Forex News
Deutsche Bank Research points to a busy week for Japan, with strong May retail sales already released and industrial production data due. The Bank of Japan’s (BoJ) Tankan survey on Wednesday is expected to show broadly steady sentiment, which the bank says could support the case for further gradual policy tightening, with implications for Japanese Yen and local markets.
Retail strength and Tankan outlook
"In Japan, today’s retail sales (out earlier) is followed by industrial production tomorrow, where our economists expect a +1.4% month-on-month increase."
"The highlight, however, will be the Bank of Japan’s Tankan survey on Wednesday, which is expected to show broadly steady sentiment and may reinforce the case for further gradual policy tightening."
"In Japan, early data showed retail sales rose 5.3% YoY in May, well above expectations of 3.0% and up from April’s downwardly revised 2.8%."
"Asian equity markets are mixed this morning. Easing geopolitical tensions in the Middle East are providing some support, though fresh regional trade frictions are weighing on sentiment after China imposed tighter export controls on 20 Japanese entities, requiring government approval for shipments."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Indian Rupee trades calmly near 94.35 against the US Dollar ahead of US-Iran talks and NFP data.
- Iran stresses the recognition of its authority near the Strait of Hormuz.
- The Fed is expected to deliver at least one interest rate hike this year.
The Indian Rupee (INR) trades flat against the US Dollar (USD) after a long weekend on Monday. The USD/INR pair wobbles around 94.35 as investors await the outcome of talks between the United States (US) and Iran, scheduled on Tuesday in Oman, regarding peace near the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply.
US-Iran agree on a ceasefire after trading attacks over weekend
The exchange of attacks between the US and Iran near the Strait of Hormuz over the weekend renewed fears of a global energy supply disruption again. Comments from Iran’s Foreign Minister Abbas Araghchi signaled that Tehran’s attacks were meant to demonstrate its intentions to have authority over the Hormuz.
Iran’s Foreign Minister Araghchi said that responsibility for the Strait of Hormuz lies solely with Tehran and warned that any attempt to bypass its preferred route in the waterway will cause “tension and escalation”. However, both nations later agreed on a ceasefire and scheduled talks regarding the same in Oman for Tuesday.
Market participants worry that signs of renewed conflicts between the two nations could lift oil prices again, which have returned close to their pre-war levels, a scenario that diminishes the appeal of currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.
US Dollar consolidates at start of US NFP week
The US Dollar Index, which gauges the Greenback’s value against six major currencies, trades calmly near 101.30. Investors seem to have sidelined, awaiting a slew of US data, especially the Nonfarm Payrolls (NFP) data for June, which will be released on Thursday.
Investors will pay close attention to the US NFP data for fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. The impact of the official employment data will be significant as comments from new Fed Chairman Kevin Warsh in his monetary policy conference this month signaled that forward-looking statements from the central bank would be restricted in the current policy conjuncture.
According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike this year are almost 90%.
This week, investors will also focus on the US ISM Manufacturing PMI and the ADP Employment Change data for June, and the JOLTS Job Openings data for May.
Technical Analysis: USD/INR holds key support around 94.00
USD/INR trades flat at around 94.38, keeping a bearish near-term tone as spot holds below the 20-period exponential moving average (EMA) at 94.80 and under the broader downward resistance trend line of the Descending Triangle formation starting near 97.10.
The pair has been sliding off recent highs and now trades closer to its rising support line from 94.1051, while the Relative Strength Index (14) around 44 suggests waning bullish momentum and leaves the door open for further downside pressure.
On the topside, initial resistance is defined by the 20-period EMA at 94.80, with a subsequent barrier coming from the longer-term descending trend line near 97.10. On the downside, the immediate focus is on the horizontal support line drawn from 94.10, with the current price area around 94.38 acting as a pivotal zone where a sustained break lower would reinforce the bearish bias and expose deeper losses in the coming sessions.
(The technical analysis of this story was written with the help of an AI tool.)
Silver prices (XAG/USD) fell on Monday, according to FXStreet data. Silver trades at $58.18 per troy ounce, down 1.63% from the $59.14 it cost on Friday.
Silver prices have decreased by 18.16% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 58.18 |
1 Gram | 1.87 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 69.64 on Monday, up from 69.15 on Friday.
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.
(An automation tool was used in creating this post.)
- USD/CAD trades flat at around 1.4195 with investors awaiting the US NFP data release.
- Fed’s Warsh signaled that forward-looking monetary policy statements should not be provided at current policy juncture.
- The US and Iran are scheduled to talks regarding the Hormuz future on Tuesday.
The USD/CAD pair trades flat at around 1.14195 during the European trading session on Monday. The Loonie pair consolidates as investors shift focus to the United States (US) Nonfarm Payrolls (NFP) data for June, which will be released on Thursday.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally lower at around 101.30.
The impact of the US NFP data will be significant on the Federal Reserve’s (Fed) monetary policy outlook, as new Chairman Kevin Warsh said in the monetary policy conference this month that the central bank should refrain from delivering forward-looking remarks in the current policy conjuncture.
Before the US NFP data, investors will focus on the US JOLTS Job Openings data for May, and the ISM Manufacturing PMI and ADP Employment Change data for June.
On the geopolitical front, investor await US-Iran talks regarding Tehran’s authority near the Strait of Hormuz in Oman on Tuesday.
USD/CAD technical analysis
USD/CAD trades flat at around 1.4193, maintaining a bullish near-term bias as spot holds comfortably above the 20-period exponential moving average (EMA) at 1.4065. The positioning reinforces an underlying uptrend, while the Relative Strength Index (RSI) at 78.9 sits deep in overbought territory, hinting that bullish pressure remains strong but increasingly vulnerable to a corrective pause or minor pullback.
On the downside, initial support emerges at the November 5 high at around 1.4140, followed by the 20-period EMA near 1.4065, where buyers could attempt to defend the broader advance on any retracement. Looking up, the pair needs to resume its upside and extend it above the June 24 high at 1.4248 to rise further towards the April 2025 high around 1.4300.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Gold falls nearly 1% after signs of de-escalation between the United States and Iran.
- Markets remain cautious ahead of US-Iran talks in Doha on Tuesday and US labor market data later this week.
- Expectations for a restrictive monetary policy continue to weigh on the appeal of the precious metal.
Gold (XAU/USD) trades around $4,050 at the time of writing on Monday, down 0.96% on the day, as investors slightly reduce their exposure to safe-haven assets following the latest developments surrounding tensions between the United States (US) and Iran.
After an exchange of strikes near the Strait of Hormuz over the weekend, a US official said on Sunday that Washington and Tehran would stand down on attacks to allow vessels to move freely. According to Axios, both sides are set to resume negotiations in Doha on Tuesday to continue discussions on all areas covered by their Memorandum of Understanding.
According to Reuters, Iranian President Masoud Pezeshkian said, citing the state news agency IRNA, that $6 billion of the $12 billion in Iranian assets frozen in Qatar should be released. The move could be viewed as a confidence-building measure ahead of the next round of US-Iran talks in Doha.
Despite this easing in tensions, markets remain cautious. Iran's Foreign Minister Abbas Araghchi reiterated that responsibility for the Strait of Hormuz lies solely with Tehran and warned that any attempt to bypass Iran's preferred route could trigger renewed tensions. The Strait of Hormuz remains a strategic chokepoint for nearly 20% of global energy flows, keeping investors alert to any risk of supply disruptions.
At the same time, traders continue to assess the monetary policy outlook of the Federal Reserve (Fed). Higher energy prices driven by geopolitical tensions continue to fuel inflation concerns, supporting expectations that interest rates could remain elevated for longer and reducing the appeal of non-yielding assets such as Gold.
According to the CME FedWatch tool, markets are now pricing in roughly a 48% chance of a rate hike as early as September. Attention now turns to the June US labor market report, with the Nonfarm Payrolls (NFP) release due on Thursday. Economists expect the US economy to have added 114K jobs while the Unemployment Rate is forecast to remain unchanged at 4.3%, data that could influence expectations for the Fed's policy path.
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.
OCBC’s Sim Moh Siong and Christopher Wong argue Gold may struggle to attract a clear haven bid despite renewed US–Iran tensions, as markets focus more on Oil shock risks, Dollar rebound and broader de-risking. Geopolitical risk could cushion downside, but unless Oil opens contained or real yields ease, rallies are expected to stay shallow, with resistance seen at 4100, 4160 and 4260 and support at 3960 and 3820.
Limited haven bid despite tensions
"Gold. 2-way trades likely. Gold may struggle to draw a clean haven bid from renewed US-Iran escalation."
"Weekend gold futures softened, suggesting that markets may be more focused on potential worries of oil shock, USD rebound and broader de-risking than on adding geopolitical hedges."
"Geopolitical risk may cushion downside at the margin, but unless oil opens contained or real yields ease, rallies may remain shallow."
"Gold last closed at 4088 levels. Mild bearish momentum on daily chart shows signs of fading while RSI showed tentative signs of rebound from near oversold conditions."
"Resistance at 4100, 4160 (61.8% fibo) and 4260 (21 DMA). Support at 3960, 3820 levels (76.4% fibo retracement of Aug low to 2026 high)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Iranian Deputy Foreign Minister Kazem Gharibabadi has stated in a post on X, formerly known as Twitter, that Tehran has concluded a meeting with Oman in which review current issues related to the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply. Gharibabadi also said that both nations also exchanged views on the future management of the waterway in the meeting. However, he didn’t specify the date of the meeting.
According to a report from The Daily Star, both Iran and Oman say they hold sovereignty over the waterway.
It is worth mentioning that Iran has been demanding for the recognition of its sovereignty near the Strait of Hormuz since the war with the United States (US) and Iran started in February end.
Meanwhile, reports from CNN show that the US Navy has significantly elevated its security posture in the Middle East, raising the maritime threat assessment level for the Hormuz to "significantly high."
Market reaction
No immediate impact seen in oil prices following the release of above-mentioned headline. At press time, the WTI Oil price trades 0.35% lower to near $69.85.
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.
MUFG’s Lee Hardman notes the US Dollar index (DXY) is trading just below year-to-date highs, with the US Dollar posting a second straight week of gains after the Fed’s hawkish update. He highlights widening expectations for monetary policy divergence versus Europe, outlines scenarios for EUR/USD between 1.1400–1.1800 or below 1.1000, and maintains a long USD/NOK recommendation.
Fed divergence underpins Dollar strength
"In our latest FX Weekly report on Friday we highlighted how widening expectations for monetary policy divergence between the Fed and other major central banks particularly in Europe have triggered a bullish break out for the US dollar."
"We see two main scenarios for EUR/USD over the remainder of the year. In our base case, where the Fed does not follow through with rate hikes, we expect EUR/USD to move back up into the 1.1400–1.1800 range that has prevailed over the past year. Alternatively, if the Fed delivers multiple rate hikes, EUR/USD could fall further below 1.1000."
"Evidence of slowing US inflation and/or a less hawkish Fed reaction function would support a weaker USD, and vice versa in the months ahead."
"For now, we maintain our long USD/NOK trade recommendation until the recent hawkish repricing of Fed rate expectations is convincingly challenged."
"Looking ahead, this week’s ECB annual policy forum in Sintra should provide further insight into the extent to which monetary policy paths in Europe and the US are likely to diverge."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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