Forex News
- The Bank of Japan is expected to hike interest rates to 1% in its June meeting.
- Governor Kazuo Ueda will not precede the meeting due to health issues.
- USD/JPY retains its bullish bias despite easing demand for the US Dollar.
The Bank of Japan (BoJ) will announce its monetary policy decision on Tuesday, at around 3:00 GMT.
The BoJ is widely expected to deliver a hawkish move by hiking the benchmark interest rate by 25 basis points (bps) to 1%, its highest level since 1995. The hike is meant not only to address mounting inflationary pressures but also the Japanese Yen’s (JPY) strength.
Governor Kazuo Ueda, who was hospitalized last week, won’t attend the monetary policy meeting. Deputy Governor Ryozo Himino would chair the policy meeting, while Deputy Shinichi Uchida would hold the press conference following the decision.
Ahead of the announcement, the USD/JPY pair trades above the 160.00 mark, a line in the sand for Japanese authorities, as it is usually seen as an intervention level.
Finally, the Middle East crisis has reached an inflection point: The United States (US) and Iran reached an agreement that will reopen the Strait of Hormuz and extend the ceasefire for another 60 days, allowing talks to continue. Financial markets are optimistic ahead of the announcement, resulting in mild US Dollar (USD) weakness across the FX board.
What to expect from the BoJ interest rate decision?
An interest rate hike has long been priced in, meaning the rate move itself should have a limited impact on the JPY. Japanese policymakers, however, will also discuss the BoJ’s plan to reduce purchases of Japanese Government Bonds (JGBs) to allow long-term rates to be guided more by the market. Their decision on the matter could define the JPY’s near-term direction.
Japan’s annual inflation, as measured by the Consumer Price Index (CPI), stood at 1.4% in April this year, easing from 1.5% in March. However, wholesale inflation jumped to 6.3% You in May, a clear sign that inflationary pressures are likely to extend in time, despite a potential end to the Iran war later this week.
But it is not only about higher Oil prices: the significant depreciation of the JPY also results in inflation stemming from pretty much all imported goods and raw materials. And the BoJ's mandate is clearly focused on the matter: “The Bank of Japan, as the central bank of Japan, decides and implements monetary policy with the aim of maintaining price stability,” targeting 2% annual inflation.
That being said, the current CPI at 1.5% YoY may not be enough to justify a rate hike, but wholesale prices and JPY weakness are.
BoJ Governor Ueda said before being hospitalized that policymakers should not look at Oil prices in isolation, noting that temporary energy shocks can become persistent and affect wages, expectations, and price-setting behavior.
"If inflation expectations are already high and wages are accelerating, the risk of second-round effects is large," Ueda stated, adding that the boundary between temporary and persistent inflation is not mechanical
How could the Bank of Japan's monetary policy decision affect USD/JPY?
As previously noted, market participants have already priced in a 25 bps rate hike. Any decision on future bond purchases is partially discounted. Japanese policymakers don’t tend to surprise investors and tend to act too cautiously. With that in mind, and given that the press conference will be led by Deputy Shinichi Uchida, the BoJ’s announcement is likely to have a limited impact on JPY.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The USD/JPY pair trades around the 160.00 mark, maintaining the positive bias despite easing market concerns undermining demand for the USD. The daily chart for the pair shows a bullish 20-day Simple Moving Average (SMA) that heads north, well above the 100- and 200-day SMAs. The same chart shows that technical indicators have lost their upward momentum but remain above their midlines, lacking directional strength. The mentioned 20-day SMA has attracted buyers and now provides near-term support at around 159.65”
Bednarik adds: “Once below the aforementioned dynamic support, the pair can extend its slide towards 159.00, while additional selling pressure could see the pair aiming for 158.60, a static support level. The USD/JPY pair peaked at 160.73 in April, a multi-decade high and a critical level to watch should JPY continue to weaken. Next comes 161.00, although it seems unlikely that Japanese authorities will allow the currency to weaken that much without actually intervening in the market.”
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.
Economic Indicator
BoJ Press Conference
The Bank of Japan (BoJ) holds a press conference at the end of each one of its eight scheduled policy meetings. At the press conference the Governor of the BoJ communicates with media representatives and investors regarding monetary policy. The Governor talks about the factors that affect the most recent interest rate decision, the overall economic outlook, inflation, and clues regarding future monetary policy. Hawkish comments tend to boost the Japanese Yen (JPY), while a dovish message tends to weaken it.
Read more.Next release: Tue Jun 16, 2026 06:30
Frequency: Irregular
Consensus: -
Previous: -
Source: Bank of Japan
- Gold price edges higher in Tuesday’s Asian session.
- A memorandum of understanding to end the war has been signed by Trump, JD Vance, and the speaker of Iran's parliament.
- Swap traders priced in lower chances of a rate hike by December.
Gold price (XAU/USD) gains momentum during the Asian trading hours on Tuesday. The precious metal extends the rally after the United States (US) and Iran reached a comprehensive framework deal to end hostilities, easing inflation concerns.
Bloomberg reported on Monday that US President Donald Trump and Vice President JD Vance signed an electronic copy of a memorandum of understanding with Iran. Trump noted that the Strait of Hormuz “is already partially opened,” and “it’ll be completely opened” on Friday.
"The gold market is moving past the conflict and pricing it out. The peace deal news took down Treasury yields, the dollar, and oil, and those were the biggest inflation and cross asset risks," said Phillip Streible, chief market strategist at Blue Line Futures.
However, caution lingered as both sides offered differing accounts on key issues. Iran intends to collect certain “fees” in the critical waterway, while Trump said it would fully reopen Friday without tolls. Trump said on Monday that if Iran failed to reach a final nuclear accord with the US, he would restart military attacks on Tehran.
Bets on Federal Reserve (Fed) rate hikes receded after the framework deal, supporting the yellow metal, a non-yielding asset. Traders cut the chance of a US rate hike in December to 58% from nearly 70% last week, according to the CME FedWatch tool.
The Fed is due to announce its next policy decision on Wednesday. Economists expect the US central bank to keep its benchmark rate in a range of 3.50% to 3.75% as it waits to see how the war’s energy-price shock ripples through the economy.
XAU/USD daily chart
Gold keeps the bearish vibe in near term below the key 100-day SMA
In the daily chart, the near-term tone of XAU/USD stays bearish as price holds beneath the Bollinger middle band and well below the 100-day simple moving average (SMA), keeping the broader recovery structure capped. The Relative Strength Index (RSI) at about 43 sits below the midline, hinting at lingering downside pressure despite the recent attempt to stabilize.
On the topside, initial resistance emerges at the June 9 high of $4,363. The next hurdle to watch is the Bollinger SMA midline near $4,415, with the upper Bollinger band around $4,685 and the 100-day SMA at roughly $4,762 forming a broader supply zone if a rebound extends. On the downside, the lower Bollinger band at about $4,145 marks the next notable support, and a decisive break beneath this area would expose further weakness toward prior swing lows.
(The technical analysis of this story was written with the help of an AI tool.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
On Tuesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8108 compared to the previous day's fix of 6.8088 and 6.7605 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.
- USD/JPY softens to near 160.15 in Tuesday’s early Asian session.
- Trump declared Iran ‘has agreed to never have a nuclear weapon.’
- BoJ is widely expected to raise its short-term policy rate to 1.0% from 0.75% on Tuesday.
The USD/JPY pair declines to around 160.15 during the Asian trading hours on Tuesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) following a deal to reopen the Strait of Hormuz. All eyes will be on the Bank of Japan (BoJ) interest rate decision later on Tuesday.
US President Donald Trump said on Tuesday that Iran agreed not to ever have a nuclear weapon, per the Guardian. On Monday, Trump and Vice President JD Vance both virtually signed the agreement to end a US blockade of Iranian ports, reopen the Strait of Hormuz, and start 60 days of nuclear negotiations. Parliament Speaker Mohammad Bagher Ghalibaf signed the document for the Iranian side. Hopes of a US-Iran peace agreement provide some support to the JPY and act as a headwind for the pair.
The BoJ is expected to raise interest rates to a 31-year high on Tuesday, marking another landmark step in normalizing monetary policy as it focuses on taming price pressures from the energy shock caused by the Iran war.
BoJ Governor Kazuo Ueda is in the hospital with an infected liver cyst. Deputy Governor Ryozo Himino will chair the meeting, marking the first time a BOJ governor has missed a policy session since 1998. Fellow Deputy Governor Shinichi Uchida will handle the post-meeting press conference.
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.
- WTI holds steady as traders await details of a looming US-Iran interim peace accord.
- Despite Trump's announced MoU to end conflict and reopen the Strait of Hormuz, the market remains deeply cautious.
- Iran's state oil company significantly slashed its July light crude official selling price for Asian buyers.
West Texas Intermediate (WTI) oil price inches higher after registering 3.7% losses in the previous day, trading around $80.10 per barrel during the Asian hours on Tuesday. Crude oil prices move little as traders adopt a wait-and-see approach ahead of a looming United States (US)-Iran interim peace accord.
US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the blockaded Strait of Hormuz, but the market remains deeply cautious. Neither Washington nor Tehran has released the official text of the agreement, prompting major shipping companies to delay routing their vessels through the strategic waterway until full transparency is established. According to Iran's semi-official Mehr news agency, the current draft calls for the strait to reopen within 30 days under Iranian arrangements.
Anticipating a return to the global market, the state-owned National Iranian Oil Company significantly slashed its official selling price for July light crude to Asian buyers. The premium was cut to $7.15 a barrel above the Oman/Dubai average, a steep drop from the previous month’s premium of $13 a barrel. This aggressive pricing strategy comes as the energy sector grapples with the fallout of a three-month blockade on the Strait of Hormuz, a vital chokepoint responsible for a fifth of the world's oil and liquefied natural gas supplies. Millions of barrels of supply have been lost during the conflict, and analysts remain uncertain about how quickly production and shipping volumes can fully recover once the gates reopen.
Fresh data from the US Department of Energy highlighted just how tight global supplies have become. The US Strategic Petroleum Reserve (SPR) plunged by 8.9 million barrels last week, marking the third-steepest draw on record and sinking the government's emergency stash to 340.3 million barrels, its lowest level since 1983. These massive drawdowns are part of an ongoing U.S. agreement to loan 172 million barrels from the facility in an effort to cool down soaring domestic fuel prices, right as the geopolitical landscape prepares for a major shift.
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 Reserve Bank of Australia is expected to hold the interest rate steady at 4.35% in June.
- RBA Governor Bullock’s words to be dissected for fresh cues on the monetary policy outlook.
- The Australian Dollar is primed for intense volatility on the RBA policy announcement.
The Reserve Bank of Australia (RBA) is widely expected to leave the Official Cash Rate unchanged at 4.35% when it announces its monetary policy decision on Tuesday, marking a pause after three consecutive rate hikes delivered earlier this year.
The decision will be announced at 04:30 GMT, accompanied by the Monetary Policy Statement (MPS). RBA Governor Michele Bullock’s press conference will follow at 05:30 GMT.
The RBA policy announcement and Bullock’s presser could trigger a big reaction in the Australian Dollar (AUD), as markets eagerly await signals on the bank’s path forward on interest rates.
RBA pauses, end of the tightening cycle?
While inflation remains stubbornly elevated and continues to pressure households, a growing number of signals suggest the Australian economy may be losing momentum. Higher borrowing costs have started to weigh on consumer demand and early signs of labour market cooling are emerging.
Data from the Australian Bureau of Statistics (ABS) showed that Gross Domestic Product (GDP) grew 0.3% quarter-over-quarter (QoQ) in the first three months of the year, compared with a forecast of 0.5% and decelerating from 0.9% in the prior quarter. Annual growth steadied at 2.5% in the same period, below the 2.7% expected.
Meanwhile, the country’s Unemployment Rate jumped to 4.5% in April, the highest since September. The monthly Consumer Price Index (CPI) inflation slowed to 0.4% in April from 1.1% in March, while the annual pace also declined to 4.2% from 4.6%.
The central bank, therefore, finds itself balancing inflation that remains above target and an economy that appears to be slowing down.
“Markets now imply just a 22% probability of an August RBA hike, down from 80% a month ago, and just 11 bps of tightening this year as higher interest rates have started to slow economic activity,” per Reuters.
The shift in sentiment accelerated after National Australia Bank (NAB) ditched its peers by suggesting the RBA's next move could eventually be a rate cut rather than another hike.
Three of the four major banks, NAB, Commonwealth Bank of Australia (CBA), and Australia and New Zealand Banking Group (ANZ), expect the RBA to leave the cash rate at 4.35% for the remainder of 2026.
For now, policymakers are likely to maintain a cautious tone, acknowledging persistent inflation pressures while emphasizing increased uncertainty surrounding growth, employment and household spending.
The main focus will be on whether the reopening of the Strait of Hormuz is enough to calm the central bank’s inflation concerns and to signal a pause in the current tightening cycle.
"It'll be about the little clues as to whether the cycle is over or it's still alive - that's going to be really important for both the Aussie and the kiwi markets," said Imre Speizer, a strategist at Westpac.
How will the Reserve Bank of Australia’s decision impact AUD/USD?
The AUD has rebounded firmly against the US Dollar (USD) in the countdown to the RBA event risk.
The key market takeaway will therefore be any change in the RBA's forward guidance. A statement retaining a tightening bias could revive expectations for an August rate increase and support the Aussie Dollar.
Conversely, any indication that the central bank is becoming more concerned about growth risks could reinforce market pricing for a prolonged pause and weigh down on the AUD.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the policy announcement.
“The pair is challenging the key 100-day Simple Moving Average (SMA) on the road to recovery. The 14-day Relative Strength Index (RSI) has bounced off the oversold territory, but remains in the bearish zone, suggesting that sellers are likely to retain control.”
“On the topside, initial resistance emerges at the 100-day SMA near 0.7084, followed by the 21-day SMA around 0.7116 and the 50-day SMA close to 0.7143, levels that would need to be reclaimed to ease the current downside pressure. On the downside, the 200-day SMA at roughly 0.6844 offers the next major support, with a sustained break below that long-term average likely opening the door to a deeper retracement,” Dhwani adds.
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.
Economic Indicator
Consumer Price Index (MoM)
The Monthly Consumer Price Index (CPI), released by theAustralian Bureau of Statistics on a monthly basis, measures the changes in the price of a comprehensive basket of goods and services acquired by household consumers. The MoM reading compares prices in the reference month to the previous one. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Wed May 27, 2026 01:30
Frequency: Monthly
Actual: 0.4%
Consensus: 0.6%
Previous: 1.1%
Source: Australian Bureau of Statistics
US President Donald Trump said that Iran agreed not to ever have a nuclear weapon, the Guardian reported on Tuesday.
In a post on Truth Social, Trump also referred to a news report that Washington is considering establishing a $300 billion fund for Iran if it upholds a final agreeement to end the war, including a nuclear deal.
“Iran has agreed to never have a Nuclear Weapon! Also, the story that the U.S. is paying Iran 300 million Dollars is Fake News, put out by the Dumocrats!!!,” Trump said on his platform.
Earlier, US Vice President JD Vance stated that nuclear inspectors will “absolutely” be allowed to return to Iran as part of the deal with the US to end the war.
Meanwhile, the Israeli military said on Monday that it intercepted “numerous rockets” launched by Hezbollah, the Iran-backed militant group, and that no injuries were reported.
Israel’s Prime Minister Benjamin Netanyahu said Israeli forces will also remain in Gaza, Lebanon and Syria. Netanyahu added that though the war saved Israel from the threat of nuclear annihilation, Israel will continue to thwart threats in the region and will do what it takes to stop Iran from obtaining nuclear weapons.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.10% on the day at $79.90.
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.
Japan's Economy Minister, Minoru Kiuchi, said on Tuesday that he will participate in today's Bank of Japan (BoJ) meeting. Kiuchi added that he strongly hopes the central bank communicates and collaborates with govthe government sustainably and stably reach the 2% inflation target.
Key quotes
Will participate in today's BoJ meeting
No comment on market expectations of BoJ rate hike today.
Strongly hopes BoJ communicates, collaborates with government to sustainably, stably reach 2% inflation target.
Market reaction
At the time of writing, the USD/JPY pair is trading 0.05% lower on the day to trade at 160.25.
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.
- EUR/USD edges higher to near 1.1590 in Tuesday's early Asian session.
- Trump and Vice President JD Vance signed an electronic copy of a memorandum of understanding with Iran.
- Fed is set to hold its benchmark interest rate steady at its June policy meeting.
The EUR/USD pair trades in positive territory around 1.1590 during the early Asian session on Tuesday. A deal to reopen the Strait of Hormuz spurred a rally in riskier assets such as the Euro (EUR) against the US Dollar (USD). Traders await the US Federal Reserve (Fed) interest rate decision later on Wednesday.
US President Donald Trump and Vice President JD Vance both virtually signed the agreement to end a US blockade of Iranian ports, reopen the Strait of Hormuz, and start 60 days of nuclear negotiations. The officials said that Parliament Speaker Mohammad Bagher Ghalibaf signed the document on behalf of the Iranian side. Hopes of a US-Iran peace agreement could provide some support to the shared currency in the near term.
Nonetheless, caution lingered as both sides offered differing accounts on key issues. Iran intends to collect certain “fees” in the critical waterway, while Trump said it would fully reopen on Friday without tolls. Trump said on Monday that if Iran failed to reach a final nuclear accord with the US, he would restart military attacks on Tehran.
The Fed is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% at its upcoming policy meeting on Wednesday. Traders will closely monitor the press conference and take more cues about how new Fed chair Kevin Warsh will lead the US central bank into its next era. Any hawkish remarks from Fed policymakers might help limit the Greenback’s losses and create a headwind for the major pair.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Forex Market News
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