Forex News
TD Securities analysts characterize the Bank of Canada’s (BoC) March Summary of Deliberations as slightly dovish, consistent with the March 18 decision. They stress patience, citing inflation near target, weaker GDP, housing softness and labour market headwinds. Officials note potential CPI spillovers from higher energy prices and stand ready to respond, but see no urgency given geopolitical uncertainty.
BoC minutes underscore cautious policy stance
"The Bank of Canada's Summary of Deliberations from March leaned slightly dovish, in line with the broader tone of the March 18th policy decision."
"The key message from the Bank remains one of patience, as the Bank noted they have "some flexibility because inflation was close to target and core measures suggested limited pressures" and that it could "take some time to see how the war in Iran evolved and what it meant for the outlook"."
"Otherwise, the minutes noted that GDP growth was tracking below the Bank's previous forecast, with "continued weakness" in housing and "ongoing softness" in the labour market."
"The Bank cited airfares and food prices as two areas where higher energy prices could spill over to other CPI components, while noting "it was too early to assess their net impact on the growth outlook"."
"The Bank stands ready to respond as needed, but it did not sound like they are in any rush given elevated uncertainty around the geopolitical outlook, alongside domestic headwinds"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold retreats from two-week highs as Trump signals continued military action in Iran.
- US Dollar and Treasury yields rebound sharply, weighing on XAU/USD.
- Technically, XAU/USD forms a bearish flag on the 4-hour chart as momentum weakens.
Gold (XAU/USD) trades on the back foot on Thursday, snapping a four-day rally as initial optimism that the US-Israel war with Iran could end soon faded after US President Donald Trump signaled continued military action in his address to the nation.
At the time of writing, XAU/USD is trading around $4,612, down nearly 3.0% on the day, pulling back from a two-week high near $4,800.
Trump’s remarks lift USD, yields as Oil rebounds
President Trump said the US is “on track to complete all of America’s military objectives shortly — very shortly,” while warning that Washington would “hit them extremely hard over the next two to three weeks” and “bring them back to the stone ages.” Trump added that discussions are ongoing, stating, “We have all the cards; they have none.”
In response, markets turned risk-averse, with the US Dollar (USD) and US Treasury yields rebounding sharply, weighing on Gold. At the same time, Oil prices resumed their upside as the reopening of the Strait of Hormuz remains a key issue.
Hawkish interest rate outlook remains a headwind for Gold
Rising inflation and growth risks linked to higher energy prices are prompting a more hawkish outlook from central banks, particularly the Federal Reserve (Fed), which is offsetting the metal’s appeal as a safe-haven asset.
The “higher-for-longer” interest rate narrative has remained a key headwind for the non-yielding metal since the Middle East war began, as higher rates increase the opportunity cost of holding Gold. According to the CME FedWatch Tool, markets widely expect the Fed to keep rates unchanged at 3.50%-3.75% this year, compared to earlier expectations of at least two rate cuts.
Fed officials struck a cautious tone this week, signaling that policymakers are in no rush to adjust interest rates despite rising inflation risks driven by energy prices.
St. Louis Fed President Alberto Musalem said on Wednesday that monetary policy is “well positioned” and should remain in place “for some time,” while noting that risks to both inflation and employment are skewed to the downside. He also described the economic outlook as “highly uncertain."
Kansas City Fed President Jeffrey Schmid said on Tuesday that the central bank must “follow through with policy actions to validate stable medium- and long-term inflation expectations.” Schmid added that “can’t assume inflation from higher oil prices will be transitory."
Technical analysis: XAU/USD forms a bearish flag on the 4-hour chart
From a technical perspective, XAU/USD remains tilted to the downside in the near term. On the 4-hour chart, prices have failed to sustain a move above the 100-period Simple Moving Average (SMA) around $4,711, keeping the bearish bias intact.
Price action appears to be forming a bearish flag pattern, with price currently trading near the lower boundary after facing rejection from the upper trendline. Momentum deteriorates as the Relative Strength Index (RSI) retreats toward the 50 line from overbought territory, while the Moving Average Convergence Divergence (MACD) histogram turns slightly negative as the MACD line crosses below the signal line, reinforcing fading upside momentum.
Immediate support is seen around the $4,600 level, followed by the 50-period SMA near $4,535. A break below this zone could open the door for further downside toward the $4,200-$4,000 region.
On the upside, a move above the 100-period SMA around $4,711 and the $4,800 mark could pave the way for a test of the next resistance near $5,000.
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.
ING’s Frantisek Taborsky notes that Central and Eastern European currencies remain under pressure despite recent gains in the Forint, Zloty and Koruna. He points to holiday-thinned liquidity, geopolitical uncertainty, and still-elevated EUR/PLN and EUR/CZK levels, while Turkish inflation data are expected to keep Central Bank of Turkey rate cuts off the table for the coming months.
Regional FX still under pressure
"The region is preparing for a long weekend, with the Czech Republic and Hungary closed for trading on Friday. Given the uncertain geopolitical environment, this should lead to a reduction of risk ahead of the extended week despite the risk-on sentiment in the last two days."
"Turkey will release its March inflation on Friday. We expect a slowdown from 3.0% to 2.2% month-on-month, but still a higher reading than before the fuel shock, resulting in an increase from 31.5% to 32.2% YoY. This should confirm that Central Bank of Turkey rate cuts are not on the table at this time – at least for the next few months, until more clarity is seen on the impact of oil prices and the development of domestic inflationary pressures."
"CEE FX saw some relief yesterday as the zloty and koruna joined the forint rally, but as global headlines suggest, we are still far from any visible relief. EUR/PLN and EUR/CZK remain close to their local highs, and we can expect some reversal in the recent EUR/HUF slide of the past few days. Getting back to 390 could be too far."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Standard Chartered’s India economists Anubhuti Sahay and Saurav Anand cut India’s FY27 GDP growth forecast to 6.4% from 7.0% and FY26 to 7.3% from 7.6%, citing elevated energy prices and Middle East tensions. They now see higher CPI inflation at 4.7% in FY27, a wider C/A deficit, persistent BoP shortfalls and a risk of RBI rate hikes if global yields rise further.
Higher energy costs hit growth and BoP
"We revise our macro forecasts amid the ongoing Middle East conflict and the likelihood of a prolonged period of elevated energy prices."
"We lower our GDP growth forecast for FY27 to 6.4% from 7% and for FY26 to 7.3% from 7.6%."
"However, we are more concerned about the external sector if energy prices stay elevated for a sustained period."
"We maintain our call for the Monetary Policy Committee (MPC) to stay on hold as a rise in inflation is likely to remain well within the mandated inflation band of 2-6%."
"However, we acknowledge the risk of a 25-50bps increase in the repo rate if a sustained rise in energy prices (crude oil prices above USD 100/bbl) pushes global rates higher, putting further pressure on the Indian rupee (INR)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver plunges nearly $10 from Wednesday's highs and hits levels below $71.00.
- Trump's disappointing message on Iran's war sent precious metals tumbling.
- XAG/USD has broken the near-term trendline support at $71.00.
Silver (XAG/USD) has lost more than $10, hammered by a risk-averse reaction to US President Trump's televised message on Wednesday. The precious metal is testing levels below $71.00 at the time of writing, after peaking at $81.13 on Wednesday, as the Dollar prevails in risk-averse markets.
Trump failed to give any specific date for the end of the Iran war, as everybody had expected. The US president, instead, reiterated the aggressive threats against the Islamic Republic and his calls on allies to “build up the courage” to secure the Strait of Hormuz. Tehran responded, pledging with devastating attacks on Israel and the US, which pushes back any hope of a de-escalation.
Technical Analysis: Silver breaks the near-time bullish trendline
The hourly chart shows XAG/USD trading at $70.80 after breaching the ascending trendline support at $71.70. The near-term bias has turned bearish as the Relative Strength Index (RSI) retreated toward the low-30s from prior readings near 60, signaling mounting downside momentum. The Moving Average Convergence Divergence (MACD) remains below the signal line, reinforcing sustained selling pressure.
The intra-day low, at $69.65, might provide some support as technical indicators approach oversold levels. Further down, the March 26 low, near $66.70, comes into focus. The March 23 low, at $61.40 aeems out of sight at the moment.
On the upside, the previous trendline support, at the mentioned $71.70, has now turned resistance and is closing the path towards the intra-day high, at $75.88.
(The technical analysis of this story was written with the help of an AI tool.)
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.
TD Securities analysts note that US yields flattened as geopolitical headlines from Iran and comments by Trump dominated sentiment. Strong ISM Manufacturing and Retail Sales data surprised to the upside, while they expect a below-consensus 30k payrolls print and unchanged unemployment. They also highlights firm February spending data and rising input costs linked to Oil and tariffs.
Solid data but payrolls seen softer
"The curve flattened on Wednesday, with news coming from Trump that we are going to be out of Iran quickly and will monitor Iran by satellite."
"Iran said that they will not open the Strait based on Trump's claims."
"ISM manufacturing came in higher than expected, while both headline and control group of retail sales also surprised to the upside."
"On Thursday, jobless claims will be released, but all focus continues to be on the Middle East and payrolls on Friday, where we expect a below consensus print of 30k and an unchanged UE rate."
"Fed's Bowman will be speaking as well as Logan, who could give some thoughts around bank reserves and the Fed's balance sheet."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
OPEC+ is likely to weigh a further oil output quota hike at the meeting on April 5, Sunday, to prepare for any easing of Strait of Hormuz export constraints, according to a report from Reuters.
Market reaction
No negative impact on the Oil price appeared despite hopes of an increase in oil output. As of writing, the WTI Oil price trades 9% higher at above $102.50.
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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