Forex News
Chinese President Xi Jinping stated during his visit to Washington that Beijing and Washington must find a proper way to coexist peacefully and act as partners rather than rivals, the Financial Times reported on Thursday.
Xinhua news agency reported that Trump and Xi confirmed that they would support each other in hosting the APEC Economic Leaders meeting and the G20 Summit in 2026.
Key quotes
China and the United States . . . stand to gain from co-operation and will both lose in confrontation.
Our competition should be a healthy one, and should be kept within bounds. It should be a race of catching up with one another, not a wrestle in which one either wins or loses.
Seek new method for major powers to coexist peacefully.
Major powers should demonstrate responsibility.
US-China ties reach new historical milestone.
Reached broad agreement on numerous issues.
Had a candid and thorough exchange with Trump.
New arrangement after China-US trade talks is good news.
Had a candid and thorough exchange with Trump.
Market reaction
At the time of writing, the AUD/USD pair is down 0.05% on the day at 0.7000.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Yemen's Houthi claimed on Thursday that it launched dozens of ballistic missiles and drones at Saudi military installations in the kingdom's southwestern Jazan region, the Saudi-led coalition in Yemen said were aimed at Taif in western Saudi Arabia and the Yanbu area on the Red Sea.
Houthi military spokesman Yahya Saree stated that the operation targeted command-and-control centers, operations rooms and weapons depots in the Al-Tuwal area of Jazan, along with missile launch sites at Al-Daghareer camp and other Saudi military camps in the region.
Saudi Arabia's Civil Defense said later that the danger had passed in Mecca, Taif and the northwestern Tabuk region, after emergency warnings had been issued earlier for those areas as well as Jeddah, Yanbu, and Jazan.
The Saudi Arabia Foreign Ministry said early Friday that Saudi, Turkey, and Pakistan will hold an urgent chiefs of staff meeting on backing Riyadh under a joint defense pact. Saudi’s Foreign Minister Prince Faisal bin Farhan bin Abdullah added that the kingdom, Turkey and Pakistan affirm Riyadh’s right to defend itself under the United Nations (UN) charter.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.80% on the day at $92.86.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Iranian President Masoud Pezeshkian said that it is for the United States (US) to decide whether to end its war against the Islamic Republic, as Tehran does not wish to continue fighting, Fox News reported on Thursday.
“When we can resolve issues through dialog, we shouldn’t resort to killing one another. But with the instigations conducted by Israel, they have imposed this war on us,” said Pezeshkian. “But we do not wish to continue,” Pezeshkian adds. “It’s America that must choose whether it wants to end this or not.”
A senior Iranian official said the most possible way to end the conflict would be a phased arrangement, with Iran allowing navigation through the Strait of Hormuz in return for the US lifting its economic blockade and Tehran potentially gaining access to frozen assets.
Elsewhere, In his speech at the United Nations General Assembly, Qatar categorically rejected Prime Minister Benjamin Netanyahu's claim that it is conducting an influence campaign against Israel, stating that "his attacks are an effort to divert attention from his political responsibility for policies on the ground."
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.80% on the day at $92.86.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- Gold price loses momentum to around $4,275 in Friday’s early Asian session.
- A fresh jump in oil prices raises inflation fears, weighing on the Gold price.
- Hawkish signals from Fed policymakers bolstered rate hike expectations.
Gold price (XAU/USD) declines to near $4,275 during the early Asian session on Friday. The precious metal extends the decline on growing bets on further Federal Reserve (Fed) interest rate hikes this year. New York Fed President John Williams and Cleveland Fed President Beth Hammack are set to speak later in the day.
Oil prices rebound after talks between the United States (US) and Iran showed little sign of progress, raising oil-driven inflation concerns. Additionally, yields on the US’s longest-dated bonds climbed to the highest level in more than two decades. A rise in oil prices has reinforced expectations that the US central bank will need to continue raising interest rates in order to quell above-target inflation.
Markets are now pricing in roughly a 67.5% chance that the Fed would hike rates by a quarter percentage point in October, up from 55.4% one week ago, according to the CME FedWatch tool. Higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.
Fed policymakers struck a hawkish tone this week. Cleveland Fed President Beth Hammack said on Thursday that inflation pressures remain elevated, and the longer this situation persists, the harder it will be to bring price pressures back to target. Meanwhile, Philadelphia Fed President Anna Paulson stated that inflation needs attention, which might require further interest rate hikes.
China demand emerges as key pillar of gold market in 2026
Analysts at Commerzbank underscore the strength of China’s physical demand, noting that, “according to data from the customs authority, China imported more than 1,000 tons of gold in the first eight months of the year, already exceeding last year’s total.” They add that official sector buying has reinforced this trend, with the Chinese central bank having “purchased a good 80 tons of gold between January and August, with purchases increasing noticeably in recent months and reaching their highest level in nearly three years in August.” Commerzbank concludes that, on this basis, “China is therefore a key driver of gold demand this year.”
Fed’s paulson flags risk of further hikes as inflation stays stubborn
Fed’s Paulson delivers a notably hawkish message, with an FXS Speechtracker score of 8.1/10 compared to the established baseline of 7/10, underscoring heightened concern about persistent price pressures. The emphasis that the US central bank “may need to raise interest rates again” and that the September hike only moved policy into a “better inflation-fighting posture,” alongside comments that underlying inflation “remains stubbornly high” and is being driven in part by the AI buildout, signals a clear willingness to tighten further to restore inflation to 2%. At the same time, references to a resilient economy, stable labor market, and the fact that inflation has “not gotten worse” frame the policy stance as firmly focused on containing upside risks rather than responding to imminent deterioration.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 148.18, reinforcing that the broader Fed communication backdrop remains deeply in hawkish territory. The combination of a high index level and an above-baseline FXS Speechtracker score suggests that, even without an incremental hawkish shift in the aggregate index, the Dollar narrative remains anchored in expectations of a prolonged restrictive stance and potential additional tightening.
Technical Analysis: Gold remains capped below the 100-day SMA
In the daily chart, XAU/USD retains a bearish near-term bias as it remains below the 100-day moving average (MA) and the Bollinger middle band. Price is holding above the lower Bollinger band, suggesting a corrective bounce cannot be ruled out, but the Relative Strength Index (14) around 44 keeps momentum tilted to the downside rather than signaling oversold conditions.
On the topside, initial resistance emerges at the 100-day MA around $4,310, followed by the Bollinger midline at $4,360, while the upper Bollinger band near $4,480 marks a stronger cap if gains extend. On the downside, the lower Bollinger band at $4,240 offers immediate support, and a daily close beneath this level would likely open the way for further retracement toward lower psychological and prior swing areas.
(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.
- USD/JPY rises for a fifth straight session to the edge of 159.00 as Tokyo holds fire.
- BoJ policy rate at 1.25%, its highest in 31 years, against 3.75%-4.00% at the Fed.
- Japan's Tankan survey lands on September 30, Tokyo CPI on October 1.
Finance Minister Katayama said on Thursday that the principles behind the joint US-Japan intervention of July 31 are still alive, and USD/JPY went on to touch 159.00, its highest since early September. The pair is trading just under 159.00, on track for a fifth straight gain. In a single week the Bank of Japan (BoJ) has raised its policy rate, Japanese authorities have checked rates with dealers and Katayama has repeated her warning, and USD/JPY is higher than it was before any of them.
Katayama declined to comment on levels. Japanese authorities checked rates with dealers in overseas markets on Friday, September 18, according to people familiar with the matter, a step that often comes before intervention. Tokyo was shut from Monday to Wednesday for national holidays, so Thursday was the first Japanese session since the September 18 rate check. Japan last bought Yen on July 31, jointly with the US, after USD/JPY went through 163.00, and is reported to have done so on April 30 after a move just above 160.50.
A 1.25% BoJ rate is still 2.5 points below the Fed's floor
The BoJ raised its policy rate to 1.25% on September 18, the highest since 1995, and the Yen fell on the day. BoJ Governor Ueda said financial conditions would stay accommodative, and two board members voted against the increase, which suggested the next one isn't close.
The Fed raised its range to 3.75%-4.00% two days earlier without a single dissent, and futures lean toward another quarter-point on October 28. Japan's highest rate in three decades left the gap to US rates exactly where it was.
Tokyo inflation is running below the BoJ's 2% target
The BoJ publishes minutes of its July 30-31 meeting on Sunday at 23:50 GMT, and they record board member Takata as the only vote for the 1.25% rate the board adopted seven weeks later. August retail sales follow on Tuesday at 23:50 GMT. The quarterly Tankan survey of large manufacturers lands on Wednesday, September 30 at 23:50 GMT, previously at 22 with an outlook of 17, alongside a summary of opinions from the September meeting.
Tokyo's Consumer Price Index (CPI) for September comes out on Thursday, October 1 at 23:30 GMT, after 1.9% YoY in August and 1.8% excluding fresh food. A soft reading would make another BoJ hike this year harder to argue for. On the US side, August inflation on the Personal Consumption Expenditures (PCE) measure comes out on September 30, and the Nonfarm Payrolls (NFP) report on October 2 carries average hourly earnings, which grew 3.1% YoY in August.
Levels and bias
Resistance: Thursday's high came in just above 159.00, the top of a five-session run. Above that, 160.00 is the next round number and the area where Japan's warnings have turned into action this year.
Support: The 50-day Exponential Moving Average (EMA), just above 158.00, is the first floor, and USD/JPY got back above it on Wednesday for the first time since early September. Below that, Thursday's low just above 157.50 is the next floor, with 157.00 under it.
Bias: Long above 158.00, looking for 159.50 and then 160.00, where intervention risk makes it the last objective rather than a waypoint. The daily Stochastic Relative Strength Index (Stoch RSI) is near 50 and rising from under 25 in mid-September. A daily close under 157.50 ends the long.
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.
- AUD/USD slides toward 200-day SMA after three straight declines.
- US 10-year yield tops 5.20% as Fed hike bets build.
- RBA hike expectations offer support ahead of September decision.
The Aussie Dollar fell for the third straight day, down 0.37% against the US Dollar, which remained boosted by elevated US yields, which jumped as Oil prices rose and as inflation pressures built. The AUD/USD trades at 0.7012, near the 200-day Simple Moving Average (SMA) of 0.7021.
AUD/USD tests major support as Fed tightening bets strengthen Dollar
US equity markets ended Thursday’s session in the red as sentiment deteriorated. The US Dollar extended its gains for the fourth consecutive day amid the lack of tangible progress in negotiations between the US and Iran. At the same time, crude Oil rose nearly 1.90%, with West Texas Intermediate trading at $93.21, recovering some ground despite reports that Tehran is eyeing a potential deal with Washington.
The story of the week is about US Treasury yields. The 10-year yield finished the day at 5.208%, up almost 10 basis points, as investors increased their hawkish bets on the Fed. Money markets had priced in a 68% chance of a rate hike in October and a 94% chance of another raise in December.
Housing data in the US revealed that New Home Sales in August bounced 6.4% MoM, after dropping -4.3% in the previous month. Jobs data was also featured, with Initial Jobless Claims for the week ending September 19 at 197K, below the previous week's reading of 198K and forecasts of 201K.
Fed speaking dominated the headlines, providing direction to the financial markets. New York Fed's John Williams suggested another rate hike this year, aligning with Philadelphia Fed's Anna Paulson, who said “more rate hikes may be needed” to curb inflation. Beth Hammack of the Cleveland Fed warned inflation pressures are rising, reaffirming her hawkish stance.
Regarding the encounter between China’s President Xi and US President Trump, both presidents exchanged conciliatory remarks and are seeking further cooperation, whether on trade or AI.
In Australia, the schedule is absent, yet traders' eyes are on the Reserve Bank of Australia (RBA) monetary policy decision on September 29. Data from Prime Terminal shows a 93% chance of a 25-basis-point rate increase to 4.60%. Besides this, Australia’s inflation data is expected in September 30..
In the US, Durable Goods Orders and Consumer Sentiment are released on September 25, ahead of next Friday's Nonfarm Payrolls report.
AUD/USD Price Forecast: Technical outlook
In the daily chart, AUD/USD trades at 0.7010, extending a bearish near-term bias as spot holds under the cluster of simple moving averages (SMA) around 0.7092 and beneath multiple upward trend-line break levels at 0.7039 and higher. Price trades only modestly above the nearer structural support trend line at 0.6906, while the Relative Strength Index (14) at 32.37 hovers just above oversold territory, suggesting selling pressure persists but may be losing intensity.
On the topside, initial resistance emerges at the upward support trend-line break near 0.7039, followed by the grouped 50/100/200-day SMA area around 0.7092, with a horizontal barrier at 0.7198 capping the broader recovery attempts; farther up, former support trend lines turning resistance at 0.7385, 0.8716 and 0.9569 mark deeper upside hurdles. On the downside, the only nearby structural support sits at the upward trend line break around 0.6906, where a clear violation would open the door to an extension of the current bearish phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Rabobank’s USD/MXN analysis highlights recent moves driven by Oil-related Dollar strength and heavy speculative long-MXN positioning. The bank maintains a baseline for USD/MXN to trade mainly between 17 and 18, but warns policy divergence, softer Mexican growth or a carry unwind could lift the pair above 18. Forecasts show USD/MXN dipping to 16.8 in one month before stabilizing near 17.6.
Carry vulnerability and policy divergence
"We maintain our baseline for USD/MXN to trade predominantly between 17 and 18, although potential policy divergence, weaker Mexican growth, or an unwind of crowded long-MXN carry positions could push the pair above the 18-handle."
"USD/MXN has been primarily driven by oil-related USD strength in the past few days, so it is not clear how the pair reacted specifically to the Banxico decision, though the risk that we could see hikes from Banxico would suggest some additional MXN strength."
"Current non-commercial positioning suggests investors are heavily net long MXN, though total positioning has been falling in recent weeks. We would interpret a fall in net long positioning from its current level of 87,782 to below 70,000 positions as indicating that investors are starting to move away from the carry trade."
"If Banxico sticks to its guns and diverges in policy from the Fed due to a softening economy, this would be destructive for MXN going forward, and we could see the pair moving above the 18-handle."
"However, at the time of writing, we are maintaining our outlook for USD/MXN to trade predominantly between 17 and 18."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- NZD/USD grinds to its lowest since late June as US bond yields climb to new highs.
- Markets price at least a 75% chance of an RBNZ hike to 3% on October 28.
- About nine-tenths of the late-June to August rally is gone.
The Reserve Bank of New Zealand (RBNZ) has its Official Cash Rate (OCR) at 2.75%, and markets now price at least a 75% chance that it goes to 3% on October 28, against about 30% right after the September 2 hike. NZD/USD is trading just above 0.5650, its lowest since late June. The Kiwi has kept falling while the odds of a hike at home more than doubled, because the Fed is expected to raise rates on the same day.
RBNZ Governor Breman said on Tuesday that near-term inflation could run above the RBNZ's forecast if higher Crude Oil prices persist, and the pricing moved within a day. New Zealand imports its fuel, so Brent trading above $106 a barrel on Thursday feeds straight into that argument. The RBNZ's own rate track, published on September 2, pointed to a pause in October and a hike in December, which puts markets a full meeting ahead of the central bank's forecast.
The RBNZ decides 17 hours before the Fed does
The RBNZ announces at 01:00 GMT on October 28 and the Fed at 18:00 GMT, so a Kiwi rally on an RBNZ hike would have most of a day before the US decision lands. The Fed's range is 3.75%-4.00% after its September 16 hike, and futures put the odds of another quarter-point in October at better than even. US 10-year Treasury yields topped 5.15% on Thursday, their highest since July 2007.
For the Kiwi to gain on rates alone, the RBNZ has to hike while the Fed holds. It's possible the Fed holds in October, although 16 of its 18 policymakers projected at least one more hike this year in their September forecasts.
Building permits won't move a hike bet this size
New Zealand's own calendar is thin. Building permits for August come out on Wednesday, September 30 at 21:45 GMT, after a -4.3% fall in July, and ANZ-Roy Morgan consumer confidence follows on Thursday, October 1 at 21:00 GMT, previously at 98. Neither is likely to shift an October hike that markets already rate at three-in-four or better.
US releases will do more of the work. Durable goods orders on Friday at 12:30 GMT are forecast to fall 0.4% after a 1.1% rise, which in this market would count as good news for the Kiwi. The Personal Consumption Expenditures (PCE) price index lands on September 30, after core prices rose 3.3% YoY in July, and the Institute for Supply Management (ISM) manufacturing survey on October 1 comes after a prices-paid reading of 71.1. Payrolls close the run on October 2.
Levels and bias
Resistance: 0.5700 gave way on Wednesday, the larger of the two down days, and Thursday's bounce stalled short of it. Above that, 0.5750 capped Tuesday's rebound.
Support: Thursday's low is just under 0.5650. Under that, the late-June low just above 0.5600 is the only stop before 0.5550.
Bias: Short below 0.5700, aiming for 0.5600 and then 0.5550. The daily Stochastic Relative Strength Index (Stoch RSI) has been pinned in single digits for more than a week, so a bounce could come without changing the lean. A daily close above 0.5750 cancels it.
NZD/USD daily chart
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- DJIA closes at its lowest since mid-June, its third straight losing session.
- The 30-year US Treasury yield hit 5.50%, its highest since June 2004.
The 30-year Treasury yield touched 5.50% on Thursday, and two Fed officials gave bond buyers no reason to expect relief. New York Fed President Williams said another rate increase this year looks reasonable, and Philadelphia Fed President Paulson said rates may need to rise a little more. Sherwin-Williams (SHW), which sells paint into a housing market priced off long-term rates, was among the Dow's three biggest losers with Walmart (WMT) and International Business Machines (IBM).
Stocks came off their lows after Reuters reported that US and Iranian negotiators are discussing a phased deal to reopen the Strait of Hormuz. Brent still finished above $106 a barrel, up on the day, on a report that tankers may soon be able to use the strait again.
The index closed at its lowest since mid-June after dipping to the 51,100 area, beneath the September 16 low near 51,200. It has now given back about 70% of the June-to-August rally that peaked near 54,750. The S&P 500 finished flat and the Nasdaq Composite edged higher, so the Dow was the only one of the three to fall. It ended the day well below its 50-day moving average, a smoothed line of recent closes near 52,500 that has stayed above the index since the second week of September. The daily Stochastic Relative Strength Index (Stoch RSI), a momentum gauge, fell under 20 for the first time since late July.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
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- GBP/USD slides to its lowest in nearly three months as Fed speakers back another hike.
- Two switches would turn the BoE's 6-3 hold into a 5-4 vote to hike.
- UK second-quarter GDP on September 30 is the only British release before US payrolls.
Bank of England (BoE) Deputy Governors Lombardelli and Breeden said on Thursday that they are moving closer to voting for a rate hike, and the Pound fell for a fourth straight session regardless. GBP/USD is trading just above 1.3200, its lowest in nearly three months. A BoE that talks about hiking should lift Sterling, but the Fed decides first, and its officials said much the same thing on the same day.
New York Fed President Williams called one more increase before the end of the year a reasonable expectation, while Philadelphia Fed President Paulson argued that some modest further tightening may be warranted. US jobless claims came in at 197K against a 201K forecast, which gives neither of them a reason to back off. The Fed decides on October 28 and the BoE on November 5, so a UK hike would arrive eight days after a US one that markets already rate as likely.
Two changed minds would make it five votes to four
The BoE held the UK's Bank Rate at 3.75% on September 17 by six votes to three, with Chief Economist Pill and external members Greene and Mann voting for 4%. Deputy Governor Lombardelli said in a speech in Warsaw that the longer energy prices stay high, the greater the risk that wage bargaining and price-setting start to adjust. Deputy Governor Breeden made the same case in London, and both voted to hold in September.
External member Dhingra sounded less urgent, arguing that Britain isn't seeing the broad price rises of 2022 and that its jobs market is weaker now. Markets still price about a 75% chance of a quarter-point BoE hike on November 5 and a second by February. A November hike would take the Bank Rate to 4%, which is the top of the Fed's range now and could be the bottom of it after October 28.
The BoE's case for a hike rests on energy, and energy can change quickly. Reuters reported on Thursday that negotiators for Washington and Tehran are weighing a phased agreement under which Iran would reopen the Strait of Hormuz, though Brent was still trading above $106 a barrel. Paulson's case rests on underlying inflation, the measure that strips out food and energy, which she said has made little progress this year, and a ceasefire wouldn't change that.
The only UK number is a third look at April to June
Britain's one data release before October 2 is the final second-quarter Gross Domestic Product (GDP) estimate on Wednesday, September 30 at 06:00 GMT, forecast at 0.4% QoQ and 1.2% YoY, both unchanged from the previous estimate. The speeches carry more weight for Sterling. Deputy Governor Ramsden speaks on Monday at 10:00 GMT and external member Taylor on Tuesday at 15:30 GMT, and both voted to hold on September 17, so either could become a third holder leaning toward a hike.
The US calendar is fuller. Durable goods orders and the University of Michigan (UoM) sentiment survey land on Friday, then the Personal Consumption Expenditures (PCE) price index on September 30 and Nonfarm Payrolls (NFP) on October 2, where August's reading was 162K. External member Mann, a hike voter in July and September, speaks on October 1. Whatever payrolls show, the BoE's next chance to respond comes five weeks later.
Levels and bias
Resistance: Thursday's bounce stalled just above 1.3250. Above that, 1.3300 is the level GBP/USD went through on Wednesday, the largest of the four down days, and it now caps the pair.
Support: 1.3200 is the first floor, with Thursday's low just above it. Below that, the late-June low just under 1.3150 is the last stop before 1.3100.
Bias: The lean is short below 1.3250, with 1.3150 as the first objective and 1.3100 after it. The daily Stochastic Relative Strength Index (Stoch RSI) reads about 11 and is still pointing lower. A daily close back above 1.3300 ends the short.
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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