Forex News
- AUD/USD softens to around 0.6775 in Monday’s early Asian session.
- Rising bets on a larger Fed rate hike lift US Treasury yields and the US Dollar.
- Traders brace for Chinese economic data on Monday ahead of RBA Minutes.
The AUD/USD pair declines to near 0.6775 during the early Asian session on Monday. The US dollar (USD) edges higher against the Australian Dollar (AUD) on hawkish comments from Federal Reserve (Fed) officials. Traders await China’s Industrial Production and Retail Sales data on Monday for fresh impetus.
Kansas City Fed President Jeff Schmid said Sunday that the central bank has the tools and responsibility to address price pressures that are “running too hot,” and the central bank “has some work to do on inflation.” Meanwhile, Boston Fed President Susan Collins stated that she supported a steady pace of modest interest rate increases because that path of action better managed economic uncertainties.
Hawkish remarks from Fed officials and this latest stronger-than-expected US inflation data have left traders weighing the prospect of a larger-than-usual Fed rate hike next month. Traders are pricing in a roughly 93.5% chance of a 25-basis-point hike next month, according to the CME FedWatch tool.
Reserve Bank of Australia (RBA) board members were split on whether to lift interest rates for the fifth time in a year. Minutes from the RBA's November meeting will be released on Tuesday and will lay out in detail the reasons for the decision to boost the cash rate to 4.85%, the highest level in 18 years.
AUD support erodes as RBA tightening runs its course and Fed repricing widens rate gap
Analysts at MUFG note that the “pre-emptive nature of monetary tightening in Australia has benefitted the Australian Dollar but time appears to have run out for providing support for the currency as investors conclude that RBA is running out of scope for additional rate hikes at a time when investors are reappraising their views on additional Fed rate hikes.” They highlight that the RBA has already delivered five hikes this year, leaving the policy rate at “4.85%…the highest since 2008 when the RBA was cutting rates into the Global Financial Crisis.” As a result of this front-loaded tightening, MUFG points out that “the OIS curve through to Q4 2027 shows mostly a flat curve but a probability of a rate cut (-15bps priced) in Q3-Q4 next year.”
By contrast, the Fed is seen as having considerably more work to do. MUFG underscores that “given the Fed has raised rates just once, the market has another 85bps of hikes priced – that’s a 100bp swing in expected policy rates by Q4 next year.” This repricing has driven a sharp deterioration in relative rate support for the Aussie, with MUFG noting that “the 2-year AU-US swap spread has moved 100bps lower since peaking in early April and has dropped 30bps just in the last week or so.” The latest RBA decision also revealed growing internal resistance to further tightening, as “the RBA vote when it hiked this month (6-3) underlined the growing opposition to hikes and RBA Governor Bullock signalled a pause to assess given some of the tightening will not have hit the real economy.”
Signs that higher rates are biting are already emerging in the domestic data. MUFG stresses that “where you’d expect to see it first has started to come through – Australian home loans plunged 15.5% in Q3, double what was expected and the biggest drop in the data series back to 2002.”
Against this backdrop, MUFG argues that “we view AUD as probably the most vulnerable currency in a sharp AI-related sell-off.” They cite the currency’s “relatively high macroeconomic exposure,” alongside “energy and commodity exposures that would result in a negative terms of trade hit,” and its status as “high-beta and hence [it] would underperform in a scenario of tightening financial conditions and a rise in financial market volatility.” Recent market behaviour is seen as reinforcing this vulnerability: “in the recent 6-day period of AI selling through to 5th November, AUD was the worst performing G10 currency.” MUFG notes that “despite the AUD sell-off from the most recent high in September, AUD is still the 2nd best performing G10 currency on a year-to-date basis,” but cautions that “if the AI sell-off intensifies again, AUD remains more vulnerable than other G10 currencies.”
Schmid flags stubborn inflation, reinforcing hawkish Fed bias
Fed’s Schmid delivers a slightly more hawkish-than-usual message, with a 7/10 FXS Speechtracker score marginally above the 6.9/10 historical average, underscoring that “work containing inflation has only gotten harder” and that inflation is “uncomfortably above” the 2% target. By stressing that inflation would still be around 3% even excluding energy and that the labor market is largely in balance, Schmid frames the problem as broad-based price pressures rather than wage-driven, while emphasizing that demand management is the Fed’s key tool and pushing back on the idea that policy should target specific prices, including AI-related tech goods.
The FXS Fed Sentiment Index rose by 1.00 points to 148.44, firmly in hawkish territory and consistent with the slightly elevated FXS Speechtracker score. This move signals that markets should expect the Fed to maintain a tightening bias, with the Dollar likely to stay supported as policy remains focused on reining in persistent inflation.
Technical Analysis: AUD/USD retains a negative outlook below the 100-day SMA
In the daily chart, AUD/USD extends its decline beneath the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-day SMA center, which together define a firmly bearish near-term structure. The pair is holding just above the lower Bollinger Band, while the Relative Strength Index (14) at around 30.6 flirts with oversold territory, suggesting that while downside pressure dominates, selling momentum could be nearing exhaustion rather than strengthening.
On the topside, initial resistance emerges at the Bollinger 20-day SMA near 0.6950, followed by the 100-day SMA at 0.7025 and then the upper Bollinger Band at 0.7135, forming a broad supply zone that would cap any corrective bounce. On the downside, the immediate support is the lower Bollinger Band at 0.6768; a decisive break beneath this floor would open the way for an extension of the downtrend, while holding above it keeps scope for a modest rebound toward the 0.6950 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Iran carried out a drone attack against a US military base in Bahrain on Sunday, its second attempt to target the country in three days, the Guardian reported on Sunday.
Iran’s Islamic Revolutionary Guards Corps (IRGC) said that it targeted the US air defence radar facility at Al-Riffa air base in Bahrain using six drones.
Bahrain's military stated its air defence systems intercepted and destroyed the Iranian air attacks "before they could achieve their objectives.” This came after Iran fired drones at Bahrain on Friday, its first attack against Gulf countries since September.
Meanwhile, in Yemen, Iran’s Houthi allies advanced against pro-government forces in the south, opening a potential route to Aden. Tehran also claimed that a mine sank an oil supertanker in the strait of Hormuz.
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.
- Gold heads for a 4.50% weekly decline despite modest Friday gains.
- US 10-year Treasury yields reach 5.15% as the US Dollar hits 19-month highs.
- December Fed hike odds approach 90% following elevated US inflation readings.
Gold (XAU/USD) is poised to finish the week with losses of nearly 4.50%, yet it is up 0.14% on Friday as the US Dollar (USD) caps its advance, following a hot US inflation report on the producer side. At the time of writing, XAU/USD trades at $3,879, near 13-month lows.
Bullion collapses nearly 4.5% as US inflation cements the Fed’s case for a rate increase
Overall, US inflation data this week has increased the chances that the Federal Reserve (Fed) will raise interest rates at its December meeting. Earlier, the release of the Producer Price Index (PPI) for October showed that headline PPI jumped 6.5% YoY, below forecasts but above September’s 6.3% print, largely due to higher transportation and warehousing prices. Core PPI, which excludes items like food and energy, was unchanged from the previous month at 5%, in line with estimates.
This, along with the release of the US Consumer Price Index (CPI) on Tuesday, prompted a reaction from most Fed officials, with many speakers this week expecting higher interest rates and noting that financial conditions are not restrictive.
On Friday, San Francisco Fed Mary Daly said she sees more rate hikes as firms seek to pass higher costs, while Boston Fed Susan Collins warned that inflation is spreading, warranting additional rate increases. Earlier, Chicago Fed Austan Goolsbee warned that inflation data suggest the situation is worsening, which “would make the Fed more aggressive.”
US Treasury yields continued to rise during the week, an indication that market players expect higher rates. The US 10-year Treasury yield is up almost two basis points at 5.15%, a tailwind for the Greenback.
The US Dollar Index (DXY), which measures the performance of the American currency against six others, is up 0.23% at 103.41, after refreshing a 19-month high of 103.42.
Markets priced in a nearly 90% chance of a 25-basis-point Fed hike in December, with a 10% chance of a 50-point increase, according to CME FedWatch.
Next week, Gold traders are looking for the release of the Federal Open Market Committee meeting minutes, Retail Sales data and speeches by Fed officials.
XAU/USD technical outlook: Gold extends its losses beneath $3,900
After its weekly decline, Gold appears to have bottomed near $3,873, slightly above the day's low of $3,867. Despite this, further weakness lies ahead. The market structure of consecutive lower highs and lower lows has extended, which puts into play a test of the year-to-date low of $3,852. A breach of the latter will expose the $3,800 psychological level, followed by the April 22, 2025, swing high-turned-support at $3,500.
On the other hand, the first resistance is $3,900. If Gold breaches that area, a move towards Thursday’s high of the day at $4,000 is on the cards. The next stop is $4,100, ahead of the confluence of the 50-day Simple Moving Average (SMA) at $4,154 and the 100-day SMA at $4,196.
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.
- Silver heads for a weekly loss of over 5% as Fed rate hike bets support the US Dollar.
- XAG/USD remains trapped in a descending channel on the daily chart, trading below major moving averages.
- RSI near 33 and fading MACD histogram bars point to weak momentum.
Silver (XAG/USD) slides back below $50 on Friday and is on track for a weekly loss of more than 5% as traders bet on more aggressive Federal Reserve (Fed) tightening in the months ahead. At the time of writing, Silver trades around $49, just above its year-to-date low of $48.62 touched on November 3.
This week’s US consumer and producer inflation reports and hawkish Fed remarks prompted traders to fully price in a rate hike in December, according to the CME FedWatch Tool. A quarter-point move is favoured, with a small chance of a half-point increase. The US Dollar Index (DXY) trades near 103.40, its highest level since April 2025, while the 10-year US Treasury yield is back above 5%, up about 30 basis points this week.
A stronger US Dollar makes Silver more expensive for buyers using other currencies, while higher Treasury yields raise the opportunity cost of holding the non-yielding metal. With buyers largely on the sidelines, the technical indicators also point to weak momentum.
Technical analysis
On the daily chart, XAG/USD extends its slide within a well-defined downward parallel channel and is holding below all major moving averages. The 21-day simple moving average (SMA, the 100-day SMA, and the 200-day SMA all sit overhead, reinforcing a bearish near-term bias while price remains capped beneath this layered resistance.
Momentum remains weak, with the 14-day Relative Strength Index (RSI) near 33, just above oversold territory. Meanwhile, the Moving Average Convergence Divergence (MACD) remains marginally positive, but fading green histogram bars suggest that the recent recovery in momentum is losing steam.
On the topside, initial resistance emerges at the psychological $50.00 mark, followed by the upper boundary of the descending channel near $52.17 and the 21-day SMA at $53.06, forming a dense supply zone before the next hurdle at $55.00. Higher up, the 100-day SMA at $60.27 and a horizontal barrier at $62.50 precede the long-term cap from the 200-day SMA at $68.13, which anchors the broader bearish structure.
On the downside, the channel floor around $45 offers the next notable support, and a clear break beneath this level would open the way for an extension of the prevailing downtrend.
(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.
- Swiss Franc heads for a sharp weekly decline as major central banks signal further tightening.
- Low Swiss inflation gives the SNB less urgency to raise interest rates.
- USD/CHF heads for a weekly gain of over 2% amid broad US Dollar strength.
The Swiss Franc (CHF) is the worst-performing major currency this week as rising expectations of further interest rate hikes in the US and elsewhere make the lower-yielding Franc less attractive. Broad US Dollar (USD) strength adds to the pressure, with USD/CHF trading around 0.8395, near levels last seen in May 2025. The pair is up more than 2% this week heading into the weekend.
Swiss Franc Price This week
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies this week. Swiss Franc was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.00% | 1.04% | 0.80% | 1.04% | 1.30% | 0.65% | 2.46% | |
| EUR | -1.00% | 0.05% | -0.21% | 0.04% | 0.39% | -0.35% | 1.45% | |
| GBP | -1.04% | -0.05% | -0.27% | -0.02% | 0.34% | -0.41% | 1.39% | |
| JPY | -0.80% | 0.21% | 0.27% | 0.24% | 0.44% | -0.13% | 1.61% | |
| CAD | -1.04% | -0.04% | 0.02% | -0.24% | 0.23% | -0.41% | 1.44% | |
| AUD | -1.30% | -0.39% | -0.34% | -0.44% | -0.23% | -0.73% | 0.96% | |
| NZD | -0.65% | 0.35% | 0.41% | 0.13% | 0.41% | 0.73% | 1.82% | |
| CHF | -2.46% | -1.45% | -1.39% | -1.61% | -1.44% | -0.96% | -1.82% |
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 Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
SNB’s low interest rates leave Swiss Franc vulnerable
The Swiss National Bank (SNB) keeps its policy rate at 0%, one of the lowest among major economies. Swiss inflation has picked up but remains within the SNB's 0%-2% range, giving policymakers less reason to raise rates. The Federal Reserve (Fed), European Central Bank (ECB), Bank of Canada (BoC) and Bank of England (BoE) have all raised rates this year to contain inflation. With inflation still above their respective targets, policymakers remain open to further tightening as they assess how much of the Middle East energy shock feeds through to wages and other prices.
US Dollar hits 19-month high as Fed rate hike bets firm
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades near 103.40, its highest level since April 2025. Hawkish remarks from Federal Reserve (Fed) officials this week have renewed demand for the US Dollar as traders ramp up bets on further interest rate hikes. October CPI rose 0.4% MoM, while annual PPI inflation climbed to 6.5%, even as monthly producer prices rose less than expected.
Several Fed officials have made the case for further rate increases this week as the central bank works to bring inflation back to its 2% target. October CPI rose 0.4% MoM, while annual PPI inflation climbed to 6.5%, even as monthly producer prices rose less than expected.
On Friday, San Francisco Fed President Mary Daly said the Fed would “in all likelihood” need to raise rates and that it was hard to say whether policy was restrictive enough.
Chicago Fed President Austan Goolsbee said inflation would determine the path of rates and that the Fed still “has work to do” to bring it down. Their remarks echoed comments earlier this week from Dallas Fed President Lorie Logan, who called for at least two more quarter-point hikes.
According to the CME FedWatch Tool, traders fully price in at least a 25-basis-point (bps) rate hike in December, which would lift the Fed’s target range to 4.00%-4.25%.
Markets also see a small chance of a 50 bps move after Fed Governor Christopher Waller said before Tuesday’s release that a half-point hike could be warranted if October core CPI rose around 0.3% or more. The reading came in at 0.3%. Traders are also pricing in another hike in the first quarter of 2027.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive 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.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
San Francisco Federal Reserve (Fed) President Mary C. Daly said on Friday that the US economy is good, but the "key problem" is inflation, adding that the “bias is that rates need to go up.”
Daly added that “in all likelihood we will need to raise rates,” commented that it is hard to say whether monetary policy is restrictive enough and that producers are saying that “they want to pass on costs.”
Key takeaways:
Key problem we have is inflation.
A good economy with one problem, inflation.
Employment broad-based, we're seeing manufacturing resurgence.
There is little evidence yet that higher productivity AI-driven.
Other tech is being used to do more with fewer workers.
Overlapping shocks changed underlying rate of inflation.
Bias is that rates need to go up.
Markets understand Fed's reaction function.
In all likelihood we will need to raise rates.
Hard to say policy is restrictive enough.
A myriad of things are pushing up inflation, which makes it concerning.
More producers saying they want to pass on costs.
Consumer spending surprisingly resilient.
I'm looking at how the gap between consumer sentiment and behavior gets closed.
I wouldn't spend a lot of time on the Summary of Economic Projections; it's just a point in time.
FOMC must be transparent, accountable and clear
Watching services ex-housing inflation carefully, it's not moving in the right direction
Businesses are cautiously optimistic, but everyone is worried about inflation.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.23% | 0.02% | 0.05% | 0.43% | 0.39% | 0.49% | |
| EUR | -0.25% | -0.03% | -0.25% | -0.19% | 0.17% | 0.15% | 0.24% | |
| GBP | -0.23% | 0.03% | -0.23% | -0.16% | 0.20% | 0.17% | 0.27% | |
| JPY | -0.02% | 0.25% | 0.23% | 0.05% | 0.42% | 0.37% | 0.48% | |
| CAD | -0.05% | 0.19% | 0.16% | -0.05% | 0.37% | 0.33% | 0.44% | |
| AUD | -0.43% | -0.17% | -0.20% | -0.42% | -0.37% | -0.03% | 0.07% | |
| NZD | -0.39% | -0.15% | -0.17% | -0.37% | -0.33% | 0.03% | 0.11% | |
| CHF | -0.49% | -0.24% | -0.27% | -0.48% | -0.44% | -0.07% | -0.11% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
The President of the Bundesbank, Joachim Nagel, who is also a member of the European Central Bank (ECB) Governing Council, hinted that the ECB would need to raise interest rates again.
In a keynote at the 79th Siemens Bankers Conference on Friday, Nagel added that “If the situation stays as it is, it seems highly probable that we’ll have to act again,” adding that monthly price rises increase the chances of second-round effects.
He noted that core inflation “is still elevated, and short-term inflation expectations have risen in line with the jump in headline inflation.”
Key takeaways:
It's highly probable ECB will have to act again.
Early stages of pricing chain point to upward pressures.
Short-term inflation expectations have risen.
Outlook has deteriorated since September.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.23% | 0.21% | 0.03% | 0.02% | 0.48% | 0.40% | 0.41% | |
| EUR | -0.23% | -0.03% | -0.19% | -0.21% | 0.24% | 0.17% | 0.18% | |
| GBP | -0.21% | 0.03% | -0.19% | -0.16% | 0.26% | 0.20% | 0.21% | |
| JPY | -0.03% | 0.19% | 0.19% | -0.01% | 0.45% | 0.36% | 0.38% | |
| CAD | -0.02% | 0.21% | 0.16% | 0.00% | 0.46% | 0.38% | 0.39% | |
| AUD | -0.48% | -0.24% | -0.26% | -0.45% | -0.46% | -0.07% | -0.07% | |
| NZD | -0.40% | -0.17% | -0.20% | -0.36% | -0.38% | 0.07% | 0.02% | |
| CHF | -0.41% | -0.18% | -0.21% | -0.38% | -0.39% | 0.07% | -0.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- The Australian Dollar extends its decline on Friday, pressured by rising US Treasury yields.
- Persistent US inflation reinforces expectations of further interest rate hikes by the Federal Reserve.
- Diverging monetary policy outlooks between the United States and Australia weigh on the Australian currency.
AUD/USD extends its decline on Friday, trading around 0.6775, down 0.43% on the day at the time of writing. The Australian Dollar (AUD) remains under pressure against the US Dollar (USD), as rising US Treasury yields reduce investors' appetite for risk-sensitive currencies.
The yield on the 10-year US Treasury bond has climbed to around 5.14%, its highest level in three weeks, following stronger-than-expected US inflation data. The Consumer Price Index (CPI) showed that core inflation rose 0.3% MoM in October, exceeding expectations of 0.2% and marking the third consecutive monthly increase of 0.3%.
According to Deutsche Bank strategists, the latest figures bring the annualized pace of core inflation over the past three months to 3.75%, its fastest rate since April 2024. This persistent inflation is prompting investors to reassess the monetary policy outlook for the Federal Reserve (Fed).
Meanwhile, Chicago Fed President Austan Goolsbee warned on Friday that inflation is spreading beyond energy-related sectors, stressing that the central bank still has work to do to restore price stability. He added that worsening inflation data could justify a more aggressive monetary policy response.
The latest Producer Price Index (PPI) rose 0.3% MoM in October, below expectations of 0.4%, although annual producer inflation accelerated to 6.5% from 6.3%. The figures have done little to ease expectations of further monetary tightening.
On the Australian side, the Reserve Bank of Australia (RBA) appears to have completed its tightening cycle. This divergence in monetary policy expectations favors the US Dollar, as higher US yields make Dollar-denominated assets more attractive, maintaining downward pressure on AUD/USD.
AUD/USD technical analysis
In the daily chart, AUD/USD trades at 0.6778, extending its retreat and holding below the 100-day simple moving average (SMA) at 0.7025 and the 200-day SMA at 0.7053, which keeps the near-term bias bearish. The pair is attempting to stabilize just above the horizontal support at 0.6766, while the Relative Strength Index (14) around 30.7 hovers near oversold territory, hinting at stretched downside conditions but not yet signaling a clear reversal.
On the topside, initial resistance emerges at 0.6834, with further barriers clustered at 0.6865 and 0.6894 before the broader trend caps near the 100-day SMA at 0.7025 and the 200-day SMA at 0.7053. On the downside, a daily close below 0.6766 would expose the next support at 0.6663, where buyers could attempt to slow the bearish phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Boston Federal Reserve (Fed) President Susan Collins said that “inflation is too high and appears to be broadening,” echoing earlier comments by Chicago’s Fed President Austan Goolsbee.
In an interview with Bloomberg TV on Friday, Collins commented that recent inflation data is “less promising than I hope” and that the path of monetary policy is clear. She said that the base-case scenario is for “careful adjustments” to monetary policy and that she doesn’t know how high rates should go.
Key takeaways:
Inflation is too high and appears to be broadening
Recent inflation data less promising than I hope
The future direction of monetary policy is clear
Labor market appears on SOLID footing
I would think some additional policy tightening warranted soon
Direction of policy clear, but pace and destination unclear
Possible the Fed may have to raise more than expected
Best case scenario is ‘careful adjustment’ of monetary policy
I don't want to say how high or fast rates should move
Many firms expect to pass on higher costs to consumers
Some firms see strong demand and expect to hire more people in key sectors
I'm seeing evidence financial markets stable and functioning well
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.19% | 0.11% | -0.02% | -0.04% | 0.40% | 0.30% | 0.35% | |
| EUR | -0.19% | -0.08% | -0.19% | -0.22% | 0.21% | 0.14% | 0.16% | |
| GBP | -0.11% | 0.08% | -0.13% | -0.13% | 0.29% | 0.23% | 0.24% | |
| JPY | 0.02% | 0.19% | 0.13% | -0.02% | 0.41% | 0.34% | 0.36% | |
| CAD | 0.04% | 0.22% | 0.13% | 0.02% | 0.43% | 0.37% | 0.39% | |
| AUD | -0.40% | -0.21% | -0.29% | -0.41% | -0.43% | -0.06% | -0.05% | |
| NZD | -0.30% | -0.14% | -0.23% | -0.34% | -0.37% | 0.06% | 0.03% | |
| CHF | -0.35% | -0.16% | -0.24% | -0.36% | -0.39% | 0.05% | -0.03% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- GBP/USD heads for a 0.90% weekly loss after retreating from 1.3460.
- US headline PPI rises to 6.5% YoY, the highest since 2022.
- December Fed hike odds approach 90% despite rising BoE tightening expectations.
The British Pound (GBP) holds steady against the US Dollar on Friday, yet it’s poised to end the week with weekly losses of nearly 0.90%, trading at around 1.3230 after the recent US producer inflation report reached its highest level since November 2022.
GBP/USD pressured by US inflation data, Fed rate hike expectations
The US Producer Price Index (PPI) in October rose by 6.5% YoY, below forecasts but above September’s 6.3% print, largely due to higher transportation and warehousing prices. Core PPI, which strips items like food and energy, was unchanged from the previous month and aligned with estimates at 5%.
Federal Reserve (Fed) officials are crossing the wires. Chicago’s Fed President Austan Goolsbee warned that inflation data suggest it’s worsening, which “would make the Fed more aggressive.”
Money markets have priced in a nearly 90% chance that the Fed will increase rates by 25 basis points in December. However, there is a slim 10% chance that policymakers could aim for a 50-basis-point increase, according to the CME FedWatch Tool.
Recent US inflation data, hawkish comments from Fed officials and expectations that the Fed may embark on a tightening cycle pushed GBP/USD lower after it hit a weekly high near 1.3460.
In the UK, Gross Domestic Product (GDP) data matched estimates on Thursday, following last week’s Bank of England (BoE) rate hike, as market participants already expect another move in December, with odds at 85%.
Next week, traders are eyeing the release of the UK’s inflation data. In the US, the Fed parade continues, with Retail Sales and the minutes of the latest Federal Open Market Committee meeting grabbing the spotlight.
GBP/USD Price Forecast: Technical outlook.
In the daily chart, GBP/USD trades at 1.3236, retaining a bearish near-term bias as spot holds beneath the latest triple simple moving average (SMA) reading around 1.3341 and a series of former rising trend-line supports that now act as overhead resistance near 1.3360 and 1.3606. The Relative Strength Index (RSI) at 40.6 stays below the midline, hinting at persistent downside pressure rather than oversold conditions, while the broader pattern of descending resistance lines off 1.3869 and 1.3653 reinforces the impression that rallies remain capped within a corrective environment.
On the topside, initial resistance is located at the clustered 1.3341–1.3360 area, where the triple SMA aligns with the nearest reclaimed trend support, followed by the descending resistance levels around 1.3508 and 1.3544, ahead of the higher former support zone close to 1.3606. With no clear structural support levels defined in the immediate vicinity below 1.3236 by the current dataset, any sustained break below recent lows would leave the pair vulnerable to extending the decline into fresh territory, keeping sellers in control unless price can recover and hold above the 1.3340–1.3360 band.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
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.
