that the debate was about the neutrality of the tone and not the need to hike interest rates. Traders, however, sharply reduced bets on any further easing by the Fed in 2026 and are now pricing in over a 10% chance of a rate increase by the year-end.
The decision comes at a time when the war-driven surge in energy prices has been fueling inflationary concerns amid stalled US-Iran peace talks and favors the USD bulls. In the latest development surrounding the Middle East crisis, US President Donald Trump rejected Iran's new proposal to end the two-month conflict and reiterated that there will be no peace deal with the Islamic Republic unless it agrees to give up the nuclear program. Trump added that the naval blockade of Iranian ports is adding to the continued disruptions of energy supplies through the Strait of Hormuz.
This, in turn, continues to underpin the Greenback's reserve currency status and keeps a lid on any meaningful appreciating move for the Gold price. Nevertheless, the XAU/USD pair now seems to have snapped a three-day losing streak and currently trades just above the $4,550 level, up 0.25% for the day. Traders now look forward to the US economic docket, featuring the release of the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index. This, along with the Bank of England and the European Central Bank policy updates, should infuse some volatility.
XAU/USD 4-hour chart
Gold seems vulnerable as breakdown below 38.2% Fibo. level remains in play
Against the backdrop of the recent failure to find acceptance above the 200-period Simple Moving Average (SMA) on the 4-hour chart, the overnight break below the 38.2% Fibonacci retracement level of the March-April upswing favors the XAU/USD bears.
Moreover, momentum indicators remain fragile, with the Relative Strength Index (RSI) hovering near 38 and the Moving Average Convergence Divergence (MACD) line still in negative territory. This, in turn, suggests that recovery attempts could struggle while the Gold price stays capped beneath these overhead levels.
On the downside, immediate support is seen at the 50.0% retracement region around $4,494.59, ahead of the deeper Fibonacci floors at $4,401.36 and $4,268.64, with the latter levels marking a broader corrective cushion if selling pressure resumes.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- USD/JPY holds steady near 160.45 in Thursday’s early European session.
- Fed held interest rates steady at 3.50%–3.75% on Wednesday; traders brace for the US Q1 GDP and Core PCE data.
- Japan’s Katayama said authorities are on standby to take decisive action against speculative currency moves.
The USD/JPY pair steadies near a 21-month high of around 160.45 during the early European trading hours on Thursday. Traders prefer to wait on the sidelines as Japanese authorities are on high alert for intervention after the Japanese Yen (JPY) breached the psychological level.
The US Federal Reserve (Fed) kept the benchmark interest rate steady in a range between 3.50% and 3.75% at the April policy meeting on Wednesday. The Fed's 8–4 decision to leave the rate unchanged was its most divided since 1992, drawing three dissents from officials who no longer think the bank should communicate a bias towards easing.
During the press conference, Fed Chair Jerome Powell warned that near-term inflation expectations are rising, adding that he would stay on the Board of Governors for an indefinite period, even after his chairmanship ends. A hawkish Fed holding rates could provide some support to the Greenback against the JPY.
The preliminary reading of the US Gross Domestic Product (GDP) for the first quarter (Q1) and the Personal Consumption Expenditures (PCE) Price Index inflation report for March will be the highlights later on Thursday.
On the other hand, potential intervention threats from Japanese officials might underpin the JPY and cap the upside for the pair. Japanese Finance Minister Satsuki Katayama highlighted a "high sense of urgency" regarding speculative and weak-JPY moves driven by Middle East tensions.
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.
- AUD/USD stages a modest recovery from a two-week low, around 0.7100, touched on Wednesday.
- The Fed’s hawkish tilt and Iran tensions continue to underpin the USD, warranting caution for bulls.
- The technical setup suggests that any further move up is likely to be sold into and remain capped.
The AUD/USD pair gains some positive traction during the Asian session on Thursday and recovers a part of the previous day's heavy losses to the 0.7100 mark, or a two-week low.
Expectations that the Reserve Bank of Australia (RBA) will stick to its hawkish stance counter China's mixed official PMIs and turn out to be a key factor offering some support to the Australian Dollar (AUD). The US Dollar (USD), on the other hand, sticks to its positive tone near the highest level since April 13 on the back of persistent geopolitical uncertainties stemming from stalled US-Iran peace talks. Furthermore, diminishing odds for any further policy easing by the US Federal Reserve (Fed) underpin the USD and should cap the upside for the AUD/USD pair.
From a technical perspective, spot prices have repeatedly failed to find acceptance above the 0.7200 mark and have oscillated in a range over the past two weeks or so. Meanwhile, the overnight slide confirms a breakdown below the 0.7130-0.7125 confluence – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement level of the recent recovery from the year-to-date low touched in March. This, in turn, favors the AUD/USD bears, suggesting that the move higher might now be seen as a selling opportunity.
Moreover, the Relative Strength Index (RSI) holds around 40 and hints at modest bearish momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) is in negative territory but flattening, suggesting downside pressure is softening rather than accelerating.
In the meantime, immediate resistance emerges at the 23.6% Fibonacci retracement at 0.7131, with a stronger barrier at the recent cycle high near 0.7223. On the downside, initial support aligns with the 0.7100 mark ahead of the 38.2% retracement at 0.7074. This is followed by the 50.0% level at 0.7027 and deeper supports at the 61.8% and 78.6% retracements at 0.6981 and 0.6915, respectively, where buyers would likely attempt to slow any extended pullback.
(The technical analysis of this story was written with the help of an AI tool.)
AUD/USD 4-hour chart
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 Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.00% | 0.00% | -0.04% | -0.11% | -0.08% | -0.01% | |
| EUR | -0.11% | -0.07% | -0.13% | -0.16% | -0.21% | -0.17% | -0.10% | |
| GBP | -0.01% | 0.07% | -0.02% | -0.08% | -0.12% | -0.09% | -0.02% | |
| JPY | 0.00% | 0.13% | 0.02% | -0.06% | -0.11% | -0.13% | -0.04% | |
| CAD | 0.04% | 0.16% | 0.08% | 0.06% | -0.08% | -0.06% | 0.04% | |
| AUD | 0.11% | 0.21% | 0.12% | 0.11% | 0.08% | 0.04% | 0.12% | |
| NZD | 0.08% | 0.17% | 0.09% | 0.13% | 0.06% | -0.04% | 0.08% | |
| CHF | 0.00% | 0.10% | 0.02% | 0.04% | -0.04% | -0.12% | -0.08% |
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).
- WTI rises amid an intensifying naval blockade of Iranian ports.
- Canada’s oil sector draws renewed major interest as Middle East tensions boost its appeal to global operators.
- President Trump said Wednesday that the naval blockade on Iran will continue until Tehran agrees to a nuclear deal.
West Texas Intermediate (WTI) oil price extends its gains for the fourth consecutive day, trading around $105.70 per barrel during the Asian hours on Thursday. Crude oil prices climb as a deepening naval blockade of Iranian ports.
US President Donald Trump stated on Wednesday that the naval blockade of Iran will remain in place until a deal is reached with Tehran over its nuclear program, according to Bloomberg. He dismissed proposals to reopen the key shipping route, arguing that economic pressure is more effective than military strikes.
Iranian officials have warned of retaliation if the blockade continues, accusing Trump of trying to force Tehran into compliance through economic coercion and internal destabilization efforts.
Data from the US Energy Information Administration (EIA) showed crude inventories fell sharply by 6.233 million barrels in the week ending April 24, reversing the previous increase of 1.925 million barrels. At the same time, oil exports jumped to record levels above 6 million barrels per day, pointing to tightening global supply conditions.
Canada’s oil and gas sector is drawing renewed interest from global energy majors as rising Middle East tensions boost its attractiveness to major operators. Shell’s $16.4 billion acquisition of ARC Resources highlights this trend, while TotalEnergies and ConocoPhillips are re-evaluating Canadian peers alongside Equinor and BP.
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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