Forex News
- GBP/JPY comes under pressure as the Sterling weakened following UK Prime Minister Keir Starmer's resignation.
- UK political uncertainty weighs on the Pound with markets watching the upcoming Labor leadership nominations starting July 9.
- Weak UK PMI data added downside pressure with the Composite PMI remaining in contraction at 49.4 and the Services PMI falling to 48.7.
The GBP/JPY cross came under pressure near the 213.00 level on Wednesday as the British Pound weakened after United Kingdom (UK) Prime Minister Keir Starmer announced he would stand down as Labour Party leader and Prime Minister. The political shock added uncertainty to the UK outlook, with nominations for Labour’s leadership expected to begin on July 9.
Sterling lost ground as investors assessed the risk of a leadership transition at a time when the UK economy is already showing signs of weakness. Markets are likely to watch whether the next Labour leader signals any major shift in fiscal policy, borrowing plans, or economic priorities as political uncertainty could keep the Pound vulnerable in the near term.
The S&P Global UK Composite Purchasing Managers Index (PMI) slipped to 49.4 in June from 49.7 in May, remaining below the 50.0 threshold for a second straight month. The Services PMI fell to 48.7 from 49.3, marking the weakest reading in 41 months, while the Flash UK Manufacturing Output Index improved to 53.6 from 52.2.
Short-term technical analysis:
On the 4-hour chart, GBP/JPY trades at 213.02, maintaining a bearish near-term tone as price holds beneath both the 20-period Simple Moving Average (SMA) at 213.45 and the 100-period SMA at 214.31. This configuration suggests rallies are likely to be capped while below these averages, with the Relative Strength Index (RSI) lingering around 41, hinting at subdued bullish momentum rather than outright oversold conditions.
On the topside, immediate resistance appears at 213.25, followed by a confluence zone around 213.45 where a horizontal barrier aligns with the 20-period SMA, while the 100-period SMA at 214.31 marks a stronger hurdle if recovery attempts extend higher. On the downside, initial support is seen at 212.77, ahead of the lower horizontal floor at 212.54, where a break would reinforce the broader bearish bias and expose deeper declines.
(The technical analysis of this story was written with the help of an AI tool.)
BNY’s Geoff Yu highlights that IMM volume is concentrated in commodity currencies, with AUD, NZD and NOK leading recent adjustments. NOK and CAD are seeing outflows linked to Oil sensitivity and modest Norges Bank tightening expectations, while NZD and AUD have underperformed since May. BNY sees scope for non‑energy commodity currencies to outperform, but prefers relative-value trades while Dollar strength endures.
Commodity currencies lead IMM positioning
"Measured by combined net flow scores and volumes, the largest adjustments occurred in commodity-linked currencies. AUD, NZD and NOK were the most actively traded currencies, while NOK, CAD, NZD and AUD all ranked among the top five G10 currencies by flow magnitude. Combined with recent spot performance, the flows point to clear valuation themes emerging around the outlook for energy and commodities."
"Outflows from NOK and CAD are unsurprising. Both currencies are highly exposed to oil prices, and the prospect of a durable ceasefire argues for some derating. NOK is particularly vulnerable as the most overheld G10currency, while expectations for further Norges Bank tightening remain modest."
"By contrast, NZD and AUD have underperformed since early May. Rising input costs have weakened the case for improved terms of trade, while soft Chinese growth has provided little support. Changes in U.S. rate expectations relative to the antipodeans have historically had a large impact on valuations, but IMM positioning suggests much of that adjustment has already occurred."
"We are sympathetic to the view that non-energy commodity currencies could outperform in the near term, but current risk-reward favors relative-value positions while USD dominance persists."
"For example, EUR has moved back into overheld territory on an aggregate basis, as strong net inflows were amplified by a high-volume session. Dollar net flows were broadly neutral, suggesting the currency was used equally as a funding and carry vehicle, which is consistent with current market conditions."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver falls 4.62% on Wednesday to $58.75, marking its lowest level of the year.
- Markets are increasing bets on a Fed rate hike later this year, supporting the US Dollar.
- Investors remain cautious ahead of the US PCE Price Index, a key gauge for monetary policy expectations.
Silver (XAG/USD) extends its correction on Wednesday and trades around $58.75 at the time of writing, down 4.62% on the day after hitting a fresh low not seen since December 2025. The white metal remains under significant pressure as expectations of a more restrictive monetary policy stance in the United States (US) continue to underpin the US Dollar (USD).
The latest decline in Silver comes amid an aggressive repricing of interest rate expectations. The Federal Reserve (Fed) delivered a distinctly hawkish message at its latest meeting, fueling speculation that borrowing costs could rise further in the coming months. According to the CME FedWatch tool, investors are now assigning a high chance to a rate hike before the end of the year.
This backdrop continues to support the US Dollar, whose strength is weighing on dollar-denominated precious metals. A stronger Greenback makes Silver more expensive for international buyers, while higher interest rates reduce the appeal of non-yielding assets such as Silver.
US Treasury yields have also moved higher as investors adjust their expectations in response to persistent inflation risks. Concerns about elevated energy costs and the resilience of the US economy have contributed to scaling back hopes for a near-term easing cycle.
Market attention is now turning to the Personal Consumption Expenditures (PCE) Price Index due on Thursday. Stronger-than-expected inflation data could reinforce expectations of further monetary tightening and add to the downside pressure on Silver. Conversely, softer inflation figures may provide some relief for the precious metal and help stabilize prices following the recent sell-off.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
European Central Bank (ECB) Executive Board member Isabel Schnabel said on Wednesday that from the present perspective, further interest rate hikes are needed to bring inflation back to the central bank’s 2% target.
Key takeaways:
From today’s view, more hiking is needed to get to 2%.
The ceasefire is not a signal for the ECB to ease vigilance.
ECB rates are not restrictive yet.
War, inflation, and growth will set the timing and size of any future hikes.
The economy is showing relative resilience.”
Schnabel flags more hikes as Euro resilience keeps ECB on front foot
The FXS Speech Tracker score of 8.6 versus a historic 7.1 marks a clear hawkish shift in Schnabel’s tone, underscored by the view that “more hiking is needed” and that current ECB rates are “not restrictive yet.” The insistence that a ceasefire would not reduce vigilance, combined with an emphasis on persistent inflation risks, supports expectations for additional tightening and is Euro-supportive on balance.
By stressing that war, inflation, and growth will shape the timing and size of any hikes, Schnabel keeps the door open to a longer and potentially higher-rate path than previously priced. The reference to the economy’s “relative resilience” further justifies scope for more rate increases, reinforcing a hawkish bias that can underpin Euro dips and limit downside in the near term.
- USD/CAD climbs to its highest level since April 2025 as a stronger US Dollar and weaker Oil prices weigh on the Canadian Dollar.
- Hawkish Federal Reserve expectations contrast with the Bank of Canada's steady policy stance.
- Technically, USD/CAD remains firmly bullish, though an overbought RSI suggests upside may be becoming overstretched.
USD/CAD climbs to fresh highs since April 2025 on Wednesday as the Canadian Dollar (CAD) faces a double blow from a stronger US Dollar (USD) and weaker Oil prices.
At the time of writing, the pair trades around 1.4235. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 101.64, a level last seen in May 2025.
The US Dollar is drawing support from rising expectations that the Federal Reserve (Fed) could raise interest rates later this year after Chair Kevin Warsh struck a hawkish tone at last week's monetary policy meeting. Warsh reiterated the central bank's commitment to restoring price stability and bringing inflation back to its 2% target.
The hawkish Fed outlook diverges from the Bank of Canada's (BoC) steady policy stance, suggesting USD/CAD is likely to remain supported in the near term.
At the same time, Oil prices have retraced almost all of their US-Iran war-driven gains amid the gradual reopening of the Strait of Hormuz following last week's 60-day memorandum of understanding. West Texas Intermediate (WTI) trades around $70.35, its lowest level since early March.
The decline in Oil prices is adding pressure on the commodity-linked Loonie, given Canada's status as a major crude exporter.
Technical Analysis:
In the daily chart, USD/CAD is extending a strong bullish phase while holding well above the 50-, 100- and 200-day Simple Moving Averages (SMAs) clustered between 1.3769 and 1.3830.
The Moving Average Convergence Divergence (MACD) histogram remains positive and elevated, hinting that upside momentum is still in play, but the Relative Strength Index (RSI) at 88 signals extreme overbought conditions, suggesting that the advance could be vulnerable to a corrective pullback even as the broader trend stays constructive.
On the downside, initial support emerges at 1.4110, followed by the 1.4000 horizontal level before the longer-term SMA band around 1.3830-1.3770 comes into view.
On the topside, immediate resistance is located at 1.4300, where a clear break higher would open the door to further gains, while failure to overcome this barrier would increase the risk of a consolidation or deeper retracement toward the cited supports.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- DJIA closed near record highs on Wednesday, up roughly 1% after a sharp afternoon rally.
- Cheaper Crude Oil and falling Treasury yields powered the late-day surge.
- Thursday's Core PCE release is the week's main catalyst and the biggest threat to the move.
The Dow Jones Industrial Average (DJIA) pushed into fresh record territory again on Wednesday, but the way it got there is worth a second look. The index added roughly 1% and closed near 52,200, just below the all-time high around 52,300. None of that came from earnings or growth surprises; it came from a falling Crude Oil price and a bond market that decided yields had gone far enough.
Crude Oil and softer yields did the lifting
The afternoon move tracked Crude Oil almost tick for tick. Both major benchmarks shed about 4% on the day, as the geopolitical risk premium kept draining out of the energy complex on the back of the Versailles peace framework. Implementation talks have stalled and the fighting in Lebanon has not stopped, so this is a fragile sort of calm; markets are treating it as durable anyway.
A cheaper barrel feeds straight into the disinflation story, which in turn pulled Treasury yields lower, with the 10-year note slipping below 4.5%. That combination flatters the Dow specifically. Its heavy weighting in industrials, financials, and dividend payers responds far more to the cost of money than the technology-led indices do, so a softer yield backdrop is close to tailor-made for this index.
The Dow's lack of chip exposure is suddenly a feature
It also helped that the Dow sat out the worst of this week's technology wobble. The semiconductor selloff that hit the Nasdaq on Tuesday barely touched an index with little chip exposure, and Wednesday's rotation out of stretched tech found a home in the Dow's value and cyclical components.
That edge is about to narrow as Alphabet replaces Verizon in the index, a swap that hands the Dow a far larger technology footprint. For now the change reads as a tailwind, since Alphabet rallied on the news.
Momentum is loud but stretched
The intraday chart is a textbook reversal: the index bottomed near 51,550 in early afternoon trade with the five-minute Stochastic Relative Strength Index (Stoch RSI) pinned in the low single digits, about as oversold as the reading gets, before ripping roughly 700 points into the close. That same reading now sits near 88, deep in overbought territory.
On the daily chart the picture is healthier. The daily Stoch RSI is only around 55 and curling up, which leaves room before the trend looks exhausted, and price sits well above the 50-day Exponential Moving Average (EMA) near 50,300. The trend structure is firmly higher; it is the speed of the latest leg, not the direction, that invites caution.
Core PCE is the only number that matters
All of this runs straight into Thursday's main event at 12:30 GMT, when the Core Personal Consumption Expenditures (PCE) Price Index lands. Consensus looks for 0.3% on the month and 3.4% on the year, both a tenth higher than the prior readings, which is the awkward part. The market spent Wednesday celebrating disinflation through a cheaper barrel while the Federal Reserve's (Fed) preferred inflation gauge is expected to show core prices speeding up, not slowing down.
The headline PCE figures point the same way, with the annual rate seen ticking up toward 4%, and the data lands inside a crowded 12:30 GMT slot alongside final first-quarter Gross Domestic Product (GDP), durable goods, and jobless claims, with Fed officials due to speak that evening. With the Fed having held at 3.75% and turned more hawkish in June, a hot Core PCE would hand the doves nothing and could puncture a rally built on the opposite assumption.
Resistance: The immediate ceiling is the record zone, with Wednesday's high near 52,250 and the all-time high around 52,300 sitting just overhead. A daily close above there opens blue sky, where the next round-number magnet is 52,500.
Levels to watch
Support: First support sits at 52,000, the level the afternoon breakout cleared and the most likely spot for dip buyers to step in. Below that, Wednesday's low near 51,550 marks the launchpad for the entire move; losing it would signal the rally has genuinely stalled rather than paused.
Bias: Bullish. The trend, the momentum, and the macro tailwind all point the same way, and pullbacks toward 52,000 read as opportunities rather than reversals. The one thing that changes the call is Thursday's Core PCE: a hot print paired with a close back under 51,550 would be the signal that the borrowed tailwinds have been repossessed.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
MUFG’s Lloyd Chan notes that MYR has underperformed since the June FOMC as higher US yields and wider US-Malaysia rate differentials weigh on the currency. While the bank’s medium-term constructive view on the ringgit remains intact, it now holds a near-term bearish bias as domestic fundamentals stay solid but US rate dynamics dominate.
Ringgit pressured by US rate dynamics
"For the ringgit, our previous constructive view—anchored on narrowing rate differentials with the US and resilient manufacturing and electronics exports—remains intact over the medium term."
"The recent weakness instead reflects a shift toward US rate dynamics rather than any deterioration in domestic fundamentals."
"Against this backdrop, contained inflation and sustained fuel subsidies reduce the urgency for Bank Negara Malaysia to tighten policy, leaving MYR increasingly exposed as US-Malaysia rate differentials widen."
"This underpins a near-term bearish bias on the ringgit, although we expect macro fundamentals to reassert themselves once US rate pressures ease."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CHF extends its rally for a sixth consecutive day as Fed rate-hike expectations underpin the US Dollar.
- Traders await the US PCE report due on Thursday for fresh clues on the Fed's policy path.
- Uncertainty over a final US-Iran agreement continues to provide support for the safe-haven Greenback.
The Swiss Franc (CHF) slides to its weakest level in more than ten months on Wednesday as hawkish Federal Reserve (Fed) outlook boosts the US Dollar (USD). At the time of writing, USD/CHF trades around 0.8126, extending its gains for a sixth consecutive day.
The US Dollar continues to edge higher, climbing to its highest level since May 2025. Renewed demand for the Greenback comes after the Federal Reserve delivered a hawkish hold at last week's policy meeting, where a majority of policymakers signaled that a rate hike later this year may be needed to contain inflationary pressure driven by higher energy costs.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 101.36, near its highest level in over a year, since May 2025.
US Consumer Price Index (CPI) accelerated to 4.2% in May, more than double the Fed's 2% target. Attention now turns to the Personal Consumption Expenditures (PCE) Price Index report due on Thursday. Economists expect the core PCE Price Index, the Fed's preferred inflation gauge, to rise to 3.4% YoY in May from 3.3% in April.
A stronger-than-expected reading could reinforce expectations that the Fed could raise interest rates in September, with markets currently pricing in roughly a 70% probability of a rate hike, according to the CME FedWatch tool.
Meanwhile, attention also remains on the ongoing US-Iran talks. US President Donald Trump said Iran had agreed to nuclear inspections, but Tehran denied that any such commitments were made during the latest round of talks.
Until a final deal is reached, geopolitical risks are likely to remain in play, lending additional support to the safe-haven US Dollar.
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