Forex News
- US-Iran peace efforts and upcoming UN meetings ease supply fears.
- A proposed $5 billion fund targets war-damaged regional rebuilding.
- Saudi Arabia maintains strong crude movement through the Strait of Hormuz.
West Texas Intermediate (WTI) oil price halts its four-day losing streak, trading around $92.30 per barrel during the Asian hours on Tuesday. However, crude oil prices may face further challenges amid easing supply concerns in the Middle East and growing diplomatic efforts to end the US-Iran war.
US President Donald Trump is scheduled to address the UN General Assembly in New York later in the day and could meet with Iranian President Masoud Pezeshkian on the sidelines. Trump is also expected to hold discussions with other Gulf nations and Chinese President Xi Jinping this week. Meanwhile, the Trump administration has proposed a $5 billion fund to help rebuild infrastructure across the Middle East damaged by the war.
Moreover, Saudi Arabia moved crude through the Strait of Hormuz at 2.9 million barrels per day over the past six days. Satellite images also showed supertankers with a combined capacity of 14 million barrels at Saudi Arabia’s Gulf export terminals over the weekend, marking the highest tanker count observed since at least June.
However, Tensions in the Middle East persisted as Yemen's Iran-backed Houthis reported launching attacks against Riyadh and a Saudi Aramco facility in Yanbu, alongside intensified maneuvers to block Saudi-backed forces from accessing the Red Sea coast.
According to TD Securities, positioning in the crude complex has shifted even as the recent rally drew in more speculative interest. The bank notes that “net speculative length has been increasing in recent weeks,” but highlights that “CTAs are now liquidating a portion of their recently acquired WTI and Brent crude oil length,” underscoring a more cautious stance among systematic traders despite the build-up in overall speculative exposure.
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/CAD enters a bullish consolidation phase as a modest bounce in oil prices underpins the Loonie.
- Hawkish comments from BoC’s Macklem further support the CAD, though the upside seems limited.
- US-Canada trade tensions, along with a firmer USD, act as a tailwind for spot prices and favor bulls.
The USD/CAD pair touches a fresh high since August 5 during the Asian session on Tuesday, though it lacks follow-through buying and remains below mid-1.4000s.
Crude oil prices bounce off a one-and-a-half-week low, which, along with hawkish comments from the Bank of Canada (BoC) Governor, Tiff Macklem, support the commodity-linked Loonie and act as a headwind for the USD/CAD pair. Speaking at an event in Nova Scotia, Macklem warned that persistently high energy prices could push inflation higher, leaving the central bank balancing between holding or raising interest rates.
Macklem added that the unpredictability of US trade policy has heightened uncertainty for businesses and could set back the recent progress of the Canadian economy. In fact, the US imposed 50% tariffs on approximately $20 billion worth of Canadian goods on August 22. Meanwhile, Canada implemented retaliatory tariffs ranging from 15% to 50% on roughly $20 billion worth of US goods on September 8, fueling trade-war fears.
This, in turn, fails to assist the Canadian Dollar (CAD) in attracting any meaningful buyers. Adding to this, the underlying bullish sentiment surrounding the US Dollar (USD) suggests that the path of least resistance for the USD/CAD pair is to the upside. The US Federal Reserve's (Fed) hawkish outlook, signaling at least one more rate hike this year, and escalating tensions in the Middle East keep the USD near its highest level since late July.
Dollar support builds as Fed dots reinforce hawkish bias
Analysts at HSBC note that the USD “strengthened following the decision,” even though the 25bp move was widely anticipated. They argue that “the unanimous vote reinforced confidence in the Committee’s tightening bias,” with the updated projections showing that “the median 2026 ‘dot’ implies one additional hike before year-end,” and “a significant minority of participants still anticipating a further rate rise in 2027.” HSBC characterises this projected policy path as “more hawkish than a ‘one-and-done’ outcome but [it] remains below current market pricing,” meaning they “do not expect a major repricing of rate expectations or the USD.”
Meanwhile, the recent pullback in crude oil prices eased inflationary concerns, leading to a further decline in US bond yields and holding back USD bulls from placing aggressive bets. Investors now look forward to a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Thursday. This, along with fresh developments surrounding the Middle East crisis, should provide a fresh impetus to the USD/CAD pair.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair keeps a bullish near-term bias above the 100-day Simple Moving Average (SMA) at 1.3953 and the mid-range 50.0% Fibonacci retracement at 1.3992. Spot prices press into overhead Fibonacci resistance, with the 61.8% retracement at 1.4052, which, if cleared, would open the way toward the next resistance cluster around the 78.6% retracement at 1.4138, where bullish momentum would face a more substantial test.
On the downside, immediate demand is seen at the 50.0% retracement at 1.3992, followed by the 100-day SMA at 1.3953, where a deeper pullback could find buyers ahead of the 38.2% level at 1.3932 and the 23.6% retracement at 1.3857.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 6.7459 compared to the previous day's fix of 6.7487 and 6.6989 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.
US Treasury Secretary Scott Bessent said that Iranian airlines could effectively be shut out of international travel from September 23, as the United States threatens foreign companies with secondary sanctions if they continue servicing the country’s carriers, Aljazeera news agency reported.
“On September 23, all the Iranian airlines will be shut down around the world,” said Bessent on Monday. “If they land, you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system,” he added.
This move marks the latest step in US President Donald Trump administration’s escalating economic campaign against Tehran, which has continued alongside the war between the US and Iran.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.41% on the day at $92.18.
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.
- Silver regains positive traction, though it remains confined in the previous day’s broader range.
- The mixed technical setup warrants some caution before positioning for any further move up.
- A break above the 23.6% Fibo. hurdle is needed to back the case for additional near-term gains.
Silver (XAG/USD) attracts fresh buyers following the previous day's two-way price moves and trades around the $66.40-$66.45 region during the Asian session on Tuesday, up nearly 0.50% for the day. The white metal, however, remains below last week's swing high, around the $67.25-$67.30 region, warranting caution for aggressive bullish traders.
The said area represents the 23.6% Fibonacci retracement level of the July-August rally and should act as a key pivotal point. The white metal currently sits just above the 100-day simple moving average (SMA) at $66.32, holding a mildly bullish near-term bias. Moreover, the cluster of Fibonacci retracements below—most notably the 38.2% level at $64.87 and the 50% line at $62.93 — suggests a layered demand zone underpinning the recent advance.
Adding to this, the Relative Strength Index (RSI) around 54 reinforces a balanced but constructive tone, indicating the metal is neither overbought nor oversold while it consolidates above its key trend marker. However, the Moving Average Convergence Divergence (MACD) indicator remains slightly negative and hints at waning upside. Hence, a sustained break above $67.27 would be needed to open the way for a retest of the higher zone.
The white metal might then climb to a more substantial barrier at the prior cycle anchor near $71.14. That said, a failure to clear this cap would keep XAG/USD confined to a range supported by the underlying Fibonacci and moving average structure. Meanwhile, immediate support is located at the 100-day SMA at $66.32, with secondary levels emerging at the 38.2% Fibo. retracement at $64.87 and the 50% retracement at $62.93 should corrective pressure deepen.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD daily chart
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.
- EUR/USD posts modest gains around 1.1470 in Tuesday’s early Asian session.
- German political risks rise following two more disappointing state election outcomes.
- Fed's Musalem said more rate hikes are likely needed to combat inflation.
The EUR/USD pair trades with mild gains near 1.1470 during the early Asian trading hours on Tuesday. Middle East diplomacy hopes provide some support to the riskier assets such as the Euro (EUR) against the US Dollar (USD). Traders await the Fedspeak later on Tuesday for fresh impetus.
President Masoud Pezeshkian will lead an Iranian delegation at the United Nations General Assembly in New York on Tuesday, amid renewed hopes for a diplomatic solution to the Middle East conflict, per CNBC. Traders will closely monitor the geopolitical developments surrounding US-Iran talks.
US President Donald Trump said that he’d “probably” be open to meeting his Iranian counterpart on the sidelines of the UN General Assembly.
On the other hand, political risks in Germany could weigh on the shared currency. The far-right Alternative for Germany took first place in state elections in northeastern Germany on Sunday, with Chancellor Friedrich Merz's conservative party suffering its worst regional election defeat in postwar Germany, leaving him clinging to power.
Hawkish comments from the US Federal Reserve (Fed) officials could lift the Greenback and act as a headwind for the major pair. Chicago Fed President Austan Goolsbee said on Monday that US inflation may have moved beyond the tariff and energy price shocks of the last 18 months and is now being driven by strong demand as well, potentially requiring a faster pace of Fed rate increases.
Meanwhile, St. Louis Fed President Alberto Musalem stated that the US central bank will likely need to hike interest rates further to lower inflation resulting from strong demand as well as a commodity price shock that has moved beyond oil.
Euro sentiment pressured as German political risks rise
Analysts at MUFG warn that “the latest political and fiscal developments in European could contribute to undermining confidence in the Euro in the near-term.” They highlight that “there is a higher risk of political instability in Germany after two more disappointing state election results for the ruling parties over the weekend,” a backdrop that they believe could further weigh on investor sentiment toward the single currency.
Technical Analysis: EUR/USD keeps a bearish vibe under the 100-day SMA
In the daily chart, EUR/USD keeps a bearish near-term tone as spot holds beneath the 100-day simple moving average (SMA) and the Bollinger middle band. Price is only slightly above the lower Bollinger band, suggesting the pair is pressing the lower edge of its recent volatility envelope, while the Relative Strength Index (RSI) around 34.5 hovers just above oversold territory, hinting at persistent but not yet extreme downside pressure.
On the topside, initial resistance emerges at the 100-day SMA at 1.1545, followed by the Bollinger SMA centerline around 1.1575, with the upper Bollinger band near 1.1705 acting as a stronger cap if a corrective bounce develops. On the downside, the lower Bollinger band at 1.1445 offers immediate support; a decisive break below this level would open the door to an extension of the current bearish phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US President Donald Trump administration has proposed investing $5 billion in a new fund to help rebuild critical infrastructure across the Middle East damaged in the war with Iran and reduce their reliance on the Strait of Hormuz to transport oil and gas, the Wall Street Journal reported on Monday.
The Partnership for Allied Construction & Trust would be led by the US Development Finance Corporation to encourage investment, reconstruction and economic expansion.
The document identifies four project categories as priorities for the platform. There are investments to help bypass the Strait of Hormuz, restore energy flows and critical material exports, hardening assets against future attacks, and rebuild essential domestic infrastructure and import flows.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 3.60% on the day at $91.80.
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.
The Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter confirmed the need for further rate hikes this year, to keep inflation in check. This has increased the chances for a rate increase at the September 29 meeting.
In a podcast, Hunter stated the board’s concern that inflation has been too high for too long, with increasing risks of it becoming entrenched. Hunter added that “We can see lots of reasons why inflation might be a bit higher than what we currently think.”
Traders should note that the RBA has raised rates three times by 75 basis points this year, bringing the cash rate back to post-pandemic levels of 4.35%.
Money markets forecast a 94% probability that the RBA will increase rates by 25 basis points at the September 29 meeting, with expectations centered around this move, as per Prime Terminal.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Yemeni government forces said that they struck Houthi fighters and supply lines near the Bab al-Mandeb Strait and in al-Bayda governorate and shot down a Houthi drone in southwestern Taiz province, aljazeera news agency reported on Monday.
Additionally, the Yemeni Ministry of Human Rights on Tuesday condemned Houthi attacks on a popular commercial market in Lahj province.
According to the statement, the market was targeted by two ballistic missiles that struck approximately an hour apart at midday and resulted in many civilian injuries as well as damage to commercial properties and vehicles. The Ministry also said that surveillance footage captured the attack and that initial data indicated that they were launched from Houthi-controlled areas in the al-Sabrah district of Ibb.
Early Monday, Yemen’s Houthis pushed to seize strategic heights in Yemen to cut off the Red Sea coast from remaining areas held by Saudi-backed forces, after a report that US President Donald Trump had called off US strikes on the group at the last minute, Reuters reported.
Riyadh was apparently struck on Saturday for the first time since the escalation began, with explosions heard and smoke visible near the airport. The Houthis claimed they had fired missiles at the Saudi capital.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 3.60% on the day at $91.80.
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.
The European Central Bank (ECB) Chief Economist Philip Lane stated that the European economy will expand steadily at a moderate pace if the energy shocks ease, according to Le Temps.
Lane said that a second surge in energy costs will push inflation higher before it eases towards the ECB’s 2% goal, from mid-2027 onwards.
So far, money markets have priced in nearly 35 basis points of tightening by year-end but have fully priced in a rate hike by the December 17 meeting, revealed Prime Terminal.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.18% | 0.28% | 0.33% | 0.07% | 0.16% | -0.16% | |
| EUR | -0.13% | -0.01% | 0.11% | 0.13% | -0.12% | -0.05% | -0.34% | |
| GBP | -0.18% | 0.01% | 0.11% | 0.14% | -0.10% | -0.05% | -0.32% | |
| JPY | -0.28% | -0.11% | -0.11% | 0.06% | -0.25% | -0.11% | -0.39% | |
| CAD | -0.33% | -0.13% | -0.14% | -0.06% | -0.29% | -0.18% | -0.47% | |
| AUD | -0.07% | 0.12% | 0.10% | 0.25% | 0.29% | 0.10% | -0.20% | |
| NZD | -0.16% | 0.05% | 0.05% | 0.11% | 0.18% | -0.10% | -0.30% | |
| CHF | 0.16% | 0.34% | 0.32% | 0.39% | 0.47% | 0.20% | 0.30% |
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
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