Forex News
- WTI price is set for a modest weekly loss following three consecutive weeks of gains.
- Crude Oil prices decline as easing fears of a potential US military strike on Iran reduce geopolitical risk premiums.
- The US seized another Venezuela-linked Oil tanker ahead of a Trump–Machado meeting in the Caribbean.
West Texas Intermediate (WTI) Oil price moves little after two days of more than 3% losses, trading around $58.80 during the Asian hours on Friday. WTI price faces challenges as geopolitical risk premiums faded following easing fears of a possible US military strike on Iran. Crude Oil prices are heading for a modest weekly decline after three straight weeks of gains.
US President Donald Trump said he had stepped back from threats of military action after receiving assurances that further killings would not occur and executions would be halted. Market sentiment was also supported by reports that Israel and other regional allies urged Washington to delay any action, amid concerns over potential retaliation.
These developments lowered fears of an imminent conflict that could disrupt Iranian Oil output or key regional shipping lanes. However, analysts cautioned that risks have not disappeared, keeping markets alert in the near term. Analysts also maintained a bearish outlook, citing expectations of ample supply this year despite earlier OPEC projections for a more balanced market.
Oil major Shell on Thursday released its 2026 Energy Security Scenarios report, outlining a bullish outlook for long-term energy demand and Oil growth, with primary energy needs projected to be significantly higher by 2050, per Reuters.
According to another report by Reuters, the United States seized another Venezuela-linked Oil tanker in the Caribbean ahead of a scheduled meeting between President Donald Trump and opposition leader María Corina Machado. This marks the sixth vessel targeted under US sanctions on Venezuelan Oil, underscoring ongoing enforcement efforts against sanctioned shipments.
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.
Here is what you need to know on Friday, January 16:
The US Dollar (USD) erases part of its earlier gains to near 99.30 heading into the European trading session, after drawing support from better-than-expected US Jobless Claims data. Traders await the release of the US December Industrial Production report for December later on Friday, along with the speech from Federal Reserve (Fed) Governor Michelle Bowman.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.05% | -0.14% | -0.04% | -0.06% | -0.32% | -0.13% | |
| EUR | 0.04% | -0.01% | -0.13% | 0.00% | -0.03% | -0.27% | -0.09% | |
| GBP | 0.05% | 0.01% | -0.08% | 0.03% | -0.01% | -0.26% | -0.07% | |
| JPY | 0.14% | 0.13% | 0.08% | 0.13% | 0.09% | -0.16% | 0.03% | |
| CAD | 0.04% | -0.01% | -0.03% | -0.13% | -0.05% | -0.30% | -0.09% | |
| AUD | 0.06% | 0.03% | 0.01% | -0.09% | 0.05% | -0.25% | -0.07% | |
| NZD | 0.32% | 0.27% | 0.26% | 0.16% | 0.30% | 0.25% | 0.19% | |
| CHF | 0.13% | 0.09% | 0.07% | -0.03% | 0.09% | 0.07% | -0.19% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
A slew of US economic data this week came in stronger than estimates, lowering the implied probabilities of imminent Federal Reserve (Fed) rate cuts. Fed funds futures have pushed back expectations for the next rate cut to June and September from January and April.
Meanwhile, US President Donald Trump said on Thursday that he had been told that killings in Iran's crackdown on protests appeared to be easing and saw no immediate plan for large-scale executions. Trump hasn’t taken any options off the table, saying that there will be “grave consequences” if killings continue.
AUD/USD strengthens above 0.6700 in Friday’s early European session. Cautious sentiment surrounding the Reserve Bank of Australia’s (RBA) policy outlook supports the Australian Dollar.
USD/JPY attracts some sellers below 158.50 amid intervention fears. Japan’s Finance Minister Satsuki Katayama on Friday reiterated her warning that all options, including direct currency intervention, are available for dealing with the recent weakness in the Japanese Yen.
EUR/USD holds positive ground above 1.1600. The European Central Bank (ECB) has kept rates on hold since ending a rate cut cycle in June and signaled last month that it was in no hurry to change policy again.
GBP/USD gains momentum to around 1.3385, bolstered by the upbeat UK Gross Domestic Product (GDP) report. The UK economy grew 0.3% MoM in November, following a 0.1% drop reported in October, the Office for National Statistics (ONS) showed on Thursday. This figure came in stronger than the expectation of a 0.1% increase.
Gold retreats from a record high to near $4,610 as Trump softens his stance on Iran, reducing bullion’s safe-haven demand. Silver slumps below $91.50 after Trump decided not to impose tariffs on imports of what are now deemed to be "critical minerals”.
WTI holds steady on the day, as easing tensions in Iran offset ongoing geopolitical conflicts between Russia and Ukraine. Reuters reported on Friday that Ukraine has ramped up attacks on Russian tankers, with at least six tankers targeted by drones and missiles in the Baltic Sea.
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.
- USD/JPY declines to near 158.35 amid verbal warnings of Japan's intervention.
- Japan’s Katayama said that all options are available to counter excessive one-way moves against Yen.
- Investors expect the Fed to leave interest rates unchanged this month.
The USD/JPY pair trades 0.18% lower to near 158.35 during the early European trading session on Friday. The pair has come under pressure as the Japanese Yen (JPY) strengthens on verbal warnings of intervention by Japan to counter one-way excessive moves.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.05% | -0.16% | -0.05% | -0.08% | -0.33% | -0.13% | |
| EUR | 0.03% | -0.02% | -0.13% | -0.02% | -0.04% | -0.29% | -0.09% | |
| GBP | 0.05% | 0.02% | -0.11% | 0.00% | -0.02% | -0.27% | -0.07% | |
| JPY | 0.16% | 0.13% | 0.11% | 0.13% | 0.08% | -0.17% | 0.03% | |
| CAD | 0.05% | 0.02% | -0.01% | -0.13% | -0.05% | -0.30% | -0.09% | |
| AUD | 0.08% | 0.04% | 0.02% | -0.08% | 0.05% | -0.25% | -0.04% | |
| NZD | 0.33% | 0.29% | 0.27% | 0.17% | 0.30% | 0.25% | 0.20% | |
| CHF | 0.13% | 0.09% | 0.07% | -0.03% | 0.09% | 0.04% | -0.20% |
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).
Earlier in the day, Japan’s Finance Minister (FM) Satsuki Katayama said that all options, including direct currency intervention, are available for dealing with the recent weakness in the JPY.
Early this week, United States (US) Treasury Secretary Scott Bessent also said that Japan needs sound formulation and communication of monetary policy, after meeting with Japanese Finance Minister Satsuki Katayama.
However, the broader outlook of the JPY remains uncertain as investors expect Japan to follow looser fiscal policy this year to stimulate economic growth.
Meanwhile, the US Dollar (USD) ticks down ahead of an extended weekend in the US, but is broadly firm as the Federal Reserve (Fed) is expected to hold interest rates steady in the policy meeting later this month.
USD/JPY technical analysis
USD/JPY corrects on Friday to near 158.00, testing the breakout region of the consolidation formed in the range between 154.40 and 157.90 in the last two months.
Price holds above the rising 20-day Exponential Moving Average (EMA) at 157.33, keeping the near-term uptrend intact. The 20-day EMA's steady upslope underscores sustained buying pressure.
The 14-day Relative Strength Index (RSI) at 62 (bullish) after easing from an overbought reading supports trend continuation as momentum normalizes.
While above the 20-day EMA, the pair would remain biased higher, with pullbacks expected to be supported at that moving average. RSI near 62 leaves room for further upside before overbought conditions re-emerge. A daily close below 157.33 would shift the bias toward a deeper retracement, whereas holding above it preserves the advance.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Gold gains despite fading safe-haven demand.
- Trump signaled delayed military action after Iran’s pledge, and allies urged restraint on a potential strike.
- The non-interest-bearing Gold weakened as US Jobless Claims reinforce expectations that the Fed will keep rates on hold.
Gold (XAU/USD) recovers its daily losses and is trading around $4,610 on Friday. However, Gold prices fell amid decreasing safe-haven demand as geopolitical risks in Iran temporarily eased.
US President Donald Trump signaled he may delay military action after Iran pledged not to execute protesters. Market sentiment was further eased by reports that Israel and other Middle Eastern allies urged the US to hold off on any potential strike against Iran.
Gold, a non-interest-bearing asset, loses its shine as Thursday’s US Initial Jobless Claims data reinforced expectations that the Federal Reserve (Fed) will keep interest rates on hold for the coming months. Fed funds futures have pushed expectations for the next rate cut back to June, reflecting stronger labor market conditions and policymakers’ concerns over sticky inflation.
Safe-haven Gold depreciates as risk sentiment improves after President Trump said he has no plans to dismiss Fed Chair Jerome Powell despite reported Justice Department indictment threats. Trump also indicated he could delay action on Iran while moving ahead with trade measures targeting critical minerals and AI chips.
Daily Digest Market Movers: Gold declines as US Dollar could strengthen on Fed caution
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is losing ground after registering modest gains in the previous session. The DXY is trading around 99.30 at the time of writing, limiting the downside of the dollar-denominated Gold.
- The US Department of Labor (DOL) reported on Thursday that Initial Jobless Claims unexpectedly fell to 198K in the week ended January 10, below market expectations of 215K and down from the prior week’s revised 207K. The data confirmed that layoffs remain limited and that the labor market is holding up despite an extended period of high borrowing costs.
- The US Census Bureau reported on Wednesday that Retail Sales rose more than expected to $735.9 billion in November, up 0.6%, following a 0.1% contraction in October and beating market expectations of a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with both headline and core measures reaching 3% year-over-year (YoY).
- Morgan Stanley analysts delayed their expectations for rate cuts to June and September from January and April following Friday’s jobs report.
- Minneapolis Fed President Neel Kashkari said at the Midwest Economic Forecast Forum hosted online by the Wisconsin Bankers Association on Wednesday that the overall economy seems quite resilient and that he has seen less tariff pass-through than expected. Kashkari added that inflation is still too high but is moving the right way.
- Fed Beige Book noted that US economic activity picked up at a "slight to modest pace" in most parts of the country since mid-November. "This marks an improvement over the last three report cycles, where a majority of Fed districts reported little change."
- US Core Consumer Price Index (CPI), excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held at 2.6%, matching a four-year low. The data provided a clearer sign of easing inflation after earlier releases were skewed by shutdown effects. Meanwhile, CPI increased by 0.3% month-over-month in December 2025, matching market expectations and repeating the rise seen in September. The annual inflation remains at 2.7% increase as expected.
Gold declines as ascending wedge indicates fading upside momentum
Gold (XAU/USD) is trading around $4,610 on Friday. Daily chart analysis shows the XAU/USD pair trading within a developing ascending wedge, indicating fading upside momentum and the risk of a bearish reversal if prices break below the lower trendline on strong volume.
The immediate resistance appears at the record high of $4,643, reached on January 14, followed by the upper boundary of the ascending wedge around $4,660. A break above this confluence resistance zone would lead the XAU/USD pair to the $4,700 level.
On the downside, the initial support lies at the nine-day Exponential Moving Average (EMA) of $4,549, followed by the lower ascending wedge boundary around $4,520.00. Further declines below the wedge would open the doors for the XAU/USD pair to navigate the region around the 50-day EMA at $4,313.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
- The Indian Rupee declines at open as FIIs continue to dump their stake in the Indian stock market.
- The RBI is expected to continue reducing interest rates in the near term.
- Fed’s Bostic stresses the need for a restrictive interest rate policy to contain inflation risks.
The Indian Rupee (INR) revisits the four-week low against the US Dollar (USD) in the opening session on Friday. The USD/INR pair rises to near 90.70 as the Indian Rupee underperforms amid the continuous outflow of foreign funds from the Indian stock market.
On Wednesday, Foreign Institutional Investors (FIIs) offloaded their stake worth Rs. 4,781.24 crore, according to data from NSE. The selling pressure from FIIs continues in the Indian equity market amid the absence of a trade deal announcement between the United States (US) and India. So far in January, FIIs have remained net sellers in nine out of ten trading days, and have pared their stake worth Rs. 21,706.27 crore.
This week, trade talks took place between India’s External Affairs Minister Subrahmanyam Jaishankar and US Secretary of State Marco Rubio, which were called “good” by both through their social media posts, but the sentiment of overseas investors towards the Indian stock market remains weak amid the absence of a breakthrough in trade discussions.
Economists at HSBC have also pointed out that weak capital inflows into the Indian stock market are a major problem for the Indian Rupee.
On the economic front, India’s retail and wholesale inflation data for December have shown growth in price pressures, but this is unlikely to deter the Reserve Bank of India (RBI) from delivering more interest rate cuts in the near term. Though the retail Consumer Price Index (CPI) has grown at a faster pace of 1.33% Year-on-Year (YoY), it is still lower than the RBI’s tolerance band of 2%-6%.
Daily Digest Market Movers: US Dollar trades broadly firm as Fed officials support restrictive policy stance
- The Indian Rupee trades lower against the US Dollar, even as the latter edges down ahead of an extended weekend in the US. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks lower to near 99.28. However, the DXY is still close to its six-week high of 99.50 posted the previous day.
- On Thursday, the US Dollar gained sharply after hawkish remarks from Federal Reserve (Fed) officials. Kansas Fed Bank President Jeffrey Schmid and Atlanta Fed Bank President Raphael Bostic stressed the need to maintain a restrictive stance on interest rates, citing upside inflation risks.
- “We need to stay restrictive because inflation is too high," Bostic said on Thursday, adding, “I expect inflation pressures will continue through 2026 as many businesses are still incorporating tariffs into prices.”
- According to the CME FedWatch tool, the Fed is certain to hold interest rates steady in the current range of 3.50%-3.75% in the January policy meeting.
- Going forward, the major trigger for the Silver price will be the announcement of the new Fed Chairman by the White House. US President Trump said in December that he would announce the successor to Fed Chair Jerome Powell sometime in January.
- The comments from Trump in his latest interviews show that White House Economic Adviser Kevin Hassett, former Fed Chair Kevin Warsh, and current Fed Governors Christopher Waller and Michelle Bowman are major contenders to replace Jerome Powell.
Technical Analysis: USD/INR jumps to near 90.70
USD/INR rises to near 90.70. The 50-day Exponential Moving Average (EMA) is rising and continues to underpin the advance. Price action holds above this dynamic gauge, keeping pullbacks contained.
The 14-day Relative Strength Index (RSI) at 58.76, above its midline, confirms steady bullish momentum. Initial support sits at the 50-EMA at 89.9134.
As long as the pair holds above the average, topside extension remains favored, while a close beneath it would soften the tone and expose a deeper retracement. Momentum would improve if RSI extends toward the 60s, whereas a drop back to 50 would cap upside and shift the bias toward consolidation.
(The technical analysis of this story was written with the help of an AI tool.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- USD/CHF may regain ground as the US Dollar Index may further advance on increasing cautious tone surrounding the Fed outlook.
- CME FedWatch shows a 95% probability the Fed will keep rates unchanged at January’s meeting.
- The safe-haven Swiss Franc could come under pressure as concerns over Iran and Fed independence ease.
USD/CHF pares its recent gains from the previous session, trading around 0.8020 during the Asian hours on Friday. The downside of the pair could be restrained as the US Dollar (USD) may regain its ground amid rising cautious sentiment surrounding the Federal Reserve (Fed) policy outlook.
Thursday’s US Initial Jobless Claims data reinforced the likelihood that the Fed will keep interest rates on hold for the coming months. According to the CME Group's FedWatch tool, Fed funds futures continue to price in about a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
Fed funds futures have pushed expectations for the next rate cut back to June, reflecting stronger labor market conditions and policymakers’ concerns over sticky inflation. Traders are likely to look for further direction from the US December Industrial Production data and comments from Federal Reserve (Fed) officials later in the day.
Data from the US Department of Labor (DOL) showed Initial Jobless Claims unexpectedly fell to 198K in the week ended January 10, below market expectations of 215K and down from the prior week’s revised 207K. The data confirmed that layoffs remain limited and that the labor market is holding up despite an extended period of high borrowing costs.
The safe-haven Swiss Franc (CHF) may face challenges against the US Dollar amid easing concerns over Iran and Fed independence. Market sentiment improved after US President Donald Trump said he has no plans to remove Fed Chair Jerome Powell despite reported Justice Department indictment threats and signalled a possible delay in action on Iran.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- AUD/JPY softens to around 106.10 in Friday’s early European session.
- Japan's finance minister warns that all options are open to aid the currency.
- The cross keeps the bullish vibe, with the first upside barrier to watch at 106.50.
The AUD/JPY cross loses ground to near 106.10 during the early Asian session on Friday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) on the intervention fears from Japanese officials.
Japanese Finance Minister Satsuki Katayama on Friday reiterated her warning that all options, including direct currency intervention, are available for dealing with recent weakness in the JPY.
On the other hand, concerns that Japanese Prime Minister Sanae Takaichi will have more leeway to implement more fiscally expansionist policies could weigh on the JPY and create a tailwind for thecross. Takaichi plans to dissolve parliament next week and call a snap parliamentary election to consolidate her power.
Technical Analysis:
In the daily chart, AUD/JPY holds well above the rising 100-day EMA at 101.52, keeping the broader bullish trend intact. The average has advanced consistently, and dips are supported while price remains above this gauge. Price sits between the upper Bollinger Band at 106.52 and the middle band at 105.21, reflecting firm buying interest near the highs. Bands have widened in recent sessions, signaling elevated momentum. RSI (14) prints 66, showing strong but not overbought momentum.
The upper Bollinger Band at 106.52 caps near-term advances. A daily close above it could unlock further gains, while failure to break would keep consolidation toward the support range at 105.21–103.90. Overall, the technical backdrop favors dip-buying within the band channel as long as the EMA slope remains higher.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Japan’s Finance Minister Satsuki Katayama said that all options, including direct currency intervention, are available for dealing with recent weakness in the Japanese Yen (JPY), Bloomberg reported on Friday.
Key quotes
I have repeatedly stated that we will take bold action including all the different measures available. if needed
We shared the view that recent moves have been excessive and do not reflect fundamentals.
For many years before I took office, the Treasury secretary has held the personal view that monetary policy has been behind the curve.
Market reaction
As of writing, the USD/JPY pair is down 0.24% on the day at 158.25.
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.
Gold prices fell in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 13,405.44 Indian Rupees (INR) per gram, down compared with the INR 13,426.52 it cost on Thursday.
The price for Gold decreased to INR 156,358.50 per tola from INR 156,604.30 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,405.44 |
10 Grams | 134,054.40 |
Tola | 156,358.50 |
Troy Ounce | 416,960.30 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- US Dollar Index may gain further support as Jobless Claims reinforce expectations the Fed will keep rates unchanged.
- CME FedWatch shows a 95% probability the Fed will keep rates unchanged at January’s meeting.
- Initial Jobless Claims fell to 198K, beating expectations of 215K and down from the prior week’s 207K.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is edging lower after registering modest gains in the previous session. The DXY is trading around 99.30 during the Asian hours on Friday. Traders are likely to look for further direction from the US December Industrial Production data and comments from Federal Reserve (Fed) officials later in the day.
The Greenback received support after Thursday’s US Initial Jobless Claims data reinforced the likelihood that the Fed will keep interest rates on hold for the coming months. According to the CME Group's FedWatch tool, Fed funds futures continue to price in about a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
Data from the US Department of Labor (DOL) showed Initial Jobless Claims unexpectedly fell to 198K in the week ended January 10, below market expectations of 215K and down from the prior week’s revised 207K. The data confirmed that layoffs remain limited and that the labor market is holding up despite an extended period of high borrowing costs.
The US Dollar may find additional support as Fed funds futures have pushed expectations for the next rate cut back to June, reflecting stronger labor market conditions and policymakers’ concerns over sticky inflation.
Market sentiment improved after US President Donald Trump said he has no plans to remove Fed Chair Jerome Powell despite reported Justice Department indictment threats and signalled a possible delay in action on Iran. Sentiment was further supported after the US and Taiwan signed a trade agreement on Thursday aimed at boosting American semiconductor production in exchange for lower tariffs.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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