Forex News
- Silver gains support from safe-haven demand amid rising US–Venezuela tensions.
- US President Trump said the US will keep seizing Venezuelan Oil and ships, and may sell the Oil.
- Fed’s Miran said failing to ease policy raises recession risks, adding the need to dissent for a 50 bps cut diminishes as rates fall.
Silver price (XAG/USD) hit a fresh record high of $70.00 during the Asian hours on Tuesday, trading around $69.70 per troy ounce at the time of writing. Precious metals, including Silver receive support from safe-haven demand amid rising United States (US)–Venezuela tensions.
US President Donald Trump said on Monday that the US would keep and maybe sell the Oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships. Moreover, Ukraine continues strikes on Russian energy infrastructure, with the latest attack damaging two vessels and two piers and igniting a fire in a Black Sea coastal village.
The non-interest-bearing Silver attracts investors amid growing expectations that the Federal Reserve will continue easing policy, reinforced by President Donald Trump’s calls for lower borrowing costs.
Federal Reserve (Fed) Member of the Board of Governors Stephen Miran said in an interview on Bloomberg TV on Monday that the last few months have seen data consistent with his view of the world and that he doesn’t see a recession in the near term. Miran said that failing to ease policy would raise recession risks, adding that the need to dissent for a 50 basis points diminishes over time as rates are reduced.
Traders await the US Gross Domestic Product (GDP) Annualized for the third quarter due on Tuesday. The US economy is estimated to have expanded at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2.
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.
- EUR/JPY falls back from record highs to near 184.00 as the Japanese Yen gains ground.
- Japan’s Katayama said that the government has a free hand in dealing with excessive moves.
- ECB officials see inflation staying close to 2% in the medium term.
The EUR/JPY pair corrects to near 184.00 during the Asian trading session on Tuesday from its all-time high of 184.92 posted the previous day. The pair retraces as comments from Japan Finance Minister Satsuki Katayama signaling a likely intervention by the administration against one-way depreciation in the Japanese Yen (JPY) have provided it some cushion.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.19% | -0.45% | -0.11% | -0.15% | -0.33% | -0.31% | |
| EUR | 0.17% | -0.01% | -0.28% | 0.07% | 0.02% | -0.15% | -0.14% | |
| GBP | 0.19% | 0.01% | -0.23% | 0.08% | 0.03% | -0.11% | -0.12% | |
| JPY | 0.45% | 0.28% | 0.23% | 0.34% | 0.31% | 0.09% | 0.15% | |
| CAD | 0.11% | -0.07% | -0.08% | -0.34% | -0.02% | -0.22% | -0.19% | |
| AUD | 0.15% | -0.02% | -0.03% | -0.31% | 0.02% | -0.17% | -0.16% | |
| NZD | 0.33% | 0.15% | 0.11% | -0.09% | 0.22% | 0.17% | 0.01% | |
| CHF | 0.31% | 0.14% | 0.12% | -0.15% | 0.19% | 0.16% | -0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
“Japan has a free hand in dealing with excessive moves in the Yen,” Katayama said, and added, “Will take appropriate action against excessive moves.”
However, the intervention boost from the Japanese government is expected to provide a short-lived cushion to the Yen due to a lack of fundamental support.
The cautious tone from Bank of Japan (BoJ) officials over the monetary-tightening campaign in 2026 has been a drag on the Yen in the past few trading days. Last week, the BoJ kept the door open for further interest rate hikes after raising them by 25 basis points (bps) to 0.75%m but refrained from offering any timeline and target.
Former BoJ policymaker, Makoto Sakurai, said in an interview with Reuters on Monday that the next interest rate hike from the central bank “is expected in June or July next year”, adding that “further rate hikes could become more challenging though”.
Meanwhile, the Euro (EUR) is broadly stable as investors struggle to gauge the direction of Eurozone interest rates in 2026. A majority of European Central Bank (ECB) officials have stated that monetary policy adjustments are unlikely as inflation is expected to remain close to the 2% target in the near term.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- Australian Dollar appreciates after the release of the Reserve Bank of Australia's Minutes of its December meeting.
- RBA Meeting Minutes showed growing doubt that policy remains restrictive as inflation pressures appear more persistent.
- The US Dollar faced headwinds as expectations grew that the Fed would continue easing policy.
The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Tuesday, following the release of the Reserve Bank of Australia (RBA) Minutes of its December monetary policy meeting. Additionally, the AUD/USD pair appreciated as the US Dollar (USD) faced challenges amid growing expectations that the Federal Reserve will continue easing policy, reinforced by President Donald Trump’s calls for lower borrowing costs.
The RBA Meeting Minutes showed that board members signalled growing less confident that monetary policy remains restrictive, as evidence mounts that inflation pressures may prove more persistent than previously expected.
Policymakers also indicated that they would assess policy at future meetings, noting that G4 inflation data had been released ahead of the February meeting. They discussed whether a rate increase might be needed at some point in 2026 and felt that it would take a little longer to assess the persistence of inflation.
The ASX 30-Day Interbank Cash Rate Futures February 2026 contract was trading at 96.34 as of December 18, implying a 27% probability of a rate increase to 3.85% at the next RBA Board meeting.
US Dollar declines as precious metals rally amid rising geopolitical tensions
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is losing ground and trading around 98.20 at the time of writing. Traders await the US Gross Domestic Product (GDP) Annualized for the third quarter due on Tuesday. The US economy is estimated to have expanded at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2.
- Federal Reserve Fed Member of the Board of Governors Stephen Miran said in an interview on Bloomberg TV on Monday that the last few months have seen data consistent with his view of the world and that he doesn’t see a recession in the near term. Miran said that failing to ease policy would raise recession risks, adding that the need to dissent for a 50 basis points diminishes over time as rates are reduced.
- The Greenback faces challenges as precious metals rally, supported by safe-haven demand amid rising geopolitical tensions between the US and Venezuela. US President Donald Trump said on Monday that the US would keep and maybe sell the oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships.
- The CME FedWatch tool shows a 80.0% probability of rates being held at the Fed’s January meeting, up from 75.6% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 20.0% from 24.4% a week ago.
- Federal Reserve Bank of Cleveland President Beth Hammack said on Sunday that monetary policy is in a good position to pause and assess the effects of the 75-basis-point (bps) rate cuts on the economy during the first quarter, according to Bloomberg.
- The University of Michigan reported on Friday that the Consumer Sentiment Index was revised down to 52.9 in December from the previous reading of 53.3. Consumer Expectations Index fell to 54.6 from 55.0. Meanwhile, One-year Inflation Expectations were revised up to 4.2% from 4.1% in both the initial estimate and the prior month.
- The People’s Bank of China (PBOC), China's central bank, announced on Monday to leave its Loan Prime Rates (LPRs) unchanged. The one- and five-year LPRs were at 3.00% and 3.50%, respectively.
- Australia’s Consumer Inflation Expectations, which rose to 4.7% in December from November’s three-month low of 4.5%, support the Reserve Bank of Australia’s (RBA) hawkish stance.
Australian Dollar eyes three-month highs near 0.6700
The AUD/USD pair is trading below 0.6660 on Tuesday. The technical analysis of the daily chart shows the pair is rising above the lower ascending channel boundary, indicating the strengthening of a bullish bias. The 14-day Relative Strength Index (RSI) stands at 63.34, reflecting bullish conditions and building momentum.
A successful break above the nine-day Exponential Moving Average (EMA) has improved the short-term price momentum and led the AUD/USD pair to target the three-month high at 0.6685 and then 0.6707, the highest since October 2024.
On the downside, the immediate support lies at 0.6633, aligned with the lower ascending channel boundary around 0.6630. A break below the channel would expose the six-month low near 0.6414, marked on August 21.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.21% | -0.20% | -0.44% | -0.13% | -0.21% | -0.38% | -0.31% | |
| EUR | 0.21% | 0.00% | -0.22% | 0.09% | -0.00% | -0.17% | -0.11% | |
| GBP | 0.20% | -0.00% | -0.23% | 0.08% | -0.01% | -0.18% | -0.11% | |
| JPY | 0.44% | 0.22% | 0.23% | 0.30% | 0.24% | 0.02% | 0.14% | |
| CAD | 0.13% | -0.09% | -0.08% | -0.30% | -0.06% | -0.26% | -0.17% | |
| AUD | 0.21% | 0.00% | 0.00% | -0.24% | 0.06% | -0.17% | -0.10% | |
| NZD | 0.38% | 0.17% | 0.18% | -0.02% | 0.26% | 0.17% | 0.07% | |
| CHF | 0.31% | 0.11% | 0.11% | -0.14% | 0.17% | 0.10% | -0.07% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic Indicator
RBA Meeting Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.
Read more.Last release: Tue Dec 23, 2025 00:30
Frequency: Weekly
Actual: -
Consensus: -
Previous: -
Source: Reserve Bank of Australia
The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.
- Gold price rises to near an all-time high in Tuesday’s Asian session.
- The prospect of more Fed rate cuts and geopolitical concerns boost the safe-haven flows, benefiting the Gold price.
- The preliminary reading of the US Q3 GDP growth report will be closely watched on Tuesday.
Gold price (XAU/USD) climbs to near a record high during the Asian trading hours on Tuesday. The precious metal has risen 10% over the past month and nearly 70% in 2025 as heightened geopolitical tensions and economic uncertainty have boosted demand for safe-haven assets such as Gold.
Additionally, expectations that the US Federal Reserve (Fed) will cut interest rates further next year could also support the yellow metal. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. The market is pricing in multiple Fed interest rate cuts in 2026 amid signs of easing inflation and sluggish jobs growth.
Traders await the preliminary reading of the US Gross Domestic Product (GDP) for the third quarter (Q3) later on Tuesday. The US economy is projected to have grown at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2. In case of a stronger-than-expected GDP report outcome, this could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term. Also, the US Durable Goods Orders, Industrial Production and ADP employment weekly data will be published on the same day.
Daily Digest Market Movers: Gold jumps on escalating geopolitical tensions, bets on further US rate cuts
- US President Donald Trump said on Monday the United States (US) would maybe keep and maybe sell the oil it had seized off the coast of Venezuela in recent weeks, Reuters reported on Monday. Trump added that the US would also keep the seized ships.
- Russia has intensified its strikes on the southern Ukrainian region of Odesa, causing widespread power cuts and threatening the region's maritime infrastructure, per the BBC.
- Fed Governor Stephen Miran said on Monday he is likely to remain on the central bank's Board of Governors beyond the expiration of his term until whoever President Donald Trump nominates as the next Fed chair is confirmed by the Senate.
- Trump is set to nominate a new central bank chief before Fed Chair Jerome Powell's term ends in May.
- Financial markets are pricing in only a 20.0% chance the Fed will cut interest rates at its next meeting in January, after it reduced them by a quarter-point at each of its last three meetings, according to the CME FedWatch tool.
Gold maintains the overall uptrend, overbought RSI suggests some caution is warranted
Gold edges higher on the day. According to the daily chart, the constructive outlook of the yellow metal prevails, with the price holding above the key 100-day Exponential Moving Average (EMA). The Bollinger Bands widen, suggesting a stronger bullish trend.
Despite the strong trend, the 14-day Relative Strength Index (RSI) is located above 70, indicating an overbought condition. This suggests that any upside extension could be tempered by a period of digestion before the next leg higher.
The recent bull breakout could open the door for a move toward the $4,400 psychological mark. Any follow-through buying above this level could pave the way to $4,450.
On the downside, the initial support level for Gold emerges near the December 22 low of $4,338. Further north, the next contention level to watch is $4,300, the round figure, and the December 17 low.
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.
- USD/CAD weakens as Fed easing expectations grow, reinforced by President Trump’s calls for lower borrowing costs.
- Fed’s Miran said failing to ease policy raises recession risks, adding the need to dissent for a 50 bps cut diminishes as rates fall.
- The commodity-linked CAD gains support from higher Oil prices amid rising geopolitical tensions.
USD/CAD extends its losses for the second successive session, trading around 1.3740 during the Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) faces headwinds amid growing expectations that the Federal Reserve will continue easing policy, reinforced by President Donald Trump’s calls for lower borrowing costs.
Federal Reserve (Fed) Member of the Board of Governors Stephen Miran said in an interview on Bloomberg TV on Monday that the last few months have seen data consistent with his view of the world and that he doesn’t see a recession in the near term. Miran said that failing to ease policy would raise recession risks, adding that the need to dissent for a 50 basis points diminishes over time as rates are reduced.
Traders await the US Gross Domestic Product (GDP) Annualized for the third quarter due on Tuesday. The US economy is estimated to have expanded at an annual rate of 3.2% in the third quarter. It would be a slowdown from the 3.8% growth in Q2.
The USD/CAD pair struggles as the US Dollar weakens alongside a rally in precious metals, driven by safe-haven demand amid rising United States (US)–Venezuela tensions. The commodity-linked Canadian Dollar (CAD) gains support from higher Oil prices amid geopolitical tensions, reflecting Canada’s status as the largest crude exporter to the US.
West Texas Intermediate (WTI) Oil price trades around $57.90 per barrel at the time of writing. Oil prices rise as traders remain focused on heightened geopolitical risks. US President Donald Trump said on Monday that the US would keep and maybe sell the Oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships.
Ukraine continues strikes on Russian energy infrastructure, with the latest attack damaging two vessels and two piers and igniting a fire in a Black Sea coastal village, a key corridor for Russia’s energy exports.
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.
Japan’s Finance Minister Satsuki Katayama said on Tuesday that the official has a free hand in dealing with excessive moves in the Japanese Yen (JPY).
Key quotes
Will not comment on forex levels or interest rates.
Will take appropriate action against excessive moves.
Japan has a free hand in dealing with excessive moves in the Yen.
FX moves following BOJ presser speculative, not reflecting fundamentals.
Market reaction
As of writing, the USD/JPY pair is down 0.33% on the day at 156.48.
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.
- WTI is seen consolidating its strong gains registered over the past two days.
- Risk of disruptions to Venezuela and Russia supplies supports the commodity.
- Dovish Fed-inspired USD selling could also act as a tailwind for Crude Oil prices.
West Texas Intermediate (WTI) US Crude Oil prices struggle to capitalize on the move up witnessed over the past two days and oscillate in a narrow band during the Asian session on Tuesday. The commodity is currently placed just below the $58.00 mark or over a one-week top, touched the previous day.
Rising tensions between the US and Venezuela, along with reports of Ukrainian drone attacks on two Russian vessels at a Black Sea port, fuel concerns about supply disruption and might continue to act as a tailwind for the black liquid. Adding to this, global demand appears more resilient than feared, as imports into India and China remain strong. This could further support Crude Oil prices and backs the case for the emergence of dip-buying at lower levels.
Meanwhile, the US Dollar (USD) hits a one-week low following US Treasury Secretary Scott Bessent's comments on Monday, which added to longer-term uncertainty around Federal Reserve (Fed) credibility. Bessent floated the idea that the new Fed chair could scrap the dot plot and also flagged possible changes to the inflation framework and communications. This continues to weigh on the USD and benefits USD-denominated commodities, including Oil.
Hence, it will be prudent to wait for strong follow-through selling before confirming that the black liquid's recent recovery move from the lowest level since April, touched last week, has run out of steam and positioning for deeper losses. Moving ahead, the market focus now shifts to US macro releases – the preliminary Q3 GDP report and Durable Goods Orders. The data would provide a fresh insight about the health of the world's largest economy and drive Oil prices.
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 People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 7.0523 compared to the previous day's fix of 7.0572 and 7.0267 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.
- NZD/USD drifts higher to around 0.5805 in Tuesday’s early Asian session.
- The RBNZ’s hawkish stance could support the Kiwi, but safe-haven flows might cap its upside.
- The preliminary reading of the US Q3 GDP data will be the highlight on Tuesday.
The NZD/USD pair gains ground to near 0.5805 during the early Asian trading hours on Tuesday. The New Zealand Dollar (NZD) edges higher against the Greenback amid the Reserve Bank of New Zealand's (RBNZ) hawkish outlook on the future policy path. The preliminary reading of the US Gross Domestic Product (GDP) for the third quarter (Q3) will take center stage later on Tuesday.
The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) by 25 basis points (bps) to 2.25% at its November meeting. The New Zealand central bank signaled that future rate changes will depend on the economic and inflation outlook, and analysts believe the rate-cutting cycle is likely finished for now. This, in turn, could provide some support to the Kiwi against the USD.
On the other hand, the risk-off sentiment amid uncertainty and rising geopolitical tensions could boost the safe-haven currency, such as the US Dollar (USD), and create a headwind for the pair. US President Donald Trump said on Monday that the US would keep and maybe sell the oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships.
Traders await the preliminary reading of the US GDP report for Q3 later in the day. The US economy is estimated to have expanded at an annual rate of 3.2% in Q3. It would be a slowdown from the 3.8% growth in Q2. In case of a stronger-than-expected outcome, this could underpin the USD against the NZD in the near term.
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 Reserve Bank of Australia (RBA) published the Minutes of its December monetary policy meeting on Tuesday, which showed that board members signalled growing less confident that monetary policy remains restrictive, as evidence mounts that inflation pressures may prove more persistent than previously expected.
Additional takeaways
Recent data indicated risks to inflation have increased to the upside.
Needed to observe how recent rise in bond yields affected financial conditions.
Economy operating with excess demand, unclear whether financial conditions are tight enough.
Board judged labor market was still somewhat tight and output gap positive.
Would assess policy at future meetings, noted G4 inflation data were released before February meeting.
Discussed whether a rate increase might be needed at some point in 2026.
Board felt it would take a little longer to assess persistence of inflation.
Some members felt conditions were no longer restrictive, some felt they were somewhat restrictive.
Board judged it too early to know whether rise in inflation would prove persistent.
Possible holding cash rate steady for some time may be sufficient to keep economy in balance.
Full impact of policy easing this year was yet to be felt.
Measures of capacity utilisation indicated supply constraints.
Market reaction
At the time of press, the AUD/USD pair is up 0.11% on the day at 0.6663.
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.41% | -0.65% | -0.60% | -0.35% | -0.78% | -1.04% | -0.43% | |
| EUR | 0.41% | -0.23% | -0.22% | 0.06% | -0.36% | -0.63% | -0.01% | |
| GBP | 0.65% | 0.23% | 0.13% | 0.29% | -0.14% | -0.40% | 0.21% | |
| JPY | 0.60% | 0.22% | -0.13% | 0.27% | -0.14% | -0.40% | 0.07% | |
| CAD | 0.35% | -0.06% | -0.29% | -0.27% | -0.33% | -0.66% | -0.07% | |
| AUD | 0.78% | 0.36% | 0.14% | 0.14% | 0.33% | 0.03% | 0.35% | |
| NZD | 1.04% | 0.63% | 0.40% | 0.40% | 0.66% | -0.03% | 0.62% | |
| CHF | 0.43% | 0.01% | -0.21% | -0.07% | 0.07% | -0.35% | -0.62% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section was published on December 22 at 22.36 GMT as a preview of the RBA Minutes release.
The RBA Minutes Overview
The Reserve Bank of Australia (RBA) will publish its minutes of its monetary policy meeting on Tuesday at 00.30 GMT. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD.
The minutes also reveal considerations on international economic developments and the exchange rate value.
How could the RBA Minutes affect AUD/USD?
AUD/USD trades on a positive note on the day in the lead up to the RBA Minutes. The pair gathers strength as the US Dollar (USD) weakens amid expectations for a dovish Federal Reserve (Fed) monetary policy path into 2026.
If the RBA is hawkish about the inflationary outlook for the economy, it could lift the Australian Dollar (AUD), with the first upside barrier seen at the December 11 high of 0.6680. The next resistance level emerges at the September 17 high of 0.6707, en route to the July 15, 2024, high of 0.6788.
To the downside, the December 18 low of 0.6592 will offer some comfort to buyers. Extended losses could see a drop to the 100-day Exponential Moving Average (EMA) of 0.6545. The next contention level is located at the November 4 low of 0.6481.
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.
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