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Gold prices rose in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 15,368.06 Indian Rupees (INR) per gram, up compared with the INR 15,165.92 it cost on Tuesday.
The price for Gold increased to INR 179,237.70 per tola from INR 176,891.30 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 15,368.06 |
10 Grams | 153,675.00 |
Tola | 179,237.70 |
Troy Ounce | 478,003.80 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
- AUD/JPY attracts some sellers for the second straight day as safe-haven flows underpin the JPY.
- The upbeat Aussie GDP reaffirms RBA rate hike bets, though it fails to impress the Aussie bulls.
- Diminishing odds for an immediate BoJ rate hike might cap the JPY gains and support spot prices.
The AUD/JPY cross meets with a fresh supply following the previous day's modest rebound from the vicinity of mid-109.00s, or the weekly low, and fails to gain any meaningful traction in reaction to the upbeat Australian GDP print. Spot prices drop to the 110.00 psychological mark in the last hour, though the fundamental backdrop warrants caution before positioning for any meaningful corrective fall from the all-time peak, touched on Tuesday.
The Australian Bureau of Statistics (ABS) reported earlier today that the domestic economy expanded by 0.8% during the fourth quarter, compared to the 0.4% rise recorded in the previous quarter. On an annualized basis, Australia's GDP grew by 2.6% in Q4, up from 2.1% in Q3 and beating consensus estimates for a 2.2% increase. The data backs the Reserve Bank of Australia's (RBA) hawkish stance and reaffirms market bets for another interest rate hike in May. This, however, does little to impress the Aussie bulls or assist the AUD/JPY cross to attract buyers amid rising geopolitical tensions.
Investors remain concerned about a prolonged conflict in the Middle East and its impact on the global economy amid an already uncertain environment. In fact, US President Donald Trump said that the US military operation in Iran could take four to five weeks, and more strikes would continue for as long as necessary. This continues to weigh on investors' sentiment, which is evident from a generally weaker tone around the equity markets, underpinning demand for the safe-haven Japanese Yen (JPY), and turns out to be a key factor exerting downward pressure on the AUD/JPY cross.
Any meaningful JPY appreciation, however, seems elusive in the wake of diminishing odds for an immediate interest rate hike by the Bank of Japan (BoJ). Reuters reported that sources familiar with the central bank’s thinking stated that fresh market volatility triggered by the Middle East conflict has heightened the chance the Bank of Japan (BoJ) will hold off on raising rates in March. This comes on top of Japanese Prime Minister Sanae Takaichi's reservations about additional monetary tightening by the BoJ. This might cap JPY gains and lend support to the AUD/JPY cross.
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Australian Bureau of Statistics on a quarterly basis, is a measure of the total value of all goods and services produced in Australia during a given period. The GDP is considered as the main measure of Australian economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Wed Mar 04, 2026 00:30
Frequency: Quarterly
Actual: 0.8%
Consensus: 0.6%
Previous: 0.4%
Source: Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) releases the Gross Domestic Product (GDP) on a quarterly basis. It is published about 65 days after the quarter ends. The indicator is closely watched, as it paints an important picture for the economy. A strong labor market, rising wages and rising private capital expenditure data are critical for the country’s improved economic performance, which in turn impacts the Reserve Bank of Australia’s (RBA) monetary policy decision and the Australian dollar. Actual figures beating estimates is considered AUD bullish, as it could prompt the RBA to tighten its monetary policy.
- Gold attracts fresh buyers as geopolitical tensions continue to underpin safe-haven assets.
- The USD retains its status as the global reserve currency and might cap the precious metal.
- Traders now look to US macro data, though the focus remains on geopolitical developments.
Gold (XAU/USD) is seen building on the previous day's bounce from levels below the $5,000 psychological mark, or over a one-week low, and gaining positive traction during the Asian session on Wednesday. Investors remain concerned about a prolonged conflict in the Middle East and its impact on the global economy amid an already uncertain environment. In fact, US President Donald Trump said that the US military operation in Iran could take four to five weeks, and more strikes would continue for as long as necessary. This continues to weigh on investors' sentiment, which is evident from a generally weaker tone around the equity markets and underpins demand for the safe-haven bullion.
Meanwhile, the closure of the Strait of Hormuz – one of the world’s most critical energy chokepoints – led to the recent surge in Crude Oil prices to the highest level since June 2025. Moreover, Iran has targeted infrastructure critical to the world’s energy production as part of its retaliation and warned that it will not allow a single drop of oil to leave the region. This has raised fears of a fresh energy crisis that could ramp up inflation and force the US Federal Reserve (Fed) to slow or scale back its plan to cut interest rates further. The outlook, in turn, assists the US Dollar (USD) to retain its dominant reserve currency status and might cap the non-yielding Gold, warranting caution for bullish traders.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, remains close to the highest level in over three months and keeps a lid on the commodity. Hence, it will be prudent to wait for a sustained strength and acceptance above the $5,200 mark before the XAU/USD bulls start positioning for any further intraday appreciating move. Traders now look forward to the US economic docket – featuring the release of the ADP report on private-sector employment and ISM Services PMI. The data might do little to provide any meaningful impetus to the buck or the Gold price, as the focus remains glued to developments surrounding the ongoing US-Israel-Iran war.
XAU/USD 4-hour chart
Gold defends a confluence support comprising the 200-SMA H4 and the lower end of an ascending channel
The near-term bias turns cautiously bearish after the Gold price slipped back from the upper boundary of the ascending channel that has guided gains since early February, now trading just above the channel’s lower band near $5,025. The Relative Strength Index (14) recovers toward 43 after briefly approaching oversold territory, which suggests fading but still-present downside momentum. The Moving Average Convergence Divergence (MACD) line holds below its signal line and has retreated toward the zero line, reinforcing a loss of bullish conviction after the rejection above $5,380.
The XAU/USD pair trades only marginally above the rising 200-period Simple Moving Average (SMA) on the 4-hour chart around $5,030, indicating that the broader uptrend remains intact but under pressure in the short term. Initial support emerges in the $5,140–$5,130 band, with a break lower exposing the 200-period SMA and channel floor clustered around $5,030, followed by a deeper cushion near $4,980.
On the upside, immediate resistance stands near $5,210, where recent intraday rebounds stalled, followed by $5,260 and then the recent swing area around $5,320. A sustained recovery above $5,260 would ease the current bearish tone and open the way back toward the $5,380 region, while failure to defend $5,030 would signal a more decisive corrective phase within the broader ascending structure.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- US Dollar strengthens as rising Middle East energy prices fuel inflation fears, reducing bets on near-term policy easing.
- President Trump warned escalation could bring equally hardline Iranian leadership, highlighting uncertainty over the conflict’s outcome.
- Israel reportedly struck a building where Iranian clerics were meeting to select a new Supreme Leader.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends gains for the third consecutive day, trading around 99.20 during the Asian hours on Wednesday. Attention now turns to the US ISM Services Purchasing Managers’ Index (PMI), due later in the day.
The Greenback advances on fading expectations of imminent rate cuts from the Federal Reserve (Fed). The yield on the US 10-year Treasury note holds around 4.06% at the time of writing after rising for two consecutive sessions amid elevated inflation fears.
Higher energy prices due to escalating tensions in the Middle East have added to inflation concerns, prompting markets to scale back bets on near-term policy easing. Investors largely expect the US central bank to keep interest rates unchanged until summer, despite calls from US President Donald Trump for lower borrowing costs.
The US Dollar also receives support from safe-haven demand due to the ongoing Middle East war. US President Donald Trump warned that the escalation could pave the way for an equally hardline leadership in Iran, underscoring uncertainty surrounding the conflict’s outcome.
Israel reportedly hit a building where Iranian clerics were meeting to choose a new Supreme Leader. Israeli forces also launched a new ground operation in southern Lebanon targeting Hezbollah, alongside increased airstrikes.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- USD/JPY weakens to around 157.55 in Wednesday’s early Asian session.
- Trump said new strikes target Iranian leadership.
- The US February ISM Services PMI will be the highlight on Wednesday.
The USD/JPY pair loses ground to near 157.55 during the Asian trading hours on Wednesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) as escalating US-Israel-Iran tensions boost a safe-haven demand. The US February ISM Services Purchasing Managers Index (PMI) will be in the spotlight later on Wednesday.
US President Donald Trump said most of Iran’s military installations have been “knocked out” and that new strikes targeted Iranian leadership, per CNBC. Israel also struck a compound belonging to a group responsible for electing Iran’s next supreme leader. Persistent geopolitical risks and fears of a prolonged war could provide some support to the JPY in the near term.
Furthermore, hawkish remarks from Japanese officials might contribute to the JPY’s upside. BoJ Deputy Governor Ryozo Himino said on Monday that while the current policy remains "somewhat accommodative," the central bank should moderately hike rates as long as its economic and price projections are met.
Traders brace for the release of the US ISM Services PMI later in the day. Economists expect the figure to edge down slightly to 53.5 in February from January's reading of 53.8. In case of stronger-than-expected outcomes, this could underpin the Greenback against the JPY.
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.
- Silver rebounds more than 3% after tumbling over 12% in the prior two sessions.
- The precious Silver attracts safe-haven demand as geopolitical conflict in the Middle East escalates.
- President Trump warned escalation could bring equally hardline Iranian leadership, highlighting uncertainty over the conflict’s outcome.
Silver price (XAG/USD) recovers over 3% during the Asian hours on Wednesday, hovering around $85.20 per troy ounce after plunging more than 12% over the previous two sessions. The precious metal draws safe-haven demand as geopolitical conflict in the Middle East intensifies.
According to CNN, US Secretary of State Marco Rubio confirmed that all personnel were safe after a drone struck the grounds of the US consulate in Dubai. The US had earlier shut its embassies in Saudi Arabia, Kuwait, and Lebanon, urging Americans to leave certain countries in the region. Meanwhile, Israeli forces launched a new ground operation in southern Lebanon targeting Hezbollah, alongside increased airstrikes.
Israel reportedly hit a building where Iranian clerics were meeting to choose a new Supreme Leader. US President Donald Trump warned that the escalation could pave the way for an equally hardline leadership in Iran, underscoring uncertainty surrounding the conflict’s outcome.
The BBC reported that Trump said the US Navy would provide insurance support to commercial vessels in the Gulf after Iran effectively disrupted traffic through the Strait of Hormuz. He added that US forces would escort ships if necessary, following reports that Iranian forces had fired on several vessels.
However, gains in dollar-denominated Silver may be capped as the US Dollar (USD) strengthens on concerns that higher energy prices could fuel inflation, leading investors to reassess the policy outlook of the Federal Reserve (Fed). Markets expect the Fed to keep interest rates unchanged until summer.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- NZD/USD softens to around 0.5875 in Wednesday’s Asian session.
- China’s official PMI dropped to 49.0 in February, weaker than expected.
- Rising Middle East tensions continue to drag the Kiwi lower against the US Dollar.
The NZD/USD pair attracts some sellers to near 0.5875 during the Asian trading hours on Wednesday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) after the mixed Chinese economic data. Traders will shift their attention to the US February ISM Services Purchasing Managers Index (PMI), which is due later on Wednesday.
China’s official Manufacturing PMI fell to 49.0 in February, compared to 49.3 in January. The reading came in below the market consensus of 49.1 in the reported month. Meanwhile, the NBS Non-Manufacturing PMI rose to 49.5 in February, compared to 49.4 in the previous reading, weaker than the 49.8 expected.
Additionally, China's RatingDog Manufacturing PMI climbed to 62.1 in February from 50.3 in January. This figure came in better than the expectation of 50.1. The RatingDog Services PMI rose to 56.7 in February, better than the estimation and the previous reading of 52.3.
Escalating tensions in the Middle East have sparked significant risk aversion, which boosts safe-haven currencies such as the Greenback and creates a headwind for the pair. The United States (US) and Israel targeted Iran's top-tier leadership and nuclear infrastructure over the weekend. US President Donald Trump said on Monday that combat operations will continue in Iran until America’s objectives are met.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/CAD regains positive traction as sustained safe-haven flows continue to benefit the USD.
- Supply disruption worries remain supportive of elevated Oil prices, underpinning the Loonie.
- Traders now look to the US macro data, though the focus remains on geopolitical developments.
The USD/CAD pair attracts fresh buyers following the previous day's late pullback from the highest level since January 23 and climbs back closer to the 1.3700 mark during the Asian session on Wednesday. Spot prices, however, remain confined in a range held over the past two weeks or so, warranting caution for bullish traders amid a combination of diverging forces.
The US Dollar (USD) continues with its relative outperformance on the back of sustained safe-haven flows, bolstered by rising geopolitical tensions in the Middle East. Furthermore, traders have been trimming their bets for three interest rate cuts by the US Federal Reserve (Fed) amid concerns about sticky inflation, which turns out to be another factor supporting the buck. The USD Index (DXY), which tracks the Greenback against a basket of currencies, retains its bullish bias below its highest level in over three months and acts as a tailwind for the USD/CAD pair.
Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) announced that the Strait of Hormuz is closed for shipping traffic and warned that any vessel attempting to pass through the strategic waterway would be set on fire. The closure of the strait, which is one of the world’s most critical oil transit routes, threatens global supply and keeps the black liquid within striking distance of the highest level since June 2025. This, in turn, underpins the commodity-linked Loonie and holds back traders from placing aggressive bullish bets around the USD/CAD pair.
Market participants now look forward to the US economic docket – featuring the release of the ADP report on private-sector employment and the ISM Services PMI. The reaction to the data, however, is more likely to be muted as the focus remains glued to geopolitical developments. Moreover, the aforementioned mixed fundamental backdrop makes it prudent to wait for strong follow-through buying before positioning for any further appreciating move for the USD/CAD pair.
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.
China's RatingDog Manufacturing Purchasing Managers' Index (PMI) climbed to 62.1 in February from 50.3 in January, the latest data published by RatingDog showed on Monday. This figure came in better than the expectation of 50.1.
Meanwhile, the Services PMI rose to 56.7 in February, compared to 52.3 prior. The market consensus was for 52.3
AUD/USD reaction to China’s PMI data
At the time of writing, the AUD/USD pair is trading around 0.7004, down 0.52% on the day.
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.
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