Forex News
Austan Goolsbee, President of the Federal Reserve (Fed) Bank of Chicago, spoke at the 2026 Milken Institute Global Conference in California, United States, on Wednesday. He stated that the impact of rising productivity on inflation remains an active topic of debate among the Fed.
Key takeaway:
The impact of rising productivity on inflation remains an active topic of debate.
If households anticipate future income and wealth gains from higher productivity, they could boost spending and inflation.
Productivity's impact on inflation and interest rates could go in either direction.”
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.50% | -0.41% | -0.95% | 0.14% | -0.69% | -1.12% | -0.52% | |
| EUR | 0.50% | 0.09% | -0.44% | 0.65% | -0.18% | -0.65% | -0.02% | |
| GBP | 0.41% | -0.09% | -0.53% | 0.56% | -0.27% | -0.73% | -0.09% | |
| JPY | 0.95% | 0.44% | 0.53% | 1.09% | 0.26% | -0.19% | 0.46% | |
| CAD | -0.14% | -0.65% | -0.56% | -1.09% | -0.82% | -1.26% | -0.64% | |
| AUD | 0.69% | 0.18% | 0.27% | -0.26% | 0.82% | -0.45% | 0.18% | |
| NZD | 1.12% | 0.65% | 0.73% | 0.19% | 1.26% | 0.45% | 0.63% | |
| CHF | 0.52% | 0.02% | 0.09% | -0.46% | 0.64% | -0.18% | -0.63% |
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).
Standard Chartered economists Carol Liao and Shuang Ding argue that both the US and China are incentivised to keep their bilateral relationship stable as President Trump’s 14–15 May visit approaches. They see a focus on preserving the existing tariff truce, modest trade concessions in non-sensitive sectors, and pragmatic, transactional arrangements rather than a comprehensive reset or grand bargain.
Pragmatic truce with limited concessions
"President Trump will most likely visit China from 14-15 May as he announced earlier. The core objective will likely be to sustain the tariff truce agreed last October, explore additional bilateral concessions where incentives align, and strengthen cooperation on select geopolitical issues."
"Recent headlines that likely reflect posturing by both sides ahead of the visit will not derail stabilisation efforts, in our view. Rather, the visit could prevent renewed escalation at a time both sides face costs from higher trade barriers and supply-chain disruptions, with trade in non-sensitive sectors remaining the most actionable areas for near-term deliverables."
"The approach from both sides may continue to be pragmatic and transactional. The preparation meeting in Paris in March appeared focused on trade issues."
"Last year’s Busan truce could serve as a blueprint, with both prioritising items that can be implemented through administrative actions (e.g., tariff relief, market access, export approvals, targeted purchases) rather than sweeping commitments."
"Possible outcomes include tariff reduction on selected products and an extended suspension or calibrated easing of specific non-tariff restrictions by the US, and incremental Chinese purchases of certain US goods (agriculture, energy, aircraft), alongside continued Chinese supply of critical minerals."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI US Oil drops sharply after reports of major diplomatic progress between the United States and Iran.
- A possible easing of restrictions around the Strait of Hormuz significantly reduces the geopolitical risk premium in Oil prices.
- Despite another drawdown in US Crude inventories reported by the EIA, markets focus on improving supply expectations.
West Texas Intermediate (WTI) US Oil tumbles on Wednesday, trading around $92.30 at the time of writing, down 7.62% on the day as investors rapidly unwind geopolitical risk premiums following reports of a potential agreement between Washington and Tehran.
According to Axios, the United States (US) and Iran are close to reaching a memorandum of understanding that could pave the way for broader negotiations regarding Iran’s nuclear program. The proposed deal reportedly includes a gradual lifting of restrictions around the Strait of Hormuz, an Iranian moratorium on nuclear enrichment and an easing of US sanctions, alongside the release of frozen Iranian assets.
The report also stated that the White House expects a response from Tehran within the next 48 hours. In parallel, a Pakistani diplomatic source told Reuters that both sides were “very close” to finalizing an agreement.
The bearish pressure intensified after US President Donald Trump announced that “Project Freedom”, the military operation aimed at restoring commercial shipping security in the Strait of Hormuz, would be temporarily paused to allow diplomatic talks to continue. US Defense Secretary Pete Hegseth also stated that the ceasefire between the United States and Iran “certainly holds for now”, while emphasizing that Washington was not seeking further escalation.
The decline in Oil prices comes despite still-supportive physical market fundamentals. The Energy Information Administration (EIA) reported on Wednesday that US Crude Oil stocks showed a drawdown of 2.314M barrels last week, following the previous 6.233M decline. The figure remains close to market expectations for a 2.8M decrease. Meanwhile, Goldman Sachs recently warned that global Oil inventories are approaching their lowest levels in nearly eight years.
However, in the near term, traders remain primarily focused on the improving geopolitical backdrop, with the prospect of normalized energy flows significantly easing fears of supply shortages across global Oil markets.
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.
- The Dow Jones Industrial Average climbed 1.1% as reports surfaced of a near-deal between the US and Iran.
- Oil prices tumbled 5% as traders unwound geopolitical risk premiums tied to the Strait of Hormuz.
- AMD soared 15% after a strong Q1 beat and upbeat Q2 guidance lifted the broader chipmaker sector.
- ADP private payrolls topped expectations ahead of Friday's Nonfarm Payrolls release.
US equities pushed higher on Wednesday as risk appetite returned on signs that the US-Iran conflict could be heading toward a broader resolution. The Dow Jones Industrial Average (DJIA) added roughly 540 points to close above 49,800 after testing levels near 50,000 intraday. The S&P 500 also gained 1.1%, while the Nasdaq Composite outperformed with a 1.5% advance, propelled by a sharp rally in semiconductors.
Risk-on as US-Iran edge toward agreement
The rally kicked into gear after Axios reported, citing sources, that Washington and Tehran were closing in on a deal that would include a moratorium on Iranian nuclear enrichment. An Iranian foreign ministry spokesperson confirmed to CNBC that Iran was evaluating the US proposal. The headlines build on the existing ceasefire that has held in recent sessions, suggesting markets are now pricing in the possibility of a more durable framework. Equities pared some gains late in the session after President Donald Trump tempered expectations on Truth Social, calling Iranian agreement "a big assumption" and warning that bombing would resume "at a much higher level and intensity" if talks collapsed. The DJIA still finished comfortably in the green, though off the session highs near 50,000.
Oil tumbles as Strait of Hormuz risk fades
Crude took a heavy hit as traders moved to unwind the geopolitical premium that had built up during the conflict. West Texas Intermediate (WTI) futures dropped 5% to trade above $96 per barrel, while Brent fell 5% to trade above $103. Trump said late Tuesday he was pausing "Project Freedom," the US plan to escort shipping through the Strait of Hormuz, citing "great progress" toward a final agreement with Iran. The combination of de-escalation headlines and reduced shipping risk gave energy bears the green light to press lower.
AMD earnings ignite chipmaker rally
Advanced Micro Devices (AMD) surged 15% after delivering a Q1 beat on both the top and bottom lines and pairing it with an upbeat Q2 outlook. The print reignited bullish sentiment across the semiconductor complex, with the VanEck Semiconductor ETF (SMH) jumping 3% and Intel (INTC) climbing nearly 2%. Chip strength was the primary driver behind the Nasdaq's outperformance and added another data point for the AI-earnings narrative that has been propping up index-level expectations.
ADP beats but Fed commentary leans hawkish
On the data front, ADP Employment Change for April came in at 109K, topping the 99K consensus and nearly doubling March's revised 61K print. The reading offers a constructive setup ahead of Friday's Nonfarm Payrolls (NFP) report, where consensus sits at 60K. Federal Reserve (Fed) commentary, however, leaned hawkish, with Fed's Alberto Musalem delivering remarks rated 7.0 on the hawkish scale against a 6.0 average, while Fed's Austan Goolsbee was also on the docket. The mixed signal kept Treasury yields supported even as equities pushed higher.
Climbing a wall of worry
RBC Capital Markets' Lori Calvasina told CNBC's "Closing Bell: Overtime" that stocks appear to be "climbing a wall of worry," noting that AI-related upward earnings revisions continue to provide a buffer for S&P 500 EPS. With Iran headlines still capable of swinging both ways and a busy Fed speaker calendar through Friday culminating in NFP and the University of Michigan (UoM) sentiment release, traders will be watching whether the DJIA can sustain its push toward the 50,000 milestone or whether the late-session fade signals exhaustion near the highs.
Dow Jones 15-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
BNY’s Geoff Yu argues Latin American FX and equities now represent a single crowded ‘total return’ trade, with all regional currencies still overheld while bond holdings begin to reverse unevenly. In Mexico, expectations for lower rates are driving more FX hedging ahead of a likely 25 bp Banxico cut, even as sovereign bond demand stays firm.
Carry trade meets growing hedging pressures
"iFlow signaled throughout this year that Latin American equities and Latin American currencies are now essentially the same position: every Latin American currency remains net overheld. Until recently, every single sovereign bond market in the region was also comfortably overheld. Despite offering liquidity and good real yields to complement cautiously hawkish central banks, these holdings are finally starting to reverse, but progress is uneven."
"In Mexico, we are seeing the clearest evidence yet that forward or even realized expectations for lower rates are starting to generate additional hedging interest, even if interest in sovereign bonds remain firm. As we head into the Banxico decision later this week, where a 25bp cut is expected, the market is likely viewing the Mexican policy approach as in stimulus/growth mode."
"The question is whether the “total return” theme in Latin America can decline outright. Banxico does appear to be an outlier in global emerging markets, whereby the real rate buffer is being compressed to the absolute minimum (we believe 100bp is needed to justify positive real rates), but the central bank is pre-empting idiosyncratic downside risk."
"Meanwhile idiosyncratic risk from the U.S. is high, both from swift transmission of less dovish policy expectations and any challenges in upcoming trade negotiations."
"If markets (and the carry theme) are now “forward looking” enough in this respect, FX hedging will likely pick up in size, but fixed income can stay resilient as fiscal impulse is limited."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver rallies as hopes for a US-Iran deal pressure the US Dollar and Treasury yields
- Technically, XAG/USD remains capped below the 50-day and 100-day SMAs despite strong intraday gains.
- Improving RSI and positive MACD readings support recovery momentum, though weak ADX signals a consolidative outlook.
Silver (XAG/USD) gains traction on Wednesday as renewed optimism surrounding a potential US-Iran peace deal triggers a sharp decline in the US Dollar (USD) and Oil prices. At the time of writing, XAG/USD is trading around 77, up over 5.50% on the day.
The latest leg higher comes after Axios reported that Washington and Tehran are moving closer to a potential agreement aimed at ending the war and establishing a framework for detailed nuclear negotiations.
The sharp decline in crude Oil helped ease immediate inflation concerns, pushing US Treasury yields lower and providing additional support to the non-yielding metal. Traders also shifted back toward pricing in the possibility of Federal Reserve (Fed) rate cuts by year-end.
Despite the renewed optimism, uncertainty over whether the US and Iran can reach a final agreement continues to keep markets on edge, limiting further upside in Silver. The technical outlook also points to a possible consolidation phase following the intraday surge.
Technical Analysis:
In the daily chart, XAG/USD remains capped in the near term, as spot holds below the 50-day Simple Moving Average (SMA) and the 100-day SMA, keeping recovery attempts vulnerable while those barriers stand overhead.
Momentum has improved, with the Relative Strength Index near 53 and the Moving Average Convergence Divergence (MACD) fractionally positive, but the subdued Average Directional Index around 12 suggests a weak underlying trend, hinting at consolidation rather than a sustained breakout.
On the topside, initial resistance is aligned at the 50-day SMA at $77, with a stronger hurdle emerging at the 100-day SMA near $80, where a daily close above would be needed to ease the current capped tone.
On the downside, initial support is seen in the $70.00-$71.00 zone, while the 200-day SMA at $63 offers the next significant structural support, and while it sits well below current prices, it defines the broader bullish floor that would need to give way to signal a deeper bearish reversal.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- GBP/USD advances as an Axios report on a US-Iran deal fuels risk appetite.
- US ADP jobs beat estimates, but markets focus on Iran headlines.
- UK political risks rise as local election results approach.
GBP/USD rises by over 0.59% on Wednesday after an Axios report revealed that the US and Iran are closing in on a deal to end the war. The US Dollar (USD) fell on the news, even though US jobs data crushed estimates, which could prompt the Federal Reserve (Fed) to focus on inflation. At the time of writing, the pair trades at 1.3614 after hitting a daily high of 1.3643.
Pound rallies as Iran peace hopes outweigh strong US jobs
Sentiment turned positive after Axios reported that the US and Iran are discussing a 14-point, one-page memorandum of understanding (MOU). If signed, the MOU would end the war, enter a 30-day period of negotiations, open the Strait of Hormuz and limit Iran’s nuclear program. On the US front, the US Treasury would unfreeze Tehran’s funds.
In the US, the labor market continued to show signs of strength and resilience as revealed by Automatic Data Processing (ADP). The ADP National Employment Change posted its largest increase in 15 months in April, rising by 109,000, exceeding forecasts of 99,000 and March’s downwardly revised 61,000.
Although the data is Dollar-positive, the Greenback is on the defensive as long as Oil prices continue to fall, with WTI tanking over 7% on news of Iran. The US Dollar Index (DXY), which measures the performance of the buck’s value against six currencies, is down 0.49% at 98.00.
Recently, St. Louis Fed Alberto Musalem stated that risks to monetary policy have shifted towards higher inflation. He said that “there are plausible scenarios that would require rates to remain stable for some time,” adding that “current policy is either neutral or slightly accommodative in real terms.”
In the UK, political turmoil was sparked by the former UK ambassador to the US, Peter Mandelson, exerting pressure on Prime Minister Keir Starmer. Starmer’s party is bracing for losses in local elections, which increases speculation that he could be replaced.
Data-wise, the S&P Global Services PMI expanded as expected, yet UK firms witnessed the largest increase in prices paid in three and a half years in April.
On Thursday, the UK economic schedule is absent, but the results of the local elections could grab the headlines. In the US, traders' eyes will be on Initial Jobless Claims and speeches by Federal Reserve officials.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3598. The pair retains a constructive near-term bias while holding above the latest reading of the simple moving average cluster (50-, 100- and 200-day SMA composite) at 1.3415, which now underpins the advance together with the longer-term rising trend line drawn from 1.3035. The broad technical tone is further supported by the ongoing recovery away from the recent mid-1.33s consolidation, even as the downwards-sloping resistance line from 1.3869 still caps the broader topside for now.
On the topside, initial resistance is defined by the descending trend line coming from 1.3869, and a clear break above this barrier would open the way for a more sustained recovery. On the downside, immediate support is seen near the 1.3598 area as a short-term pivot, followed by stronger demand at the triple simple moving average cluster around 1.3415; a loss of this area would expose the rising structural support line off 1.3035.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.52% | -0.40% | -0.95% | 0.03% | -0.72% | -1.16% | -0.52% | |
| EUR | 0.52% | 0.11% | -0.39% | 0.56% | -0.19% | -0.67% | 0.00% | |
| GBP | 0.40% | -0.11% | -0.51% | 0.45% | -0.30% | -0.77% | -0.08% | |
| JPY | 0.95% | 0.39% | 0.51% | 0.96% | 0.21% | -0.25% | 0.45% | |
| CAD | -0.03% | -0.56% | -0.45% | -0.96% | -0.74% | -1.20% | -0.52% | |
| AUD | 0.72% | 0.19% | 0.30% | -0.21% | 0.74% | -0.45% | 0.22% | |
| NZD | 1.16% | 0.67% | 0.77% | 0.25% | 1.20% | 0.45% | 0.67% | |
| CHF | 0.52% | -0.01% | 0.08% | -0.45% | 0.52% | -0.22% | -0.67% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- EUR/USD rises as hopes for a potential US-Iran agreement weigh on the US Dollar.
- Softer Oil prices ease inflation concerns and pull US Treasury yields lower.
- Stronger-than-expected US ADP jobs data and lingering geopolitical uncertainty help limit US Dollar losses.
EUR/USD trades higher on Wednesday as renewed optimism surrounding a potential US-Iran peace deal pressures the US Dollar (USD) and lifts the Euro (EUR). At the time of writing, the pair is trading around 1.1750, up nearly 0.50% on the day after hitting an intraday high of 1.1796, its highest level since April 17.
Market sentiment improved after Axios reported that Washington and Tehran are moving closer to a potential agreement aimed at ending the war and establishing a framework for detailed nuclear negotiations.
The report said the proposed deal could include Iran pausing nuclear enrichment, while the US would lift sanctions and release billions of Dollars in frozen Iranian funds. Both sides are also expected to end the blockade around the Strait of Hormuz.
Following the report, Oil prices plunged, pushing US Treasury yields lower as the sharp decline in crude Oil helped ease concerns over energy-driven inflation and reduced pressure on the Federal Reserve (Fed) to tighten monetary policy. Traders also shifted back toward pricing in the possibility of Fed rate cuts by year-end, reversing earlier expectations that the central bank may need to keep rates higher for longer.
However, gains in EUR/USD remained capped as uncertainty surrounding the negotiations continued to linger. US President Donald Trump warned that military action could resume if Iran does not agree to the deal, while Iran’s ISNA News Agency reported that parts of the Axios story were “speculation” and described the US proposal as containing “ambitious and unrealistic” demands.
This lingering uncertainty helped the US Dollar stabilize after its earlier decline. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 97.98 after touching an intraday low of 97.62.
On the data front, the US ADP Employment Change report showed private sector payrolls increased by 109K in April, up from 61K in March and beating market expectations of 99K, offering additional support to the Greenback.
Meanwhile, traders also digested comments from St. Louis Fed President Alberto Musalem, who said inflation remains “meaningfully above target” and warned that “underlying inflation” still requires attention beyond tariff and Oil-related shocks. Musalem added that inflation risks are rising and said “plausible scenarios” could require interest rates to remain steady for a period.
Looking ahead, traders remain focused on further developments surrounding the US-Iran negotiations, while attention also turns to upcoming US labor market data, including weekly Jobless Claims on Thursday and the Nonfarm Payrolls (NFP) report on Friday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- AUD/USD climbed toward the 0.7240 region, its highest level since June 2022.
- Easing tensions around the Strait of Hormuz reduced safe-haven flows into the US Dollar.
- Stronger-than-expected US ADP Employment Change data showed 109K jobs added in April versus 99K expected.
AUD/USD surges near the 0.7240 price region, supported by improving risk sentiment after Axios reported that the United States (US) and Iran are moving closer to a deal aimed at ending the conflict. At the time of writing, the pair trades at 0.7239 after hitting a daily high of 0.7277, its highest level since June 2022.
These developments have alleviated fears of a prolonged disruption to global energy flows, increasing demand for risk-sensitive currencies such as the Australian Dollar (AUD). A more stable geopolitical outlook has also reduced safe-haven demand for the US Dollar (USD), allowing the AUD/USD pair to recover some lost ground.
However, the pair's upward movement is constrained by stronger-than-expected United States (US) private-sector employment data. The ADP Employment Change report revealed that US employers added 109,000 jobs in April, surpassing market expectations of 99,000 and improving from a revised 61,000 increase in March.
Nela Richardson, Chief Economist at ADP, noted that hiring remains uneven, with small and large employers actively hiring, while mid-sized firms show signs of weakness. This data reinforces the perception that the US labor market remains resilient, limiting downward pressure on the US Dollar.
Short-term technical analysis:
On the four-hour chart, AUD/USD trades at 0.7239, holding a constructive bullish bias as it consolidates above both the 20-period Simple Moving Average (SMA) at 0.7197 and the 100-period SMA at 0.7166. The pair is probing a tight overhead band, while the Relative Strength Index (RSI) near 63 suggests firm but not yet overbought upside momentum, keeping the door open for further gains if nearby resistance gives way.
On the topside, immediate resistance emerges at 0.7242, with a subsequent barrier at 0.7251, where sellers may attempt to cap the advance. On the downside, initial support is seen at 0.7232 followed by 0.7229, while deeper pullbacks would look to the 20-period SMA at 0.7197 and the 100-period SMA at 0.7166 to maintain the broader constructive structure.
(The technical analysis of this story was written with the help of an AI tool.)
MUFG’s Derek Halpenny notes that renewed hopes for a peace deal with Iran and a sharp drop in Brent crude Oil are pressuring the US Dollar (USD), with risk appetite supported by strong global equities and AI-driven gains. Suspected Japanese intervention has driven USD/JPY sharply lower, while resilient China data boosts the Australian Dollar (AUD) and New Zealand Dollar (NZD).
Peace hopes, Oil slump hit Dollar
"The plan by the US to guide shipping vessels through the Strait of Hormuz (Project Freedom) has been abandoned before it ever really got going with President Trump citing the “Great Progress made toward a Complete and Final Agreement” with Iran that has helped to fuel renewed hopes of a peace deal to end the conflict. Brent crude oil has gapped lower this morning and is now down 6% from the peak yesterday. That has fuelled renewed US dollar selling, reinforced by the continued positive momentum in global equities."
"How the Middle East plays out will be crucial on whether upside momentum in USD/JPY fades. While there is optimism today over progress toward peace that could change suddenly at any time."
"If action has been taken today, the selling of the US dollar would have been reinforced by the decline in crude oil prices and increased hope of progress toward a peace deal. But we believe there remains a danger that these bouts of intervention could prove the least successful of any of the previous periods of intervention mentioned above. The Japanese authorities are more at the mercy of unpredictable factors than in the past."
"Signs of continued China resilience have also helped undermine the dollar. The Australian and New Zealand dollars are the top performing G10 currencies today with the China PMIs stronger than expected fuelled by strong services. Ultimately whether the drop in crude oil prices can hold and progress can be made in resolving the conflict in the Middle East will determine whether the dollar selling will extend further over the short-term although other macro factors are certainly helping."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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