Forex News
- Gold price gains ground to near $4,175 in Monday’s early Asian session.
- Fed Chairman declined to signal an imminent policy move during remarks at the IMF meetings in Bangkok.
- Geopolitical risks and the US-Iran situation will be closely watched.
Gold price (XAU/USD) drifts higher to around $4,175 during the early Asian trading hours on Monday. The precious metal recovers amid fading expectations for a Federal Reserve (Fed) rate hike. Traders will closely monitor the developments surrounding geopolitical risks and Middle East tensions.
Despite hotter-than-expected US inflation data, market expectations have shifted. Fed Chair Kevin Warsh voiced optimism about US economic strength but gave no clues about the US rate-path trajectory. Traders largely expect the Fed to hold rates steady in the October policy meeting, while pricing in a 91.8% probability of a rate hike in December, according to the CME's FedWatch Tool.
"While inflation remains a concern and further tightening cannot be ruled out, Warsh’s latest tone suggests little urgency to deliver consecutive rate hikes," said Gerald Gan, chief investment officer at Reed Capital Partners.
US President Donald Trump said he cut a diesel export deal with Russia and blocked numerous sanctions because he doesn’t want to drive Vladimir Putin away from peace talks with Ukraine, per Bloomberg.
Meanwhile, an Iranian official warned on Sunday that Tehran has prepared a new retaliation plan for any renewed US-Israeli attack, as maritime authorities reported several separate attacks on commercial vessels around the Strait of Hormuz. Ongoing tensions between Russia and Ukraine, and conflicts in the Middle East could drive oil-inflation concerns and weigh on the yellow metal.
Bond rally deepens as AI growth worries outweigh hawkish US data
According to Deutsche Bank’s Early Morning Reid report, “the theme of the day was a big global rate rally, as the prospect of slower AI growth pushed yields lower across the board.” In the US, “the 2yr yield (-5.9bps) fell to 4.74%, whilst the 10yr yield (-12.7bps) was down to 5.06%.” Deutsche Bank highlights that this was “a global pattern as well, with yields on 10yr bunds (-5.3bps), OATs (-8.5bps) and BTPs (-6.7bps) all falling over the session.”
The bank stresses that this move came “even as bonds were rallying” in the face of “another batch of hawkish US data,” noting that “AI growth concerns continued to outweigh the inflation impulse when it came to yields.” They flag “a huge upside surprise in PPI inflation, with headline inflation up +1.3% in September (vs. +0.6% expected),” yet real yields still moved lower, reinforcing the recent backdrop of falling US real rates and easing breakevens that has been supportive for Gold.
Warsh flags investment surge and AI demand risks while avoiding policy pre-commitment
Fed Chair Warsh delivered a moderately constructive but cautious message, with a 5.6/10 FXS Speechtracker score undershooting the 6.1/10 historical average and signaling slightly softer conviction than the established baseline. The admission of being “over-scarred from the global financial crisis” underscores a persistent risk-averse bias even as Warsh highlights a structural growth and investment surge driven by “good policies,” and stresses that upcoming October and December meetings will be the “crystallizing moment” for judging output, employment, and inflation. Warsh’s focus on AI as a near-term demand-side force with uncertain employment effects, alongside an insistence on not pre-judging meetings, points to a Fed that is open to further tightening if data warrant but reluctant to pre-commit, a stance that is mildly supportive for the Dollar via higher-for-longer expectations tempered by risk-management caution.
The FXS Fed Sentiment Index was unchanged on the speech, with a 0.00-point move leaving the index at 127.51, firmly in hawkish territory despite the slightly softer FXS Speechtracker score relative to the historical average. The stable but elevated FXS Fed Sentiment Index level suggests markets see Warsh’s emphasis on price stability, investment-led structural growth, and AI-driven demand as consistent with a still-hawkish reaction function, even if the tone was somewhat less forceful than the established baseline.
Technical Analysis: Gold remains capped under the 100-day SMA
In the daily chart, XAU/USD holds beneath a dense cap of resistance that keeps the near-term tone bearish. Spot gold is lodged under the 20-period Bollinger simple moving average and the 100-day simple moving average, suggesting rallies remain vulnerable while price stays below these reference lines. The upper Bollinger band marks a more distant ceiling, while a subdued Relative Strength Index at 45.92 hints at weak upside momentum rather than oversold stress.
On the downside, initial support is aligned with the lower Bollinger band around $4,053.65, where volatility-based demand could emerge if sellers extend the decline. On the topside, a daily close back above the mid-Bollinger band at $4,185 would be the first sign of stabilization, though bears would likely defend the 100-day SMA at $4,240 ahead of the upper band barrier at $4,315.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- GBP/USD attracts some dip-buyers at the start of a new week, though it lacks follow-through.
- Hawkish Fed expectations and geopolitical risks support the safe-haven USD, capping the pair.
- November BoE rate hike bets might continue to act as a tailwind for the GBP and spot prices.
The GBP/USD pair bounces off the 1.3300 neighborhood at the start of a new week, stalling Friday's modest pullback from its highest level since September 23. Spot prices, however, lack follow-through and currently trade around the 1.3330 region, unchanged for the day as the US Dollar (USD) selling seems to have abated.
The USD dropped to a two-week low on Friday, snapping a four-week winning streak, amid the recent sharp decline in US government bond yields from multi-year highs. Moreover, US Federal Reserve (Fed) Chair Kevin Warsh’s unwillingness to provide any signals on further policy moves led to a reduction in odds for policy tightening later this month and outweighed significantly hotter-than-expected inflation reports, which keep USD bulls on the back foot.
Market players, however, are still pricing in over a 90% chance that the US central bank will raise borrowing costs in December amid inflation risks stemming from rising energy prices. In fact, crude oil prices rallied to a nearly one-month high on Friday amid escalating Middle East tensions. Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Sunday that an oil tanker caught fire and exploded after striking a naval mine in the Strait of Hormuz.
Furthermore, a secretary of Iran’s Supreme National Security Council, Mohsen Rezaei, warned that Tehran has prepared a new retaliation plan for any renewed US-Israeli attack. This keeps the geopolitical risk premium in play, lending some support to the safe-haven buck and capping the upside for the GBP/USD pair. That said, firming expectations of a 25 basis points (bps) Bank of England (BoE) rate hike in November should act as a tailwind for the British Pound (GBP).
GBP/USD daily chart
Technical Analysis
The GBP/USD holds below the 100-day Simple Moving Average (SMA) at 1.3390 and the 50.0% Fibonacci retracement at 1.3406, which keeps the broader tone bearish despite the recent bounce. Immediate topside pressure is reinforced by the nearby 38.2% Fibo. retracement at 1.3343, suggesting that rallies are likely to struggle while spot prices remain capped beneath this dense resistance band.
On the downside, first support emerges at the 23.6% retracement at 1.3265, with a deeper floor at 1.3138, where the Fibonacci cycle low comes in.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
On Monday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7208 compared to Friday's fix of 6.7220 and 6.6897 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.
Japanese Prime Minister Sanae Takaichi said on Monday that no preset idea on whether government will compile extra budget. Takaichi added that the government plans to maintain issuance of Japanese Government Bond (JGB) at appropriate level.
Key quotes
No preset idea on whether government will compile extra budget.
Plan to maintain issuance of JGB at appropriate level.
Building robust economy can boost market confidence in yen.
Market reaction
At the time of writing, the USD/JPY pair is down 0.07% on the day at 157.90.
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.
- WTI fell as US waive sanctions on Russia to boost global oil supply.
- Escalating clashes and tanker attacks near the Strait of Hormuz keep supply risks high.
- Ukrainian drone strikes on Russian oil infrastructure in St. Petersburg add further market uncertainty.
West Texas Intermediate (WTI) oil price declines after seven days of gains, trading around 97.40 per barrel during Asian hours on Monday. Crude oil prices slipped following US President Donald Trump’s decision to waive key sanctions and tariffs on Russia, a move expected to boost Russian fuel exports. The executive order signed on Friday paused restrictions under the Graham Act, a bill Trump had signed just last month under pressure from lawmakers seeking to punish Moscow over its war in Ukraine. Secretary of State Marco Rubio noted that the president will take up to 60 days to evaluate the economic impact of this waiver.
Turkey is set to absorb some of the diesel Russia releases into global markets under its agreement with the US. Turkish Energy Minister Alparslan Bayraktar highlighted the deal as crucial for national energy security, noting that while Ankara currently relies heavily on Russia, Iran, and Azerbaijan, it continues to seek diversification through new partnerships with the US and other nations.
Despite the initial price decline, crude markets could soon recover as escalating conflicts in the Middle East and Eastern Europe sustain severe supply risks. In the Middle East, hostilities between Saudi Arabia and Iran-backed Houthi rebels remain intense, highlighted by a recent Saudi helicopter crash near the Yemen border and Houthi strikes targeting Yanbu, a major oil export hub. Furthermore, three tankers were damaged in the Strait of Hormuz over the weekend while Iran’s IRGC Navy reaffirmed that the vital transit route remains closed to unauthorized traffic.
Meanwhile, in Eastern Europe, Ukrainian forces launched one of the war's largest aerial assaults, deploying over 1,000 drones against targets in Russia. The attacks sparked major fires at an oil export terminal and a storage depot in St. Petersburg on Sunday, further compounding global supply uncertainty.
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.
Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that underlying inflation near the 2% target. Ueda further stated that if bank raises short-term policy rate, long-term interest rates likely to rise steadily with policy.
Key quotes
Underlying inflation near 2% target.
Anchoring core inflation near 2% grows more crucial.
Japan experiencing positive loop of increasing wages, recovering prices.
Middle East conflict is driving up energy and other supply-driven inflation pressures.
Robust global al demand driving up domestic capex, exports and various goods prices as demand-led inflation.
Japan's steady economic recovery and tight labor market also fuel inflation.
No shift in central bank's fundamental bond taper approach.
It is inappropriate to preannounce timing of emergency bond market measures.
Bank will review market conditions including speed of long-term rate rise and signs of market instability to decide on intervention.
If bank raises short-term policy rate, long-term interest rates likely to rise steadily with policy.
Financial conditions stay accommodative.
If policy rate isn't adjusted properly, market concerns about inflation risk could raise long-term rates.
By implementing monetary policy properly to reach 2% inflation target, BoJ can help stabilize JGB market.
Fiscal spending supports demand, helps raise prices and wages.
Fiscal spending that boosts Japan’s supply capacity could help tame inflation over time.
Market reaction
At the time of writing, the USD/JPY pair is down 0.13% on the day at 157.80.
Ueda leans mildly hawkish as BoJ ties rate path to inflation and JGB stability
Ueda’s 7/10 FXS Speechtracker score is slightly below the 7.4/10 historic average, but the emphasis on “underlying inflation near 2%” and a “positive loop” of wages and prices marks a mildly hawkish tilt versus Japan’s past disinflation narrative. The focus on anchoring core inflation at 2%, robust global demand lifting exports and capex, and a tight labor market fueling inflation all support a gradual shift away from ultra-emergency settings, which is modestly supportive for the Yen.
At the same time, Ueda stresses no change in the fundamental bond taper approach and refuses to preannounce emergency bond measures, signaling caution and a desire to avoid destabilizing the JGB market. The message that properly calibrated rate hikes would allow long-term yields to rise “steadily” while keeping financial conditions accommodative suggests a controlled normalization path, limiting upside for the Yen in the near term but reinforcing a slow, hawkish-leaning bias over the medium term.
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.
- AUD/USD gains momentum to around 0.6970 in Monday’s early Asian session.
- Fed’s Warsh gives no hint on October policy decision.
- RBA’s Kent says neutral rate is rising, questions if policy is restrictive enough.
The AUD/USD pair gathers strength to near 0.6970 during the early Asian session on Monday. Fading expectations for a Federal Reserve (Fed) rate hike weigh on the US Dollar (USD) against the Australian Dollar (AUD).
Remarks from Fed officials signaling no urgency to tighten policy further helped stabilize Treasury yields and undermine the Greenback. Fed Chairman Kevin Warsh spoke at the International Monetary Fund (IMF) event on Friday, saying that he does not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or hold short-term rates steady at its upcoming October 27-28 meeting.
According to the CME FedWatch Tool, markets are now pricing in nearly 83.9% odds that the US central bank will leave rates unchanged later this month, up from 49% a month earlier.
Early Monday, Reserve Bank of Australia (RBA) Assistant Governor Chris Kent stated that there is reasonable evidence that neutral rates are rising in Australia and abroad. Kent is confident policy is somewhat restrictive but questioned whether it is restrictive enough.
Traders await the release of the Chinese economic data, including Gross Domestic Product (GDP), Industrial Production and Retail Sales later on Monday. If the reports show stronger-than-expected outcome, this could boost the China-proxy Aussie as China is a major trading partner of Australia.
Aussie downside bias builds as AUD/USD breaks recent range
Strategists at UOB Group note that the recent slide in AUD/USD has shifted the technical tone more negatively over the 1–3 week horizon. They recall that as of last Wednesday, with the pair trading near 0.6980, they had expected AUD “is likely to trade between 0.6935 and 0.7020.” However, that range has since given way: “Two days ago, AUD rose to 0.7015 and then fell. Yesterday, AUD fell further and broke below 0.6935 with a low of 0.6895.”
UOB highlights that “while downward momentum is increasing, it is not strong for now.” Even so, “the bias for AUD is on the downside, but any decline may not reach the June low of 0.6865.” On the topside, the bank flags that “a breach of 0.6980 would suggest that AUD is more likely to range-trade rather than declining further.”
Warsh flags investment surge and AI demand risks while avoiding policy pre-commitment
Fed Chair Warsh delivered a moderately constructive but cautious message, with a 5.6/10 FXS Speechtracker score undershooting the 6.1/10 historical average and signaling slightly softer conviction relative to the established baseline. The admission of being “over-scarred” by the Global Financial Crisis underscores a persistent risk-averse bias even as Warsh highlights a structural growth and investment surge driven by “good policies,” while stressing that upcoming October and December meetings will be the true “crystallizing moment” for decisions on output, employment, and inflation. Warsh’s focus on AI as a near-term demand catalyst with uncertain employment effects, plus the refusal to pre-judge meetings, keeps policy optionality wide open and tempers any immediate hawkish read-through for the Dollar.
The FXS Fed Sentiment Index was unchanged on the speech, with a 0.00-point move leaving the index at 127.51, firmly in hawkish territory despite the slightly softer FXS Speechtracker score. The static but elevated FXS Fed Sentiment Index level suggests markets still price a broadly hawkish Fed reaction function, even as Warsh’s tone leans more data-dependent and risk-aware at the margin.
Technical Analysis: AUD/USD retains a negative tone below the 100-day SMA
In the daily chart, AUD/USD holds a bearish near-term bias as spot remains under the 100-day Simple Moving Average (SMA) and below the 20-day Bollinger middle band, now immediate resistance. Price is sliding along the lower half of the Bollinger envelope, while the 14-day Relative Strength Index near 44 hints at lingering downside pressure rather than oversold capitulation.
On the topside, initial resistance is located at the Bollinger middle band around 0.6982, followed by the 100-day SMA at 0.7035, with the Bollinger upper band near 0.7070 capping any stronger recovery attempts. On the downside, the next notable support is the Bollinger lower band, coming in close to 0.6896, where sellers could hesitate if the decline extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Sunday that an oil tanker caught fire and exploded after striking a naval mine in the southern part of the Strait of Hormuz, Times of Israel news agency reported.
Meanwhile, Saudi Arabia’s civil defence agency stated that its national early warning platform issued a “potential danger” alert for Abha City. Shortly after, the agency announced that the danger had passed and advised: “For your safety, continue following civil defence instructions and avoid gathering and filming”.
The Houthis spokesperson, Yahya Saree, said that Saudi warplanes carried out 110 air strikes and missile attacks over the past 24 hours. Saree added in a statement the bombardment targeted sites in the capital Sanaa and the governorates of Hodeidah, Taiz, Amran, Hajjah, Saada, al-Jawf, al-Dhale, and Marib.
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.
US President Donald Trump said he cut a diesel export deal with Russia and blocked numerous sanctions because he doesn’t want to drive Vladimir Putin away from peace talks with Ukraine, Bloomberg reported on Sunday.
Meanwhile, Trump accused Ukrainian President Volodymyr Zelenskyy of prolonging the Russia-Ukraine war, now in its fifth year, because of the military aid he has gotten from European allies. Zelensky said that it was unfortunate the US has decided to "completely disregard" the sanctions.
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.
Reserve Bank of Australia (RBA) Assistant Governor Chris Kent said on Monday that reasonable indication neutral rates are increasing domestically and globally, adding that it’s difficult to pinpoint neutral rate amid high uncertainty.
Key quotes
Reasonable indication neutral rates are increasing domestically and globally.
Difficult to pinpoint neutral rate amid high uncertainty.
Tax adjustments on housing move monetary policy in a favorable direction.
Confident policy is somewhat restrictive, question is whether it is restrictive enough.
Household demand softening, but business credit remains strong.
Tax adjustments on housing move monetary policy in a favorable direction.
A bit cautious about monthly job figures, but labor market loosens.
Market reaction after labour data was reasonable.
Market reaction
At press time, the AUD/USD pair trades 0.28% higher at around 0.6965.
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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