Forex News
- USD/CAD remains steady as strong US CPI data boosts December Fed rate hike expectations.
- Hot US CPI data has reinforced expectations of a December Fed rate hike.
- The commodity-linked Canadian Dollar may struggle as oil prices decline amid growing US crude oil inventory.
USD/CAD moves little after two days of gains, trading around 1.4250 during Asian hours on Friday. However, the pair may appreciate as the US Dollar (USD) could receive support from persistent inflation concerns and expectations of higher interest rates. Traders will take more cues from the US October Producer Price Index (PPI) report later on Friday.
Stronger-than-expected US Consumer Price Index (CPI) inflation data released earlier this week has reinforced expectations of a Fed rate hike in December. Fed Governor Christopher Waller said that a 50-basis-point rate hike should be considered if core inflation remains elevated.
Markets now see a 14.5% chance of a 50-basis-point hike, up from zero before Tuesday’s inflation report. Attention will shift to Friday’s US PPI report for further clues on inflation and the US central bank’s decision on interest rates. The headline PPI is expected to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period.
Moreover, the USD/CAD pair also may gain ground as the commodity-linked Canadian Dollar (CAD) could face challenges on lower oil prices. West Texas Intermediate (WTI) oil price loses momentum amid growing US crude oil inventory.
US crude oil inventories rose sharply last week, fueling worries about oversupply. According to the Energy Information Administration (EIA), crude stockpiles climbed by 9 million barrels in the week ending November 5, compared to a fall of 5.267 million barrels in the previous week. The market consensus was for a decline of 1 million barrels.
USD strength seen as Canadian Dollar and Korean Won come under pressure
According to TD Securities, the US Dollar still has scope to outperform selectively, with analysts noting that “across global major currencies, we see room for the USD to rally selectively against CAD and KRW in the near-term.” They argue that “diverging employment data releases will likely keep USDCAD supported above 1.40,” as a “rising unemployment rate amid falling wage growth rate in Canada also reduces the market pricing of a December BoC rate hike relative to the Fed.”
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- USD/JPY oscillates in a range as looming intervention risks keep JPY bears on the back foot.
- The BoJ rate-hike uncertainty and the wide US-Japan rate gap do little to impress JPY bulls.
- Hawkish Fed expectations and geopolitical risks act as a tailwind for buck and spot prices.
The USD/JPY pair enters a bullish consolidation phase during the Asian session on Friday, trading near its highest level since early September, just below the 160.00 psychological mark. The Japanese Yen (JPY) bears remain on high alert as intervention fears have resurfaced following the recent decline to the critical threshold.
In fact, Japan’s top currency diplomat, Atsushi Mimura, warned on Thursday that recent currency movements had been too fast and reminded markets that it was too early to forget the summer intervention. Adding to this, Japan's Finance Minister Satsuki Katayama signaled that authorities are monitoring one-sided, swift FX shifts recently, adding that the government will respond appropriately to currency volatility and will engage with the US Treasury. Furthermore, rising bets for an imminent rate hike by the Bank of Japan (BoJ) in December support the JPY.
The US Dollar (USD), on the other hand, pauses for a breather after a strong three-day rally to its highest level since April 2025 and turns out to be another factor capping the USD/JPY pair. The near-term bias, however, seems tilted in favor of USD bulls amid the growing acceptance that the US Federal Reserve (Fed) will raise borrowing costs again in December. Adding to this, traders have started pricing in the possibility of a jumbo 50-basis-point (bps) rate hike next month in the wake of hawkish comments from Fed officials.
Fed path repriced as markets lean toward back-to-back hikes
Analysts at MUFG/BTMU note that the policy path has shifted meaningfully, with “a 25bps rate hike at the next FOMC meeting in December” now “fully priced in.” They add that market participants have gone further to “price in small probability of larger 50bps hike,” with “around 28bps of hikes priced by December, and 43bps of hikes priced by the following meeting in January.” In their view, this configuration “indicat[es] that even if the Fed hikes by 25bps in December it is now expected to quickly follow up with another 25bps hike at the start of next year.”
In contrast, investors remain uncertain about the pace and timing of future BoJ interest rate hikes. This, along with the wide US-Japan interest rate differential, keeps the so-called carry trade active and might do little to provide any meaningful boost to the JPY. Meanwhile, Middle East risks could further underpin the Greenback's safe-haven demand, suggesting that any corrective pullback in the USD/JPY pair is more likely to be bought into. Nevertheless, spot prices remain on track to register gains for the third straight week.
USD/JPY daily chart
Technical Analysis
The USD/JPY pair holds a bullish near-term bias above the 100-day Simple Moving Average (SMA) at 158.97 and the 50.0% Fibonacci retracement at 158.49. Spot prices have marginally reclaimed the 61.8% retracement at 159.79, turning it into immediate support and hinting at ongoing upside pressure while the next key hurdle is the 78.6% retracement at 161.64. A sustained break above would open the way for a retest of the 164.00 cycle high.
On the downside, weakness below the 61.8% Fibonacci retracement at 159.79 could find support near the 100-day SMA at 158.97, which reinforces the broader bullish structure. Below there, the 50.0% retracement at 158.49 and the lower Fibonacci levels at 157.20 and 155.59 guard the path toward the structural anchor at 152.99.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- AUD/USD drifts higher to near 0.6810 in Friday’s early Asian session.
- Hawkish comments from Fed officials have boosted market bets on a December rate hike.
- Traders await the US October PPI data on Friday for fresh impetus.
The AUD/USD pair edges higher to around 0.6810 during the early Asian session on Friday. However, the potential upside for the pair might be limited amid a hawkish stance from the US Federal Reserve (Fed). The US October Producer Price Index (PPI) data will be published later on Friday.
The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points (bps) to an 18-year high of 4.85% earlier this month. Markets view the Australian central bank as likely finished with rate hikes, creating a widening policy divergence with the Federal Reserve (Fed).
Bets on a 50-basis-point Fed rate hike in December started to grow after a hotter-than-expected US inflation report and comments by Fed governor Christopher Waller. Waller said that he would support a quarter-point rate increase in December and might push for a half-point move if inflation data is worse than expected.
The US October PPI inflation data will be in the spotlight on Friday. Economists expect the headline PPI to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period. Any signs of hotter inflation in the US could boost the US Dollar (USD) against the Australian Dollar (AUD).
RBA focus sharpened as Australia inflation expectations stay elevated
Analysts at Rabobank highlight that November inflation expectations in Australia “stayed at 5.3%, so over double the RBA’s mid-point target,” underscoring the persistence of elevated price pressures that will remain central to upcoming RBA policy deliberations and Australian Dollar sentiment.
Williams flags resilient US economy but warns inflation still too high
Fed’s Williams delivers a moderately more hawkish tone relative to the historical average, with a 7/10 FXS Speechtracker score versus a 6.1/10 baseline. The emphasis on a resilient, robust US economy alongside “stubbornly persistent” and “too elevated” inflation underscores that the central bank still sees a need to tighten or maintain restrictive policy over time to return inflation to 2%, while clarifying that monetary policy targets inflation rates rather than rolling back overall price levels to avoid damaging economic conditions. Overall, the speech reinforces a narrative of ongoing policy work ahead rather than signaling an imminent pivot.
The FXS Fed Sentiment Index slipped by 0.08 points to 147.47, indicating a slight pullback in perceived hawkishness even as the index remains firmly above the neutral 100 mark. This combination suggests that, despite a marginal moderation in tone, the broader Fed communication backdrop still resides in clearly hawkish territory, consistent with Williams’ message of persistent inflation and the need for further policy adjustment.
Technical Analysis: AUD/USD keeps a bearish vibe under the 100-day SMA
In the daily chart, AUD/USD extends a bearish near-term tone as spot holds beneath the 100-day Simple Moving Average (SMA) and the 20-day Bollinger midline. The pair is hovering just above the lower Bollinger Band, now providing initial support at 0.6805, while the Relative Strength Index (14) at 33.41 is approaching oversold territory, hinting that downside pressure remains dominant but somewhat stretched.
On the topside, immediate resistance is located at the 20-day Bollinger SMA near 0.6962, with the 100-day SMA at 0.7025 reinforcing a broader cap ahead of the upper Bollinger Band around 0.7119. On the downside, a clear break below the lower Bollinger support at 0.6805 would open the door to further losses, whereas a daily close back above the 0.6962 region would be needed to ease the current bearish bias and signal scope for a corrective rebound.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
(This story was corrected on November 13 at 02:00 GMT to correct the rate to 0.6800, not 0.6900)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Japanese Finance Minister (FM) Satsuki Katayama said on Friday that the officials are observing one-sided, swift foreign exchange shifts recently. Katayama added that the government will respond appropriately to currency volatility and will engage with US treasury, respond suitably.
Japan recently intervened in the currency market on three separate days between July 30 and August 3, spending a record 15.4 trillion yen ($96.47 billion) to support the Japanese Yen (JYP) after it weakened to a 40-year low of nearly 164 yen per US Dollar (USD).
Key quotes
To advance utility subsidies for winter, using reserve fund.
Observing one-sided, swift forex shifts recently.
Will engage with US treasury, respond suitably.
US, Japan align on forex policy at summit.
Declines to comment on intervention record.
Market reaction
At the time of writing, the USD/JPY pair is up 0.14% on the day at 157.80.
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.
- GBP/USD struggles to register any meaningful recovery amid a bullish USD undertone.
- Firming Fed rate hike expectations and Middle East risks continue to support the USD.
- Bets for another BoE rate hike in December fail to provide any impetus to the Streling.
The GBP/USD pair is seen consolidating around the 1.3230 region during the Asian session on Friday, trading near its lowest level in more than four weeks amid a bullish US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands firm near April 2025 tops amid firming Federal Reserve (Fed) rate hike expectations and Middle East uncertainties. Following hotter-than-expected US consumer inflation data for October, several Fed officials adopted a more hawkish tone and reaffirmed market bets for further policy tightening. Moreover, traders have also started pricing in the possibility of a jumbo 50-basis-point (bps) Fed rate hike in December, pushing the yield on the benchmark 10-year US government bond back above the 5% threshold.
Daly leans hawkish as AI inflation risks keep Fed tightening bias intact
Fed’s Daly delivers a notably more hawkish tone, with an FXS Speechtracker score of 8.3/10, well above the 6.5/10 historical average, underscoring elevated concern about persistent inflation despite optimism on technology-driven productivity. The key AI remark stresses that while the current technology boom and deep AI pipeline are not the primary drivers of today’s inflation and have limited labor market impact, AI-fueled price pressures and the risk of greater future inflation mean the Fed cannot be complacent. Daly’s emphasis on sticky services inflation, comfort with a September hike, and a bias toward further tightening reinforces a policy stance focused squarely on bringing inflation down even as potential future productivity gains could eventually be disinflationary.
The FXS Fed Sentiment Index rose by 1.01 points to 147.55, keeping the gauge firmly in hawkish territory and signaling a stronger tightening bias across recent Fed communication. This move, combined with the elevated FXS Speechtracker score, suggests that markets should continue to price a supportive backdrop for the Dollar, with tighter financial conditions seen as aligned with where the Fed needs to be.
Meanwhile, President Donald Trump said in a Truth Social post that the US does not need a deal with Iran, adding that those days have long since passed. Adding to this, continued attacks on Saudi Arabia's energy infrastructure and commercial ships in the Strait of Hormuz keep the geopolitical risk premium in play, which is seen as another factor underpinning the safe-haven Greenback and weighing on the GBP/USD pair. However, bets of a back-to-back 25 basis point (bps) rate hike by the Bank of England (BoE) at its next policy meeting on December 17 could support the British Pound (GBP).
The lack of buying interest, however, warrants some caution before positioning for any recovery. Meanwhile, bearish traders might now await a break below the 1.3200 mark before placing fresh bets on the GBP/USD pair. Nevertheless, spot prices seem poised to register losses for the second straight week and remain at the mercy of USD price dynamics.
GBP/USD 4-hour chart
Technical Analysis
The GBP/USD pair keeps a bearish near-term tone beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and following the overnight breakdown below the 1.3280 horizontal support. Bulls would need a sustained recovery above the 200-SMA at 1.3315 to ease negative outlook pressure. Meanwhile, failure to reclaim this level would leave spot prices vulnerable to continued downside extension.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.74% | 0.86% | 0.96% | 0.96% | 0.79% | 0.33% | 2.03% | |
| EUR | -0.74% | 0.12% | 0.23% | 0.22% | 0.18% | -0.41% | 1.28% | |
| GBP | -0.86% | -0.12% | 0.11% | 0.09% | 0.05% | -0.54% | 1.16% | |
| JPY | -0.96% | -0.23% | -0.11% | -0.02% | -0.24% | -0.63% | 1.00% | |
| CAD | -0.96% | -0.22% | -0.09% | 0.02% | -0.19% | -0.65% | 1.10% | |
| AUD | -0.79% | -0.18% | -0.05% | 0.24% | 0.19% | -0.57% | 1.04% | |
| NZD | -0.33% | 0.41% | 0.54% | 0.63% | 0.65% | 0.57% | 1.72% | |
| CHF | -2.03% | -1.28% | -1.16% | -1.00% | -1.10% | -1.04% | -1.72% |
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).
On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7152 compared to the previous day's fix of 6.7174 and 6.6756 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- EUR/USD depreciates as strong US CPI data boosts December Fed rate hike expectations.
- Rising oil prices on Iran further fuel inflation fears ahead of Friday's US PPI report.
- Economic uncertainty is expected to halt the ECB's monetary tightening cycle after one final projected rate hike in December.
EUR/USD extends its losses for the fourth successive day, trading around 1.1050 during Asian hours on Friday. The pair depreciates as the US Dollar (USD) gains ground amid persistent US inflation concerns and expectations of higher interest rates. Traders will take more cues from the US October Producer Price Index (PPI) report later on Friday.
Stronger-than-expected US Consumer Price Index (CPI) inflation data released earlier this week has reinforced expectations of a Fed rate hike in December. Fed Governor Christopher Waller said that a 50-basis-point rate hike should be considered if core inflation remains elevated.
Markets now see a 14.5% chance of a 50-basis-point hike, up from zero before Tuesday’s inflation report. Attention will shift to Friday’s US PPI report for further clues on inflation and the US central bank’s decision on interest rates. The headline PPI is expected to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period.
US President Donald Trump said on Thursday that the US did not need a deal with Iran, quashing hopes of a deal to end the conflict. Oil prices jumped after the news, fanning inflationary concerns.
Meanwhile, market experts doubt that the European Central Bank's (ECB) monetary tightening cycle can be sustained in the long run. Although the ECB has raised interest rates twice this year and is projected to deliver one final hike at its December meeting, growing economic uncertainty is expected to halt further tightening afterward.
Lane stresses consensus and inflation risks, supporting Euro on the margins
ECB’s Lane scores 6.2/10 on FXS Speechtracker, exactly in line with the historic average, signaling no major shift in overall tone but a steady, mildly cautious stance. The rejection of “dots” and the “high bar” on directional forward guidance point to a preference for flexibility, which limits immediate Euro upside but avoids a dovish pre-commitment that could undermine policy credibility.
Lane’s focus on underlying inflation as a guide to one-year-ahead price dynamics, and the warning that it would be a surprise if there are no second-round effects, leans modestly hawkish despite acknowledging reversing energy prices. The emphasis on having an instrument for multiple bond-market equilibriums underlines readiness to counter fragmentation, which supports Euro stability and keeps rate-cut expectations in check even as headline inflation may temporarily fall.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- WTI price falls to near $87.50 in Friday's early Asian session.
- Trump says US does not need a deal with Iran.
- Attacks on Saudi energy infrastructure escalated, threatening global oil flows.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $87.50 during the early Asian trading hours on Friday. WTI loses momentum amid growing US crude oil inventory.
US crude oil inventories showed a sharp build last week, feeding worries about oversupply. According to the Energy Information Administration (EIA), crude stockpiles climbed by 9 million barrels in the week ending November 5, compared to a fall of 5.267 barrels in the previous week. The market consensus was for a decline of 1 million barrels.
US President Donald Trump said on Thursday that the US should no longer seek a deal with Iran, per CNBC. “We don’t need a deal with Iran. Those days have long since passed,” Trump wrote in a Truth Social post.
His remarks came just over a week after Republicans suffered huge losses in the US midterm election. Vance and other Republicans have pinned those losses on the Iran war, which the US and Israel started in late February. Trump’s comments stoked worries that an end to the US-Iran war was not in sight.
Attacks on Saudi energy infrastructure escalated, and shipping disruptions through the Strait of Hormuz threatened global oil flows.
Yemen's Iran-aligned Houthis said that they had attacked a pumping station on the Saudi East-West oil pipeline, an oil facility in the Saudi Red Sea city of Yanbu, and an Aramco building in the capital, Riyadh.
Meanwhile, Iran's military said on Thursday that four oil tankers were hit by explosions in the Strait of Hormuz after ignoring warnings.
Brent finds support as Strait of Hormuz tensions flare
Analysts at Commerzbank Research report that "tensions in the Strait of Hormuz escalated overnight," with Iran’s IRGC Navy claiming that "two additional oil tankers struck mines while attempting to transit the waterway, with both vessels reportedly on fire." Against this backdrop, Commerzbank notes that "Brent crude rose 1.2% to USD92.63, as the latest Hormuz mine incidents provided a floor to prices despite the broader November slide of approximately 17%."
Technical Analysis: WTI keeps a consolidation mode in the near term
In the daily chart, the near-term tone of WTI US Oil appears neutral to range-bound as price holds just above the 100-day simple moving average (SMA) while remaining well below the Bollinger Bands’ 20-day SMA center line, which caps the topside. The lower Bollinger band at $82.30 underpins the broader consolidation, and the Relative Strength Index (RSI) at 40.6 sits below the 50 mark, hinting at mild bearish momentum but not a decisive trend break.
On the topside, initial resistance is located at the Bollinger 20-day SMA center band near $94.60, with a stronger barrier at the upper Bollinger band at $106.85. On the downside, immediate support is seen at the 100-day SMA at $87.00, ahead of a more important structural floor at the lower Bollinger band near $82.30, where buyers would likely attempt to defend the broader uptrend from deeper correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
New York Federal Reserve (Fed) President John Williams said on Friday that inflation remains too elevated, adding that the central bank will have to act over time to bring inflation back to 2%.
Key quotes
Economy resilient and growth robust.
US economy strengthening but not overheating.
Inflation remains too elevated.
Inflation remains stubbornly persistent and elevated.
Central bank has maintained consistent pace of gathering data.
Central bank will have to act over time to bring inflation back to 2%.
Central bank still has work to do to reach right monetary policy stance.
Monetary policy aims at inflation, not price levels.
Attempting to reduce overall price levels may cause poor economic conditions.
Williams flags resilient US economy but warns inflation still too high
Fed’s Williams delivered a moderately hawkish message, with a 7/10 FXS Speechtracker score standing above the 6.1/10 historical average and underscoring a firmer policy tone relative to the established baseline. The emphasis on a “resilient” and “robust” US economy, alongside “stubbornly persistent” and “too elevated” inflation, signals that the Federal Reserve sees ongoing strength that justifies keeping a tightening bias in place. By stressing that monetary policy targets inflation rather than overall price levels and warning that trying to push prices down could damage economic conditions, the speech reinforces a focus on bringing inflation back to 2% over time rather than engineering outright deflation.
The FXS Fed Sentiment Index slipped by 0.08 points to 147.47, indicating a slight pullback in perceived hawkishness despite the still-robust tone captured by the FXS Speechtracker. With the index well above the neutral 100 mark, the Federal Reserve remains firmly in hawkish territory, even as the marginal decline hints at a more measured approach to future Dollar-supportive policy tightening.
Market reaction
At press time, the US Dollar Index (DXY) trades 0.05% higher at around 103.23.
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 price tumbles to near $3,880 in Friday’s early Asian session.
- Inflation worries and hawkish comments from Fed officials reinforced expectations of higher interest rates.
- The US October PPI inflation data will be in the spotlight on Friday.
Gold price (XAU/USD) drops to a more-than-one-year low around $3,880 during the early Asian session on Friday. Persistent US inflation concerns and expectations of higher interest rates weigh on the precious metal. Traders will take more cues from the US October Producer Price Index (PPI) report later on Friday.
US President Donald Trump said on Thursday that the US did not need a deal with Iran, quashing hopes of a deal to end the conflict. Oil prices jumped after the news, fanning inflationary concerns.
"Higher energy prices continue to warrant a hawkish Fed, and a hawkish Fed is an environment of higher interest rates and hence a headwind for the yellow metal," said David Meger, director of metals trading at High Ridge Futures.
Stronger-than-expected US Consumer Price Index (CPI) inflation data released earlier this week also have reinforced expectations of a Fed rate hike in December. Fed Governor Christopher Waller said that a 50-basis-point rate hike should be considered if core inflation remains elevated.
Markets now see a 14.5% chance of a 50-basis-point hike, up from zero before Tuesday’s inflation report.
Attention will shift to Friday’s US PPI report for further clues on inflation and the US central bank’s decision on interest rates. The headline PPI is expected to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period.
Gold shines as risk-off tone offsets steady credit and mixed bond moves
Analysts at Deutsche Bank note that “credit was actually fairly flat on both sides of the Atlantic,” but the prevailing risk-off tone in equities translated into “a good week for gold, which was up +5.06% (-0.42% Friday) in its best week since August.” They add that “along with the risk-off tone from the AI selloff, that helped to bring down sovereign bond yields around the world.” Even so, the move in core rates has been uneven, with Deutsche Bank highlighting that “the 10-year US Treasury yield is up +1bps at 4.87% and Brent down around a percent as I type.”
Daly leans hawkish on inflation risks from AI, supporting Dollar upside
Daly’s speech scores 8.3/10 on the FXS Speechtracker, a clear hawkish tilt relative to the historical average of 6.5/10, with repeated emphasis on persistent inflation and a bias toward further tightening. The key remarks frame AI as a structural driver of productivity and potential future price pressures, but not the main culprit behind current inflation, reinforcing a narrative of solid growth, stable labor markets, and sticky services inflation that still demands policy restraint. Comfort with a September hike and the view that “inflation pressure is up, not down” underscore a policy stance that remains skewed toward additional rate increases, supportive for the Dollar versus the Euro and Yen.
The FXS Fed Sentiment Index rises by 1.01 points to 147.55, firmly in hawkish territory and consistent with the elevated FXS Speechtracker score. This move signals that markets should interpret Daly’s comments as reinforcing tighter-for-longer expectations, a backdrop that typically underpins the Dollar against major peers.
Technical Analysis: Gold retains a negative outlook below the 100-day SMA
In the daily chart, XAU/USD maintains a bearish near-term bias as spot holds beneath the 100-day Simple Moving Average (SMA) and the Bollinger Bands (20) middle band. Price is hovering just above the lower Bollinger band support, suggesting downside pressure remains dominant, while the Relative Strength Index (14) at 37.64 stays below the neutral 50 line, hinting at weak bullish conviction rather than outright oversold conditions.
On the topside, initial resistance is located at the Bollinger Bands middle band near $4,038, followed by the 100-day SMA around $4,200, with the Bollinger upper band at $4,205 acting as a higher technical cap. On the downside, immediate support is aligned with the lower Bollinger band at $3,870, and a sustained break below this zone would open the door for a deeper retreat, while recovery above the mid-band would be needed to ease the current bearish tone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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