Forex News

• Gold price jumps to near $4,320 as rally in oil prices cools down.
• The Fed hiked interest rates on Wednesday and a majority signlaed at least one more this year.
• Deutsche Bank reports that markets price in another 75bps of Fed hikes by next June.

Gold price (USD) is up 1.15% to near $4,320 during the European trading session on Thursday. The precious metal gains as rally in oil prices cool down after Saudi Arabia mulls alternatives to ship energy products.

According to a Times of India (ToI) report, Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port.

Gold price has been carrying a negative relationship with oil prices as higher energy prices de-anchor inflation expectations, a scenario that prompts fears of interest rate hikes by global central banks.

Meanwhile, the upside in the Gold price appears to be limited as market experts see more interest rate hikes by the Federal Reserve (Fed) in the near term.

On Wednesday, the Fed hiked interest rates by 25 basis points (bps) to 3.75%-4.00%, as expected, and its dot plot signaled that 16 of 18 policymakers see at least one more interest rate hike this year. Fed Chair Kevin Warsh didn’t participate in the dot plot projections.

Money markets fully factor in further Fed tightening

According to strategists at Deutsche Bank, the Fed’s latest move has triggered a notable shift along the front end of the US curve, with “money markets moved to price in more tightening, with another 75bps of Fed hikes now being fully priced by next June (+10.8bps on the day), and with a hike around 50% priced for the upcoming October meeting.”

Gold Technical Analysis

In the daily chart, XAU/USD trades at $4,314.02, holding a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at $4,364.99. The price action suggests gold is capped by this dynamic resistance, while the Relative Strength Index (RSI) at 46.39 hovers just below neutral, hinting at waning upside momentum rather than outright oversold conditions.

On the topside, immediate resistance is located at the 20-day EMA near $4,365, followed by the September 8 high near $4,443. On the downside, the Gold price could fall to the psychological level of $4,000 if it falls below the Wednesday's low at $4,235.40.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Mark Carney says Canada does not pursue relationships based on short-term interests or zero-sum deals.
• The Canadian Prime Minister links sovereignty to secure access to strategic technologies and resources.
• Artificial intelligence, semiconductors, critical minerals and clean energy feature among the sectors identified as essential.

Canadian Prime Minister Mark Carney stressed on Thursday that Canada intends to remain a reliable international partner while strengthening its economic and technological sovereignty.

Key takeaways

We are not fair-weather allies, we do not pursue zero-sum deals.
Sovereignty requires secure access to AI, semiconductors, critical minerals, payment systems, clean energy, vaccines, space communications.

Market reaction

The Canadian Dollar (CAD) shows little reaction to Carney’s remarks. USD/CAD remains in consolidation below the 1.4000 psychological level at the time of writing on Thursday, trading broadly unchanged on the day.

• EUR/JPY loses ground on Thursday after three consecutive days of gains.
• Markets expect the Bank of Japan to raise interest rates by 25 basis points on Friday.
• Annual inflation in the Eurozone eases slightly to 3.2%, while core inflation meets expectations.

EUR/JPY falls 0.25% on Thursday, trading around 178.70 at the time of writing and snapping a three-day winning streak. The strengthening Japanese Yen (JPY) weighs on the cross as investors anticipate another interest rate hike from the Bank of Japan (BoJ) on Friday.

Expectations of monetary tightening in Japan remain in focus. Markets expect the BoJ to raise its policy rate by 25 basis points at Friday's meeting, a prospect that supports the Japanese Yen against the Euro (EUR).

Japanese officials, however, maintain a cautious tone ahead of the monetary policy decision. Japan's Economy Minister Minoru Kiuchi said on Thursday that the government aims to balance economic strength with fiscal sustainability while declining to comment directly on the interest rate outlook.

Meanwhile, Japan's Finance Minister Satsuki Katayama said authorities will review budget requests and manage debt issuance to maintain market confidence. Katayama added that she expects the central bank to conduct monetary policy appropriately to achieve its 2% inflation target in a stable manner.

On the European side, the latest inflation data provide little support to the Euro. The Harmonized Index of Consumer Prices (HICP) rose 0.4% MoM, matching expectations and the previous increase. On an annual basis, inflation eased slightly to 3.2%, below the 3.3% expected.

Core HICP increased 0.2% MoM, unchanged from the previous reading, while the annual rate came in at 2.4%, in line with expectations. The figures point to relatively stable underlying price pressures, leaving the monetary policy divergence between Europe and Japan at the center of the near-term outlook for EUR/JPY.

• EUR/USD consolidates losses at the 1.1475 level, more than 1% down so far this week. 
• The Federal Reserve hiked rates on Wednesday and left the door open for further hikes in coming months.
• Eurozone inflation has been revised slightly lower, although it remains above the ECB's target.

The Euro (EUR) consolidates losses at one-and-a-half-month lows on Thursday, with the US Dollar (USD) still buoyed by the hawkish message sent by the Federal Reserve (Fed) after Wednesday’s monetary policy meeting. The EUR/USD pair is trading practically flat at the 1.1475 level, after depreciating more than 1% so far this week.

The Fed hiked rates by a quarter-point for the first time in three years on Wednesday, meeting market expectations, but the hawkish tone shown by Chairman Kevin Warsh, whose distaste for forward guidance is notorious, came as an absolute surprise.

Warsh affirmed during the press release that “inflation remains elevated” and that the “economy appears to be strengthening,” which markets interpreted as a clear sign that further rate hikes are in the pipeline. These comments restored confidence in the central bank’s independence while boosting hopes of further rate hikes later this year, which sent the US Dollar rallying against its main peers.

Eurostat revised down August's HICP

In the Eurozone, the final Harmonised Index of Consumer Prices (HICP) released on Thursday confirmed that price pressures accelerated to a 0.4% pace in August from 0.2% in July, while the year-over-year (Y-o-Y) record was revised down to a 3.2% growth from the 3.3% previous estimate.

The Core HICP has been confirmed at 0.2% growth and a 2.4% Y-o-Y rise, which maintains the pressure on the European Central Bank (ECB) to keep tightening interest rates in order to tame consumer inflation.

All things considered, analysts at ING see the risks skewed to the downside for the Euro, amid a hawkish Fed and higher Oil prices. They report that their model “now shows a short-term fair value at 1.150, 1% lower than a week ago,” and caution that “further moves in front-end rates, oil or global equities can quickly push that fair value lower.” On the Euro side, ING warns that “there is little (especially eurozone-born) – outside of a correction in energy prices – that is likely to turn the tide for EURUSD at this stage.”

MUFG’s Derek Halpenny notes the US Dollar is holding most of its post-FOMC gains after a 25bps hike and hawkish guidance from Fed Chair Warsh. The Fed’s projections imply only gradual disinflation and a higher long-run rate, but market pricing had already anticipated more tightening. Halpenny expects one further Fed hike, with Dollar upside constrained as other G10 central banks also raise rates.

Fed hike and guidance back Dollar

"The US dollar has held on to most of last night’s gains following the FOMC decision to hike the fed funds rate by 25bps and provide communications that certainly suggest the scope for further action ahead. The headline grabbing comment from Fed Chair Warsh that the hike had “removed a dose of accommodation” was the clearest signal that a certain level of accommodation still exists and therefore more action will be required. That was also underlined by the fact that the YoY core CPI rate only hits the 2% target in 2029."

"In the same light, we possibly shouldn’t read too much into the median dot levels and those levels could and very likely will change as developments unfold moving forward. The 4.125% median dot for 2026 and 2027 points to another hike and then no cuts until 2028 when the median dot drops by just 25bps and then by another 25bps in 2029 to 3.625%. That’s a very cautious removal of the two hikes pencilled in for this year that certainly implies a faster reduction in core CPI will require more than just one additional hike."

"But while Warsh was hawkish and emphasised again his focus on achieving price stability, the bar was high going into the meeting for a large sell-off in rates and/or advance for the US dollar. Clearly UST bond yields had moved in advance of the decision with larger moves higher in yields on 10th September than the reaction yesterday. The OIS curve ahead of the meeting was priced for more than the two hikes signalled by the 2026 median dot and that should help contain the rates and FX reaction for now with the focus back on the data to determine whether those pushing for more than one further hike will start to have greater say."

"The US dollar gains ahead should also be curtailed by the fact that other central banks are set to turn more active in hiking rates as well. We have altered our view for the ECB (we now assume two further hikes to 3.00%) and the BoE (we have added two hikes to our core view) while the BoJ is set to speed up the pace of tightening (as we expected). Every G10 central bank, bar the SNB, is priced to hike by year-end."

"Front-end rate spreads (2-yr swap) do not point to further dollar buying from these levels, except for USD/JPY."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Societe Generale sees scope for the British Pound (GBP) to outperform its G10 peers outside the US Dollar (USD), as accelerating UK growth and inflation strengthen the case for a more hawkish Bank of England (BoE). The bank also sees potential support from a slower pace of quantitative tightening, while its economists expect Bank Rate to remain unchanged at 3.75%; for EUR/GBP, support is seen at 0.8530 and resistance around 0.8610.

BoE hawks and QT stance support Pound

"For sterling, we identify three reasons why the currency could outperform its G10 peers outside the dollar today. Firstly, GDP growth, CPI and PPI inflation are accelerating again. This strengthens the case of the minority of hawks on the MPC (Pill, Greene, Mann) who are backing an immediate increase in bank rate, led by chief economist Pill."

"Those who advocate a hike could be in the majority come November (94% priced in), reasoning that policy must be more restrictive to bring inflation down to target. The statement could also turn more hawkish, signalling a greater likelihood of tightening on Guy Fawkes Night when the growth and inflation forecasts may be revised in function of the upward shift in energy prices and the implied rate curve since August."

"Finally, if the bank decides to pause or stop Gilt sales (QT), this will cause long end yields to flatten and implicitly ease the burden on fiscal policy (headroom), and on monetary policy by reversing the increase in mortgage rates. The correlation between the pound and yields has diminished because if the global fixed income selloff but respite today could rub off positively on sterling. Our house view is for active gilt sales to stay at £20bn between October 2026 and September 2027, implying a £50bn reduction in the APF versus £70bn previously."

"For EUR/GBP, key support is at 0.8530 while graphical levels at 0.8610 may act as a hurdle. Our economists are aligned with consensus for a status quo of bank rate at 3.75%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• Euro stays firm after Eurozone August HICP matches expectations at 0.4% MoM and 2.4% core YoY.
• Canadian Dollar weakens alongside falling crude oil prices as Middle East supply disruption fears ease.
• Saudi Arabia targets full restoration of its damaged East-West pipeline within six weeks.

EUR/CAD appreciates after posting modest losses in the previous day, trading around 1.6050 during the European hours on Thursday. The currency cross holds its ground, driven by a stronger Euro (EUR) following the release of the Eurozone Harmonized Index of Consumer Prices (HICP) data for August.

As expected, the monthly HICP rose 0.4% MoM, matching the previous period's increase. Annual inflation eased slightly to 3.2% compared to the expected 3.3% reading. Meanwhile, core monthly HICP held steady at a 0.2% gain, and the annual core reading met expectations at 2.4%, demonstrating consistent underlying price trends across the region.

Simultaneously, the EUR/CAD cross is gaining ground due to weakness in the commodity-linked Canadian Dollar (CAD), which has been dragged down by falling crude oil prices. Oil markets cooled following reports that Saudi Arabia expects to restore about half the capacity of its damaged East-West pipeline within days, with full operations targeted within six weeks. The pipeline serves as a critical bypass route around the vulnerable Strait of Hormuz following recent drone strikes on the infrastructure.

BoC seen edging toward late-year normalization as inflation concerns build

Strategists at Scotiabank highlight that the BoC’s stance remains notably supportive, stressing that “the Bank’s policy settings remain accommodative and concern about price pressures suggests a growing risk that the process of normalization may start late this year,” in line with Scotia’s long-held rate forecast.

Silver prices (XAG/USD) rose on Thursday, according to FXStreet data. Silver trades at $63.96 per troy ounce, up 1.58% from the $62.97 it cost on Wednesday.

Silver prices have decreased by 10.02% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 67.40 on Thursday, down from 67.71 on Wednesday.

(An automation tool was used in creating this post.)

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has fallen for five straight sessions, closing at 1.1464 after a sharp 0.68% drop. Short-term, the pair is seen staying within 1.1435–1.1505 due to oversold conditions, but the 1-3 weeks view still looks for further downside toward 1.1435 with potential extension to 1.1400 unless resistance at 1.1545 is breached.

Euro slide extends with firm supports

"24-HOUR VIEW: After our expectations for EUR to decline to 1.1520 did not materialise, we highlighted the following yesterday: “Downward momentum is starting to slow, but there is still a chance for EUR to decline toward 1.1520. A breach of this level is not ruled, but based on the prevailing momentum, the major support at 1.1490 is still unlikely to come under threat.” Our call of a weaker EUR was not wrong, but we did not expect the sharp drop that sent it to a low of 1.1460. While further EUR weakness is not ruled, deeply oversold conditions suggest any decline could stay within a 1.1435/1.1505 range. In other words, EUR is unlikely to break clearly below 1.1435."

"1-3 WEEKS VIEW: Our most recent narrative was from two days ago (15 Sep, spot at 1.1550), when we highlighted that “the sharp increase in momentum suggests EUR could decline toward 1.1490.” In a sharp move yesterday, EUR plunged by 0.68% as it closed lower for the fifth straight day at 1.1464. Although EUR has fallen substantially over the past few days, downward momentum continues to build, and from here, we expect EUR to decline toward 1.1435, with potential extension to 1.1400. On the upside, a breach of 1.1545 (‘strong resistance’ was at 1.1585 yesterday) would mean that the downward momentum from late last week is easing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• The Bank of England is expected to keep its policy rate at 3.75%.
• UK inflation figures remain well above the BoE’s target.
• GBP/USD remains below the 1.3500 mark, close to its key 200-day SMA.

The Bank of England (BoE) is set to reveal its latest monetary policy decision on Thursday, coinciding with its sixth rate-setting meeting of 2026.

Market analysts expect the central bank to keep its benchmark interest rate steady at 3.75%, which should be its sixth hold in a row following December’s 25-bps rate cut.

The Monetary Policy Committee’s (MPC) decision will be followed by the release of Meeting Minutes, which will detail the internal discussions that shaped the outcome.

The central bank maintained interest rates at 3.75% in July, despite a surprisingly hawkish 6-3 vote from the MPC that indicated increased anxiety about the inflationary effect of the Iran conflict. In addition, Governor Andrew Bailey said there was no sign of second-round consequences yet, but that continued conflict and wider pricing pressures would likely require higher interest rates.

Attention remains broadly on inflation and geopolitics

At the latest Treasury Select Committee hearings on September 8, policymakers have sought to push back against the idea that a rate hike is inevitable, while acknowledging that the inflation outlook remains highly sensitive to geopolitical and energy-market developments.

That said, Governor Andrew Bailey argued the increase in market-implied rates partly reflected a risk premium linked to the possibility of further energy-price rises, rather than the BoE’s most likely policy path.

The MPC’s internal debate nevertheless remains finely balanced: Deputy Governor Dave Ramsden described domestically generated inflation pressures as “relatively benign” amid softer labour-market conditions, while Alan Taylor argued that keeping rates at restrictive levels offered insurance against external inflation risks. Megan Greene, who voted to raise the Bank rate from 3.75% to 4.00% in July, struck a more hawkish tone, warning that a prolonged oil-price shock could become embedded in inflation expectations.

How will the BoE interest rate decision impact GBP/USD?

Despite being a close call, market participants appear to lean toward another steady hand by the BoE on Thursday at 11:00 GMT.

Other than the rate decision per se, attention will also focus on the vote split among MPC members, which might be a market mover for the British Pound if it indicates an unusual outcome.

In the run-up to the meeting, GBP/USD navigates the lower end of the current multi-week range in the mid-1.3400s, confronting at the same time its critical 200-day SMA.

"Cable came under fresh downside pressure in the last few days, exclusively following US Dollar dynamics. Further weakness could see the provisional 100-day SMA around 1.3440 retested in the short-term horizon," said Pablo Piovano, Senior Analyst at FXStreet. Further south, there are no support levels of note until the late-July trough at 1.3273 (July 28).

On the upside, Piovano identified the monthly high at 1.3567 (September 9) as the first level to watch, followed by the August ceiling at 1.3675 (August 21).

“Momentum indicators seem to favour extra losses, as the Relative Strength Index (RSI) declines toward the 40 zone, while the Average Directional Index (ADX) around 21 is indicative of a fairly firm trend,” he concludes.