Forex News
The Bank of England (BoE) Governor Andrew Bailey speaks at the Swiss Institute of International Studies SIAF, Zurich, Switzerland. He said that “UK economic activity is proving more resilient than expected, partly due to AI investment, particularly in business services.”
Bailey added that AI, digital technology and robotics have the potential to raise “sustainable economic growth,” while adding that the “AI asset price bubble poses clear financial stability risks.”
Key highlights:
UK economic activity is proving more resilient than expected, partly due to AI investment, particularly in business services.
AI, digital technology and robotics have potential to raise sustainable economic growth through higher productivity.
Growing signs of beginnings of positive supply shock from AI, investment
AI asset price bubble poses clear financial stability risks
AI returns may be strong but markets could overvalue them or returns could take longer than expected to materialize
Frontier AI has increased cyberattack risks, more extensive model testing is needed before and after release
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- The Australian Dollar gains 0.75% on Monday, supported by a broad-based decline in the US Dollar.
- China's consumer inflation slows more than expected in October, while producer prices surprise to the upside.
- Strong US employment data reinforce expectations of a December rate hike, ahead of key inflation reports.
AUD/USD rebounds sharply on Monday, gaining 0.75% to trade around 0.6915 at the time of writing. The Australian Dollar (AUD) benefits from broad-based weakness in the US Dollar (USD), despite mixed economic data from China and elevated expectations of further monetary tightening in the United States (US).
The latest data from China, Australia's largest trading partner, show that the Consumer Price Index (CPI) rose 0.7% YoY in October, slowing from 0.9% in September and falling short of market expectations of 0.8%. On a monthly basis, consumer prices remained unchanged, following a 0.2% increase in the previous month, in line with forecasts. Meanwhile, China's Producer Price Index (PPI) accelerated to 5.7% YoY in October, compared with 5% in September and expectations of 5.3%. The stronger-than-expected increase suggests persistent inflationary pressures at the production level, despite the slowdown in consumer prices.
These figures paint a mixed picture of the Chinese economy, whose outlook remains particularly important for the Australian Dollar due to the close trade ties between the two countries. However, US Dollar weakness appears to dominate market sentiment on Monday, allowing AUD/USD to maintain its bullish momentum.
The US Dollar Index (DXY), which measures the Greenback's performance against a basket of six major currencies, falls 0.44% on Monday to trade around 101.85, despite growing expectations of an interest rate hike by the Federal Reserve (Fed).
According to the CME FedWatch tool, markets now price in nearly an 80% chance of a 25-basis-point (bps) rate hike at the December Fed meeting. These expectations reflect the resilience of the US economy and the Fed's commitment to bringing inflation sustainably back toward its 2% target.
The latest US employment figures reinforce this outlook. Nonfarm Payrolls (NFP) increased by 165K in October, significantly exceeding expectations of 65K and improving from September's 60K reading. Meanwhile, the Unemployment Rate declined to 4.1%, compared with forecasts of 4.2%.
Investors now turn their attention to Tuesday's US Consumer Price Index report, followed by Friday's Producer Price Index release. Stronger-than-expected inflation figures could reinforce expectations of a December rate hike and support a rebound in the US Dollar, potentially weighing on AUD/USD.
On the geopolitical front, US President Donald Trump played down the likelihood of renewed strikes against Iran, while Qatar's Prime Minister visits Washington for discussions aimed at ending the conflict. These developments help ease concerns in energy markets, with West Texas Intermediate (WTI) Oil falling more than 3% on Monday to trade around $86.85 at the time of press.
Against this backdrop, the near-term direction of AUD/USD will largely depend on US Dollar dynamics and upcoming US inflation data, which could reshape market expectations for the Fed's next monetary policy decision.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.59% | -0.56% | -0.35% | 0.02% | -0.74% | -1.42% | 0.06% | |
| EUR | 0.59% | 0.03% | 0.28% | 0.60% | -0.15% | -0.84% | 0.65% | |
| GBP | 0.56% | -0.03% | 0.23% | 0.57% | -0.18% | -0.87% | 0.62% | |
| JPY | 0.35% | -0.28% | -0.23% | 0.34% | -0.41% | -1.10% | 0.39% | |
| CAD | -0.02% | -0.60% | -0.57% | -0.34% | -0.76% | -1.44% | 0.04% | |
| AUD | 0.74% | 0.15% | 0.18% | 0.41% | 0.76% | -0.69% | 0.80% | |
| NZD | 1.42% | 0.84% | 0.87% | 1.10% | 1.44% | 0.69% | 1.50% | |
| CHF | -0.06% | -0.65% | -0.62% | -0.39% | -0.04% | -0.80% | -1.50% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Richmond Federal Reserve (Fed) President Thomas Barkin said on Monday that the risks “lie on the inflation side” of the Fed’s dual mandate, adding that the direction of monetary policy is “straightforward” but that they should move “with care.”
In remarks prepared for delivery to the Greater Greer Chamber of Commerce in South Carolina, Barkin added that the economy in the US is “remarkably stable,” that demand, along with broad-based cost increases, exerts pressure on inflation, and that firms are saying that they’re “trying to pass on higher costs.”
Key highlights:
Risk lies on the inflation side of the us central bank's mandate
Direction of monetary policy is ‘straightforward; but best to move policy 'with care’
US economy is ‘remarkably stable’
Resilient demand alongside broad-based cost increases putting upward pressure on prices.
Firms say they will be trying to pass on higher costs
Businesses are performing well, with 'remarkable' earnings:
Bankers say loan pipelines are healthy, demand extending well beyond artificial intelligence
Layoffs remain muted
I'm hearing reports of broad-based cost pressures.
Consumer sentiment is 'bleak. But consumers continue to spend, supported by resilient job market
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 | -0.54% | -0.52% | -0.30% | 0.06% | -0.71% | -1.34% | 0.12% | |
| EUR | 0.54% | 0.02% | 0.27% | 0.60% | -0.17% | -0.80% | 0.66% | |
| GBP | 0.52% | -0.02% | 0.25% | 0.57% | -0.20% | -0.83% | 0.64% | |
| JPY | 0.30% | -0.27% | -0.25% | 0.35% | -0.42% | -1.05% | 0.42% | |
| CAD | -0.06% | -0.60% | -0.57% | -0.35% | -0.77% | -1.39% | 0.07% | |
| AUD | 0.71% | 0.17% | 0.20% | 0.42% | 0.77% | -0.63% | 0.84% | |
| NZD | 1.34% | 0.80% | 0.83% | 1.05% | 1.39% | 0.63% | 1.48% | |
| CHF | -0.12% | -0.66% | -0.64% | -0.42% | -0.07% | -0.84% | -1.48% |
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 New York Federal Reserve (Fed) Survey of Consumer Expectations (SCE) for October showed that Americans' inflation expectations one year ahead remained unchanged from September at 3.9%, citing expectations that gas prices could moderate over the next twelve months.
Inflation expectations for three and five years ahead were unchanged from their previous print of 3.3% and 3%, respectively, while households said that they’re more upbeat about their personal financial situation.
The survey showed that consumers expect the unemployment rate to rise to its highest level since 2020, and that home price change is seen as steady at 3%.
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 | -0.54% | -0.49% | -0.30% | 0.05% | -0.64% | -1.32% | 0.12% | |
| EUR | 0.54% | 0.05% | 0.25% | 0.58% | -0.11% | -0.79% | 0.65% | |
| GBP | 0.49% | -0.05% | 0.21% | 0.53% | -0.17% | -0.84% | 0.60% | |
| JPY | 0.30% | -0.25% | -0.21% | 0.34% | -0.35% | -1.02% | 0.41% | |
| CAD | -0.05% | -0.58% | -0.53% | -0.34% | -0.68% | -1.35% | 0.07% | |
| AUD | 0.64% | 0.11% | 0.17% | 0.35% | 0.68% | -0.67% | 0.76% | |
| NZD | 1.32% | 0.79% | 0.84% | 1.02% | 1.35% | 0.67% | 1.45% | |
| CHF | -0.12% | -0.65% | -0.60% | -0.41% | -0.07% | -0.76% | -1.45% |
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).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Euro climbs toward 1.1200 as the US Dollar weakens amid falling Oil prices.
- Trump downplays renewed strikes on Iran as diplomatic efforts continue.
- Fed and ECB rate hike expectations remain in focus amid persistent inflation risks.
EUR/USD trades on the front foot on Monday as the US Dollar (USD) softens alongside Oil prices, with traders weighing the latest diplomatic developments between the US and Iran. At the time of writing, the pair trades around 1.1203, up 0.55% on the day.
US President Donald Trump played down the likelihood of renewed strikes on Iran. Qatar’s prime minister is in Washington, DC, for talks with President Donald Trump and Vice President JD Vance on efforts to end the conflict. West Texas Intermediate (WTI) trades around $86.85 a barrel, down more than 3% on the day.
Though a diplomatic breakthrough remains uncertain. Tehran says progress towards peace depends on Washington lifting its naval blockade, releasing seized assets and lifting sanctions. Without progress in the talks, Oil prices may struggle to sustain their decline, keeping inflation risks in focus in both the US and the Eurozone.
In the US, resilient economic growth and a firm labour market give the Federal Reserve (Fed) room to raise interest rates further as policymakers seek to bring inflation back to their 2% target.
US Nonfarm Payrolls (NFP) rose by 165K in October, more than double the 65K forecast, while the Unemployment Rate edged down to 4.1%. Traders price in roughly an 80% chance of a December hike, according to the CME FedWatch Tool. This week’s US inflation data could shift those expectations and drive the Dollar’s next move. The Consumer Price Index (CPI) is due on Tuesday, followed by the Producer Price Index (PPI) on Friday.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 101.85, down 0.44% on the day.
In the Eurozone, traders also expect the European Central Bank (ECB) to raise rates in December. The ECB held its deposit rate at 2.5% in October after raising it by a cumulative 50 basis points (bps) earlier this year. Policymakers remain cautious about further tightening as they weigh the risk of higher inflation against the prospect of weaker growth.
Eurozone headline inflation rose to 4% YoY in October from 3.8% in September, driven largely by higher energy costs, while core inflation held steady at 2.5%.
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 | -0.55% | -0.49% | -0.32% | 0.00% | -0.64% | -1.32% | 0.10% | |
| EUR | 0.55% | 0.06% | 0.27% | 0.55% | -0.09% | -0.77% | 0.65% | |
| GBP | 0.49% | -0.06% | 0.21% | 0.48% | -0.17% | -0.83% | 0.58% | |
| JPY | 0.32% | -0.27% | -0.21% | 0.29% | -0.35% | -1.02% | 0.39% | |
| CAD | -0.00% | -0.55% | -0.48% | -0.29% | -0.65% | -1.30% | 0.10% | |
| AUD | 0.64% | 0.09% | 0.17% | 0.35% | 0.65% | -0.67% | 0.75% | |
| NZD | 1.32% | 0.77% | 0.83% | 1.02% | 1.30% | 0.67% | 1.43% | |
| CHF | -0.10% | -0.65% | -0.58% | -0.39% | -0.10% | -0.75% | -1.43% |
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).
- GBP/USD gains over 0.50% as easing geopolitical fears lift sentiment.
- December Fed hike odds climb to 82% following strong payrolls.
- US headline CPI expected at 3.9%, with core inflation reaching 2.8%.
The Pound Sterling (GBP) gains over 0.50% against the US Dollar (USD) on Monday as US President Donald Trump downplays a potential escalation in the US-Iran war, while traders brace for the release of the latest US inflation report following last Friday's Nonfarm Payrolls report. At the time of writing, GBP/USD trades above the 1.3400 threshold.
GBP/USD advances as geopolitical optimism weakens the US Dollar; focus on US CPI
Sentiment remains upbeat on Trump’s comments, as the US Navy blockade remains. The Islamic Revolutionary Guard Corps (IRGC) claimed that Hormuz is closed to unauthorized transit. US equity markets open in the green as bulls buy the dip following the sell-off after the Democrats' victory in the US midterm elections, while the Greenback losses ground.
The US Dollar Index (DXY), which measures the performance of the buck versus six currencies, is down 0.36% at 101.91, a tailwind for the GBP/USD pair.
Last week, the Bank of England (BoE) increased rates in a 7-2 vote, with the two dissenters opting for a larger hike. Even though it was a hawkish hike, BoE Governor Andrew Bailey pushed back against the possibility of second-round inflation effects, saying there is no clear evidence.
In the meantime, the release of Gross Domestic Product (GDP) figures in the UK could shape the path for the future of interest rates and the influence of high energy prices.
In the US, last week’s stellar employment report pushed the Unemployment Rate down from 4.2% to 4.1%, triggering a mildly hawkish repricing of the Federal Reserve's (Fed) December meeting.
The chances that the Fed is going to increase rates are at 82%, up from last Friday’s 76%, according to the CME FedWatch Tool.
Chicago Fed President Austan Goolsbee was hawkish on Monday, saying services inflation is beginning to “pick up,” has become a “big problem,” and that the Fed has to come to terms with inflation failure.
Eyes shift to the release of the US Consumer Price Index (CPI) on Tuesday, which is expected to rise from 3.7% to 3.9% YoY. Core CPI is forecast to rise from 2.6% to 2.8% YoY.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3402, holding a constructive bullish tone as it sits above the latest simple moving average triple at 1.3359, which now underpins the advance. The pair also trades above the broken downward trend line with a break reference around 1.3228 and the more recent downward trend line break near 1.3376, reinforcing a supportive structural base. Momentum aligns with this positive bias, with the 14-period Relative Strength Index around 54, hinting at steady bullish pressure rather than overbought conditions, while the elevated FXS Fed Sentiment Index suggests a still supportive macro backdrop for the pound.
On the downside, immediate support is seen at the recent trend-line break area around 1.3376, followed by the clustered technical floor at the simple moving average triple near 1.3359, with deeper structural protection referenced by the earlier break of the long-term descending trend line around 1.3228. On the topside, bulls face the next significant resistance at the upward support trend-line break drawn from 1.3140 around 1.3696, ahead of a higher barrier near the other upward trend-line break around 1.3865, where prior supply could cap further gains unless buying pressure intensifies.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.46% | -0.39% | -0.22% | 0.07% | -0.53% | -1.18% | 0.25% | |
| EUR | 0.46% | 0.07% | 0.28% | 0.53% | -0.07% | -0.71% | 0.72% | |
| GBP | 0.39% | -0.07% | 0.21% | 0.46% | -0.15% | -0.79% | 0.64% | |
| JPY | 0.22% | -0.28% | -0.21% | 0.26% | -0.33% | -0.98% | 0.45% | |
| CAD | -0.07% | -0.53% | -0.46% | -0.26% | -0.60% | -1.24% | 0.18% | |
| AUD | 0.53% | 0.07% | 0.15% | 0.33% | 0.60% | -0.64% | 0.79% | |
| NZD | 1.18% | 0.71% | 0.79% | 0.98% | 1.24% | 0.64% | 1.44% | |
| CHF | -0.25% | -0.72% | -0.64% | -0.45% | -0.18% | -0.79% | -1.44% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Chicago Federal Reserve (Fed) President Austan Goolsbee held a Q&A session at the Leadership Greater Chicago event on Monday. He reiterated that services inflation has accelerated over the last few months, complicating the argument that prices are influenced only by tariffs.
Goolsbee added that “employment and growth are actually pretty stable,” adding that the big problem is on the inflation side. He emphasized that the Fed has “to come to terms with inflation failure.”
Key highlights:
Employment and growth are actually pretty stable.
Big problem has all been on the inflation side.
We've got to come to terms with inflation failure
Starting to see inflation kicking up in services
Data centers looking like old-fashioned overheating.
Consumer spending has been main driver of growth
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 | -0.45% | -0.38% | -0.22% | 0.07% | -0.52% | -1.14% | 0.23% | |
| EUR | 0.45% | 0.07% | 0.25% | 0.53% | -0.06% | -0.69% | 0.68% | |
| GBP | 0.38% | -0.07% | 0.19% | 0.45% | -0.14% | -0.75% | 0.61% | |
| JPY | 0.22% | -0.25% | -0.19% | 0.28% | -0.31% | -0.94% | 0.44% | |
| CAD | -0.07% | -0.53% | -0.45% | -0.28% | -0.59% | -1.21% | 0.16% | |
| AUD | 0.52% | 0.06% | 0.14% | 0.31% | 0.59% | -0.63% | 0.75% | |
| NZD | 1.14% | 0.69% | 0.75% | 0.94% | 1.21% | 0.63% | 1.38% | |
| CHF | -0.23% | -0.68% | -0.61% | -0.44% | -0.16% | -0.75% | -1.38% |
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.
- Gold opens the week higher as the US Dollar gives back some of its post-NFP gains.
- US inflation data and Fed speeches could shift expectations for the December rate decision.
- XAU/USD shows improving bullish momentum, with the 21-day SMA offering immediate support.
Gold (XAU/USD) edges higher during Monday’s American trading hours as a softer US Dollar (USD) and lower US Treasury yields support the metal. Traders are turning their attention to this week’s US inflation data. At the time of writing, XAU/USD trades around $4,117, up 1.26% on the day.
The US Dollar gives back some of the gains sparked by the upbeat US jobs report released on Friday. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 101.83, down from its post-payrolls high of 102.36.
US Nonfarm Payrolls (NFP) rose by 165K in October, more than double the 65K forecast, while September’s gain was revised up to 60K from 29K. The Unemployment Rate fell to 4.1% from 4.2%.
The figures suggest the labour market is holding up, giving the Federal Reserve (Fed) room to raise interest rates further to bring inflation back to its 2% target. Higher energy costs linked to the Middle East conflict leave inflation risks tilted to the upside.
However, Oil prices have eased from recent highs as diplomatic efforts continue and traders bet that Democrats’ midterm victory will increase pressure on President Donald Trump to end the war with Iran. West Texas Intermediate (WTI) trades around $86.75 a barrel, down more than 3% on the day.
In a CBS News interview that aired Sunday, Trump said there was “no reason” to escalate the conflict. Trump is also expected to meet Qatar’s prime minister at the White House on Monday.
The US Consumer Price Index (CPI) is due on Tuesday, followed by the Producer Price Index (PPI) on Friday. Both reports could shift expectations for the Fed’s final policy decision of the year.
Analysts at Commerzbank Research note that the Fed’s September projections already leaned decisively toward further tightening, pointing out that “of the 18 Fed officials who submitted projections for the appropriate path of interest rates in September, 16 anticipated at least one more rate hike this year.” They add that the economic releases since then, including strong October payrolls and still-elevated inflation, are “unlikely to have changed that assessment materially.”
Traders are pricing in an 80% chance of a December rate hike, according to the CME FedWatch Tool. The hawkish Fed outlook remains a headwind for Gold, as higher interest rates raise the opportunity cost of holding the non-yielding metal.
Alongside the inflation data, traders will also watch a busy slate of Fed speeches this week for clues on how policymakers are leaning ahead of the December meeting.
Technical Analysis: Bulls eye 50-day and 100-day SMAs near $4,200
On the daily chart, the upside in XAU/USD remains capped by the 50-day and 100-day Simple Moving Averages (SMAs), while the 200-day SMA sits higher still, reinforcing the broader bearish bias.
Still, the metal trades above the 21-day SMA at $4,068 while the Relative Strength Index (RSI) hovers just above the neutral 50 mark and the Moving Average Convergence Divergence (MACD) indicator advances in positive territory, hinting at improving short-term momentum within a still bearish structural backdrop.
On the topside, immediate resistance is seen at the 50-day SMA at $4,190, followed closely by the 100-day SMA at $4,201, while a more distant barrier emerges at the 200-day SMA at $4,457. On the downside, initial support appears at the 21-day SMA near $4,068, ahead of the psychological horizontal floor at $4,000 and the year-to-date low of $3,870.
(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 starts the week lower as broad US Dollar weakness supports the Japanese Yen.
- Falling Oil prices ease US inflation concerns and drag the 10-year Treasury yield near a two-month low.
- Traders eye US inflation data for clues on a December Fed hike, while the BoJ signals scope for further tightening.
USD/JPY starts the week on the back foot as broad-based weakness in the US Dollar (USD) lends support to the Japanese Yen (JPY). At the time of writing, the pair trades around 157.91, down 0.36% on the day.
The Greenback comes under pressure as Oil prices extend their decline after US President Donald Trump downplayed the likelihood of renewed strikes on Iran. West Texas Intermediate (WTI) trades around $86 a barrel, down more than 3% on the day.
The pullback in crude prices eases some inflation concerns and helps keep US Treasury yields in check. The benchmark 10-year US Treasury yield is down 0.33% on the day at 4.83%, near a two-month low.
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 101.80 after climbing to 102.36 following the stronger-than-expected US jobs report released on Friday.
US Nonfarm Payrolls (NFP) rose by 165K in October, more than double the 65K forecast, while the Unemployment Rate edged down to 4.1% from 4.2%. The figures reinforce expectations of another Federal Reserve (Fed) rate hike, with traders pricing in roughly an 80% chance of a quarter-point increase in December.
Brown Brothers Harriman’s Elias Haddad notes that the Dollar has surrendered part of its post-payrolls advance, with “USD pared back some of Friday’s strong October non-farm payrolls gains.” He adds that, looking ahead, “robust US economic activity, favorable labor market conditions and sticky underlying inflation back the Fed’s hawkish bias, keeping rate differentials supportive of USD,” reinforcing the view that upcoming US data will be critical in shaping expectations for the Fed’s policy path.
The US Consumer Price Index (CPI) is due on Tuesday, followed by the Producer Price Index (PPI) later in the week. A hotter-than-expected CPI reading could strengthen those bets and lend the Dollar some support.
In Japan, the Bank of Japan (BoJ) remains on a gradual tightening path. The central bank held its policy rate at 1.25% in October but signalled it was prepared to raise rates further. Board member Hajime Takata favoured a hike to 1.50%, while Governor Kazuo Ueda warned that inflation could overshoot the BoJ’s 2% target.
Separately, Japan’s Finance Ministry disclosed on Monday that authorities spent ¥7.98 trillion buying Yen on July 30, a record for a single day, according to Reuters. The scale of the operation helps explain why traders remain wary of further intervention when USD/JPY pushes higher.
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 | -0.46% | -0.45% | -0.25% | -0.12% | -0.57% | -1.22% | 0.15% | |
| EUR | 0.46% | 0.00% | 0.21% | 0.34% | -0.12% | -0.76% | 0.60% | |
| GBP | 0.45% | -0.01% | 0.21% | 0.33% | -0.13% | -0.77% | 0.60% | |
| JPY | 0.25% | -0.21% | -0.21% | 0.13% | -0.32% | -0.97% | 0.39% | |
| CAD | 0.12% | -0.34% | -0.33% | -0.13% | -0.45% | -1.10% | 0.26% | |
| AUD | 0.57% | 0.12% | 0.13% | 0.32% | 0.45% | -0.64% | 0.72% | |
| NZD | 1.22% | 0.76% | 0.77% | 0.97% | 1.10% | 0.64% | 1.37% | |
| CHF | -0.15% | -0.60% | -0.60% | -0.39% | -0.26% | -0.72% | -1.37% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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