Forex News
- USD/CHF struggles as the Swiss Franc gains on safe-haven demand amid geopolitical tensions.
- Swiss Franc may further gain on expectations of continued SNB accommodative stance as January inflation held at 0.1%.
- US Dollar steadies after recent gains, supported by hawkish FOMC Meeting Minutes.
USD/CHF remains in the negative territory after paring daily losses, trading near 0.7720 during the Asian hours on Thursday. The pair struggles as the Swiss Franc (CHF) draws safe-haven support amid persistent tensions between the United States and Iran, alongside stalled Ukraine-Russia talks. Traders are also awaiting Switzerland’s Trade Balance and Industrial Production data later in the day.
The Swiss Franc could receive more support from expectations that the Swiss National Bank (SNB) will maintain an accommodative stance in the near term. Swiss inflation remained slightly positive at 0.1% in January, at the lower bound of the SNB’s 0–2% target range and in line with its Q1 projections. This reinforced market views that rates will likely stay unchanged at the SNB’s March meeting and possibly throughout 2026.
SNB President Martin Schlegel recently said the central bank can tolerate short periods of negative inflation while focusing on medium-term price stability, noting that the bar for returning to negative rates remains high.
However, the USD/CHF pair could find renewed support as the US Dollar (USD) steadies after gaining more than 0.5% in the previous session, boosted by hawkish minutes from the Federal Open Market Committee (FOMC). The January FOMC Meeting Minutes revived speculation about possible rate hikes if inflation persists. While nearly all policymakers backed holding rates steady, only a few favored a cut, and officials signaled openness to easing if inflation cools as expected.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
Reserve Bank of New Zealand (RBNZ) Assistant Governor Karen Silk said in a Reuters interview on Thursday, the next move in interest rates will likely be up.
Additional quotes
Uncertainty over the path of inflation and consumer demand meant there are still risks on both sides.
I think it is just a reflection of reality to say that policy will stay accommodative for some time.
Even with a small increase, then you're really only coming into the bottom end of what the central bank views as the band for the neutral rate.
It's just the quantum of spare capacity that sits in the economy, you can actually have growth that goes above potential for a period of time and still have inflation come back.
Market reaction
The New Zealand (NZD) recovery seems to be gaining some traction following these above comments, with the NZD/USD adding 0.17% on the day to trade at 0.5972, as of writing.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | 0.04% | 0.09% | -0.05% | -0.36% | -0.14% | -0.07% | |
| EUR | 0.06% | 0.10% | 0.15% | -0.01% | -0.30% | -0.08% | -0.01% | |
| GBP | -0.04% | -0.10% | 0.06% | -0.09% | -0.40% | -0.18% | -0.11% | |
| JPY | -0.09% | -0.15% | -0.06% | -0.17% | -0.47% | -0.28% | -0.19% | |
| CAD | 0.05% | 0.01% | 0.09% | 0.17% | -0.30% | -0.09% | -0.02% | |
| AUD | 0.36% | 0.30% | 0.40% | 0.47% | 0.30% | 0.22% | 0.29% | |
| NZD | 0.14% | 0.08% | 0.18% | 0.28% | 0.09% | -0.22% | 0.06% | |
| CHF | 0.07% | 0.01% | 0.11% | 0.19% | 0.02% | -0.29% | -0.06% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- GBP/USD struggles to register any recovery from a four-week low touched this Thursday.
- Bets for a March BoE rate cut continue to undermine the GBP and favor bearish traders.
- The less dovish FOMC Minutes support the USD and back the case for a further decline.
The GBP/USD pair is seen consolidating its weekly losses registered over the past three days and oscillating in a narrow range near a four-week trough, touched during the Asians session on Thursday. Spot prices currently trade just below the 1.3500 psychological mark and seem vulnerable to slide further.
The British Pound (GBP) continues with its relative underperformance on the back of rising bets that the Bank of England (BoE) will cut interest rates at its next policy meeting in March. The expectations were reaffirmed by the disappointing UK jobs report and a fall in the UK consumer inflation to its lowest level in nearly a year. This, along with a bullish US Dollar (USD), validates the near-term negative outlook for the GBP/USD pair.
The January FOMC meeting Minutes released on Wednesday showed that policymakers were deeply divided over the necessity and timing of further interest rate cuts amid concerns over still sticky inflation. In fact, several Federal Reserve (Fed) officials indicated that more rate cuts could be warranted if inflation declines as expected, while others cautioned that easing too early could compromise the central bank's 2% inflation target.
Meanwhile, reports that the US military is prepared to strike Iran as early as this weekend keep geopolitical risks in play, assisting the safe-haven Greenback in preserving the overnight strong gains to over a one-week high. This further backs the case for an extension of the GBP/USD pair's weekly downtrend, suggesting that any attempted recovery might now be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
Traders now look to Thursday's US economic docket – featuring the release of Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Pending Home Sales data. Apart from this, speeches from influential FOMC members will drive the USD and the GBP/USD pair later during the North American session. The focus, however, will remain glued to the US Personal Consumption Expenditure (PCE) Price Index, due on Friday.
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.
- EUR/JPY may fall as the Japanese Yen could gain on expectations of continued BoJ policy tightening.
- Japan’s Core Machinery Orders surged 19.1% MoM; orders rose 16.8% YoY, beating forecasts.
- The Financial Times reports ECB President Christine Lagarde may step down before October 2027.
EUR/JPY extends its gains for the second successive session, trading around 182.80 during the Asian hours on Thursday. The upside of the currency cross could be restrained as the Japanese Yen (JPY) may find support from expectations that the Bank of Japan (BoJ) will continue tightening policy. According to Reuters, markets are pricing in nearly an 80% chance of a BoJ rate hike in April 2026. Still, policymakers are likely to assess upcoming data before deciding on further tightening.
Japan’s Core Machinery Orders jumped 19.1% month-over-month (MoM) to ¥1,052.5 billion in December 2025, rebounding from an 11% decline in November and far exceeding expectations of a 4.5% rise. The surge, the strongest in over a decade, was driven by large, one-off orders from refineries and nuclear fuel producers. On annual basis, private-sector orders rose 16.8% in December, reversing November’s 6.4% contraction and beating forecasts for a 3.9% increase.
The Financial Times reported that European Central Bank (ECB) President Christine Lagarde may step down before her scheduled retirement in October 2027. The report said Lagarde aims to give French President Emmanuel Macron and German Chancellor Friedrich Merz time to agree on her successor, though no timeline was specified.
Looking ahead, traders will focus on Japan’s National Consumer Price Index (CPI) data due Friday. Focus will shift toward preliminary Purchasing Managers' Index (PMI) readings from Germany and the Eurozone.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- USD/JPY drifts higher to near 155.00 in Thursday’s early Asian session.
- Hawkish signals from the Fed support the US Dollar.
- Further rate hikes by the BoJ by April or July are expected to lift the Japanese Yen and create a headwind for the pair.
The USD/JPY pair gains traction to around 155.00 during the Asian trading hours on Thursday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) following hawkish Federal Reserve (Fed) meeting minutes. Traders brace for Japan’s National Consumer Price Index (CPI) data on Friday for fresh impetus.
The US central bank decided to cut its benchmark rate by three-quarters of a percentage point in consecutive reductions in September, October and December. Those moves bring the key rate in a range between 3.5%-3.75%.
According to minutes released on Wednesday from the January Fed meeting, officials split on where the interest rates should go. Several policymakers stated that rate hikes could be on the table and wanted the post-meeting statement to more closely reflect “a two-sided description of the Committee’s future interest rate decisions.”
Japanese Prime Minister Sanae Takaichi’s landslide election victory earlier this month has led to expectations of expansionary fiscal policy, including a potential two-year suspension of food sales tax. The IMF has warned Japan to avoid these tax cuts to maintain fiscal stability.
Analysts anticipate the next rate hike is most likely to occur in April. Some market experts indicate a move as early as March is possible if economic data, particularly wage negotiations and inflation trends, remain strong.
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.
- The USD pauses for a breather following the previous day’s rally to over a one-week top.
- The less dovish FOMC Minutes temper rate cut bets and continue to support the USD.
- Geopolitical risks offset a positive risk tone and further underpin the safe-haven buck.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, is seen consolidating the previous day's strong move up to over a one-week high and oscillating in a narrow range during the Asian session on Thursday. The Index currently trades around the 97.70 region, nearly unchanged for the day.
Minutes from the January FOMC meeting revealed on Wednesday that policymakers were deeply divided over the necessity and timing of further rate cuts amid concerns about inflation. In fact, several Federal Reserve (Fed) officials indicated that more rate cuts could be warranted if inflation declines as expected, while others cautioned that easing too early could compromise the central bank's 2% inflation target.
This comes on top of the blowout January Nonfarm Payrolls (NFP) report, released last week, and tempers expectations for a more aggressive policy easing by the US central bank, which, in turn, acts as a tailwind for the US Dollar (USD). Moreover, reports that the US military is prepared to strike Iran as early as this weekend keep geopolitical risks in play and further underpin the Greenback's safe-haven status.
That said, traders are still pricing in the possibility of at least two interest cuts by the Fed in 2026. The bets were lifted by softer US consumer inflation figures last Friday, which, along with the upbeat market mood, held back the USD bulls from placing aggressive bets. The focus now shifts to the US Personal Consumption Expenditure (PCE) Price Index on Friday, which should provide a fresh impetus to the USD.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.67% | 1.13% | 1.52% | 0.58% | 0.09% | 0.91% | 0.52% | |
| EUR | -0.67% | 0.46% | 0.86% | -0.08% | -0.59% | 0.25% | -0.14% | |
| GBP | -1.13% | -0.46% | 0.13% | -0.54% | -1.05% | -0.22% | -0.60% | |
| JPY | -1.52% | -0.86% | -0.13% | -0.93% | -1.39% | -0.59% | -0.94% | |
| CAD | -0.58% | 0.08% | 0.54% | 0.93% | -0.54% | 0.34% | -0.06% | |
| AUD | -0.09% | 0.59% | 1.05% | 1.39% | 0.54% | 0.84% | 0.45% | |
| NZD | -0.91% | -0.25% | 0.22% | 0.59% | -0.34% | -0.84% | -0.39% | |
| CHF | -0.52% | 0.14% | 0.60% | 0.94% | 0.06% | -0.45% | 0.39% |
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 may rebound on supply concerns amid US-Iran tensions and stalled Ukraine-Russia talks.
- US-Iran talks remain inconclusive, with Tehran citing a general agreement framework for a possible nuclear deal.
- Ukraine-Russia peace talks in Geneva ended without progress.
West Texas Intermediate (WTI) Oil price edges lower after registering 4.9% losses in the previous session, trading around $65.00 per barrel during the Asian hours on Thursday. Crude Oil prices could regain ground on potential supply risks amid escalating tensions between the United States (US) and Iran, as well as stalled Ukraine-Russia negotiations.
US-Iran discussions remain inconclusive, with Tehran claiming a “general agreement” on the framework of a potential nuclear deal with United States officials. Vice President JD Vance said Iran failed to meet US red lines, while US President Donald Trump reiterated that military action remains on the table. Reports also suggest any US military action may evolve into a prolonged campaign, with Israel pushing for an outcome targeting regime change in the Islamic Republic.
According to Reuters, two days of peace talks in Geneva between Ukraine and Russia ended without progress. Ukrainian President Volodymyr Zelenskiy accused Moscow of delaying US-mediated efforts to end the four-year war. Trump has repeatedly urged Ukraine to accept a deal that may involve significant concessions, as Russian forces continue targeting energy infrastructure and advancing on the battlefield.
On the trade front, India’s state-run Bharat Petroleum Corporation Limited made its first-ever purchase of Venezuelan crude, while HPCL Mittal Energy Limited bought cargoes from the South American producer for the first time in two years, Reuters cited sources.
American Petroleum Institute (API) reported on Wednesday that US Weekly Crude Oil Stock declined by 0.609 million barrels last week, partly reversing the prior week’s 13.4 million-barrel surge, the largest build since January 2023.
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.
- USD/CAD softens to near 1.3695 in Thursday’s Asian session.
- Cooler Canadian inflation boosts BoC rate cut bets.
- FOMC minutes revived speculation about potential interest rate hikes if inflation remains elevated.
The USD/CAD pair loses ground to around 1.3695 during the Asian trading hours on Thursday, pressured by higher crude oil prices. Nonetheless, softer Canadian inflation data has raised prospects the Bank of Canada (BoC) would resume its interest rate cutting campaign, which could weigh on the Canadian Dollar (CAD) against the Greenback.
Crude oil prices rebounds amid persistent tensions between the US and Iran. This, in turn, boost the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and higher crude oil prices generally have a positive impact on the CAD.
Canada’s Consumer Price Index (CPI) inflation eased to 2.3% YoY in January from 2.4% in December, according to Statistics Canada on Tuesday. This figure came in below the market consensus of 2.4%. This report reinforced the case that the BoC will cut the key interest rate again, which could drag the CAD lower and act as a tailwind for the pair.
On the other hand, hawkish FOMC minutes from its January policy meeting could provide some support to the US Dollar (USD) in the near term. Several policymakers said that the Federal Reserve (Fed) may need to raise rates if inflation remains stubbornly high.
On Friday, traders will take more cues from the preliminary reading of the US Gross Domestic Product (GDP) for the fourth quarter (Q4), along with the Personal Consumption Expenditures (PCE) Price Index and S&P Global Purchasing Managers Index (PMI) reports.
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.
- NZD/USD attracts some buyers after RBNZ Governor Breman’s hawkish comments on Thursday.
- The less dovish FOMC Minutes assist the USD in preserving gains, capping the upside for the pair.
- The fundamental backdrop also warrants caution before positioning for any meaningful upside.
The NZD/USD pair recovers slightly from the vicinity of mid-0.5900s or a nearly two-week low set during the Asian session on Thursday, and recovers a part of the previous day's dovish Reserve Bank of New Zealand (RBNZ)-inspired losses. Spot prices, however, lack bullish conviction and currently trade around the 0.5975 region, up less than 0.15% for the day.
The RBNZ kept its Official Cash Rate (OCR) at 2.25% at the end of the February policy meeting on Wednesday and reiterated an accommodative policy outlook amid expectations that inflation will return to the target over the next year. Traders were quick to react and pushed back the likely timing for a rate hike further into late-2026. This, in turn, is seen acting as a headwind for the New Zealand Dollar (NZD) and the NZD/USD pair.
That said, RBNZ's new Governor Anna Breman said this Thursday that we would act to tighten earlier if we see pricing behaviours change, a much stronger economic recovery that can sustain higher interest rates. This, along with a positive tone around the equity markets, offers some support to the risk-sensitive Kiwi and the NZD/USD pair. However, a bullish US Dollar (USD) might keep a lid on any meaningful appreciating move for the currency pair.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, preserves the previous day's gains led by the less dovish FOMC Minutes, which showed that policymakers were split over the timing of further rate cuts. Several officials indicated that more rate cuts could be warranted if inflation declines as expected, while others cautioned that easing too early amid elevated inflation could compromise the Federal Reserve’s (Fed) 2% target.
Meanwhile, reports suggest that the US military is prepared to strike Iran as early as this weekend, which keeps geopolitical risks in play. This turns out to be another factor underpinning the Greenback's safe-haven status and might contribute to capping the NZD/USD pair. Traders now look to the US macro data, which, along with speeches from influential FOMC members, will drive the USD and provide some impetus later during the North American session.
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.
- AUD/JPY flat lines around 109.00 in Thursday’s early Asian session.
- Australia’s Unemployment Rate steadied at 4.1% in January, better than expected.
- Expectations that the BoJ will stick to its policy tightening path might lift the Japanese Yen.
The AUD/JPY cross trades on a flat note near 109.00 during the Asian trading hours on Thursday. The release of the Australian employment report for January fails to boost the Australian Dollar (AUD) against the Japanese Yen (JPY). Traders brace for Japan’s National Consumer Price Index (CPI), which is due later on Friday.
Data released by the Australian Bureau of Statistics (ABS) on Thursday showed that the Unemployment Rate in Australia stayed at 4.1% in January. The figure came in below the market consensus of 4.2%. Meanwhile, the Australian Employment Change arrived at 17.8K in January from 68.5K in December (revised from 65.2K), missing the expectations of 20K.
This report might lead some analysts to suggest that the Reserve Bank of Australia (RBA) may have more room for further interest rate hikes to curb persistent inflation, which could support the Aussie.
On the other hand, bets that the Bank of Japan (BoJ) will stick to its policy tightening path could underpin the JPY and create a headwind for the cross. Markets are pricing in nearly an 80% probability of a rate hike by the BoJ in April 2026, according to Reuters.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
