Forex News
Federal Reserve (Fed) Chair Kevin Warsh is reportedly weighing whether the US central bank should hold fewer policy meetings each year, according to the New York Times, citing four people familiar with the matter.
Bloomberg later reported that Warsh floated a schedule of six rate-setting meetings a year, plus two additional meetings focused on broader economic issues.
The eight regular FOMC meetings a year to set interest rates have been standard since the 1980s, and next year's tentative meeting dates have already been posted on the Fed's website. Any reduction would mark a major change to a monetary policy framework that has been in place for decades.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Iranian state television, advisor to the Supreme Leader, General Mohsen Rezaei said that the country will absolutely not allow the opening of a second corridor in the Strait of Hormuz, Reuters reported on Monday. Rezaei added that if warships or military forces are brought to the critical waterway for that purpose, Iran will target them.
Key quotes
After US stopped the attacks, we continued our attacks for another 2 days so they would understand the situation.
We will absolutely not allow the opening of a second corridor in the Strait of Hormuz.
If warships or military forces are brought to the Strait of Hormuz for that purpose, we will target them.
Saudi official contacted one of the officials at the Ministry of Foreign Affairs and stated that they were not involved in the attack on Iraq
We were prepared to attack three points in Ukraine, but after that country apologized, we canceled the attack.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 0.03% on the day at $80.50.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Gold price edges lower to around $4,050 in Tuesday’s early Asian session.
- Trump said new talks between Washington and Tehran are the “last chance” for Iran.
- The US July jobs data will take center stage later on Friday.
Gold price (XAU/USD) declines to near $4,050 during the early Asian session on Tuesday. The precious metal eased slightly from the recent rally after the US paused planned airstrikes against Iran. Traders will closely monitor the developments surrounding US-Iran talks for fresh impetus.
Bloomberg reported on Monday that US President Donald Trump said his latest offer of talks is a “last chance” for Iran after he called off what he said was a major attack on the Islamic Republic. Trump said he expected negotiations to begin in the next day or two to reopen the Strait of Hormuz and create a pathway for Iran to address the US’s concerns about its nuclear programme.
Iran denied it was negotiating with the US but said talks with Oman to get more ships moving through the critical waterway are making progress.
Uncertainty in the Middle East remains high despite hopes of a breakthrough between the US and Iran. Any signs of escalating tensions between the US and Iran could push crude oil prices up and prompt central banks to hold rates at elevated levels for longer. It’s worth noting that Gold is often used as a hedge against inflation but does not yield interest, making it less attractive when interest rates are high.
The US Federal Reserve (Fed) decided to hold the interest rates steady in its current target range between 3.50% and 3.75% at its July policy meeting last week. During the press conference, Fed Chair Kevin Warsh pledged an unwavering commitment to bring inflation down. Traders await the US jobs data on Friday for more clues about the US interest rate path.
Gold upside seen capped by lingering Fed hike expectations
According to analysts at Commerzbank, the outlook for bullion remains constrained by the policy path in the US. They argue that “the persistent expectation of Fed interest rate rises should counteract any rise in the gold price,” with ongoing speculation about further tightening limiting investors’ willingness to chase the recent rally.
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.
- AUD/USD retreats to 0.7000 as Dollar recovers on strong ISM.
- Oil slump eases Fed hike bets, but data supports Greenback.
- US jobs data next as Australia sentiment indicators enter focus.
The Aussie Dollar retraces despite an overall risk-on mood as the US Dollar recovers some ground, sponsored by positive data, and easing geopolitical tensions in the Middle East. The AUD/USD trades at 0.7000 after reaching a daily high of 0.7050.
AUD/USD retreats from session highs as stronger US factory data offsets risk-on mood
Progress in US-Iran talks tumbled Oil prices, with the US Oil benchmark, West Texas Intermediate (WTI), losing over 7.70% to $80 per barrel. This eased expectations for higher interest rates from the Federal Reserve, but market participants were also digesting two days of intervention in the FX markets to propel the undervalued Japanese Yen.
The US ISM Manufacturing PMI for July came at 55.6, up from 53.3, its highest level since 2022, while the sub-components of employment showed that companies are hiring, but the prices paid revealed elevated input costs. Even though the sub-components' readings are mixed, overall, they reveal the strength of the US manufacturing industry.
Ahead, the US economic calendar will be busy, with employment data taking the center stage. The ADP Employment Change, JOLTS job openings survey, jobless claims, and Nonfarm Payrolls will provide updates on the status of the labor market. If the jobs market remains solid, next week’s inflation data could move the needle sharply, as the Federal Reserve remains laser-focused on tackling five years of high inflation.
New York Fed President John Williams commented that monetary policy is well-positioned to return inflation to the 2% goal. He added that if the economy appears unlikely to push inflation to its target, they wouldn’t hesitate to increase rates. However, he remains optimistic that inflation could aim towards the central bank’s target.
In Australia, the Aussie Dollar opened the session on a higher note, due to the intervention by US and Japanese authorities in the FX markets. Nevertheless, as the Yen crosses weakened, the Aussie weakened.
The economic docket in Australia will feature the release of ANZ job advertisements for June and the ANZ-Roy Morgan Australian Consumer Confidence.
AUD/USD Price Forecast: Technical outlook
In the daily chart, AUD/USD trades at 0.6999, with the near-term bias capped as the latest reading of the triple simple moving average (50, 100 and 200-day composite) at 0.7007 sits just above spot as immediate resistance. Price is effectively testing an upward-sloping trend-line cluster originating from 0.6833 and 0.6865, keeping the broader uptrend structure intact, while the Relative Strength Index (14) around 52 suggests neutral-to-slightly constructive momentum rather than strong directional conviction.
On the topside, the first hurdle is the grouped longer-term simple moving averages acting as resistance at 0.7007, and a daily close above this barrier would open the way for further recovery toward higher levels on the chart. On the downside, failure to hold the current trend-line pivot zone around 0.6999 would expose a deeper pullback into the broader ascending support structure, with the pair likely to retreat toward prior swing lows within that rising channel.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- USD/CHF rebounds from 50-day SMA as buyers reclaim 0.8100.
- RSI turns bullish again after two days of weakness.
- Break above 0.8150 exposes 0.8200 and yearly peak.
The USD/CHF rises by about 0.27% on Monday as traders buy the Greenback following an intervention in FX markets by US and Japanese authorities. Better-than-expected US economic data, a “halt” in hostilities between the US and Iran, provided a tailwind for the American currency, which so far trades at 0.8100 against the Swiss Franc, after bouncing off daily lows of 0.8056.
USD/CHF Price Forecast: Technical outlook
Overall, the technical picture remains constructive after USD/CHF bounced off the 50-day Simple Moving Average (SMA) at 0.8037, which exacerbated a move above 0.8100. Momentum remains bullish, as depicted by the Relative Strength Index (RSI), after two days of bearishness, as buyers moved in to buy the dip.
For a bullish continuation, the USD/CHF needs to clear the 0.8150 milestone. Above this area sits the 0.8200 figure, followed by the yearly peak at 0.8207. Once surpassed, the next key resistance levels are the psychological 0.8250 and 0.8300.
For a bearish reversal, spot prices must drop below the 0.8100 mark and the 50-day SMA at 0.8037. After this level, the next area of interest would be the 100-day SMA at 0.7954, followed by the 200-day SMA at 0.7928.
USD/CHF Price Chart – Daily
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- NZD/USD consolidates around 0.5870 on Monday after stalling below the recent swing high.
- New Zealand's Unemployment Rate is expected to climb to 5.4% in the second quarter from 5.3%.
- A firmer US Dollar following the strong ISM Manufacturing PMI caps the Kiwi's recovery attempts.
NZD/USD trades with a flat tone near the 0.5870 zone on Monday, holding onto the bulk of last week's advance but struggling to extend it as the US Dollar (USD) regains composure. The pair rallied sharply from the sub-0.5800 area before losing momentum near the top of the range, leaving price action confined to a narrow band ahead of a heavy Asia-Pacific calendar.
The Greenback found support from the United States (US) ISM Manufacturing Purchasing Managers Index, which rose to 55.6 in July from 53.3 and beat the 54.0 consensus, lifting Treasury yields and trimming appetite for high-beta currencies. Working in the opposite direction, a steep decline in Crude Oil prices after President Donald Trump confirmed talks with Iran improved the broader risk mood, helping the New Zealand Dollar (NZD) avoid the losses seen in its Australian counterpart.
Attention now shifts to New Zealand's second-quarter labor market report. The Unemployment Rate is forecast to edge up to 5.4% from 5.3%, while Employment Change is expected to slow to 0.1% QoQ from 0.2%, pointing to a labor market that continues to loosen at the margin. The Participation Rate stood at 70.4% in the previous quarter.
The Labor Cost Index will be the component to watch. Wage growth is seen accelerating to 0.6% QoQ from 0.5%, and a hotter-than-expected print would complicate the disinflation narrative and argue for a more patient Reserve Bank of New Zealand (RBNZ). A combination of rising unemployment and firmer wage costs would leave the Kiwi vulnerable to two-way volatility, since the two readings would pull the policy outlook in opposite directions.
Beyond the domestic release, the New Zealand Dollar remains exposed to Chinese data, with the RatingDog Services PMI due later in the session and expected to ease to 53.7 from 54.1. Softer Chinese activity would weigh on demand expectations for New Zealand's commodity exports and add another headwind for the pair.
Technical Analysis:
In the four-hour chart, NZD/USD trades at 0.5868, holding a constructive bullish bias as it stays above both the 20-period simple moving average (SMA) at 0.5858 and the 100-period SMA at 0.5818. The pair is pressing into an overhead band defined by nearby horizontal resistance at 0.5874, while the Relative Strength Index (14) around 59 suggests firm but not overstretched bullish momentum.
On the topside, immediate resistance is seen at 0.5874, followed by a tighter cap at 0.5888, with higher hurdles emerging at 0.5930 and then 0.5965. On the downside, initial support is located at 0.5859 ahead of the 20-period SMA at 0.5858, with a deeper floor at 0.5849 and the 100-period SMA at 0.5818 reinforcing the broader bullish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Here is what you need to know for Tuesday, August 4:
Oil prices fell sharply on Monday amid growing expectations that talks between the US and Iran will resume soon. US President Donald Trump stated that conversations are underway after Tehran said it had no plans for direct negotiations.
The US Dollar Index (DXY) rises around 0.1% and trades near 99.90, holding just below the 100.00 threshold. The ISM Manufacturing Purchasing Managers Index climbed to 55.6 in July from 53.3, comfortably above the 54 forecast, while the New Orders Index improved to 56.7. The Prices Paid component eased to 71.1 from 73, remaining deep in expansion territory and suggesting cost pressures persist despite some moderation.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.35% | -0.38% | 0.15% | 0.31% | 0.07% | 0.33% | |
| EUR | -0.10% | 0.24% | -0.51% | 0.06% | 0.19% | 0.02% | 0.17% | |
| GBP | -0.35% | -0.24% | -0.72% | -0.23% | -0.04% | -0.23% | -0.05% | |
| JPY | 0.38% | 0.51% | 0.72% | 0.46% | 0.61% | 0.45% | 0.58% | |
| CAD | -0.15% | -0.06% | 0.23% | -0.46% | 0.15% | -0.02% | 0.11% | |
| AUD | -0.31% | -0.19% | 0.04% | -0.61% | -0.15% | -0.19% | 0.00% | |
| NZD | -0.07% | -0.02% | 0.23% | -0.45% | 0.02% | 0.19% | 0.18% | |
| CHF | -0.33% | -0.17% | 0.05% | -0.58% | -0.11% | -0.00% | -0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD declines around 0.2% and trades near 1.1510, giving back part of last week's advance as the firmer ISM print lifted US Treasury yields. The pair continues to hold above the 1.1500 handle, with the broader recovery structure intact.
GBP/USD falls around 0.4% and settles near 1.3430, the weakest performer among the European majors. Cable retreats from the multi-week highs reached after the Bank of England's hawkish hold, with no domestic catalysts to offset the Dollar's rebound.
USD/JPY drops around 0.4% and trades near 156.90, extending the decline that followed last week's intervention and the Bank of Japan's hawkish hold. The pair's inability to recover alongside the wider Greenback advance underlines how reluctant investors remain to rebuild Yen-short positions while Japanese authorities keep the threat of further operations alive.
AUD/USD slides around 0.5% to near 0.6990, slipping back below the 0.7000 psychological level. The Australian Dollar (AUD) leads losses among the majors, pressured by the softer commodity complex and the firmer Greenback.
West Texas Intermediate (WTI) Oil plunges around 7.4% and trades near $78 per barrel, one of the sharpest single-session declines this year. The prospect of negotiations between Washington and Tehran prompted traders to unwind supply-disruption hedges accumulated during the escalation of hostilities.
Gold (XAU/USD) edges around 0.2% higher and trades near $4,052 per troy ounce, holding above the $4,000 mark. The metal shrugs off the stronger Dollar as investors keep defensive exposure in place while the outcome of the Iran talks remains unresolved.
On Tuesday, the Asia-Pacific session carries the heaviest load. New Zealand publishes second-quarter labor market data, with the Unemployment Rate expected to rise to 5.4% from 5.3% and Employment Change seen slowing to 0.1% from 0.2%, while the Labor Cost Index is forecast to accelerate to 0.6% QoQ. Australia releases the final S&P Global Services and Composite PMIs, both expected to be confirmed at 53 and 52.6 respectively, alongside the AiG Industry Index.
Japan will publish Labor Cash Earnings, forecast to accelerate to 3.4% YoY in June from 3.2%, a reading that carries added weight given the Bank of Japan's emphasis on the wage-price cycle. The BoJ will also release the Minutes of its June policy meeting, which investors will scan for early evidence of the hawkish shift that surfaced in last week's vote split. China closes the session with the RatingDog Services PMI, seen easing to 53.7 from 54.1.
Earlier in the day, Canada releases the S&P Global Manufacturing PMI, expected at 50.2 after 53 in June. In the United States, Factory Orders are forecast to rebound 0.2% MoM in June from a 1.3% contraction, while JOLTS Job Openings are seen easing to 7.45 million from 7.594 million ahead of Wednesday's ADP report.
- USD/MXN slips as carry appeal supports Mexican Peso demand.
- Mexico GDP rebounded strongly, driven by household consumption and welfare programs.
- Banxico hold bets rise as inflation forecasts move lower.
The Mexican Peso (MXN) gains ground against the US Dollar (USD) on Monday as risk appetite increases the carry-trade appeal of the emerging-market currency, while traders await the release of the Bank of Mexico (Banxico) monetary policy meeting later this week. The USD/MXN pair trades at 17.32, down 0.14%.
USD/MXN falls on improved risk appetite; Mexico’s stronger growth expectations
Last week, Mexico’s economic docket showed that the economy, in its preliminary reading for the second quarter, grew above estimates, as reported by the National Statistics agency. Mexico’s GDP expanded by 1.5% QoQ in Q2, up from a -0.6% contraction in Q1 2026. The recovery was remarkable, supported by household consumption as the principal engine of growth and by welfare social programs, according to Moody’s Analytics.
This week, the Mexican economic calendar is moderate, with traders awaiting Consumer Confidence data on Tuesday, followed by Banxico’s Interest Rate Decision on Thursday. Data from Prime Terminal shows an 88% chance of a hold at 6.50%, and a slim 12% chance of a hike at the next meeting.
Economists expect a stronger economy in Mexico
Banxico released its private economists' survey, with the majority trimming their inflation forecasts for the current year and raising GDP projections. Inflation is seen to end at 4% in 2026, down from 4.2% in June, while core inflation is also projected to dip from 4.18% to 4%. The economy is expected to grow from 1.10% to 1.20%, while the USD/MXN exchange rate is foreseen to remain stable at 17.88.
Across the northern border, the US economy continues to be driven by geopolitical issues related to the US-Iran war. Although hostilities paused, talks remained the same, as CBS News reported, citing US officials.
Data-wise, business activity in the manufacturing sector in the US improved according to July’s ISM Manufacturing PMI. The PMI improved from 53.3 to 55.6, exceeding estimates of 54 and hinting that companies are hiring, while the prices paid sub-component suggests that input costs remain high.
The US schedule will feature jobs data, led by the ADP Employment Change, the job openings survey, jobless claims and the July Nonfarm Payrolls report, on Friday.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 17.3198, extending its pullback and maintaining a bearish near-term bias as spot holds below the clustered simple moving averages (SMA) pack, whose latest reading stands at 17.4158. The pair also remains under a nearer descending resistance trend line coming from 18.1651, last interacted around 17.5456, while the Relative Strength Index (14) at 42.24 drifts toward the lower half of its range, hinting at persistent but not yet oversold downside pressure.
On the topside, initial resistance is located at the SMA cluster around 17.4158, with the aforementioned descending trend-line barrier near 17.5456 reinforcing the cap ahead of a more distant structural hurdle at 18.1200 along the longer-term downtrend line. With no meaningful support levels defined by the current indicator set beneath spot, the pair would need to reclaim 17.4158 first to ease immediate bearish pressure and then challenge 17.5456 to open a more sustained recovery phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN 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.
- Gold slips amid strong US data and Dollar recovery.
- Trump keeps Hormuz blockade in place until Iran signs deal.
- Strong ISM data complicates Fed outlook before key jobs reports.
Gold (XAU/USD) price retreats on Monday as the US Dollar (USD) recovers some ground, even though hostilities in the Middle East paused at the request of Iran and other Middle Eastern countries, according to US President Donald Trump. The XAU/USD pair trades at $4,037, down 0.12%.
XAU/USD retreats on geopolitical uncertainty, stronger US factory activity; Fed repricing
The Greenback has bounced off month-and-a-half lows reached earlier in the session, following an intervention in the FX markets by US and Japanese authorities, which propelled the Japanese Yen. Meanwhile, geopolitics is pushing US economic data to the backseat, as Trump crosses the wires.
He said that “Iran conflict is working out very well,” though added that Iran’s leadership is duplicitous, asking for talks, but publicly states that they’re not having discussions. Trump added that the US Navy blockade will stay in place until Iran signs a deal which includes to never having a nuclear weapon and keeping the Strait of Hormuz open.
Recently, the US President added: “I’m not going to let Iran charge to go through Hormuz Strait.”
On the data front, the Institute for Supply Management (ISM), reported that the Manufacturing Purchasers Managers Index (PMI) in July expanded at the highest pace in four years, with the PMI improving from 53.3 to 55.6, crushing forecasts of 54. The employment sub-component in companies rose for the first time since 2023, although prices paid suggest input costs still remain high.
The report showed sustained demand, clarity on tariffs, and the dissipation of supply disruptions related to the Gulf War, which increased demand in the jobs market.
Meanwhile, the dip in Oil prices triggered a repricing for a less hawkish Federal Reserve. Investors expect 22 basis points of tightening towards the end of 2026, according to Prime Terminal data.
However, uncertainty in the US-Iran conflict remains high. A jump in energy prices could open the door to higher interest rates, which could prompt a repricing toward a more hawkish Fed.
At the last Fed meeting, three members dissented, opting for a 25-basis-point rate hike. They explained that delaying higher borrowing costs could keep inflation above the Fed's 2% target.
Recently, New York Fed President John Williams said the central bank was ready to tighten policy if inflation pressures did not ease.
This week, the US economic docket will feature a series of US jobs reports, including the ADP National Employment Change, the Job Openings and Labor Turnover Survey (JOLTS), jobless claims, and the Nonfarm Payrolls report.
XAU/USD technical outlook: Gold trades above/below $4,050, directionless
Gold continues to move sideways after falling below the $4,100 level since mid-last week. Bullish momentum has faded, and the downside is evident in the Relative Strength Index (RSI).
The RSI, although bearish – below its 50-neutral level, shifted flattish after edging lower, an indication that neither buyers nor sellers are opening fresh directional bets.
Nevertheless, the market structure of a successive series of lower highs and lower lows, and Gold prices trading below the 200-day Simple Moving Average (SMA), suggest that further downside is seen in the short term.
Downwards, the first support is the July 24 low of $4,022. A break below this level could open the door to the key psychological level of $4,000 and the June 17 daily low of $3,959.
For a bullish continuation, buyers need to push back above $4,100, targeting the July 22 high of $4,165, with the possibility of testing the 50-day Simple Moving Average near $4,185. The next resistance sits at the July 6 peak of $4,202.
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.
United States (US) President Donald Trump said on Monday that Washington is currently holding talks with Iran, adding that the discussions are taking place at Tehran's request and describing them as a final opportunity for the Islamic Republic.
Key quotes
Iran conflict is working out very well.
Iran talks are going on now.
We are talking at request of Iran.
This is a last chance for Iran."
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.38% | -0.41% | 0.16% | 0.34% | 0.14% | 0.34% | |
| EUR | -0.11% | 0.25% | -0.54% | 0.05% | 0.21% | 0.06% | 0.19% | |
| GBP | -0.38% | -0.25% | -0.78% | -0.24% | -0.03% | -0.19% | -0.03% | |
| JPY | 0.41% | 0.54% | 0.78% | 0.50% | 0.66% | 0.53% | 0.64% | |
| CAD | -0.16% | -0.05% | 0.24% | -0.50% | 0.18% | 0.04% | 0.14% | |
| AUD | -0.34% | -0.21% | 0.03% | -0.66% | -0.18% | -0.17% | 0.00% | |
| NZD | -0.14% | -0.06% | 0.19% | -0.53% | -0.04% | 0.17% | 0.16% | |
| CHF | -0.34% | -0.19% | 0.03% | -0.64% | -0.14% | -0.01% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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