Forex News
- USD/CAD struggles to gain any traction as traders seem hesitant amid a combination of diverging forces.
- Elevated US bond yields support the USD, though higher oil prices underpin the Loonie and cap the pair.
- Investors also seem hesitant ahead of a looming US tariffs deadline and the release of FOMC Minutes.
The USD/CAD pair struggles to capitalize on this week's modest recovery from its lowest level since June 3 and oscillates in a range around the 1.3900 mark during the Asian session on Wednesday. Traders seem hesitant to place aggressive directional bets ahead of a high-stakes US tariffs deadline and the release of FOMC Minutes.
US President Donald Trump and Canadian Prime Minister Mark Carney are engaged in last-minute talks in an effort to reach an agreement and avert 50% US tariffs on $20 billion worth of Canadian products. This comes just hours before a looming US deadline on Wednesday, August 19, and keeps traders on the sidelines, leading to the USD/CAD pair's subdued price action.
Meanwhile, FOMC Minutes will be looked upon for more cues about the US Federal Reserve's (Fed) future policy path amid inflation risks stemming from higher oil prices. In fact, West Texas Intermediate (WTI) – the benchmark US Crude Oil price – touches a nearly three-week high as the US-Iran standoff over the Strait of Hormuz keeps the geopolitical risk premium in play.
BNY’s Geoff Yu highlights that “bond prices are sending warnings” as the long end of the curve increasingly dictates the stance of financial conditions. He notes that the “30y U.S. Treasury yield has moved above 5.3%, its highest since 2007,” underscoring that the long end is “increasingly managing financial conditions even as U.S. data suggest the Fed may need to behave differently.” In Yu’s view, the move in long-term yields reinforces the message that global financing costs are being driven higher by market dynamics rather than policy rates alone, with the Dollar supported as investors demand greater compensation for duration and inflation risk.
In the meantime, interest rates remained the big story amid a rout in US Treasury bonds on Tuesday, which pushed the longer-end 30-year yield to its highest level since June 2007. This, along with fading US-Iran diplomacy hopes, acts as a tailwind for the safe-haven Greenback. However, rising oil prices underpin the commodity-linked Loonie and cap the USD/CAD pair.
Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any further appreciating move.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair holds above the 50.00% Fibonacci retracement of the April-June upswing and the 200-day Simple Moving Average (SMA) near 1.3848, suggesting a supportive broader trend backdrop. A convincing break below, however, would expose the 61.8% retracement at 1.3818 and the 78.6% level at 1.3703.
On the topside, initial resistance is seen at the 38.2% Fibo. retracement at 1.3981, ahead of a stronger barrier at the 23.60% level at 1.4081. A sustained break above these caps should pave the way for a move towards the cycle high area at 1.4244.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7854 compared to the previous day's fix of 6.7905 and 6.7421 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- EUR/USD posts modest gains around 1.1580 in Wednesday’s early Asian session.
- Reduced Fed rate hike expectations undermine the US Dollar.
- ECB’s Lane said Eurozone inflation at 3% remains too high.
The EUR/USD pair trades with mild gains near 1.1580 during the early Asian session on Wednesday. The US Dollar (USD) softens against the Euro (EUR) as softer US inflation data dialed back expectations of tighter Federal Reserve (Fed) policy. Traders will take more cues from the European Central Bank (ECB) President Christine Lagarde’s speech later on Wednesday.
The Fed is likely to keep its key interest rate unchanged in the upcoming September policy meeting and through year-end, according to most economists in a Reuters poll.
Market pricing for a September quarter-point hike flipped toward near a 65% odds of a Fed hold after the release of unexpected job losses in July, softer consumer price inflation and weaker Retail Sales.
Nonetheless, the US-Iran conflict has entered its sixth month, with US President Donald Trump saying that he is not interested in renewing the expiring peace deal with Iran. On Tuesday, Trump stated that “no talks or conversations are going on, or scheduled, with the Islamic Republic of Iran," adding that the naval blockade remains in full force and effect.
Signs of a prolonged conflict in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair.
Across the pond, financial markets are now pricing in a continuation of the ECB hiking cycle. The ECB Watch Tool indicates a 90% to 94% chance of a 25 basis points (bps) hike to 2.50% at the next policy meeting scheduled for September 9.
ECB chief economist Philip Lane said Tuesday that Eurozone inflation at 3% remains too high despite appearing modest compared to previous levels.
Euro holds firm as Germany ZEW expectations beat forecasts
Strategists at Scotiabank note that the Euro remains “resilient, but little changed on the session,” with support from improving survey data out of Germany. They highlight that Germany’s August ZEW survey “reflected better-than-expected sentiment,” as the Expectations component “rising to 34, above the consensus forecast of 30 and above July’s 26.3” underscores a more constructive outlook among analysts despite the still-gradual recovery backdrop.
Lane’s cautious optimism keeps Euro bulls in check
The FXS Speechtracker score of 5.4/10, below Lane’s historic 6.4/10 average, points to a softer tone despite comments that the European economy continues to grow and that inflation will be guided back to target within the next year or so. Emphasis on meeting-by-meeting, data-dependent decisions and a “more reactive” role suggests a mildly dovish shift, limiting immediate upside for the Euro as markets see less urgency for aggressive tightening.
Lane’s remark that the US is not a dominant factor in global trade reinforces a Euro-centric policy focus, but does not materially strengthen hawkish expectations. Overall, the combination of growth reassurance with reactive policy guidance supports a narrative of gradual normalization rather than renewed tightening, keeping Euro traders cautious about pricing in stronger policy support.
Technical Analysis: EUR/USD keeps a positive tone above the 100-day SMA
In the daily chart, EUR/USD holds a constructive near-term bias as it trades above the 100-day simple moving average (SMA) and the Bollinger middle band, suggesting underlying demand on dips. Price is advancing towards the upper Bollinger band, while the Relative Strength Index (14) around 63 maintains a bullish momentum tone without yet reaching overbought territory.
On the topside, initial resistance is located at the upper Bollinger band near 1.1650, where recent gains could face profit-taking. On the downside, immediate support aligns with the 100-day SMA at 1.1570, followed by the Bollinger middle band around 1.1505, with the lower Bollinger band near 1.1365 marking a more distant structural floor in the event of a deeper pullback.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the 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.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
- AUD/USD reverses from 0.7119 as Middle East uncertainty weighs.
- Weak US housing data fails to sustain Aussie gains.
- Australia wage data and Fed minutes drive next move.
The Aussie Dollar reversed its course against the Greenback on Tuesday as investors remain uncertain of the outcome of the Middle East conflict, which tends to push energy prices higher, increasing the likelihood that major central banks would need to tighten monetary policy. The AUD/USD trades at 0.7080 after reaching a high of 0.7119.
AUD/USD Reverses as Iran Risks Lift Dollar Before Fed Minutes
The US-Iran conflict is making headlines. Recently, CNN, citing a US official, reported that Trump instructed senior officials to stop talks with Iran. Trump also confirmed that the US Navy blockade is still active, while US data was mixed, with Housing Starts falling short of expectations due to higher mortgage rates and elevated prices.
US housing and industrial production data disappointed traders. Housing Starts fell 12.4% MoM from 1.415 million in June to 1.239 million in July, due to high prices and elevated mortgage rates. At the same time, the Fed revealed that Industrial Production slowed from the expected 0.3% to 0.2% MoM.
In Australia, traders would eye the release of the Wage Price Index for the second quarter, with figures forecast at 0.8%, unchanged from the previous print. Annually, the index is projected to ease from 3.3% to 3.2%.
Meanwhile, Moody’s rating agency affirmed Australia’s creditworthiness at Aaa, maintaining a stable outlook. The agency expects real GDP growth of 1.9% this year and 1.6% in 2027, and added that weak productivity, housing affordability, higher debt and exposure to external shocks are key challenges.
In the US, the economic docket will feature the release of the Federal Reserve’s last meeting minutes.
AUD/USD Price Forecast: Technical Outlook
In the daily chart, AUD/USD trades at 0.7081, maintaining a mildly bullish near-term bias as spot holds above the 50-day simple moving average (SMA) at 0.6993 and the more recent uptrend support around 0.7058. Price is currently testing a broader ascending trend line derived from the 0.6833 base, reinforcing the 0.7080 area as an immediate pivot, while a firming Relative Strength Index (14) near 59 suggests constructive momentum without yet reaching overbought territory.
On the downside, initial support is eyed at the 0.7081 pivot before 0.7058 and the 50-day SMA at 0.6993, with deeper backing coming from the former downward trend-line break level near 0.6399. On the topside, a sustained move higher would first target the ascending trend-line break zone around 0.7307, ahead of secondary resistance levels at 0.8425 and 0.9139, where prior structural barriers could slow further gains.
(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.
US President Donald Trump and Canadian Prime Minister Mark Carney are negotiating in an effort to reach an agreement on tariffs, with just hours to go before the United States (US) imposes 50% tariffs on hockey sticks, wine and an array of other Canadian imports, CNBC reported on Tuesday.
"We are negotiating," said Carney. ”The negotiations are very intense and delicate. This is not the time to talk about negotiations in public,” he added.
The new tariffs are set to take effect Wednesday, unless a deal is struck to postpone or cancel them. If no deal is reached, this measure will be the latest that Trump has slapped on Canada.
According to the Office of the US Trade Representative, the new duties cover around $20 billion worth of Canadian imports.
Market reaction
At the time of writing, the USD/CAD pair is up 0.20% on the day at 1.3900.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
- Gold price flatlines around $4,335 in Wednesday’s early Asian session.
- US 30-year Treasury yields hit their highest since 2007.
- Traders expect a 65% chance of a rate hold at the Fed's September meeting.
Gold price (XAU/USD) holds steady near $4,335 after pulling back from an early-June top near $4,450 during the early Asian trading hours on Wednesday. The precious metal faced some selling pressure in the previous session as Treasury yields surged to their highest levels in decades.
Long-term borrowing costs from the US to Japan and Germany hit their highest levels in decades, undermining non-yielding gold. Thirty-year bond yields in the US hit their highest since 2007 on Tuesday, while expectations that the Bank of Japan (BoJ) could raise interest rates as early as September pushed 10-year borrowing costs to a three-decade high. In Europe, Germany’s 10-year Bund yield reached its highest since 2011, and French yields were at their highest since 2008.
Furthermore, rising energy prices on ongoing US-Iran tensions and uncertainty surrounding the Strait of Hormuz could stoke inflation worries and weigh on non-interest-bearing bullion. US President Donald Trump said on Tuesday that no talks are underway or scheduled with Iran, per CNN. MarineTraffic data also showed that commercial vessel traffic through the critical Strait of Hormuz and Bab al-Mandeb channels remains depressed.
“The steepening of the yield curve poses a headwind for gold, while firmer oil prices are also a factor behind today’s weakness,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
On the other hand, the run of softer US inflation data has led investors to scale back expectations of a rate hike by the US Federal Reserve (Fed). This, in turn, could drag the US Dollar (USD) lower and support the USD-denominated commodity price.
Markets are now pricing in for a September quarter-point hike flipped to a near-65% chance of a hold, after softer consumer price inflation, and weaker retail sales.
Gold demand hinges on inflation hedging as rising yields pose near-term risk
BNY’s strategists observe that investors “appear to prefer explicit inflation protection through gold rather than positioning for a broader reflationary upswing,” with the metal increasingly favoured as a direct hedge against rising price pressures. At the same time, they caution that “with yields moving sharply higher, the metal could struggle in the near term, unless monetary policy remains far more dovish than expected,” underscoring the delicate balance between inflation hedging demand and the headwind from higher rates.
Technical Analysis: Gold
In the daily chart, XAU/USD remains under a bearish near-term bias as price holds below the 100-day simple moving average (SMA), keeping the broader uptrend context out of reach. At the same time, spot is trading above the 20-day Bollinger middle band, suggesting a corrective bounce within a still-capped structure, while the Relative Strength Index (14) around 58 points to firm but not overextended bullish momentum.
On the topside, initial resistance is seen at the 100-day SMA near $4,385, ahead of the upper Bollinger band at roughly $4,500, where rallies would likely meet stronger supply. On the downside, immediate support comes from the 20-day Bollinger middle band around $4,210, with deeper demand parked near the lower Bollinger band at about $3,915; a daily close below the mid-band would reopen a slide toward the lower envelope, whereas a sustained break above $4,385 would be needed to soften the current bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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/JPY stalls near 184.70 despite two-day recovery attempt.
- SMA confluence at 184.72/73 caps immediate bullish momentum.
- Break above 185.00 exposes July high at 187.47.
The EUR/JPY registers two consecutive days of gains, but on Tuesday, buyers failed to gain traction as they faced a confluence of key resistance levels near the 184.70 area. The cross-pair is poised to end the day unchanged, near its opening price of 184.69.
EUR/JPY Price Forecast: Technical Outlook
The cross is approaching the confluence of the 50- and 100-day Simple Moving Averages (SMAs) at around 184.72/73, with the 50-day SMA showing strong bullish momentum that could carry EUR/JPY past the 200-day SMA, which sits below the current spot price at 184.05.
A decisive break above the confluence of the 50- and 100-day SMAs opens the door to challenge 185.00. Once surpassed, the uptrend gains relevance, with traders eyeing the next cycle high at 187.47, the July 29 high.
On the flip side, the first support for EUR/JPY is the 200-day SMA at 184.05. Once surpassed, the next area of interest would be the May 6 swing low of 182.05, followed by the August 3 low of 179.37.
EUR/JPY Price Chart – Daily
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.06% | 0.08% | 0.16% | 0.30% | 0.43% | 0.18% | |
| EUR | -0.03% | 0.04% | 0.06% | 0.13% | 0.26% | 0.40% | 0.15% | |
| GBP | -0.06% | -0.04% | 0.00% | 0.13% | 0.25% | 0.38% | 0.13% | |
| JPY | -0.08% | -0.06% | 0.00% | 0.09% | 0.22% | 0.36% | 0.11% | |
| CAD | -0.16% | -0.13% | -0.13% | -0.09% | 0.14% | 0.28% | 0.02% | |
| AUD | -0.30% | -0.26% | -0.25% | -0.22% | -0.14% | 0.13% | -0.11% | |
| NZD | -0.43% | -0.40% | -0.38% | -0.36% | -0.28% | -0.13% | -0.24% | |
| CHF | -0.18% | -0.15% | -0.13% | -0.11% | -0.02% | 0.11% | 0.24% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- USD/JPY trades near 159.50, its highest level since the July intervention.
- More than half of the 900-pip intervention drop retraced in a dozen sessions.
- Japan's July trade deficit is forecast to widen to 680 billion Yen.
The Dollar trades near 159.50 against the Yen on Tuesday after a session high just short of 160.00, the strongest level the pair has reached since Tokyo and Washington intervened together at the end of July. That operation drove close to 900 pips out of the rate across two sessions, from just short of 164.00 down to the 155.00 handle.
More than half of it has been ground back in the dozen sessions since, and grinding is the right word, because the recovery has been built on small bodies and narrow ranges rather than on any single reversal. Tuesday's 49-pip range fits the pattern exactly, and the run of higher session highs through August has not once needed a headline to justify itself.
The government is selling what the ministry bought
Japan spent close to 14 trillion Yen defending the currency, a record single-session operation followed by a rare coordinated round with the United States Treasury, the first joint Yen-buying action between the two countries since 1998. That is a very large cheque written against a level rather than against a cause, and the cause has since moved further out of reach.
The administration's plan to cut the consumption tax on food to 1% for two years carries no identified funding, which amounts to a fiscal loosening aimed at an inflation problem the weak currency is helping to create. Japanese government bond yields have risen in response, but American yields have risen with them, so the differential that actually drives the pair has barely narrowed at all.
A policy rate that is still negative in real terms
The Bank of Japan raised to 1.00% in June and has held there since, the highest policy rate since 1995, and it is still not enough. National inflation on the headline gauge ran at 1.7% YoY in the latest reading, which leaves the real policy rate negative on the simplest arithmetic available. Minutes from the June meeting show a board worried that crude costs are broadening into consumer prices.
That combination explains why traders have begun pricing a September move, and also why the move may not help. A quarter point against a Federal Reserve upper bound of 3.75% closes almost none of the gap, and the terms-of-trade drain that a shut Strait of Hormuz imposes on an economy importing nearly all of its energy is not a problem 25 basis points repairs.
Growth gives the board no cover for it either, with the preliminary second-quarter reading showing the economy expanding at an annualised 1.1% against expectations near 2% as robust exports were outweighed by weak domestic demand. That is precisely the composition that makes tightening politically expensive, so the currency problem and the growth problem now pull the committee in opposite directions.
Three prints and a set of minutes
Japan's July trade figures land at 23:50 GMT on Wednesday, August 19, with the merchandise balance forecast to widen to a deficit of 680 billion Yen from 406.9 billion. Imports are seen up 26.5% YoY against exports at 19.9%, which is the energy bill written out in a single line. A gap widening by more than half in one month is not a currency story the Bank of Japan can price away.
National inflation follows at 23:30 GMT on Thursday, with the core gauge excluding fresh food forecast at 1.8% from 1.6% and the headline measure at 1.7%, both still short of the 2% target. A central bank whose own inflation reading sits under target has a thin case for the increase its currency needs.
The Dollar side of the pair gets its event first and it is the larger of the two, because minutes of the July 28-29 Federal Open Market Committee (FOMC) meeting publish at 18:00 GMT on Wednesday, covering the 9-3 hold that produced the first unified three-way dissent since September 2016.
Those minutes were written before the payrolls contraction, the July Consumer Price Index (CPI) and the retail sales miss that cut September hike odds to roughly 31% from above 82%. They record an argument rather than a forecast, and the Dollar will trade the conditions attached to that argument rather than the headcount behind it.
Levels to watch
Resistance: The 160.00 handle sits in immediate reach after a session high just beneath it, with the declining 50-day Exponential Moving Average (EMA) just short of 160.50 directly behind. A daily close above 160.50 opens 161.50.
Support: The 159.00 handle has contained every pullback this month and 158.00 marks the shelf beneath it. The rising 200-day EMA just above 157.50 is the floor the entire post-intervention structure depends on.
Bias: Bullish. Every Japanese driver in the week ahead points the same way, from a widening trade deficit to a core gauge short of target, and the daily Stochastic Relative Strength Index (Stoch RSI) near 27 leaves room above rather than warning of exhaustion. The risk here is official rather than technical, because the last round was confirmed only after the fact and the ministry has said it will not hesitate to repeat it. A daily close beneath 158.00 invalidates.
USD/JPY daily chart
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.
- GBP/JPY holds near 216.00 as buyers lose momentum.
- Flat bullish RSI signals consolidation before next directional move.
- Break below 215.56 exposes 214.71 and 212.35 supports.
The GBP/JPY consolidates at familiar levels on Tuesday, virtually unchanged near 216.00, with the cross-pair seesawing within the 215.85-216.22 range, as neither buyers nor sellers are able to clear key resistance/support levels during the day.
GBP/JPY Price Forecast: Technical Outlook
The GBP/JPY is neutral to upward biased, though the last intervention between US and Japanese authorities prevented investors from opening fresh long or short bets. Bullish momentum has faded even though the Relative Strength Index (RSI) remains bullish. Nevertheless, as it turned flat, a potential consolidation lies ahead.
Upwards, the first key resistance is 217.00, followed by a downward resistance trendline near 217.50/65. Above this area, up next is the July 9 high of the day (HOD) at 218.01.
On the flip side, a drop below the 50-day SMA at 215.56 opens the door to further downside. Below lies the 100-day SMA of 214.71, ahead of the 200-day SMA at 212.35.
GBP/JPY Price Chart – Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.07% | 0.18% | 0.16% | 0.05% | 0.26% | 0.03% | |
| EUR | 0.09% | 0.17% | 0.28% | 0.25% | 0.10% | 0.35% | 0.13% | |
| GBP | 0.07% | -0.17% | 0.17% | 0.10% | -0.07% | 0.18% | -0.09% | |
| JPY | -0.18% | -0.28% | -0.17% | -0.01% | -0.19% | 0.06% | -0.17% | |
| CAD | -0.16% | -0.25% | -0.10% | 0.01% | -0.16% | 0.08% | -0.17% | |
| AUD | -0.05% | -0.10% | 0.07% | 0.19% | 0.16% | 0.25% | -0.01% | |
| NZD | -0.26% | -0.35% | -0.18% | -0.06% | -0.08% | -0.25% | -0.27% | |
| CHF | -0.03% | -0.13% | 0.09% | 0.17% | 0.17% | 0.01% | 0.27% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- GBP/USD trades just short of 1.3550, its strongest level since early May.
- UK unemployment holds at 4.9% against 4.8% expected, employment growth halved.
- September Fed hike odds near 31%, down from above 82% in late July.
The British Pound trades just short of 1.3550 against the Dollar on Tuesday, holding inside Monday's range after a peak short of 1.3600 carried it to its strongest level since early May. That leaves close to 300 pips of recovery from the base just short of 1.3300 built in the first week of August.
The advance has taken the rate back above both major moving averages and pushed the shorter one above the longer for the first time since spring, which is a change of structure rather than a bounce. What it has not involved is any material contribution from Britain. Tuesday's labour market release was the first red-band domestic event in three weeks, and the currency answered it with a 35-pip range and a small loss.
The jobs report cooled in the direction that counts
Regular pay growth, the series the Monetary Policy Committee (MPC) treats as the cleanest read on domestically generated inflation, accelerated to 3.5% in the three months to June from 3.4%, a tenth above consensus. Total pay including bonuses eased to 4.1% from 4.4%. Pay at that pace still sits above the 3.3% the committee pencilled in for the fourth quarter back in February, so on price the release handed the hawks a marginal win.
On quantity the same release handed them nothing at all, with employment growth over those three months nearly halving to 83K from 147K and the unemployment rate holding at 4.9% where a decline to 4.8% was expected. Vacancies slipped to 707K on the May to July estimate, the weakest reading outside the pandemic since late 2014. July's claimant count fell 11K against an expected rise above 11K, the single line in the release that argues the other way.
The rally carries an American passport
Almost the entire August advance belongs to the other side of the quote, where futures now price a September Federal Reserve increase near 31%, down from above 82% in the days after the July 29 decision, a collapse delivered by three consecutive American releases: payrolls contracting 23K, July Consumer Price Index (CPI) at 3.4% YoY with core at 2.5%, and retail sales falling 0.6%.
Sterling's own rate story has barely shifted across the same three weeks, which is what makes the attribution awkward. Swap pricing puts a hold at the September 17 MPC decision near 72%, with roughly 7 basis points of tightening in that meeting and about 30 basis points by year-end.
That curve was built on the energy shock rather than on anything the domestic data has delivered, and Tuesday's numbers gave it no fresh support. The Pound is not being bought. The Dollar is being sold, and the autumn Budget in October still sits beyond the horizon of every forecast currently in the price. Renewed tension around the Strait of Hormuz put a modest bid back under the Dollar on Tuesday, which accounts for most of the session's small decline.
Wednesday hands the Pound its first domestic test
July inflation lands at 06:00 GMT on Wednesday, August 19, with consensus at 2.9% YoY on the headline against 2.6% in June, and 0.3% MoM against 0.1%. Core is forecast a tenth lower at 2.5%. The shape of that combination matters more than either number, because a headline pushed up by energy while core drifts down is the easiest hold the September meeting could ask for.
Services inflation ran at 3.6% in June and remains the component the committee actually reads, so the reaction function sits well below the headline. The rest of the British calendar runs the same way. Producer prices arrive alongside the inflation release, consumer confidence is forecast to slip to -18 on Thursday, and Friday brings July retail sales expected at -0.5% MoM after a 1% gain, with all three preliminary August Purchasing Managers Index (PMI) readings forecast lower.
Wednesday's 18:00 GMT release of the Federal Open Market Committee (FOMC) minutes is the other half of the equation, and it covers a meeting held three weeks before every print that repriced September. Those minutes carry a record of an argument rather than a forecast, and the Dollar will trade the conditions attached to that argument rather than the vote itself.
Levels to watch
Resistance: Monday's peak short of 1.3600 is the line that matters, and a daily close above it opens the early-May high near 1.3650 with little standing in between. The 1.3550 shelf caps in the interim.
Support: The 1.3500 handle contained Tuesday's low and marks the first shelf. Beneath it, both moving averages now sit stacked in a band between 1.3400 and 1.3450, which is where the August trend gets its first genuine test.
Bias: Bullish. The moving-average band has flipped to support and price holds a clear cent above it, so pullbacks into 1.3450 are for buying rather than fading. The caveat is momentum, with the daily Stochastic Relative Strength Index (Stoch RSI) near 87 and a domestic calendar heavy enough to break the trend. A daily close beneath 1.3400 invalidates.
GBP/USD daily chart
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.
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