Forex News
TD Securities’ Prashant Newnaha expects the Reserve Bank of New Zealand (RBNZ) to raise the Official Cash Rate (OCR) by 25bps to 2.50% at next week’s meeting, keeping policy too accommodative with the cash rate still below neutral. Newnaha anticipates further hikes in September and sees Gross Domestic Product (GDP) and inflation running above RBNZ forecasts, arguing against delaying the start of the tightening cycle.
Hiking now but at measured pace
"TD forecasts the RBNZ to hike the OCR 25bps to 2.50% at next week's meeting, but it could signal patience around how quickly it intends to lift the cash rate towards neutral. This should cap any uptick in yields on hike headlines while initial NZD strength is unlikely to be outsized."
"While we concede recent oil moves may see the RBNZ hike at a slower pace than our forecast(Jul, Sep, Dec and Feb to 3.25%), we stick with our call for a July hike."
"A 25bps hike at the July meeting would still have monetary policy too accommodative. The cash rate is currently around 75-100bps below neutral."
"Taking 50bps of those cuts back over July & Sep is prudent considering markets were debating if the RBNZ had an inflation problem brewing before the US/Iran war."
"Of course the Bank may decide to wait till Sep to begin hiking. However, we struggle to see the catalyst for hiking then when conditions are already loose now and will likely loosen further if it decides to wait another two months to calibrate policy."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
When asked about the sudden spike in the Japanese Yen (JPY), Japan’s Finance Ministry declined to comment, per Reuters.
In the last hours, JPY has experienced unexpected bouts of strong buying, leaving USD/JPY volatile between 161.00 and 162.00 levels.
Traders stay alert to the prospect of intervention from Japan to prop up its stubbornly weak currency from 40-year lows against the US Dollar (USD), while weighing a possible new approach to Yen-buying from Japanese officials.
more to come ...
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.
- EUR/CAD holds ground after Eurozone unemployment unexpectedly fell to 6.2% in May.
- ECB's Wunsch opposes further tightening, citing downside inflation risks, while Kocher warns wage growth could force a hold or hike.
- The Canadian Dollar may struggle as global crude benchmarks slide due to easing supply anxieties.
EUR/CAD rises after two days of losses, trading around 1.6200 during the European hours on Thursday. The pair remains stronger as the Euro (EUR) holds ground following the release of the Eurozone Unemployment Rate, which came in at 6.2% in May, against the 6.3% expected. The previous reading was revised to 6.2% from 6.3%.
Diverging views emerged from European Central Bank (ECB) officials on Wednesday regarding the path of interest rates. Belgian central bank chief Pierre Wunsch stated he does not favor further monetary policy tightening, noting that any inflation surprises ahead of the July meeting are more likely to skew to the downside. Conversely, ECB Governing Council member Martin Kocher suggested that the central bank's next move will either be a rate hike or a hold, warning that rising wages could keep inflationary pressures stubbornly elevated.
The EUR/CAD cross may further appreciate as the commodity-linked Canadian Dollar (CAD) could face challenges amid falling oil prices. Global crude benchmarks have experienced a sharp downturn, sliding significantly below recent highs as supply anxieties begin to ease.
This energy market decline is primarily driven by a rapid recovery in maritime shipping traffic through the critical Strait of Hormuz, coupled with notable breakthroughs in indirect diplomatic talks between Washington and Tehran. While lower energy prices have helped soothe inflation concerns, they simultaneously sap the strength of the petro-dependent CAD.
Statistics Canada indicated earlier this week that the economy grew by 0.5% in April, rebounding more robustly than anticipated following a mild contraction in March. Furthermore, an advance estimate pointing to an additional 0.1% monthly expansion in May suggests that national growth may be stabilizing, a trend that has successfully eased investor fears over a deeper, tariff-driven economic slowdown.
Economic Indicator
Unemployment Rate
The Unemployment Rate released by the Eurostat is the percentage of unemployed workers in the total civilian labor force. It is a leading indicator for the economy of the European Union. If the rate goes up, it indicates a lack of expansion within the European labor market and a weakening of the economy. Generally speaking, a decrease of the figure is seen as bullish for the Euro (EUR), while an increase is seen as bearish.
Read more.Last release: Thu Jul 02, 2026 09:00
Frequency: Monthly
Actual: 6.2%
Consensus: 6.3%
Previous: 6.3%
Source: Eurostat
Volkmar Baur at Commerzbank highlights solid Japanese activity data, with the manufacturing PMI at 54.8 and the Tankan business conditions index at its highest since 2003. He stresses that Tankan output price expectations have been a reliable inflation indicator, and their recent rise suggests the Bank of Japan may need to consider faster rate hikes, which would support the Japanese Yen.
Tankan hints at tighter policy
"Sentiment in the Japanese economy appears to be solid. The Purchasing Managers’ Index (PMI) for the manufacturing sector was confirmed yesterday at a strong 54.8 points (the flash estimate was 54.9)."
"And in the Bank of Japan’s broader Tankan survey, which covers more companies, the diffusion index for business conditions remained unchanged from the first quarter at 18. This is the highest level since 2003."
"However, the survey also contains a warning for the Bank of Japan. This is because the output prices sub-component among large manufacturing firms has consistently been a very good indicator of inflation in recent years. Only in 2014, when a sales tax hike artificially raised the consumer price index, was there a significant divergence."
"The recent rise in the subcomponent - which contrasts with the recent decline in CPI - should therefore give the central bank pause for thought."
"With sentiment indicators at high levels and price indicators in a dangerous range, it might be time for the Bank of Japan to consider slightly faster interest rate hikes after all. The JPY would certainly appreciate that as well."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Societe Generale strategists highlight that EUR/GBP has completed a Head and Shoulders pattern and broken below its neckline around 0.8610, now seen as initial resistance. They note that GBP/USD outperformance versus EUR/USD has already pushed EUR/GBP below this level, with analysts pointing to next downside objectives at 0.8535/0.8520 and potentially 0.8475 if selling persists.
Head and shoulders signals deeper pullback
"EUR/GBP had been tracing out a Head and Shoulders pattern over the past few months, signalling potential downside risk. The pair has now broken below the neckline of this formation, denoting possibility of a deeper pullback."
"The neckline, located around 0.8610, may now serve as the first resistance. If EUR/GBP fails to cross this hurdle, the current decline could extend. The next objectives could be located at projections of 0.8535/0.8520 and 0.8475."
"In FX, the outperformance of GBP/USD vs EUR/USD deflated EUR/GBP to a daily close below 0.8610/00, forcing short covering in the pound."
"The combination of M&A flows, the stable UK political backdrop and ebbing of ECB tightening prospects could guide the cross towards next support at 0.8535/0.8520."
"Governor Bailey, speaking in Sintra, characterised the pre-conflict pricing of two rate cuts this year as “not unreasonable” in the context of the softening economy. However, he added “that was off the table in March and is off the table at the moment.”"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI is seen consolidating the recent sharp decline to its lowest level since late February.
- A break below the 200- SMA favors bearish traders and backs the case for further losses.
- The oversold RSI warrants some caution before positioning for an extension of the downfall.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – enters a bearish consolidation phase near its lowest level since late February, set earlier this Friday. The commodity trades below the $68.00 mark through the first half of the European session, with bears looking to extend the fall further below the 78.6% Fibonacci retracement level of the January-March upswing.
The recent breakdown below the technically significant 200-day Simple Moving Average (SMA) was seen as a key trigger for bearish traders and validates the near-term negative outlook for Crude Oil prices. Moreover, the Moving Average Convergence Divergence (MACD) indicator remains in negative territory with the latest reading at -0.43. However, the Relative Strength Index (RSI) sits at 27.58, hinting at oversold conditions.
Momentum indicators, in turn, make it prudent to wait for some near-term consolidation or a modest bounce before positioning for an extension of the well-established downtrend. Any meaningful recovery attempt, however, is likely to confront a hurdle near the 200-day SMA at $73.17, which forms a key supply band that would need to be reclaimed to ease the bearish bias. Above these, the 61.8% Fibo. at $77.67 and the 50% level at $84.34 mark subsequent barriers, ahead of denser resistance at the 38.2% retracement at $91.02 and the 23.6% level at $99.27.
On the downside, the main structural support is located near $56.06, or the year-to-date low touched in January, 0where a more substantial floor could emerge if selling persists.
(The technical analysis of this story was written with the help of an AI tool.)
WTI daily chart
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.
- Nonfarm Payrolls are expected to rise by 110K in June, slowing from the impressive 172K increase recorded in May.
- The Unemployment Rate is forecast to hold steady at 4.3%.
- US employment data could influence the Fed policy outlook and ramp up the US Dollar’s volatility.
The United States (US) Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) data for June on Thursday at 12:30 GMT.
With investors pricing in a hawkish Federal Reserve (Fed) policy outlook with the new Chairman Kevin Warsh at the helm, the underlying details of the employment report could influence the timing of a possible interest rate increase.
Payroll data is among the indicators that generally trigger a significant market reaction. Still, this time, with all eyes on the inflation front, only a dismal print could hurt the US Dollar in a meaningful way.
What to expect from the Nonfarm Payrolls report?
Investors expect NFP to rise by 110K following three consecutive months of surprisingly strong increases. The Unemployment Rate is seen holding steady at 4.3%, while the annual wage inflation, as measured by the change in the Average Hourly Earnings (AHE), is projected to edge higher to 3.5% from 3.4% in May.
TD Securities analysts note that they expect NFP to rise at a softer pace than what markets expect.
“We expect June payrolls to moderate to 80k (55k private, 25k government) after strong early‑2026 gains. Job growth broadened beyond healthcare, led by trade/transport and leisure, but should cool this month. Local governments may stay firm on World Cup effects. We see the Unemployment Rate edging down to 4.2% as participation dips. AHE likely moderated to 0.2% m/m (3.5% y/y),” they add.
The Automatic Data Processing (ADP) reported on Wednesday that private sector employment in the US grew by 98K in June. This print followed the 122K increase recorded in May and came in below the market expectation of 113K.
Similarly, National Bank of Canada Senior Economist Jocelyn Paquet forecasts a 90K increase in NFP and explain:
“Based on the weekly data released by ADP and previously published “soft” employment indicators, such as S&P Global's flash composite PMI, job creation likely remained fairly robust during the month, although not as robust as what we had been accustomed to between February and May. Layoffs, for their part, may have increased slightly, judging by the rise in initial jobless claims recorded between the May and June survey periods. These two factors combined should, in our view, result in an increase of 90K in nonfarm payrolls.”
How will the US June Nonfarm Payrolls affect EUR/USD?
Although crude Oil prices came down to levels seen since pre-US-Iran conflict, investors remain concerned over global inflation remaining sticky, mainly due to heightened costs of consumer electronics via AI-driven hardware demand. As a result, the US Dollar (USD) has been outperforming its major rivals, supported by growing expectations for a tighter Fed policy.
Hammack flags broad inflation, keeps rate hike option alive
In an interview with CNBC on Tuesday, Cleveland Fed President Beth Hammack delivered a moderately hawkish message with the FXS Speechtracker score at 6.4/10.
This is slightly softer relative to the historical average of 7/10 but still signals a tightening bias. By stressing that the job market is “right around full employment” and that growth “looks good,” while warning that “inflation is still too high” and that rate hikes may need to be considered, the speech underscores a willingness to tighten policy despite concerns about the broader economy.
According to the CME FedWatch Tool, markets are currently pricing in about a 34% probability of the Fed raising the interest rate by 25 basis points (bps) as early as July, compared to a 6% chance seen in early June. Moreover, the probability of at least two rate increases by the end of 2026 now sits slightly above 40%.
Another positive surprise of 130K or higher in the headline NFP could feed into July rate hike projections and fuel another leg higher in the USD. In this scenario, EUR/USD could remain under bearish pressure and extend its downtrend in the near term.
On the other hand, a significantly disappointing print below 70K could trigger an upward correction in the pair. However, a steady bullish reversal is unlikely to materialize unless Fed policymakers shift their tone and put more emphasis on labor market conditions rather than the inflation outlook.
Given three consecutive months of very strong prints, however, a single NFP miss is likely to be overlooked, keeping any potential rebound in EUR/USD short-lived.
Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:
“EUR/USD’s near-term technical outlook doesn’t point to oversold conditions and suggests that the bearish bias stays intact. The Relative Strength Index (RSI) indicator on the daily chart remains below 40 after recovering from oversold territory and the pair trades slightly above the lower arm of the Bollinger Band.”
“On the downside, 1.1320-1.1280 (lower arm of the Bollinger Band, static level) forms the first support ahead of 1.1160 (static level) and 1.1000 (psychological level, static level).”
“Looking north, a strong resistance area could be spotted at the 1.1485-1.1500 region (20-day Simple Moving Average (SMA), round level) before 1.1600 (round level, 50-day SMA) and 1.1650-1.1660 (200-day SMA, descending trend line, 100-day SMA).”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
(This story was corrected at 09:16 GMT to say in the subheading "How will the US June Nonfarm Payrolls affect EUR/USD?" instead of May.)
- USD/CAD declines as traders brace for Friday's crucial June US jobs report.
- Fed Chair Kevin Warsh avoided giving explicit guidance on the central bank's upcoming July interest rate decision.
- Falling oil prices create headwinds for the Canadian Dollar as global crude benchmarks slide due to easing supply anxieties.
USD/CAD has lost its recent gains from the previous day, trading around 1.4190 during the European hours on Thursday. Traders adopt a cautious stance ahead of the highly anticipated June Nonfarm Payrolls (NFP) report. Investors are looking to the labor data for fresh insights into economic health and to gauge the Federal Reserve’s (Fed) upcoming monetary policy path.
Fed Chairman Kevin Warsh at Wednesday's ECB Forum on Central Banking. Fed Chair Warsh opted not to provide explicit guidance regarding the central bank's upcoming July policy decision. While he acknowledged that inflation remains too elevated and reiterated a firm commitment to the Fed's 2% target and institutional independence, his overall tone was perceived as less hawkish than anticipated.
On Wednesday, the ADP Employment Change report showed private payrolls grew by just 98,000—missing Wall Street's 113,000 forecast and marking a slowdown from May's 122,000 increase. Further compounding growth concerns, the manufacturing sector showed signs of cooling as the ISM Manufacturing PMI edged lower to 53.3, missing the 54.0 consensus estimate.
The downside of the USD/CAD pair could be restricted as the commodity-linked Canadian Dollar (CAD) may face headwinds from falling oil prices. Global crude benchmarks have experienced a sharp downturn, sliding significantly below recent highs as supply anxieties begin to ease.
This energy market decline is primarily driven by a rapid recovery in maritime shipping traffic through the critical Strait of Hormuz, coupled with notable breakthroughs in indirect diplomatic talks between Washington and Tehran. While lower energy prices have helped soothe inflation concerns, they simultaneously sap the strength of the petro-dependent Loonie.
This crude-driven pressure on the CAD effectively overshadows otherwise resilient domestic economic data. Statistics Canada revealed that the economy grew by 0.5% in April, rebounding more robustly than anticipated following a mild contraction in March. Furthermore, an advance estimate pointing to an additional 0.1% monthly expansion in May suggests that national growth may be stabilizing, a trend that has successfully eased investor fears over a deeper, tariff-driven economic slowdown.
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.
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