Forex News
- The Indian Rupee declines further against the US Dollar due to rising oil prices.
- Traffic through the Hormuz has declined significantly.
- Investors keenly await the India-US CPI data for July.
The Indian Rupee (INR) extends its decline against the US Dollar (USD) on Wednesday as the former continues to face pressure due to surging oil prices.
In the opening session, USD/INR trades slightly higher to near 95.45. The MCX Crude Oil contract expiring on August 19 trades 1% higher to near Rs. 8,040.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
Restricted energy supply continues to boost oil prices
A prolonged oil supply disruption due to the closure of the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, amid tensions between the United States (US) and Iran continues to boost oil prices.
According to data from Kpler, shipping traffic through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, was recorded at just six vessels on August 10, down from a recent 10-day average of about 11. This remains a massive decline from pre-war levels of 130 to 140 ships daily, Reuters reports.
Meanwhile, mediators from Pakistan have expressed optimism regarding progress in negotiations between the US and Iran. Pakistan’s Defence Minister, Khawaja Asif told reporters that “things are shaping up again in favor of a peace arrangement or a deal, according to Bloomberg.
India-US CPI data awaited
In Wednesday’s session, major triggers for the USD/INR pair will be the Consumer Price Index (CPI) data for July of both India and the US.
India’s retail CPI data is scheduled to be released at 04:00 PM (10:30 GMT). Economists at DBS Group Research note that key “inflation numbers are due in the second week of August,” with “headline inflation in July… largely steady at 4.4% YoY vs June.” They point out that high-frequency indicators for food staples “point to a rise in pulses, sugar, milk and edible oils, while vegetables have stabilized,” adding that “a catch-up in rainfall in July has helped boost sowing activity.”
DBS also highlights that “adjustments in domestic retail fuel products (non-subsidized LPG was up 10% YoY in July) are also likely to reflect in the utilities and fuel segments.” Even so, the bank expects underlying price pressures to remain contained, with “core readings… benign at sub-4% in July, helped also by moderation in precious metals in the period.”
The major highlight will be the US inflation data, which is expected to have a significant influence on the Federal Reserve’s (Fed) monetary policy outlook. In the July policy meeting, remarks from Fed Chairman Kevin Warsh clearly showed that officials are heavily concerned regarding inflationary pressures remaining well above the central bank’s 2% target for a long period.
US inflation seen firming but not reaccelerating in July
Brown Brothers Harriman’s Elias Haddad expects the upcoming US July CPI report to show inflation "firm modestly but stop short of signaling a renewed acceleration in inflation." He notes that "headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June," while "core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June." Haddad argues that such a profile would underscore a gradual disinflation trend rather than a renewed pickup in price pressures.
Technical Analysis: USD/INR recovers to near 20-day EMA
USD/INR is inching closer to the 20-day exponential moving average (EMA) at 95.52, which is above the price, hinting at a shift in the near-term bias from bearish to neutral.
The Relative Strength Index (14) around 48 hints at soft, range-bound momentum rather than aggressive selling pressure.
On the topside, immediate resistance is located at the 20-day EMA near 95.52, which would need to be decisively reclaimed to ease the current downside bias and open the way for a further recovery move toward 96.00. Looking down, key support zones are the August 5 low at 94.83 and the June low at 94.15.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- EUR/JPY could find immediate support at the nine-day EMA at 183.46.
- The 14-day Relative Strength Index at 48.21 signals neutral momentum.
- Primary resistance sits at the 50-day EMA at 184.54.
EUR/JPY moves little for the second successive day, trading around 183.90 during the Asian hours on Wednesday. The currency cross is maintaining a mildly bearish near-term tone as it slips beneath the 50-day Exponential Moving Average (EMA) while holding above the shorter nine-day EMA. This alignment suggests the recent bounce is vulnerable to renewed selling while intraday dips still find some demand.
The 14-day Relative Strength Index (RSI) at 48.21 sits close to its midline, hinting at neutral momentum that neither strongly favors a continuation lower nor an immediate bullish reversal.
The primary support lies at the nine-day EMA at 183.46. A successful break below the short-term moving average would reinforce the bearish bias and put downward pressure on the EUR/JPY cross to fall toward the eight-month low of 179.37, reached on August 3, followed by the nine-month low of 175.70.
On the upside, the EUR/JPY cross could rise toward the primary resistance at the 50-day EMA at 184.54. Further advances above the medium-term moving average would cause a bullish emergence and support the currency cross to explore the region around the all-time high of 187.95, which was recorded on April 17.
Yen steadies as intervention gains hold after recent slide
Strategists at Scotiabank note that the Yen is holding firm after the latest bout of volatility, with the currency “steady and showing signs of stabilization following Monday’s worrisome decline that hinted to renewed pressure and a rapid reversal of its recent intervention-driven gains.” They suggest the current price action indicates those intervention gains are, for now, being preserved despite lingering market concerns.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.00% | 0.08% | 0.05% | 0.11% | 0.24% | 0.17% | |
| EUR | -0.07% | -0.06% | 0.00% | -0.02% | 0.02% | 0.18% | 0.10% | |
| GBP | -0.01% | 0.06% | 0.04% | 0.03% | 0.06% | 0.24% | 0.16% | |
| JPY | -0.08% | 0.00% | -0.04% | -0.03% | 0.01% | 0.15% | 0.09% | |
| CAD | -0.05% | 0.02% | -0.03% | 0.03% | 0.04% | 0.20% | 0.12% | |
| AUD | -0.11% | -0.02% | -0.06% | -0.01% | -0.04% | 0.16% | 0.12% | |
| NZD | -0.24% | -0.18% | -0.24% | -0.15% | -0.20% | -0.16% | -0.06% | |
| CHF | -0.17% | -0.10% | -0.16% | -0.09% | -0.12% | -0.12% | 0.06% |
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).
- WTI trades with a positive bias for the third straight day, close to a nearly two-week high.
- The US-Iran standoff fuels supply concerns and lends some support to the black liquid.
- The bullish technical setup supports prospects for a further near-term appreciating move.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts buyers for the third straight day and trades just below the $83.00 mark during the Asian session on Wednesday, close to a nearly two-week high set the previous day.
An advisor to Iran’s Supreme Leader Mojtaba Khamenei said on Tuesday that the Strait of Hormuz will not be opened until the US meets Tehran's demands. Moreover, fresh strikes by Yemen’s Iran-backed Houthis on shipping in the Red Sea fuel concerns over supply disruptions in West Asia. This, in turn, acts as a tailwind for the commodity and underpins the case for a further near-term appreciating move.
From a technical perspective, WTI holds above the 38.2% Fibonacci retracement level of the July-August slide and maintains a near-term bullish bias. The Relative Strength Index (14) at 64.63 remains in positive territory without yet reaching overbought, and the Moving Average Convergence Divergence (MACD) indicator shows the line in positive territory, reinforcing that momentum remains constructive.
Hence, a subsequent move up towards the next relevant hurdle, defined by the 50% retracement at $82.93, looks like a distinct possibility. This is followed by the 61.8% level at $85.13, with further barriers at the 78.6% retracement at $88.27 and the prior cycle high at $92.26.
On the downside, a first layer of support emerges at the 38.2% Fibo. retracement at $80.73, ahead of the 23.6% level at $78.00, while the $73.60 swing low acts as a more distant structural floor if a deeper corrective pullback unfolds.
WTI 4-hour chart
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Gold prices rose in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 13,493.33 Indian Rupees (INR) per gram, up compared with the INR 13,402.99 it cost on Tuesday.
The price for Gold increased to INR 157,382.80 per tola from INR 156,329.80 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,493.33 |
10 Grams | 134,932.60 |
Tola | 157,382.80 |
Troy Ounce | 419,695.80 |
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.
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- Gold regains positive traction on Wednesday, though the upside potential seems limited.
- Geopolitical risks and Fed-hike bets support the safe-haven USD, which could cap gains.
- Traders might also opt to move to the sidelines ahead of the crucial US inflation figures.
Gold (XAU/USD) attracts fresh buyers during the Asian session on Wednesday and climbs back above the $4,400 mark, closer to its highest level since June 5, which was touched the previous day. Traders now look to the US Consumer Price Index (CPI) report for more cues about the US Federal Reserve's (Fed) future policy path amid inflation risks stemming from volatile oil prices. The crucial data will play a key role in driving the US Dollar (USD) and providing meaningful impetus to the non-yielding yellow metal.
Heading into the key data risk, oil prices stand firm near a one-and-a-half-week high amid fading hopes for a swift reopening of the Strait of Hormuz. In fact, an advisor to Iran’s Supreme Leader Mojtaba Khamenei said that the critical waterway will not be opened until the US meets Tehran's demands. Adding to this, Iran-backed Houthi rebels in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb, particularly targeting Saudi-linked ships. The latest developments keep war-risk premiums in play and act as a tailwind for crude oil prices, fueling inflation fears.
Analysts at Commerzbank highlight that “hopes for a new agreement between Iran and the US in the near future and for the Strait of Hormuz to be reopened are fading,” after diplomatic positions hardened over the weekend. They note that Iran “set out its conditions for reopening the strait” – including “demands for reparations” – while US President Trump countered with “a new demand for compensation payments for the victims of the conflict.” According to Commerzbank, this escalation in mutual demands underscores the diminishing likelihood of a near-term deal to restore full transit through the key shipping corridor, reinforcing the current risk premium embedded in energy markets.
This offsets signs of a cooling US labor market and underpins the case for the Fed to hike interest rates. According to CME Group's FedWatch Tool, traders are still pricing in over a 75% chance that the US central bank will raise borrowing costs at least once by the end of this year. The outlook remains supportive of elevated US Treasury bond yields, which, along with persistent geopolitical uncertainties, should benefit the safe-haven USD. Against the backdrop of the US-Iran standoff, Asia was rattled by an early morning ballistic missile launch by North Korea.
This comes days ahead of major joint military exercises by South Korea and the US. Meanwhile, Taiwan condemned planned naval drills between China and an Indonesian warship off the island's east coast. This favors USD bulls and warrants some caution before positioning for an extension of Gold's recent strong positive move witnessed over the past week or so.
XAU/USD daily chart
Technical Analysis
The metal is hovering around the 100-day Simple Moving Average (SMA), though it remains capped beneath a dense band of overhead resistance, starting with the 50.0% Fibonacci retracement of the April-June fall and extending toward the 200-day SMA at $4,500.51, suggesting that bulls need a clear break higher to regain control.
On the downside, immediate support is provided by the 100-day SMA at $4,388.33, with further cushions at the 38.2% retracement at $4,298.48 and the 23.6% level at $4,161.40. A break below the latter could expose the structural floor around $3,939.81.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- US Dollar Index gains on safe-haven demand amid rising uncertainty over Middle East peace talks.
- Despite reports of US-Iran progress, President Trump's demand for reparations injected fresh caution into markets.
- Markets remain divided on a September Fed rate hike ahead of critical inflation data releases.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending gains for the third successive day and trading around 99.90 during the Asian hours on Wednesday. Traders are likely observing the upcoming inflation report closely due later in the day, as it is expected to play a major role in shaping the Federal Reserve’s (Fed) next interest rate decision.
Dollar outlook hinges on US inflation and Fed rate stance
Analysts at Commerzbank highlight that, in the US, the key issue for markets is "whether inflation is falling quickly enough to prevent the Fed from raising interest rates," with the trajectory of price pressures seen as central to the Dollar’s medium‑term policy and yield backdrop.
The DXY gains ground on increased safe-haven demand amid rising uncertainty surrounding Middle-East peace talks. Pakistan’s defence minister indicated that Washington and Tehran were approaching an agreement regarding the Strait of Hormuz, alongside reports that parallel negotiations between Iran and Oman had reached an advanced stage. However, US President Donald Trump insisted that Tehran must pay reparations to the victims of attacks associated with the Islamic Republic, injecting renewed caution into the markets.
Market expectations remain divided over the central bank's rate trajectory following its decision to hold rates steady in July. Although rising crude oil prices have fueled arguments for a more aggressive policy stance, odds for a 25-basis-point Fed rate hike in September have softened slightly, dropping to nearly 48% according to the CME FedWatch Tool, down from 52% the previous day.
Goolsbee flags inflation as top risk but keeps Fed tone broadly hawkish
Fed's Goolsbee scores 7/10 on the FXS Speechtracker, a clear uptick relative to the historical average of 5.8/10 and consistent with a firmer policy stance. By calling the labor market "stable, without being good" and stressing that prices and affordability are "the biggest problem we are facing right now," the remarks underscore inflation as the dominant risk while still leaning on a "healthy" consumer to sustain growth, a mix that keeps the Dollar supported but tempers expectations for aggressive tightening. The emphasis on inflation as "the biggest problem facing the economy" reinforces a bias toward keeping policy restrictive even as growth and employment show signs of cooling.
The FXS Fed Sentiment Index slipped by 0.42 points to 136.59, signaling a modest pullback in perceived hawkishness following the speech. Despite the decline, the index remains well above the neutral 100 threshold, indicating that Fed communication is still firmly in hawkish territory, even as markets reassess the pace and extent of future tightening in light of Goolsbee's nuanced tone.
- Silver price rises to near $65.40 ahead of the US CPI data for July.
- The US headline and core CPI are expected to have grown at a moderate pace of 3.4% and 2.5% YoY, respectively.
- Oil prices continue to surge due to a sharp slowdown in traffic through the Hormuz.
Silver price (XAG/USD) trades 1.1% higher at around $65.40 during the Asian trading session on Wednesday. The white metal reflects strength ahead of the United States (US) Consumer Price Index (CPI) data for July, which will be published at 12:30 GMT.
According to estimates, the US headline CPI grew at an annual pace of 3.4%, slower than 3.5% in June. In the same period, the core CPI – which excludes volatile food and energy items – is also seen lower at 2.5% Year-on-Year (YoY) from the previous reading of 2.6%.
On a monthly basis, the headline and core inflation grew by 0.1% and 0.2%, respectively.
Investors will pay close attention to the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. In the latest monetary policy announcement, Chairman Kevin Warsh warned of upside inflation risks, adding that the board is committed to bringing inflation down to the 2% target.
Meanwhile, surging oil prices due to restricted global energy supply on the back of Middle East conflicts will likely limit the Silver price’s upside.
According to data from Kpler, shipping traffic through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, was recorded at just six vessels on August 10, down from a recent 10-day average of about 11. This remains a massive decline from pre-war levels of 130 to 140 ships daily, Reuters reports.
On Tuesday, the CME Group said that it will allow round-the-clock trading in its 100-ounce silver futures contract from September after seeing a strong response for the 1-ounce Gold futures contract, which began on July 24, Reuters reports.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $65.53, extending its advance above the 20-day exponential moving average (EMA) at $61.28 and reinforcing a bullish near-term bias.
Price action has steadily pushed away from the prior consolidation zone, while the Relative Strength Index (14) at 61.21 stays in positive territory but short of overbought, hinting that upside momentum remains constructive without being overstretched.
On the downside, immediate support is seen at the 20-day EMA around $61.28, which underpins the broader rebound and would be the first line of defense on any pullback. Looking up, the white metal would attempt to extend the advance towards the June 17 high at $71.56 if it manages to break above the August 10 high at $66.59.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- USD/CAD steadies after the recent slide to a two-month low as traders keenly await the US CPI report.
- Rising crude oil prices continue to underpin the Loonie and keep a lid on further gains for the pair.
- The US-Iran standoff and Fed-hike bets support the safe-haven USD, and limit losses for spot prices.
The USD/CAD pair ticks higher during the Asian session on Wednesday, snapping a three-day losing streak to the 1.3915 area or its lowest level since June 10. Spot prices, however, lack bullish conviction and trade around 1.3930, awaiting the release of the latest US inflation figures.
The crucial US Consumer Price Index (CPI), due later today, and the Producer Price Index (PPI) on Thursday will be looked for fresh cues about the US Federal Reserve's (Fed) future policy path. The outlook, in turn, will play a key role in influencing the US Dollar (USD) demand in the near term and providing a fresh impetus to the USD/CAD pair. In the meantime, a combination of diverging forces might hold back traders from placing aggressive bullish bets or positioning for any meaningful appreciation.
Crude oil prices shot to a one-and-a-half-week high on Tuesday after an advisor to Iran’s Supreme Leader Mojtaba Khamenei said that the Strait of Hormuz will not be opened until the US meets Tehran's demands. Adding to this, Iran-backed Houthi rebels in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, targeting Saudi ships. This keeps war-risk premiums in play and acts as a tailwind for the black liquid, which should underpin the commodity-linked Loonie.
Meanwhile, investors remain worried that elevated energy prices will rekindle inflationary pressures and force the US central bank to adopt a more hawkish stance. According to CME Group's FedWatch Tool, traders are currently pricing in over a 75% chance that the Fed will raise borrowing costs by the end of this year. This, along with persistent geopolitical uncertainties, lends some support to the safe-haven Greenback and helps limit the downside for the USD/CAD pair, warranting caution for bears.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair sits just above the 100-day Simple Moving Average (SMA) at 1.3919 and the 50.0% Fibonacci retracement of the May-June rally, suggesting underlying demand after the recent pullback. On the topside, initial resistance emerges at the 38.2% Fibo. retracement at 1.3980, followed by the denser barrier at the 23.6% retracement near 1.4081, ahead of the cycle high anchor at 1.4244.
That said, a break below the 100-day SMA and the 50.0% retracement at 1.3898 would make the USD/CAD pair vulnerable to test the 61.8% level at 1.3817 and subsequent Fibonacci supports at 1.3701 and 1.3553.
(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.
- NZD/USD depreciates as safe-haven demand buoyed the US Dollar amid mounting uncertainty over Middle East peace talks.
- Markets remain divided on a September Fed rate hike ahead of critical inflation data releases.
- Traders expect a September RBNZ rate hike, while PM Luxon survives a leadership challenge ahead of elections.
NZD/USD continues its losing streak for the third consecutive day, trading around 0.5870 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) gains ground on increased safe-haven demand amid rising uncertainty surrounding Middle East peace talks.
Pakistan’s defence minister indicated that Washington and Tehran were approaching an agreement regarding the Strait of Hormuz, alongside reports that parallel negotiations between Iran and Oman had reached an advanced stage. However, US President Donald Trump insisted that Tehran must pay reparations to the victims of attacks associated with the Islamic Republic, injecting renewed caution into the markets.
Traders are likely observing the upcoming inflation report closely due later in the day, as it is expected to play a major role in shaping the Federal Reserve’s (Fed) next interest rate decision.
Dollar outlook hinges on US inflation and Fed rate stance
Analysts at Commerzbank highlight that, in the US, "the focus is on whether inflation is falling quickly enough to prevent the Fed from raising interest rates," a dynamic they see as central to the medium‑term Dollar outlook and the trajectory of US yields.
Market expectations remain divided over the central bank's rate trajectory following its decision to hold rates steady in July. Although rising crude oil prices have fueled arguments for a more aggressive policy stance, odds for a 25-basis-point Fed rate hike in September have softened slightly, dropping to nearly 48% according to the CME FedWatch Tool, down from 52% the previous day.
Markets remain set on a September rate hike from the Reserve Bank of New Zealand as policymakers signal further tightening to withdraw monetary stimulus and keep inflation contained.
On the political front, Prime Minister Christopher Luxon survived a second leadership challenge in four months. Following a three-hour party meeting in Wellington, Luxon confirmed he retains the full backing of his MPs with 87 days remaining until the general election.
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.
- AUD/USD weakens as markets remain divided on a September Fed rate hike ahead of critical inflation data releases.
- Despite rising oil prices, odds for a September Fed rate hike fell from 52% to nearly 48%.
- MUFG and Westpac warn energy risks could trigger RBA hikes, while NAB expects rates held until mid-2027 cuts.
AUD/USD depreciates after registering modest gains in the previous day, trading around 0.7060 during the Asian hours on Wednesday. The currency pair loses ground as the US Dollar (USD) rises ahead of a crucial inflation report. Traders are closely watching this upcoming reading, as it is expected to play a major role in shaping the Federal Reserve’s (Fed) next interest rate decision.
Market expectations remain divided over the central bank's rate trajectory following its decision to hold rates steady in July. Although rising crude oil prices have fueled arguments for a more aggressive policy stance, odds for a 25-basis-point Fed rate hike in September have softened slightly, dropping to nearly 48% according to the CME FedWatch Tool, down from 52% the previous day.
The Greenback receives support from geopolitical uncertainty surrounding a potential diplomatic deal between the US and Iran. Market sentiment briefly improved after Pakistan’s defence minister indicated that Washington and Tehran were approaching an agreement regarding the Strait of Hormuz, alongside reports that parallel negotiations between Iran and Oman had reached an advanced stage. However, US President Donald Trump insisted that Tehran must pay reparations to the victims of attacks associated with the Islamic Republic, injecting renewed caution into the markets.
The Reserve Bank of Australia unanimously held the cash rate at 4.35% in August, but major forecasters split on the outlook. MUFG warns that surging energy prices driven by US-Iran tensions and the closure of the Strait of Hormuz threaten a global inflation shock, potentially forcing an RBA hike as early as September. Westpac calls it a "hawkish hold," arguing softer domestic data weakened the explicit tightening bias, though rising energy risks leave a late-year hike on the table. Conversely, NAB views conditions as sufficiently restrictive, forecasting steady growth and a hold through 2026 before mid-2027 cuts.
RBA tightening weighs as Australia data momentum cools
BNY’s Wee Khoon Chong highlights that the domestic backdrop has turned more challenging, with “financial conditions have tightened, consumer spending is slowing gradually, housing momentum has softened, and labor market conditions have eased a little more than expected.” Against that softer tone in activity, Chong notes the RBA still characterizes policy as somewhat restrictive and expects inflation to return to the midpoint of its target only by late 2027, reinforcing a cautious outlook for the Aussie and AUD/USD.
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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