Forex News
- The US Dollar trades flat around 101.35 as investors shift focus to the US NFP data.
- Fed’s Warsh signaled in his monetary policy press conference this month that he will restrict him from delivering forward guidance.
- The US and Iran agree to halt attacks and talk in Qatar over the future of Hormuz.
The US Dollar (USD) starts the week on a steady note, with the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trading calmly near 101.35.
However, investors brace for high volatility in the counter as an array of United States (US) data is scheduled to be published this week, especially the Nonfarm Payrolls (NFP) data for June, which will be released on Thursday.
Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook. According to the CME FedWatch tool, there is almost 90% chance that the Fed will deliver at least one interest rate hike this year.
Since the Fed’s first monetary policy announcement in the middle of the current month under new Chairman Kevin Warsh, the importance of data in monetary policy expectations has increased, as comments from Warsh indicated that the central bank will talk less in the current circumstances.
“Absent, also, is so-called forward guidance—which we agreed was not well suited to the current policy conjuncture,” according to the transcript of Chairman Warsh’s Press Conference.
This week, investors will also focus on the US JOLTS Job Openings data for May, and ISM Manufacturing and Services PMI data for June.
On the global front, investors await talks between the US and Iran in Qatar after the exchange of attacks in the last several days near the Strait of Hormuz, a critical chokepoint to one-fifth of global energy flows.
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.
- Silver drops as renewed US-Iran tensions over the Hormuz lift concerns over oil prices and inflation.
- Silver's decline is capped as the US and Iran pause attacks ahead of this week's peace talks in Doha.
- Non-yielding metal faces headwinds as persistent hawkish Fed expectations keep pressure on the precious metal.
XAG/USD depreciates after two days of gains, trading around $58.80 per troy ounce during the Asian hours on Monday. The price of the white metal falls as fresh military clashes between the United States (US) and Iran in the Strait of Hormuz drove oil higher, sparking renewed fears of inflation. Investors remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment.
However, Washington and Tehran have agreed to halt attacks against each other before peace talks resume in Doha this week. This diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both the US and Iran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.
The non-yielding Silver also faces challenges due to lingering hawkish expectations from the Federal Reserve (Fed). According to the CME FedWatch Tool, traders are currently pricing in a 59.7% probability of a rate hike as soon as September 2026.
Traders are awaiting this week's key labor market reports, culminating in Thursday’s Nonfarm Payrolls (NFP) data, which are expected to provide critical clues regarding the Fed's interest rate trajectory. Forecasters anticipate June job growth to come in at 114,000, with the Unemployment Rate expected to remain flat at 4.3%.
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.
- USD/JPY trades with mild gains near 161.80 in Monday’s Asian session.
- The US and Iran appear to be returning to talks to end the war.
- Traders are on high alert for further Japanese Yen intervention as the currency remains highly volatile near the 162.00 psychological level.
The USD/JPY pair posts modest gains around 161.80 during the Asian trading hours on Monday, bolstered by uncertainty surrounding US-Iran talks. Nonetheless, the potential upside might be limited amid fears of intervention from Japanese authorities. Traders will keep an eye on the US June Nonfarm Payrolls (NFP) report, which is due later on Thursday.
A US President Donald Trump administration official said on Monday that the US and Iran will “stand down for now” after both sides traded fire near the Strait of Hormuz. The US official added that vessels can move freely in the strait, but the interim agreement has not been reflected in the waterway. Two countries plan to meet on Tuesday in Qatar, Axios reported.
Markets are on high alert for currency intervention from Japanese officials, which might support the Japanese Yen (JPY) and act as a headwind for the pair. Japan’s Chief Cabinet Secretary Minoru Kihara said last week that officials will take appropriate action against the foreign exchange moves if needed.
The Bank of Japan (BoJ) hawkish board member Naoki Tamura stated last week that the central bank should raise interest rates once every few months and stand ready to speed up the pace of hikes, highlighting the BoJ’s focus on inflationary risks from the Middle East conflict.
The Japanese central bank is scheduled to hold its next monetary policy meeting on July 30–31, when it is widely expected to hold rates steady but will also update quarterly forecasts that markets will parse for signals on the timing of the next hike. A Reuters poll taken before the June hike showed most economists forecasting a rate increase to 1.25% in the fourth quarter (Q4).
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/CAD slips as the US Dollar weakens on news that Washington and Tehran paused attacks ahead of Doha peace talks.
- Traders remain highly sensitive to Middle East headlines, assessing regional stability and its impact on global risk appetite.
- The commodity-linked Canadian Dollar’s upside could be restrained as falling oil prices drag down the energy-dependent currency.
USD/CAD remains in the negative territory for the third consecutive day, trading around 1.4190 during the Asian hours on Monday. The pair depreciates as the US Dollar (USD) inches lower following reports that Washington and Tehran have agreed to halt attacks against each other before peace talks resume in Doha this week.
However, market participants remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment. This diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both Washington and Tehran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.
The Greenback’s downside may be protected by lingering hawkish expectations from the Federal Reserve. According to the CME FedWatch Tool, traders are currently pricing in a 59.7% probability of a rate hike as soon as September 2026. This week's key labor market reports—culminating in Thursday’s Nonfarm Payrolls (NFP) data—are expected to provide critical clues regarding the Fed's interest rate trajectory. Forecasters anticipate June job growth to come in at 114,000, with the unemployment rate expected to remain flat at 4.3%.
Additionally, the commodity-linked Canadian Dollar (CAD) could face challenges due to lower oil prices. As Canada is one of the largest crude exporters, lower oil prices put downward pressure on the country’s foreign inflows.
West Texas Intermediate (WTI) oil price trades around $69.80 at the time of writing. Crude oil prices fell after Reuters’ report on Sunday that the US and Iran have agreed to temporarily pause recent hostilities in the Gulf and renew discussions regarding their ongoing dispute over the Strait of Hormuz.
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.
Reserve Bank of Australia (RBA) Assistant Governor Chris Kent said during a review of alternative monetary policy tools that the central bank will be better prepared to respond to the next crisis it faces, Bloomberg reported on Monday.
Key quotes
The cash rate target remains our primary and preferred instrument.
Additional tools can play an important role during extraordinary times and provide some extra support, but they are more complex and carry greater risks.
In those circumstances, it may consider responding earlier and more decisively to disinflationary shocks by pre-emptively lowering the cash rate target.
In short, the most important support during the pandemic came from lowering the cash rate to historically low levels and keeping it there.
Additional tools can reinforce that support, but their effects – beyond addressing severe market strains – are likely to be more marginal and their risks need to be managed carefully.
Market reaction
At press time, the GBP/USD pair trades 0.12% lower at around 0.6886.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- Gold price edges lower to near $4,060 in Monday’s Asian session.
- US and Iran to ‘stand down for now,’ a US official said.
- All eyes will be on the US Nonfarm Payrolls data later on Thursday.
Gold price (XAU/USD) attracts some sellers to around $4,060 during the Asian trading hours on Monday. The precious metal declines amid uncertainty surrounding US-Iran talks and hawkish Federal Reserve (Fed) expectations. The US Nonfarm Payrolls (NFP) data will take center stage later on Thursday.
The United States (US) and Iran agreed to halt attacks and plan to meet in Doha, Qatar, on Tuesday to resolve their dispute over the Strait of Hormuz, Axios reported. US officials stated that Washington and Tehran “will stand down for now” following an exchange of fire near the critical waterway over the last several days.
However, uncertainty remains high as Iran’s Foreign Minister Abbas Araghchi said that responsibility for the Strait of Hormuz lies solely with Tehran. An Iranian official warned that any attempt to bypass its preferred route in the waterway will cause “tension and escalation.” Any signs of rising tensions in the Middle East could raise inflation worries, prompting traders to raise their bets on rate hikes and weighing on the non-yielding bullion.
Traders are now pricing in nearly a 59.7% chance of a rate hike as early as September 2026, according to the CME FedWatch Tool. The upcoming NFP and labor market reports on Thursday will offer some hints about the US interest rate path. Economists forecast an increase of 114,000 jobs in June and the Unemployment Rate holding steady at 4.3% during the same period.
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.
On Monday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8175 compared to the previous day's fix of 6.8166 and 6.8041 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.
- GBP/USD falls amid higher uncertainty surrounding Middle East tensions.
- Gulf hostilities halted to resume Strait of Hormuz talks following several days of retaliatory strikes.
- British politician Andy Burnham will outline his national vision on Monday.
GBP/USD inches lower after opening at a bullish gap, trading around 1.3200 during the Asian hours on Monday. The pair loses ground as the Pound Sterling (GBP) declines against the US Dollar (USD) amid emerging safe-haven demand, which could be attributed to the United States (US)-Iran talks uncertainty.
Market participants remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment. According to a Reuters report on Sunday, the two nations have agreed to temporarily pause recent hostilities in the Gulf and renew discussions regarding their ongoing dispute over the Strait of Hormuz.
This US-Iran diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both Washington and Tehran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.
In the United Kingdom (UK), following Keir Starmer’s resignation as Labour leader due to intense political pressure, newly sworn-in MP Andy Burnham is set to outline his national vision on Monday. As the current frontrunner to take over the governing party, a lack of alternative challengers could see the former Greater Manchester mayor installed as Prime Minister as early as July 17.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
Iran’s Foreign Minister Abbas Araghchi said that responsibility for the Strait of Hormuz lies solely with Tehran and warned that any attempt to bypass its preferred route in the waterway will cause “tension and escalation,” Aljazeera reported on Monday.
Last Sunday, the US and Iran agreed to halt attacks and meet in Doha, Qatar, on Tuesday to resolve their dispute over the Strait of Hormuz, the Axios news site reported. US officials stated that Wasington and Tehran “will stand down for now” following an exchange of fire near the critical waterway over the last several days.
Elsewhere, Hezbollah accused the Israeli military of breaching the ceasefire in Lebanon by launching several attacks across southern areas on Sunday. “We are monitoring and observing these violations [of the ceasefire agreement] and reserve our right to defend our homeland and people,” the statement added.
Lebanese Parliament Speaker Nabih Berri said that the trilateral framework agreement between Lebanon, Israel and the US “will not pass” and “will not be implemented” as it does not guarantee Lebanon’s rights.
Market reaction
At press time, the WTI Oil price trades 0.48% lower at around $69.80.
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.
- EUR/USD may fall as the US Dollar could gain ground from uncertainty surrounding Middle East tensions.
- The US and Iran paused Gulf hostilities to resume Strait of Hormuz talks following several days of retaliatory strikes.
- Commerzbank expects one final September ECB rate hike, as quantitative models show sticky inflation despite declining oil and gas prices.
EUR/USD pair maintains its upward momentum for a third consecutive session, trading near 1.1390 during Monday's Asian hours. Despite this positive streak, the Euro’s (EUR) gains could face headwinds if geopolitical uncertainty sparks a flight to safety, boosting the US Dollar (USD). Market participants remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment.
The primary geopolitical focus centers on the volatile situation between the United States (US) and Iran. According to a Reuters report on Sunday, the two nations have agreed to temporarily pause recent hostilities in the Gulf and renew discussions regarding their ongoing dispute over the Strait of Hormuz. This diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both Washington and Tehran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.
Meanwhile, currency traders are weighing shifting monetary policy expectations for the European Central Bank (ECB) against a backdrop of easing energy prices, which have helped cool immediate inflation fears.
However, Commerzbank analysts still expect the central bank to deliver one final interest rate hike in September. According to their quantitative modeling, despite the decline in oil and gas prices, underlying inflation is projected to stick close to 3% through the end of the year because businesses are expected to gradually pass their accumulated, higher operational costs down to consumers.
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.
Forex Market News
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At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
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