Forex News
- WTI gains to near $59.00 as Ukraine hits Russian oil facilities.
- Peace talks between the US and Russia to end the war in Ukraine failed to get a breakthrough.
- The Fed is expected to cut interest rates next week.
West Texas Intermediate (WTI) futures on NYMEX trade 0.25% higher to near 59.00 during the Asian trading session on Thursday. The Oil price gains as Ukraine’s attack on the Druzhba oil pipeline, situated in Russia’s central Tambov region that supplies energy products to Hungary and Slovakia, has raised supply concerns at times when Moscow’s major oil companies Rosneft and Lukoil are already facing the burden of sanctions.
Though the Oil price trades higher during Asian trading hours, it is still inside Wednesday’s trading range.
The Oil price rose on Wednesday as well after peace talks between top envoys of the United States (US) and Russia failed to make a breakthrough.
Trump said that special envoy Steve Witkoff and his son-in-law Jared Kushner had a “very good meeting” on Tuesday with Russian President Vladimir Putin. The Kremlin said Putin accepted some US proposals, although the meetings did not yield a breakthrough, CNN reported.
Going forward, the major trigger for the Oil price will be the monetary policy announcement by the Federal Reserve (Fed) next week, in which the US central bank is expected to cut interest rates by 25 basis points (bps) to 3.50%-3.75%.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December policy meeting is 89%.
This will be the third interest rate cut by the Fed in a row. Lower interest rates by the Fed bode well for the Oil demand outlook.
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 stages a modest bounce from the vicinity of a one-month trough set last week.
- A modest USD uptick supports spot prices, though a combination of factors caps gains.
- The divergent Fed-BoC policy outlooks and an uptick in Crude Oil prices act as a headwind.
The USD/CAD pair attracts some buyers during the Asian session on Thursday, and for now, seems to have snapped a two-day losing streak back closer to the 1.3940-1.3935 region, or a nearly one-month low, touched last week. Spot prices, however, lack bullish conviction and currently trade around the 1.3960-1.3965 area, up 0.10% for the day, amid mixed cues.
The US Dollar (USD) attempts a modest recovery from its lowest level since late October, touched on Wednesday, and turns out to be a key factor offering some support to the USD/CAD pair. Any meaningful USD appreciation, however, seems elusive amid bets that the US Federal Reserve (Fed) will lower borrowing costs again next week. The expectations were reaffirmed by the dismal US ADP report, which showed that private-sector employers unexpectedly shed 32,000 jobs in November.
The data points to a weakening US labor market and comes on top of signs of a slowdown in the world's largest economy, which backs the case for further policy easing by the Fed. This marks a significant divergence in comparison to the Bank of Canada's (BoC) hawkish signal, stating that it is likely finished cutting for now. Apart from this, some follow-through recovery in Crude Oil prices could underpin the commodity-linked Loonie and contribute to capping further gains for the USD/CAD pair.
Traders now look to Thursday's US economic docket, featuring Challenger Job Cuts and the usual Weekly Initial Jobless Claims. Apart from this, the Canada Ivey PMI might provide some impetus later during the North American session. The market focus, however, will remain on the release of the US Personal Consumption Expenditure (PCE) Price Index and the monthly Canadian jobs report. This, in turn, will play a key role in determining the next leg of a directional move for the USD/CAD pair.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday, “there is uncertainty on how far we can eventually raise interest rates.”
Additional comments
We are working on narrowing our estimate on neutral interest rate, will disclose findings if we can successfully do so.
For now, we have to work with our current estimate set in a fairly wide range.
There is uncertainty on how far we can eventually raise interest rates.
Current monetary conditions still accommodative.
Govt's economic package likely to push up economic growth.
Package will likely work both ways in terms of impact on inflation.
Market reaction
At the time of writing, USD/JPY is inching 0.09% higher on the day to trade at 155.46.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- The Japanese Yen remains well supported by rising bets for a December BoJ rate hike.
- Dovish Fed expectations weigh on the USD and act as a headwind for the USD/JPY pair.
- The setup suggests that the path of least resistance for spot prices is to the downside.
The Japanese Yen (JPY) is trading with a positive bias during the Asian session on Thursday and looking to build on the previous day's gains against a broadly weaker US Dollar (USD). Traders ramped up their bets for an imminent interest rate hike by the Bank of Japan (BoJ) following Governor Kazuo Ueda's remarks earlier this week. Moreover, a survey showed on Wednesday a modest expansion of private sector output in Japan for the eighth straight month in November and backs the case for further BoJ policy normalization. This, in turn, might continue to underpin the JPY.
Meanwhile, prospects for BoJ tightening, along with a reflationary push by new Prime Minister Sanae Takaichi, keep super-long-dated Japanese government bonds (JGB) under pressure. The resultant narrowing of the rate differential between Japan and other major economies could further benefit the lower-yielding JPY. The USD, on the other hand, languishes near its lowest level since late October amid rising bets for another interest rate cut by the Federal Reserve (Fed) next week. This, in turn, suggests that the path of least resistance for the USD/JPY pair is to the downside.
Japanese Yen bulls have the upper hand amid firming BoJ rate hike expectations
- Bank of Japan Governor Kazuo Ueda gave the clearest hint so far of an impending rate hike and said on Monday that the central bank would consider the pros and cons of raising its policy rate at its December 18-19 meeting. Ueda added that real interest rates were deeply negative, and another hike would still leave borrowing costs low.
- Japan’s S&P Global Composite PMI was finalized at 52.0 for November, marking the strongest reading since August. It also signaled an eighth consecutive month of private-sector expansion amid a quicker rise in services and a slower contraction in manufacturing. Moreover, business confidence strengthened to its highest level since January.
- This, in turn, reaffirmed bets that the BoJ will raise its rate by a quarter percentage point, to 0.75% this month. Moreover, Prime Minister Sanae Takaichi's massive spending plan, to be funded by new debt issuance, pushed the yield on 30-year Japanese government bonds to a record high on Thursday and should benefit the Japanese Yen.
- The US Dollar, on the other hand, dropped to its lowest level since late October on Wednesday amid the growing acceptance that the Federal Reserve (Fed) will lower borrowing costs at the end of next week's policy meeting. The expectations were reaffirmed by weaker-than-expected US private-sector employment details released on Wednesday.
- The Automatic Data Processing (ADP) reported that private-sector employers shed 32,000 jobs in November, compared to the 47,000 increase (revised from 42,000) in the previous month. This figure came in below expectations for an addition of 5,000 and also marked the largest monthly decline since early 2023, pointing to a weakening US labor market.
- Traders now look forward to Thursday's US economic docket, featuring Challenger Job Cuts and the usual Weekly Initial Jobless Claims. The focus, however, will remain glued to the US Personal Consumption Expenditure (PCE) Price Index on Friday, which will drive the near-term USD demand and provide a fresh impetus to the USD/JPY pair.
USD/JPY seems vulnerable while below the 100-hour SMA pivotal resistance
The overnight slide followed Tuesday's failure to find acceptance above the 100-hour Simple Moving Average (SMA) and the 156.00 round figure, which, in turn, favors the USD/JPY bears. However, slightly positive oscillators on the daily chart suggest that any further decline could find decent support near the 155.00 psychological mark. A convincing break below the latter will reaffirm the negative outlook and set the stage for an extension of the recent pullback from the 158.00 neighborhood, or the highest level since January touched last month.
On the flip side, the 100-hour SMA, currently pegged near the 155.70 region, could act as an immediate hurdle and cap any attempted recovery move. This is closely followed by the 156.00 mark, above which a fresh bout of short-covering could lift the USD/JPY pair to the next relevant hurdle near the 156.60-156.65 region en route to the 157.00 round figure. The momentum could extend further towards mid-157.00s before spot prices make a fresh attempt to conquer the 158.00 mark.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Japanese Chief Cabinet Secretary Minoru Kihara said in a statement on Thursday, he is “concerned about forex move.”
Additional quotes
Recent Yen moves are somewhat rapid, one-sided.
Important for currencies to move in a stable manner, reflecting fundamentals.
Take appropriate action for excessive, disorderly FX moves.
Even more important to communicate with the market, home and overseas to buy JGBs.
What's important in JGB management policy is to smooth issuance of JGB while keeping mid- and long-term necessary cost low.
Market reaction
USD/JPY is off the high following the Japanese jawboning. At the press time, the pair trades 0.04% higher on the day at 155.34.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.09% | 0.08% | 0.07% | -0.06% | 0.09% | 0.04% | |
| EUR | -0.04% | 0.05% | 0.04% | 0.03% | -0.11% | 0.04% | 0.02% | |
| GBP | -0.09% | -0.05% | -0.02% | -0.02% | -0.16% | -0.00% | -0.03% | |
| JPY | -0.08% | -0.04% | 0.02% | -0.00% | -0.15% | -0.02% | -0.02% | |
| CAD | -0.07% | -0.03% | 0.02% | 0.00% | -0.13% | -0.01% | -0.01% | |
| AUD | 0.06% | 0.11% | 0.16% | 0.15% | 0.13% | 0.15% | 0.12% | |
| NZD | -0.09% | -0.04% | 0.00% | 0.02% | 0.00% | -0.15% | -0.03% | |
| CHF | -0.04% | -0.02% | 0.03% | 0.02% | 0.01% | -0.12% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- NZD/USD loses ground to around 0.5765 in Thursday’s early Asian session.
- The downtick of the pair is pressured by the rebound in the US Dollar.
- A hawkish shift by the RBNZ could support the Kiwi.
The NZD/USD pair edges lower to near 0.5765 during the early Asian trading hours on Thursday, bolstered by renewed US dollar (USD) demand. Nonetheless, the potential downside for the pair might be limited amid the prospect of the US interest rate cut next week. The US weekly Initial Jobless Claims report will be the highlight later on Thursday.
The Greenback recovers some lost ground against the New Zealand Dollar (NZD) after reaching a nearly two-month low on Thursday. The rebound in the USD could be short-lived, as weaker US private payrolls data have boosted expectations of an interest rate cut by the US Federal Reserve (Fed) at the December policy meeting.
Financial markets are currently pricing in nearly an 85% odds of a 25 basis point (bps) rate reduction next week, according to the CME FedWatch tool.
The Reserve Bank of New Zealand (RBNZ) decided to cut its Official Cash Rate (OCR) by a quarter percentage point to 2.25% last week, as widely anticipated. The New Zealand central bank signaled that future rate changes will depend on the economic and inflation outlook, and analysts believe the rate-cutting cycle is likely finished for now. This, in turn, might contribute to the NZD’s upside.
All eyes will be on the delayed US September Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, and inflation data later on Friday. This report could give some insight into the US interest rate path.
The headline PCE is expected to show an increase of 2.8% YoY in September, while the core PCE is projected to show a rise of 2.9% during the same period. In case of a hotter-than-expected inflation reading, this could boost the USD in the near term.
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.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Thursday at 7.0733 compared to the previous day's fix of 7.0754 and 7.0554 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.
- Gold price trades with mild gains around $4,210 in Thursday’s early Asian session.
- Weaker US private payrolls data have boosted expectations of a US interest rate cut next week, supporting the Gold price.
- Traders will take more cues from the US weekly Initial Jobless Claims data ahead of the delayed US PCE inflation report.
Gold price (XAU/USD) posts modest gains near $4,210 during the early Asian trading hours on Thursday. The precious metal edges higher amid growing expectations of a US interest rate cut next week. Traders will keep an eye on the release of the US weekly Initial Jobless Claims data, which is scheduled for release later on Thursday.
US private payrolls fell by 32,000 jobs in November, according to Automatic Data Processing (ADP) on Wednesday. This reading followed the 47,000 increase (revised from 42,000), weaker than the market expectation of a 5,000 growth. This report pointed to a weakening US labor market, which weighs on the Greenback and provides some support to the USD-denominated commodity price.
Traders increase their bets that the US Federal Reserve (Fed) will deliver a 25 basis points (bps) rate cut at the December policy meeting. Fed funds futures traders are now pricing in nearly an 89% chance of a rate reduction next week, up from 71% probability a week ago, according to the CME FedWatch Tool. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
The US weekly Initial Jobless Claims data will be in the spotlight on Thursday. The attention will shift to the delayed US September Personal Consumption Expenditures (PCE) inflation data later on Friday. The Fed’s preferred inflation gauge report could offer some hints about the US interest rate path. Any signs of hotter inflation in the US economy could lift the USD and undermine the yellow metal in the near term.
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.
- AUD/USD continues scaling higher as hawkish RBA continues to underpin the Aussie.
- Rising Fed rate cut bets keep the USD depressed and lend additional support to the pair.
- Spot prices reacted little to rather unimpressive Australian Trade Balance data on Thursday.
The AUD/USD pair prolongs its strong uptrend witnessed over the past two weeks or so and advances to a fresh high since late October during the Asian session on Thursday. Spot prices stick to gains following the release of Australian trade balance data, with bulls looking to build on the momentum further beyond the 0.6600 mark amid a supportive fundamental backdrop.
Data published by the Australian Bureau of Statistics showed that the country's trade surplus widened to A$4,385 million MoM in October, compared to A$3,938 million in the previous month. Additional details showed that exports rose 3.4% vs 7.9% in September, while imports registered a growth of 2% during the reported month. The immediate market reaction, however, turns out to be muted as diminishing odds for more policy easing by the Reserve Bank of Australia (RBA) continue to underpin the Aussie and act as a tailwind for the AUD/USD pair.
On Wednesday, RBA Governor Michele Bullock admitted that inflation is not yet sustainably back within the central bank's 2% to 3% target band. Furthermore, Bullock warned that if the price pressure turns out to be permanent, it would have implications for the future path of monetary policy. Traders further pared their bets for an RBA rate cut next week, instead now see a greater chance that the central bank will hike rates next year. This marks a significant divergence in comparison to dovish US Federal Reserve (Fed) expectations and favors the AUD/USD bulls.
In fact, traders are now pricing in a nearly 90% probability that the US central bank will lower borrowing costs next week amid signs of a gradual cooling of the US economy. Adding to this, speculations about a dovish successor of Fed Chair Jerome Powell keep the US Dollar (USD) depressed near its lowest level in over one month, which turns out to be another factor that acts as a tailwind for the AUD/USD pair. Furthermore, the bullish tone around the equity markets undermines the safe-haven buck and validates the positive outlook for the risk-sensitive Aussie.
Economic Indicator
Trade Balance (MoM)
The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Read more.Last release: Thu Dec 04, 2025 00:30
Frequency: Monthly
Actual: 4,385M
Consensus: -
Previous: 3,938M
Source: Australian Bureau of Statistics
Australia’s Trade Surplus widened to 4,385M MoM in October versus 3,707M (revised from 3,938M) in the previous reading, according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday.
Further details reveal that Australia's Exports climbed by 3.4% MoM in October from a rise of 7.6% (revised from 7.9%) seen a month earlier. Meanwhile, Imports rose by 2.0% MoM in October, compared to an increase of 1.8% (revised from 1.1%) seen in September.
Market reaction to Australia’s Trade Balance
At the press time, the AUD/USD pair is up 0.12% on the day to trade at 0.6609.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.57% | -0.77% | -0.62% | -0.16% | -0.95% | -0.67% | -0.42% | |
| EUR | 0.57% | -0.21% | -0.04% | 0.41% | -0.38% | -0.11% | 0.15% | |
| GBP | 0.77% | 0.21% | 0.41% | 0.62% | -0.17% | 0.10% | 0.36% | |
| JPY | 0.62% | 0.04% | -0.41% | 0.45% | -0.36% | -0.08% | 0.18% | |
| CAD | 0.16% | -0.41% | -0.62% | -0.45% | -0.83% | -0.50% | -0.26% | |
| AUD | 0.95% | 0.38% | 0.17% | 0.36% | 0.83% | 0.28% | 0.53% | |
| NZD | 0.67% | 0.11% | -0.10% | 0.08% | 0.50% | -0.28% | 0.26% | |
| CHF | 0.42% | -0.15% | -0.36% | -0.18% | 0.26% | -0.53% | -0.26% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section was published on December 4 at 23.10 GMT as a preview of the Australian Trade Data release.
The Australian Trade Data Overview
The Australian Bureau of Statistics will publish its data for August on Thursday at 00.30 GMT. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
How could the Australian Trade Data affect AUD/USD?
AUD/USD trades on a positive note on the day in the lead up to the Australian Trade Data. The pair gathers strength as the US Dollar softens amid weaker than expected US jobs data and expectations of further US rate cuts.
If data comes in better than expected, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the October 6 high of 0.6620. The next resistance level emerges at the September 11 high of 0.6665, en route to the September 17 high of 0.6707.
To the downside, the December 1 low of 0.6532 will offer some comfort to buyers. Extended losses could see a drop to the 100-day EMA at 0.6514. The next contention level is located at the October 10 low of 0.6472.
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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