Forex News
- NZD/USD gains ground to near 0.5905 in Wednesday’s Asian session.
- New Zealand’s CPI rose 3.1% YoY in Q1, hotter than expected.
- Warsh rejected senators’ concerns that he would bend to Trump’s demands to cut interest rates.
The NZD/USD pair gathers strength to around 0.5905 during the Asian trading hours on Wednesday. The New Zealand Dollar (NZD) edges higher against the US Dollar (USD) on hotter-than-expected domestic inflation data.
New Zealand’s Consumer Price Index (CPI) rose 3.1% YoY in the first quarter (Q1) of 2026, versus 3.1% increase seen in the fourth quarter of 2025, Statistics New Zealand reported on Tuesday. This figure came in above the market consensus of 2.9%. The quarterly CPI inflation climbed to 0.9% in Q1 from the previous reading of 0.6%, beating the estimates of 0.8%.
Higher-than-expected Q1 inflation data has fueled market speculation that the Reserve Bank of New Zealand (RBNZ) may need to raise interest rates sooner than previously. This, in turn, provides some support to the Kiwi.
On the other hand, remarks from Federal Reserve (Fed) Chair nominee Kevin Warsh regarding independent monetary policy might help limit the USD’s losses. Warsh said on Tuesday he had made no promises to Trump about cutting interest rates, as he tried to assure US senators mulling his confirmation to lead the Fed that he would act independently of the White House while pursuing broad reforms.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The United Kingdom’s Office for National Statistics will publish the March CPI data on Wednesday.
- The annual UK headline inflation is set to pick up in March, while growth in core CPI is seen stabilizing.
- The UK CPI data could trigger a big reaction in the Pound Sterling amid receding BoE interest rate hike bets.
The United Kingdom (UK) Office for National Statistics (ONS) will publish the high-impact Consumer Price Index (CPI) data for March at 06:00 GMT.
The report could significantly alter market expectations about a Bank of England (BoE) interest rate hike later this year, ramping up volatility around the Pound Sterling (GBP), as traders brace for the impact of the energy shock from the Middle East war.
What to expect from the next UK inflation report?
The UK Consumer Price Index is expected to rise 3.3% year-over-year (YoY) in March, following a 3% increase in February. The reading is likely to come in above the BoE’s projection of 3%, moving further away from its 2% target.
Core CPI inflation, which excludes energy, food, alcohol, and tobacco prices, is expected to hold steady at 3.2% YoY in the reported period.
According to industry experts, official data is expected to show that service inflation remained stable at 4.3% YoY in March.
Meanwhile, the British monthly CPI is seen rising by 0.6% in the same period after a 0.4% growth in February.
"We expect headline inflation to rise to 3.3% year-over-year from 3.0%, driven by the energy supply shock, while core inflation is expected to hold at 3.2%, matching February and in line with consensus expectations. This would mark a significant reversal in the progress toward disinflation seen in the U.K. through February and is likely to persist for several months, “ Wells Fargo said in a research note ahead of the data release.
How will the UK Consumer Price Index report affect GBP/USD?
It’s the inflation print that covers the first monthly period data after the United States (US) and Israel launched airstrikes on Iran in late February, prompting retaliatory strikes by the Iranian Republic and leading to higher energy costs, particularly for Oil. Therefore, an uptick in headline British inflation, both monthly and annual, is well anticipated.
However, markets may consider this a one-off, as what would matter the most for the BoE when deciding on interest rates are the so-called second-round effects on core inflation from the war impact.
Speaking on the energy shock-led inflationary pressures, in a speech on April 14, BoE policymaker Megan Greene said that “we won't have definitive evidence of second-round effects for a while, it could take months.”
She further noted that “we can't just look through negative supply shocks; the view needs to be more nuanced.”
“The swaps curve has slashed BoE rate hike bets over the next twelve months from as much as 100 basis points (bps) on March 26 to 25 bps currently. BoE rate hike bets should ease further given excess slack in the economy. The BoE estimates a negative output gap of -1% of GDP in 2026,” BBH Analysts noted.
The latest labor data published by the Office for National Statistics (ONS) showed annual growth in regular earnings, excluding bonuses, slowed less than expected to 3.6% in the three months to February from 3.8% previously, while the Unemployment Rate unexpectedly fell to 4.9% in the three months to February, from 5.2% in January, and lower than estimates of 5.2%.
With signs of stabilization in the UK labor market and higher inflation projections, the March CPI data will be critical to keeping bets alive for a BoE rate hike this year.
A surprise uptick in the core CPI and services inflation could double down on hawkish BoE expectations. In such a case, the Pound Sterling will receive the much-needed lift, driving GBP/USD back toward the 1.3600 barrier. Conversely, an unexpected slowdown in core readings could push back against BoE rate hike bets, weighing negatively on the pair.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and explains: “GBP/USD is defending the triple top breakout resistance-turned-support near 1.3485, with the 14-day Relative Strength Index (RSI) momentum indicator holding well above the 50 level.”
“The pair needs acceptance above the 1.3600 round level to break the consolidative mode, paving the way toward the 1.3700 threshold. The next topside target is aligned at the February high of 1.3732. On the flip side, the immediate support is seen near 1.3485, below which the 1.3415 area could challenge bullish commitments. That zone is the confluence of the 50-day Simple Moving Average (SMA) and the 200-day SMA. Further down, the 21-day SMA at 1.3384 will be the level to beat for sellers,” Dhwani adds.
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Wed Apr 22, 2026 06:00
Frequency: Monthly
Consensus: 3.3%
Previous: 3%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- GBP/USD steadies after Trump extends Iran ceasefire until negotiations make progress.
- US Vice President Vance canceled his Islamabad trip after Iran declined participation.
- Markets expect UK headline inflation to rise to 3.3% YoY from 3.0%, while Core CPI holds at 3.2% in March.
GBP/USD remains flat after registering modest losses in the previous trading day, hovering around 1.3510 during the Asian hours on Wednesday. The pair moves little as the US Dollar (USD) maintains its position after Bloomberg reported that US President Donald Trump will extend the ceasefire with Iran until negotiations between the two sides make progress.
Reports indicated that Vice President JD Vance canceled a planned visit to Islamabad for negotiations after Tehran informed Washington via Pakistan that it would not attend the meeting.
However, uncertainty surrounding the US-Iran peace talks prevails. Trump said earlier, “I expect to be bombing” if Iran failed to meet his demands, adding the military was “raring to go.” Moreover, the US blockade on Iranian vessels remains in place as plans for a second round of US-Iran peace talks collapsed. Iran's military warned of a powerful attack on predetermined targets in view of repeated threats by US President Donald Trump.
The Greenback gained support against its major peers following stronger-than-expected US Retail Sales data released on Tuesday. The US Census Bureau reported that Retail Sales increased 1.7% month-over-month (MoM) in March, compared to the 0.7% rise (revised from 0.6%) recorded in February. The figure exceeded market expectations of 1.4%. On a YoY basis, Retail Sales rose 4.0% in March, matching February’s reading.
In the United Kingdom (UK), Tuesday’s employment data delivered a mixed picture for March. The ILO Unemployment Rate declined to 4.9%, beating the 5.2% consensus. However, the Claimant Count rose by 26.8K, exceeding the 21.4K forecast, while the 3M Employment Change slowed to 25K from 84K previously.
Attention now turns to Wednesday’s March Consumer Price Index (CPI) release, where headline inflation is expected to rise to 3.3% YoY from 3.0%, while the Core CPI is projected to remain steady at 3.2%.
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Wed Apr 22, 2026 06:00
Frequency: Monthly
Consensus: 3.3%
Previous: 3%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
US Treasury secretary Scott Bessent said on Wednesday that the United States Navy will continue the blockade of Iranian ports, warning that constraints on maritime trade are aimed at targeting Iran’s main revenue sources.
“In a matter of days, Kharg Island storage will be full and the fragile Iranian oil wells will be shut in. Constraining Iran’s maritime trade directly targets the regime’s primary revenue lifelines,” said Bessent.
Meanwhile, Iran's Ambassador to the UN, Amir Saeid Iravani, stated that ending the blockade remains a condition for to rejoin peace talks. He added when that happens, “I think the next round of the negotiations will take place”.
UK Defense Ministry said in a statement that military planners from more than 30 countries will hold two-day talks in London from Wednesday to advance a mission to reopen the Strait of Hormuz and draw up detailed plans.
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.
- USD/JPY struggles to capitalize on the previous day’s strong move up to over a one-week high.
- An extension of the US-Iran ceasefire undermines the USD and acts as a headwind for the pair.
- Economic woes and fading BoJ rate hike bets weigh on the JPY, lending support to spot prices.
The USD/JPY pair oscillates in a narrow band during the Asian session on Wednesday and currently trades around the 159.30 area, just below a one-week high set the previous day. Spot prices, however, remain confined in a familiar range held over the past month or so, warranting caution before placing aggressive directional bets.
The Japanese Yen (JPY) continues with its relative underperformance on the back of economic concerns stemming from the risk to energy supplies due to continued disruptions to shipping through the Strait of Hormuz. In fact, US President Donald Trump reiterated on Tuesday that the US Navy blockade of Iranian ports will continue. In response, Iran's military said that it won't reopen the strategic waterway while the naval blockade persists.
Furthermore, growing acceptance that the Bank of Japan (BoJ) will hold interest rates steady at its upcoming April meeting turns out to be another factor undermining the JPY and supporting the USD/JPY pair. However, Reuters, citing sources, reported on Tuesday that the BoJ is likely to signal its readiness to raise borrowing costs as soon as June in the face of mounting inflationary pressures. Moreover, intervention fears help limit JPY losses.
The US Dollar (USD), on the other hand, is pressured by the optimism that followed Trump's announcement of an indefinite extension of the ceasefire with Iran, hours before it was set to expire. Furthermore, a modest slide in Crude Oil prices eases inflationary concerns, which, along with diminishing odds for a rate hike by the US Federal Reserve (Fed), exerts some pressure on the USD and contributes to keeping a lid on the USD/JPY pair.
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 softens to around 1.3655 in Wednesday’s Asian session.
- Trump announced he was extending a ceasefire with Iran indefinitely, a day before it was set to expire.
- US Retail Sales climbed 1.7% MoM in March, hotter than expected.
The USD/CAD pair trades on a weaker note near 1.3655 during the Asian trading hours on Wednesday. Tensions in the Strait of Hormuz provide some support to the commodity-linked Canadian Dollar (CAD) against the US Dollar (USD).
US President Donald Trump said he will extend the ceasefire with Iran until talks between the two countries have progressed. In a Truth Social post, Trump stated that he would maintain a blockade over ships coming to and from Iran in the Strait of Hormuz.
A White House official confirmed in a statement that the US Vice President JD Vance’s trip to Pakistan would not take place on Tuesday. Uncertainty surrounding the US-Iran peace talks could underpin the Canadian Dollar (CAD) in the near term. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD.
On the other hand, hotter-than-expected US Retail Sales data might help limit the Greenback’s losses. Retail Sales in the United States (US) rose 1.7% MoM in March, according to the US Census Bureau on Tuesday. This figure followed the 0.7% increase (revised from 0.6%) seen in February and came in above the market consensus of 1.4%. On a yearly basis, Retail Sales jumped 4.0% in March, matching February's print.
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.
- US Dollar Index remains flat as President Trump extends the Iran ceasefire.
- US blockade on Iranian vessels persists after the second round of US-Iran peace talks collapsed.
- US Retail Sales rose 1.7% MoM in March, accelerating from February’s 0.7% increase.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground after registering modest gains in the previous day and trading around 98.40 during the Asian hours on Wednesday.
The Greenback maintains its position after Bloomberg reported on Wednesday that US President Donald Trump will extend the ceasefire with Iran until negotiations between the two sides make progress. Trump’s statement marked a sharp shift in tone from earlier in the day, when he said, “I expect to be bombing” if Iran failed to meet his demands, adding the military was “raring to go.”
However, uncertainty surrounding the US-Iran peace talks prevails. The US blockade on Iranian vessels remains in place as plans for a second round of US-Iran peace talks collapsed. Reports indicated that Vice President JD Vance canceled a planned visit to Islamabad for negotiations after Tehran informed Washington via Pakistan that it would not attend the meeting. Iran's military warned of a powerful attack on predetermined targets in view of repeated threats by US President Donald Trump.
The US Dollar also gained support following stronger-than-expected US Retail Sales data released on Tuesday. The US Census Bureau reported that Retail Sales increased 1.7% month-over-month (MoM) in March, compared to the 0.7% rise (revised from 0.6%) recorded in February. The figure exceeded market expectations of 1.4%. On a YoY basis, Retail Sales rose 4.0% in March, matching February’s reading.
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.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8635 compared to the previous day's fix of 6.8594 and 6.8233 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.
- Silver shows some resilience below the 200-SMA on H4 and regains some positive traction.
- The broader technical setup warrants some caution before positioning for further upside.
- A move beyond 23.6% Fibo. is needed to back the case for the resumption of the uptrend.
Silver (XAG/USD) attracts some buyers during the Asian session on Wednesday and moves away from a one-week low, around the $75.50 region, which it touched the previous day. The white metal currently trades near mid-$77.00s, up just over 1% for the day, though the mixed technical setup warrants caution before placing aggressive directional bets.
The XAG/USD holds just above the 200-period Simple Moving Average (SMA) on the 4-hour chart but is capped by the 23.6% Fibonacci retracement of the recent goodish recovery from the $61.00 mark, or the March swing low. This leaves the near-term tone neutral to slightly bearish. The modest cushion provided by the 200-SMA suggests underlying demand on dips.
Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains below zero with a negative reading, and the Relative Strength Index (RSI) hovers near 44. Both the momentum indicators hint that recovery attempts may struggle while the XAG/USD trades under the nearby Fibonacci barrier.
A sustained strength beyond the 23.6% retracement at $77.76 should pave the way for additional gains. Further upside hurdles, however, only emerge toward the cycle high reference at $82.90. On the downside, initial support is seen at the 200-period SMA at $76.58, followed by a more substantial Fibonacci cluster at the 38.2% retracement near $74.59.
A convincing break below the latter would expose deeper supports at $72.02 and $69.46, corresponding to the 50.0% and 61.8% retracements of the broader upswing.
(The technical analysis of this story was written with the help of an AI tool.)
XAG/USD 4-hour chart
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.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
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.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
