Forex News
Brown Brothers Harriman’s (BBH) Elias Haddad expects Australia’s June labor force report to show a modest 15k job gain and unemployment steady at 4.4%, slightly above the Reserve Bank of Australia's (RBA) projection. Futures imply a 60% chance of one final 25 bps hike to 4.60%, but Haddad sees risks skewed toward a longer pause, citing below-potential Gross Domestic Product (GDP) growth and a cash rate already near the top of neutral estimates, weighing on Australian Dollar (AUD).
Jobs report and neutral rate cap upside
"The economy is projected to add +15k jobs vs. +40.3k in May and the unemployment rate is seen unchanged at 4.4% for a second straight month."
"That would be marginally higher than the RBA’s June unemployment rate projection of 4.2% and support the case for an extended pause to the bank’s tightening cycle."
"First, the RBA projects real GDP growth to be below potential over the next two years. Second, the RBA cash rate at 4.35% currently sits near the top of the range of model-based central estimates of the nominal neutral rate."
"RBA cash rate futures imply 60% odds of one final 25bps hike by year end to 4.60%. In our view, the risk is skewed towards a more extended pause in the RBA tightening cycle which is a headwind for AUD."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
HSBC strategists see NZD/USD supported by New Zealand’s strengthening growth data and an aggressive Reserve Bank of New Zealand (RBNZ) hiking path. The RBNZ has begun raising rates and HSBC Economics projects 25bp hikes per quarter to 3.50% by Q3 2027. The stance is viewed as NZD-positive, though the currency’s high sensitivity to global growth and Middle East-related risks is highlighted.
Kiwi buoyed by policy but growth risks
"New Zealand’s growth upswing appears to be gaining traction, with retail sales rebounding, consumer sentiment improving and the PMI rising to 59.7 in June."
"The Reserve Bank of New Zealand (RBNZ) delivered its first hike in July, lifting its cash rate by 25bp to 2.50%."
"HSBC Economics expects 25bp of tightening per quarter, taking the cash rate to 3.50% in Q3 2027, while markets are pricing a faster path."
"We see the RBNZ’s stance as NZD-positive: it is priced to hike the most in G10 over the next year yet remains comfortably below the upper end of estimates for the neutral rate."
"Key risks stem from NZD’s high sensitivity to global growth, particularly if spillovers from the Middle East conflict weigh on activity, an exposure amplified by New Zealand’s high oil-to-GDP intensity among G10 net energy importers."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver extends its gains for a second consecutive day, trading around $56.90 on Monday, up 1.62% on the day.
- Escalating tensions between the United States and Iran continue to support safe-haven demand.
- Rising Oil prices are reviving inflation concerns and reinforcing expectations of a Fed rate hike in September.
Silver (XAG/USD) advances toward $56.90 per troy ounce on Monday at the time of writing, gaining 1.62% on the day. The precious metal continues to benefit from safe-haven demand as geopolitical tensions in the Middle East keep risk sentiment under pressure.
The United States (US) has carried out a ninth consecutive night of strikes against Iranian targets. In response, Tehran considers the ceasefire between the two countries effectively over, raising concerns about further disruptions to key regional energy supply routes. Meanwhile, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said that intermediaries have delivered messages to Tehran in recent days aimed at reducing tensions, while stressing that diplomacy remains a tool to pursue the country's national interests.
Concerns intensified further after Yemen's Houthis announced a naval blockade against Saudi Arabia, raising fears of additional disruptions to energy trade. Against this backdrop, West Texas Intermediate (WTI) Oil rebounded from daily lows to near $82.00 per barrel at the time of press, increasing the risk of renewed inflationary pressures.
Higher energy prices are reinforcing expectations of further monetary tightening. Speaking on Friday, Federal Reserve (Fed) of Cleveland President Beth Hammack said inflation remains persistent, strengthening expectations that interest rates could remain higher for longer. According to the CME FedWatch tool, markets now assign a 55.3% chance to a Fed rate hike in September.
The prospect of higher interest rates is typically a headwind for Silver, as the precious metal does not generate yield. However, strong safe-haven demand driven by geopolitical tensions is currently allowing the white metal to maintain a bullish bias despite this unfavorable backdrop.
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.
DBS Group Research’s Philip Wee argues that the Euro (EUR) may find support in coming weeks as markets reassess geopolitical risks and central bank divergence. He highlights investor unease over Federal Reserve (Fed) Chair Kevin Warsh’s push to end forward guidance, contrasting it with the European Central Bank’s (ECB) clearer framework. The analysis focuses on EUR/USD’s potential to break its recent trading range.
ECB clarity contrasts Fed uncertainty push
"Against this volatile geopolitical backdrop, the coming fortnight may underpin the EUR, driven by a market preference for the European Central Bank’s new and transparent Framework Guidance over Fed Chairman Kevin Warsh’s campaign to end forward guidance."
"The ECB has flagged a tactical pause at its governing council meeting on July 23. However, the market is currently pricing in an 87.8% chance of a 25-bps hike to 2.50% at the subsequent September 10 meeting. If the ECB affirms this trajectory, the EUR/USD pair could break above this month’s tight range of 1.1360 to 1.1480."
"Conversely, Warsh’s testimony to US lawmakers last week confirmed his intention to restore an "uncertainty premium" to the market’s pricing for a September hike. Warsh plans to use the July 28-29 FOMC meeting to foster an "honest internal discussion" with his colleagues at the Fed."
"Markets will become anxious that slashing the FOMC statement and Warsh’s refusal to provide his own forecasts at his first FOMC meeting in June could be a prelude to stripping the dots and the Summary of Economic Projections of their market-moving authority at the September meeting."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
James Smith at ING highlights that UK markets have reacted calmly to Andy Burnham becoming prime minister, with risk premia contained as investors expect no major policy shocks this year. Nonetheless, he flags that ambitious plans on social housing, welfare and tax reform, plus possible changes to fiscal rules or a snap election, could shift perceptions of UK assets over the coming years.
Sterling sentiment and policy uncertainty
"Risk premium in the bond markets looks contained. Most investors I speak to don’t expect him to rock the boat this year, even if there are concerns about the fiscal trajectory further ahead."
"Burnham's bold ambition towards everything from social housing investment to nationalisation is constrained by a commitment to stick to the fiscal rules and not raise the biggest taxes."
"That tentatively points towards a relatively modest Autumn Budget. Expect a focus on policies that are as eye-catching as they are cheap and simple to implement."
"So far, so boring. So how could Burnham surprise markets this autumn?"
"A snap election is still the major wildcard. And markets probably wouldn’t like it."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Canada’s inflation has cooled a tad in June, with the Consumer Price Index (CPI) rising 2.8% from a year earlier, coming in below market expectations and down from the 3.2% increase recorded in May. On a monthly basis, prices declined by 0.4%.
Meanwhile, the Bank of Canada’s (BoC) preferred core measure, which excludes more volatile components such as food and energy, rose 2.1% over the past year and increased by 0.1% compared with the previous month
Looking at the BoC’s other key inflation gauges, Common CPI came in at 2.6% (from 2.7%), Trimmed CPI at 1.8% (from 2.0%), and Median CPI at 1.9% (from 2.1%). Together, they show that underlying price pressures seem to have resumed the downtrend.
According to the press release, "Prices for gasoline increased at a slower rate on a year-over-year basis in June compared with May, driving the deceleration in the headline CPI. Excluding gasoline, the CPI was unchanged in June compared with May, at 2.2%... The CPI fell 0.4% month over month in June, the largest monthly decline since December 2024. On a seasonally adjusted monthly basis, the CPI fell 0.1% in June, the first decline since April 2025 (-0.2%).”
Market reaction
The Canadian Dollar (CAD) trades on the back foot on Monday, motivating USD/CAD to revisit the 1.4050 zone, reversing at the same time part of the severe pullback in place since the beginning of the month.
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.
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.
