Forex News
- Canadian Dollar struggles as recovering Middle East oil exports and planned US reserve releases dragged down oil prices.
- Rising US crude inventories further added downward pressure to energy markets.
- Strong Federal Reserve rate-hike expectations provided additional support to the buoyant US Dollar.
USD/CAD continues its winning streak for the eighth consecutive day, trading around 1.4200 during Asian hours on Wednesday. The currency pair remains positioned near two-month highs as the commodity-linked Canadian Dollar (CAD) faces headwinds from falling crude oil prices.
Energy markets eased as Middle Eastern crude exports recovered toward pre-war levels, reaching 17.5 million barrels per day, about 98% of baseline output. Supply streams received a boost as Saudi Arabia partially restarted its East-West pipeline at roughly half capacity, while covert tanker traffic through the Strait of Hormuz remained active.
Downwards pressure on oil prices intensified following supply relief measures and inventory gains in the United States (US). The US government announced plans to release up to 40 million barrels from the Strategic Petroleum Reserve (SPR) to curb domestic fuel costs. Reinforcing the bearish tone for crude, fresh industry data revealed a 1-million-barrel build in US crude inventories over the past week.
Canada growth cools as third-quarter rebound loses steam
Economists at NBC argue that “this morning’s GDP report confirms that the Canadian economy’s rebound lost some momentum in the third quarter,” underscoring a softer tone after several months of solid gains. Even so, they highlight that Statistics Canada’s preliminary estimate still “points to a 0.2% increase in GDP in August,” suggesting that activity continues to expand, albeit at a more moderate pace.
Meanwhile, the US Dollar gained ground as market expectations of further Federal Reserve rate hikes strengthened. According to the CME FedWatch Tool, traders are now pricing in nearly a 68% chance of a rate hike in October and a 95% likelihood of a quarter-point increase in December. Market focus now shifts to Friday's US Nonfarm Payrolls report, where economists project 90,000 jobs added in September, with the Unemployment Rate steady at 4.1%.
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.
Efforts this week by Qatari mediators to broker a diplomatic breakthrough between the United States (US) and Iran have made little progress, with neither side willing to budge, Axios reported on Wednesday.
The lack of progress has raised concerns that the diplomatic stalemate could eventually lead to renewed tensions. US officials believe US President Donald Trump could potentially order a return to major combat operations after the midterm elections.
Iran said that it will consider nuclear concessions only after the US agrees to return to the June memorandum of understanding. Meanwhile, Iran's Supreme National Security Council Secretary Mohsen Rezaei said on Tuesday that Trump is unable to decide.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.34% on the day at $88.38.
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.
- USD/JPY declines to near 157.00 in Wednesday’s early Asian session.
- Fresh verbal warnings from authorities support the Japanese Yen.
- Hawkish remarks from the Fed officials might cap the downside for the pair.
The USD/JPY pair loses momentum to around 157.00 during the early Asian session on Wednesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) amid intervention fears after US Treasury Secretary Scott Bessent and Japan's Finance Minister Satsuki Katayama reaffirmed that the two countries intend to strengthen cooperation to address Japanese Yen (JPY) weakness.
Katayama said on Tuesday that she believes that undervalued Yen is problematic, while saying that she agreed with Bessent to beef up cooperation when asked about phone talks last week. She added that officials will continue close communications with the US Treasury to ensure orderly foreign exchange markets.
Last week, Katayama said US President Donald Trump had raised concerns over the JPY during a meeting with Prime Minister Sanae Takaichi. Earlier this week, Japan's top currency diplomat Atsushi Mimura stated that markets should take at face value the "very clear" message Tokyo and Washington have about their concerns about FX depreciation.
The Japanese Yen gathers strength despite the disappointing domestic data. Industrial production fell 2.2% year-on-year in August, versus 4.0% prior.
However, hawkish signals from the Federal Reserve (Fed) officials might help limit the Greenback’s losses. Fed Governor Michael Barr repeated a warning that further rate increases will likely be needed to slow inflation. Last week, Cleveland Fed President Beth Hammack stated that inflation risks remain high and that restrictive monetary policy should be maintained.
Traders will keep an eye on the US ADP employment and Personal Consumption Expenditures (PCE) Price Index reports later in the day. Markets currently see a 47.1% probability of a Fed rate hike in October and a 92.5% odds of an increase in December, according to the CME's FedWatch Tool.
Yen outperforms as Japan officials reiterate FX warning
Analysts at Scotiabank highlight the Japanese Yen as a clear outlier in G10 FX, noting that it is “the only notable exception” to broader defensive trading. They point to “a clear late Asian-session surge” in JPY, which was “driven by FX-related comments from Japan’s Vice Minister for International Affairs, Atsushi Mimura,” after he “reminded market participants to heed last week’s warnings from both PM Takaichi and FinMin Katayama.” This renewed emphasis from senior Japanese officials has underpinned modest Yen gains and reinforced its relative strength on the crosses.
Goolsbee flags AI-driven overheating risks, reinforcing hawkish Fed tone
Fed's Goolsbee delivered a notably hawkish-leaning address, with a 7.1/10 FXS Speechtracker score modestly above the 6.7/10 historical average, underscoring heightened concern about persistent inflation and policy complacency. The warning that expectations of future AI-driven productivity gains create a “high danger of overheating now,” alongside comments about massive fiscal deficits as stimulus and the need to revisit the logic of looking through supply shocks, signals a readiness to prioritize inflation control over market comfort and a lower tolerance for staying above the inflation target. The emphasis on keeping an eye on productivity and securing clear evidence that inflation is coming back down suggests limited appetite for early rate cuts, a backdrop typically supportive of the Dollar and a headwind for risk-sensitive currencies.
The FXS Fed Sentiment Index rose by 1.01 points to 145.30, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker score. This elevated reading, far above the neutral 100 mark, confirms that Goolsbee's remarks are interpreted as reinforcing expectations of a relatively restrictive policy stance, with implications for Dollar strength and continued sensitivity in bond and equity markets to incoming inflation and productivity data.
Technical Analysis: USD/JPY keeps a bearish vibe under the 100-day SMA
In the daily chart, USD/JPY retains a mildly bearish near-term bias as spot holds beneath the 100-day simple moving average (SMA) and the upper Bollinger Band. The Relative Strength Index (14) around 48.8 hints at neutral momentum after the latest pullback.
On the topside, immediate resistance is located at the upper Bollinger Band around 159.20, followed by the 100-day SMA at 159.55, which together define a dense cap on recovery attempts. On the downside, initial support is seen at the Bollinger middle band near 156.10, ahead of stronger demand around the lower Bollinger Band at 152.95, where a deeper slide would likely meet buyers.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- Australia's monthly trimmed mean CPI cooled to 0.2%, pointing to easing underlying inflation pressures.
- China’s RatingDog Manufacturing PMI rose to 52.1 and Services PMI reached 51.6 in September, signaling steady economic growth.
- Stronger Chinese services and private-sector PMI figures failed to provide meaningful support for the Aussie dollar.
AUD/USD extends its losses for the third successive day, trading around 0.6970 during Asian hours on Wednesday. The currency pair remains under pressure, holding onto losses as the Australian Dollar (AUD) stays subdued following a flurry of key economic data releases from both Australia and its largest trading partner, China.
Australia’s Consumer Price Index (CPI) accelerated to 4.0% year-over-year (YoY) in August as expected, rising from 3.5% in July, while the monthly inflation rate eased to 0.4%. However, the underlying Trimmed Mean CPI came in slightly weaker than anticipated; while holding steady at 3.6% year-over-year, the monthly trimmed reading cooled to 0.2%, falling just short of the forecasted 0.3%.
Over in China, manufacturing and non-manufacturing surveys signaled expanding business activity in September. Official data from the National Bureau of Statistics (NBS) showed the Manufacturing PMI creeping back into expansion territory at 50.1, matching market forecasts and recovering from August's 49.8 reading. The NBS Non-Manufacturing PMI also saw a notable boost, rising to 50.2 from 49.0 in August, comfortably beating the market's expectation of 49.3.
The private-sector economic readings reflected similar momentum across Chinese industries. The RatingDog Manufacturing PMI climbed to 52.1 in September, outperforming both the previous 51.5 reading and the 51.6 consensus estimate. Additionally, China's Services PMI edged up to 51.6, beating both the prior month's 51.4 and the expected 51.1, indicating steady improvement across the broader economy.
US rate expectations push bond yields higher across the curve
Strategists at BNY Markets highlight that the rates complex remains under upward pressure as investors continue to price in further monetary tightening. With “the market expecting upwards of an additional 75bp in policy tightening through this cycle,” they note that “bond yields across the curve continue to move higher,” reflecting persistent conviction that the Fed is not yet at the end of its hiking path.
Williams tempers post-hike urgency but keeps Fed firmly hawkish
Fed’s Williams delivers a moderately hawkish message, with a FXS Speechtracker score of 6.4 slightly above the 6.2 historical average, signaling continuity rather than a tonal shift. The emphasis on “no need for urgency” after the September rate hike, combined with guidance that one further hike is likely if the economy meets expectations, underscores a data-dependent stance that still prioritizes getting inflation back to 2% and preventing it from becoming entrenched. Projections of inflation only reaching target in 2028, alongside strong US economic momentum and AI-related investment pressures, reinforce a bias toward keeping policy restrictive for longer relative to the established baseline.
The FXS Fed Sentiment Index fell by 1.43 points to 144.29, indicating a modest pullback in perceived hawkishness despite the speech’s above-baseline tone. With the index still well above the neutral 100 mark, the Fed remains firmly in hawkish territory even as markets interpret Williams’ “no urgency” language as a slight softening at the margin.
Economic Indicator
RatingDog Manufacturing PMI
The RatingDog Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Wed Sep 30, 2026 01:45
Frequency: Monthly
Actual: 52.1
Consensus: 51.6
Previous: 51.5
Source: IHS Markit
- AUD/JPY attracts heavy selling for the second straight day amid a combination of factors.
- The AUD adds to the post-RBA losses following the release of rather unimpressive CPI data.
- Intervention fears and BoJ rate hike bets underpin the JPY, further weighing on spot prices.
The AUD/JPY cross remains under heavy selling pressure for the second consecutive day, falling to a six-month low during the Asian session on Wednesday following the release of Australian consumer inflation figures. Bears now await a sustained break and acceptance below the 109.00 mark before positioning for any further losses.
The Australian Bureau of Statistics (ABS) reported that the headline Consumer Price Index (CPI) rose 0.4% in August, down from 1% recorded in the previous month. Meanwhile, the yearly rate accelerated from 3.5% in July to 4%, and the Trimmed Mean CPI held steady at 3.6% YoY during the reported month. Meanwhile, the data does little to revive bets for another interest rate hike by the Reserve Bank of Australia (RBA) against the backdrop of a mild-dovish tilt by Governor Bullock at the post-meeting press conference on Tuesday. This, in turn, undermines the Australian Dollar (AUD) and continues to exert downward pressure on the AUD/JPY cross.
Meanwhile, Aussie bulls shrugged off China's official PMIs, which showed that business activity in both manufacturing and services sectors recorded growth in September. The Japanese Yen (JPY), on the other hand, draws support from looming intervention fears and hawkish Bank of Japan (BoJ) bets. Japan's top currency diplomat Atsushi Mimura and Finance Minister Satsuki Katayama warned markets to take joint US-Japan messaging on FX depreciation seriously. This follows after US President Donald Trump conveyed his concerns about the JPY's depreciation to Prime Minister Sanae Takaichi on the sidelines of the United Nations General Assembly.
Furthermore, Minutes from the BoJ's July monetary policy meeting, released on Monday, revealed that policymakers debated the need for faster interest rate hikes amid growing concern over mounting inflation risks. This lifted expectations that the BoJ will hike again as soon as October or December. This, in turn, favors JPY bulls and backs the case for a further depreciating move for the AUD/JPY cross.
Economic Indicator
Consumer Price Index (YoY)
The Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The indicator is the primary measure of headline inflation after a new methodology was applied to transition from quarterly to monthly readings, applying to data from April 2024 onwards. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Wed Sep 30, 2026 01:30
Frequency: Monthly
Actual: 4%
Consensus: 4%
Previous: 3.5%
Source: Australian Bureau of Statistics
China's Manufacturing Purchasing Managers' Index (PMI) climbed to 52.1 in September from 51.5 in August, the latest data published by RatingDog showed on Wednesday. The market forecast was for a 51.6 print.
China’s RatingDog Services PMI ticked higher to 51.6 in September, against the 51.4 previous figure and 51.1 expected.
Market reaction to China’s RatingDog PMIs
The China-proxy Australian Dollar (AUD) remained deep in the red following PMI data. At the press time, the AUD/USD pair is losing 0.40% on the day to trade at 0.6960.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.02% | -0.33% | 0.06% | 0.30% | 0.00% | -0.00% | |
| EUR | -0.05% | -0.00% | -0.37% | 0.00% | 0.24% | -0.04% | -0.05% | |
| GBP | -0.02% | 0.00% | -0.37% | 0.03% | 0.24% | -0.02% | -0.02% | |
| JPY | 0.33% | 0.37% | 0.37% | 0.37% | 0.63% | 0.32% | 0.35% | |
| CAD | -0.06% | -0.00% | -0.03% | -0.37% | 0.25% | -0.05% | -0.03% | |
| AUD | -0.30% | -0.24% | -0.24% | -0.63% | -0.25% | -0.29% | -0.28% | |
| NZD | -0.01% | 0.04% | 0.02% | -0.32% | 0.05% | 0.29% | 0.00% | |
| CHF | 0.00% | 0.05% | 0.02% | -0.35% | 0.03% | 0.28% | -0.01% |
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).
Australia’s Consumer Price Index (CPI) rose by 4.0% year-over-year (YoY) in August, compared to a 3.5% growth reported in July, the latest data published by the Australian Bureau of Statistics (ABS) showed on Wednesday.
The market forecast was a 4.0% print for the reported period.
The monthly Consumer Price Index climbed by 0.4% in August, compared to the previous reading of a rise of 1.0%, in line with the market consensus.
Meanwhile, the Trimmed Mean CPI increased 0.2% MoM in August. Annually, the Trimmed Mean CPI advanced 3.6% YoY during the same period.
AUD/USD reaction to Australia's Consumer Price Index data
The Australian Dollar (AUD) attracts some sellers following Australia's CPI report. The AUD/USD pair is down 0.25% on the day to trade at 0.6970 at the press time.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.01% | -0.33% | 0.01% | 0.29% | -0.03% | -0.07% | |
| EUR | 0.01% | 0.03% | -0.32% | 0.02% | 0.28% | -0.02% | -0.06% | |
| GBP | 0.01% | -0.03% | -0.37% | 0.02% | 0.26% | -0.02% | -0.06% | |
| JPY | 0.33% | 0.32% | 0.37% | 0.34% | 0.64% | 0.29% | 0.29% | |
| CAD | -0.01% | -0.02% | -0.02% | -0.34% | 0.28% | -0.05% | -0.06% | |
| AUD | -0.29% | -0.28% | -0.26% | -0.64% | -0.28% | -0.31% | -0.34% | |
| NZD | 0.03% | 0.02% | 0.02% | -0.29% | 0.05% | 0.31% | -0.03% | |
| CHF | 0.07% | 0.06% | 0.06% | -0.29% | 0.06% | 0.34% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the 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).
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.
China’s Manufacturing Purchasing Managers' Index (PMI) rose to 50.1 in September from 49.8 in August, China’s National Bureau of Statistics (NBS) reported on Wednesday.
The reading aligned with the market forecast of 50.1 in the reported month.
Additionally, the NBS Non-Manufacturing PMI jumped to 50.2 in September from 49.0 in August, up from 49.3 expected.
Market reaction
Mixed China PMI data is having limited impact on the China-proxy Australian Dollar (AUD). At press time, the AUD/USD pair is down 0.30% to 0.6968, as the AUD is largely hurt by the Australian Inflation data.
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.
- GBP/USD struggles to register any meaningful recovery from a two-month low, set on Tuesday.
- Fed hike bets and geopolitical risks underpin the safe-haven USD, capping the upside for the pair.
- Traders look to the US PCE Price Index and the final Q2 GDP print for some meaningful impetus.
The GBP/USD pair enters a bearish consolidation phase during the Asian session on Wednesday, trading just above a two-month low, around the 1.3200 mark, touched the previous day. The fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though bears opt to wait for important US macro releases before placing fresh bets.
The US Personal Consumption Expenditures (PCE) Price Index – the Federal Reserve's (Fed) preferred inflation gauge – will be published later today, along with the final Q2 GDP report. The crucial data will influence market expectations about the Fed policy path, which, in turn, will play a key role in driving the US Dollar (USD) and provide some meaningful impetus to the GBP/USD pair. In the meantime, the bullish USD undertone might continue to act as a headwind for the currency pair and keep a lid on any attempted recovery.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, shot to a fresh high since July 28 on Tuesday amid bets for another Fed rate hike in October. This, along with inflationary concerns, has been pushing US bond yields to multi-year highs and lending support to the Greenback. Apart from this, persistent geopolitical uncertainties stemming from the US-Iran standoff might continue to benefit the safe-haven buck, validating the negative outlook for the GBP/USD pair and backing the case for further losses.
Hopes for a diplomatic solution to end the seven-month-old US-Iran war faded after US President Donald Trump turned down a seven-day ceasefire proposal from Iran. Moreover, Qatari efforts to broker a US-Iran breakthrough made little progress this week. In further developments, US officials think Trump could order a return to major combat after the midterms. This keeps the geopolitical risk premium firmly in play, which favors USD bulls and suggests that the path of least resistance for the GBP/USD pair remains to the downside.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair keeps a bearish near-term tone and a break below the 1.3200 mark will set the stage for a fall towards retesting the year-to-date low, around the 1.3140 region, touched in June. This is followed by the 1.3100 round figure, which, if broken, will set the stage for an extension of the recent downtrend witnessed over the past month or so.
On the top side, any attempted recovery is more likely to confront stiff resistance ahead of the 1.3300 mark. A sustained strength beyond, however, could trigger a short-covering move and lift the GBP/USD pair back to the 200-day Simple Moving Average (SMA) at 1.3448.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Wed Sep 30, 2026 12:30
Frequency: Monthly
Consensus: 3.3%
Previous: 3.3%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7351 compared to the previous day's fix of 6.7411 and 6.7025 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
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