Forex News
- USD/CHF falls as easing US-Iran tensions weaken the US Dollar following a weekend pause in hostilities.
- The Fed will likely hold rates steady in July before potential September hikes.
- Falling Swiss 10-year bond yields, now near 0.46%, could weigh on the Swiss Franc.
USD/CHF depreciates after five days of losses, trading around 0.8150 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) declines on easing geopolitical tensions following a weekend pause in military hostilities between the US and Iran, offering a reprieve after 13 days of escalating conflict.
US halted strikes amid growing concerns over depleting interceptor supplies and a shrinking list of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the military campaign would severely strain critical munitions reserves.
However, market participants remain cautious about potential supply disruptions after Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.
Traders expect the Federal Reserve (Fed) to hold interest rates steady on Wednesday before resuming rate hikes in September, though a minority of market participants still anticipate a surprise move at this week's meeting. Moving forward, investors are closely watching upcoming economic indicators, including advance Q2 GDP data, PCE inflation figures, and earnings reports from major US corporations, for further insight into the underlying strength of the economy.
The USD/CHF pair could rebound as falling Swiss government bond yields may weigh on the Swiss Franc (CHF). With the 10-year Swiss yield dropping near 0.46%, reduced returns on domestic fixed-income assets are prompting global investors to rotate capital toward higher-yielding foreign bonds.
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.
Gold prices rose in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 12,658.26 Indian Rupees (INR) per gram, up compared with the INR 12,543.37 it cost on Friday.
The price for Gold increased to INR 147,643.80 per tola from INR 146,303.40 per tola on friday.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,658.26 |
10 Grams | 126,582.90 |
Tola | 147,643.80 |
Troy Ounce | 393,712.30 |
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.)
- USD/IDR rises as the Indonesian Rupiah weakens following Bank Indonesia Governor Perry Warjiyo's surprise resignation, rattling investors.
- The pair’s upside could be restrained as the US Dollar declines, as easing US-Iran geopolitical tensions reduced safe-haven demand.
- The Fed will likely hold rates steady Wednesday before September hikes, though some anticipate a surprise move this week.
USD/IDR has recovered its losses from the previous trading day, hovering around 18,050 during the Asian hours on Monday. The pair appreciates as the Indonesian Rupiah (IDR) faces pressure following the surprise resignation of Bank Indonesia (BI) Governor Perry Warjiyo, a move expected to rattle investors and reignite concerns over central bank independence. Senior Deputy Governor Destry Damayanti has been appointed interim governor, clarifying that Warjiyo stepped down for personal reasons.
The upside of the USD/IDR pair could be limited as the US Dollar (USD) falls sharply, as geopolitical tensions eased following a weekend pause in military hostilities between the US and Iran, offering a reprieve after 13 days of escalating conflict. However, market participants remain cautious about potential supply disruptions after Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.
US halted strikes amid growing concerns over depleting interceptor supplies and a shrinking list of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the military campaign would severely strain critical munitions reserves.
Traders expect the Federal Reserve (Fed) to hold interest rates steady on Wednesday before resuming rate hikes in September. However, a minority of market participants still anticipate a surprise move at this week's meeting. Moving forward, investors are closely watching upcoming economic indicators, including advance Q2 GDP data, PCE inflation figures, and earnings reports from major US corporations, for further insight into the underlying strength of the economy.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Silver price gains sharply to near $60.00 as the US-Iran military aggression pauses.
- The pause in Middle East hostilities has weighed heavily on oil prices.
- The Fed is expected to leave interest rates unchanged on Wednesday.
Silver price (XAG) trades sharply higher near $60.00 during the Asian trading session on Monday. The white metal starts the week on a firm note as the pause in military aggression between the United States (US) and Iran has sent oil prices sharply lower.
The exchange of attacks between the US and Iran paused after US ambassador to the United Nations (UN), Mike Waltz, told "Fox News Sunday" that President Donald Trump had decided to pause US attacks to allow more time for diplomacy, Reuters reports.
In the Asian trade, the WTI Oil price trades 5.6% lower to near $84.00. A sharp decline in oil prices has reduced concerns of a prolong elevated inflation expectations, which has eased fears of higher interest rates by global central banks in the near term.
The Silver price underperformed in the last months when the onset of the Middle East war boosted oil prices. Technically, higher interest rates diminish the appeal of non-yielding assets, such as Silver.
Going forward, investors will pay close attention to the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, in which the central bank is expected to leave interest rates unchanged.
Silver technical analysis
XAG/USD trades higher at around $60 at press time, striving to return above the 20-day Exponential Moving Average (EMA), which is at $59.35.
The 14-day Relative Strength Index (RSI) lifts toward the mid-40s and hints at modestly improving momentum rather than outright bearish exhaustion.
On the topside, a decisive daily close above the 20-day EMA at $59.35 would be needed to ease immediate downside pressure and open the way for a deeper recovery. Looking down, the July 17 low at $54.77 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- US Dollar Index declines as easing US-Iran geopolitical tensions reduced safe-haven demand.
- Despite a brief US-Iran pause, markets fear supply disruptions after Houthi attacks on Saudi Red Sea facilities.
- The Fed will likely hold rates steady Wednesday before September hikes, though some anticipate a surprise move this week.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground after posting minor losses in the previous trading day, trading around 101.20 during the Asian session on Monday.
The Greenback falls sharply as geopolitical tensions eased following a weekend pause in military hostilities between the US and Iran, offering a reprieve after 13 days of escalating conflict. However, market participants remain cautious about potential supply disruptions after Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.
Reports suggest the US halted strikes amid growing concerns over depleting interceptor supplies and a shrinking list of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the military campaign would severely strain critical munitions reserves.
On the policy front, the Federal Reserve (Fed) is widely expected to hold interest rates steady on Wednesday before resuming rate hikes in September. However, a minority of market participants still anticipate a surprise move at this week's meeting. Moving forward, investors are closely watching upcoming economic indicators, including advance Q2 GDP data, PCE inflation figures, and earnings reports from major US corporations, for further insight into the underlying strength of the economy.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- NZD/USD struggles to build on an Asian session uptick, though the downside remains cushioned.
- Iran diplomacy hopes and receding Fed hike bets undermine the USD, lending support to the pair.
- Hawkish RBNZ expectations also warrant caution for bears ahead of the FOMC meeting this week.
The NZD/USD pair kicks off the new week on a positive note amid a broadly weaker US Dollar (USD), though it struggles to capitalize on gains beyond the 0.5800 mark.
The US and Iran paused following 13 straight nights of strikes, reviving hopes for a diplomatic resolution to end a five-month-old US-Iran conflict. US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. This prompts traders to unwind some of the geopolitical risk premium, which, in turn, undermines the safe-haven USD and lends some support to the NZD/USD pair.
Meanwhile, the latest optimism triggers a steep decline in crude oil prices, easing inflationary fears and tempering US Federal Reserve (Fed) rate-hike expectations. This is evident from a modest pullback in US Treasury bond yields, which turns out to be another factor that drags the USD away from the vicinity of the monthly high, retested last week. Traders, however, refrain from placing aggressive bearish bets on the USD and opt to wait for the outcome of a two-day FOMC policy meeting.
The US central bank is scheduled to announce its decision on Wednesday and is universally anticipated to leave interest rates unchanged. Hence, investors will look for fresh cues about the Fed's future policy path, which will play a key role in influencing the USD price dynamics. Apart from this, developments surrounding the Middle East crisis should infuse volatility in financial markets, which should further drive the USD demand and provide some meaningful impetus to the NZD/USD pair.
In the meantime, stronger-than-expected inflation data from New Zealand reaffirmed expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another rate hike at its September meeting. The hawkish outlook might continue to act as a tailwind for the New Zealand Dollar (NZD), which favors NZD/USD bulls and suggests that any corrective pullback is more likely to be bought into.
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.
- USD/CAD slips as easing US-Iran geopolitical tensions reduced safe-haven demand and sparked a market risk-on rally.
- Despite a brief US-Iran pause, markets fear supply disruptions following Houthi attacks on Saudi Red Sea facilities.
- Falling oil prices could weigh on the commodity-linked Canadian Dollar.
USD/CAD depreciates after posting minor gains in the previous trading day, hovering around 1.4080 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) falls sharply on easing geopolitical tensions following a weekend pause in military hostilities between the US and Iran.
The brief US-Iran pause came after 13 days of escalating conflict. However, market participants remain cautious about potential supply disruptions as Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea.
Reports suggest that the US halted strikes amid growing concerns over depleting interceptor supplies and a shortage of remaining targets within Iran. Additionally, General Dan Caine, Chairman of the Joint Chiefs of Staff, reportedly cautioned President Trump on Friday that continuing the campaign would severely strain critical munitions reserves.
On the policy front, the Fed is widely expected to hold interest rates steady on Wednesday before resuming rate hikes in September, though a minority of market participants still anticipate a surprise move at this week's meeting.
The downside of the USD/CAD pair is restrained as the commodity-linked Canadian Dollar (CAD) could struggle on lower oil prices. West Texas Intermediate (WTI) oil price opened at a bearish gap, down by over 5%, trading around $84.50 per barrel at the time of writing.
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.
- GBP/USD attracts strong follow-through buying on Monday amid a broadly weaker USD.
- US-Iran diplomacy hopes and receding Fed rate hike bets undermine the safe-haven buck.
- Traders might refrain from placing aggressive bets ahead of the FOMC meeting this week.
The GBP/USD pair builds on Friday's modest bounce from a three-week low and gains strong follow-through positive traction at the start of a new week. This marks the second straight day of a positive move and lifts spot prices above mid-1.3300s during the Asian session amid a broadly weaker US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, moves away from the vicinity of the monthly high, retested last week, amid reviving hopes for a diplomatic resolution to end a five-month-old US-Iran conflict. In fact, the US paused its bombing campaign following 13 consecutive nights of strikes on Iranian targets late on Friday, prompting Tehran to suspend its retaliatory attacks against Washington's allies in the Middle East.
US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. Traders were quick to unwind some of the geopolitical risk premium, undermining the safe-haven buck. Moreover, the latest developments trigger a sharp fall in oil prices and ease inflation fears, tempering US Federal Reserve (Fed) rate hike bets and further weighing on the Greenback.
Meanwhile, restricted shipping traffic through the Strait of Hormuz and the Bab el-Mandeb Strait helps limit losses for oil prices. USD bears might also refrain from placing aggressive bets and opt to wait for the outcome of the highly-anticipated two-day FOMC meeting on Wednesday. Investors will look for more cues about the Fed's policy path, which, along with geopolitical developments, will drive the USD and provide some meaningful impetus to the GBP/USD pair.
(This story was corrected on July 27 at 03:26 GMT to correct the asset name in the first bullet point as GBP/USD, instead of GBP/JPY.)
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.
- Gold rises as falling oil prices and a pause in US-Iran strikes eased inflation and interest rate concerns.
- Upcoming policy decisions from the Fed, BoE, and BoJ could trigger further market movement.
- Iran confirmed it will refrain from retaliatory attacks as long as the US bombing pause holds.
Gold price (XAU/USD) gains ground for the second consecutive day, trading around 4,103 per troy ounce during the Asian hours on Monday. Gold prices pushed higher as a sharp drop in oil prices eased market fears over inflation and interest rate hikes, following a weekend pause in military hostilities between the US and Iran.
Attention now shifts to a dense week of economic catalysts that could spark fresh market volatility. Investors face an unusually heavy lineup of central-bank decisions, including meetings by the Federal Reserve (Fed), Bank of England (BoE), and Bank of Japan (BoJ), alongside pivotal inflation and growth figures. Key releases such as US GDP, US core PCE inflation, and CPI reports from the Eurozone and Australia are expected to heavily influence global interest rate expectations.
The diplomatic landscape saw a reprieve after the US suspended its two-week bombing campaign against Iran late Friday. Tehran responded by holding back retaliatory strikes against Washington's Middle Eastern allies for a second consecutive night. US Ambassador to the United Nations Mike Waltz noted that while American forces remain locked and loaded, President Donald Trump wants to give room for potential negotiations.
Reuters corroborated this stance, quoting a senior Iranian official who stated that Tehran's policy remains "attack for attack"—meaning if US strikes halt, Iran will likewise suspend its military operations.
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.
- EUR/USD kicks off the new week on a positive note as US-Iran diplomacy hopes weigh on the USD.
- Falling oil prices ease inflation fears and temper Fed rate hike bets, further undermining the buck.
- Traders, however, seem hesitant as the focus remains on the crucial FOMC policy meeting this week.
The EUR/USD pair builds on a modest bullish gap opening and climbs back above the 1.1400 mark during the Asian session on Monday. The intraday move up is sponsored by a broadly weaker US Dollar (USD), weighed down by renewed optimism over a diplomatic resolution to end a five-month-old US-Iran war.
The US paused its bombing campaign following 13 consecutive nights of strikes on Iranian targets late on Friday, prompting Tehran to suspend its retaliatory attacks against Washington's allies in the Middle East. US ambassador to the United Nations (UN) Mike Waltz said that while forces remained locked and loaded, President Donald Trump wants to give negotiations a little bit of room. This, in turn, boosts investors' sentiment and undermines the safe-haven Greenback.
Meanwhile, the easing in hostilities triggers a sharp fall in crude oil prices and eases inflationary concerns, tempering US Federal Reserve (Fed) rate hike expectations. This turns out to be another factor that drags the USD Index (DXY), which tracks the buck against a basket of currencies, away from the vicinity of the monthly high retested last week. Traders, however, might refrain from placing aggressive bets on the EUR/USD pair ahead of the key central bank event risk.
The US central bank is scheduled to announce its policy decision at the end of a two-day meeting on Wednesday. Traders will look for fresh cues about the future policy path, which will play a key role in influencing the near-term USD price dynamics. Apart from this, the focus will be on further developments surrounding the Middle East crisis, which would further drive the USD demand and produce some meaningful trading opportunities around the EUR/USD pair.
According to TD Securities, the FOMC is expected to leave policy steady, with the bank stating, “We expect the FOMC to keep rates unchanged.” The team acknowledges that “higher oil prices driven by Middle East tensions have increased inflation risks and strengthened the case for a rate hike,” but they argue that “more evidence is needed to win majority support.” In their view, “hawkish momentum is building,” yet Chair Warsh is “unlikely to provide guidance,” and they anticipate “two dissents from Hammack and Logan.”
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.36% | -0.24% | -0.18% | -0.13% | -0.27% | -0.24% | -0.46% | |
| EUR | 0.36% | 0.09% | 0.15% | 0.21% | 0.08% | 0.13% | -0.12% | |
| GBP | 0.24% | -0.09% | 0.07% | 0.13% | -0.00% | 0.00% | -0.20% | |
| JPY | 0.18% | -0.15% | -0.07% | 0.02% | -0.09% | -0.07% | -0.27% | |
| CAD | 0.13% | -0.21% | -0.13% | -0.02% | -0.12% | -0.10% | -0.32% | |
| AUD | 0.27% | -0.08% | 0.00% | 0.09% | 0.12% | 0.05% | -0.20% | |
| NZD | 0.24% | -0.13% | -0.01% | 0.07% | 0.10% | -0.05% | -0.25% | |
| CHF | 0.46% | 0.12% | 0.20% | 0.27% | 0.32% | 0.20% | 0.25% |
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).
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