Forex News
- AUD/USD advances despite the fact that markets are ruling out any interest rate action on Tuesday.
- US Dollar declines as a US-Iran peace deal faded safe-haven demand, easing fears of inflation and higher interest rates.
- The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.
AUD/USD gains around 0.5% after registering minor losses in the previous day, trading around 0.7080 during the Asian hours on Monday. However, the Australian Dollar (AUD) could struggle against the US Dollar (USD) as markets are ruling out a Reserve Bank of Australia (RBA) rate move at Tuesday's June meeting and have lowered bets for an August hike. All eyes now turn to the May CPI data on June 24, which will be critical for policymakers looking for signs of persistent inflation to justify future policy tightening.
The AUD/USD pair appreciates as the US Dollar (USD) declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.
The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.
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.
Gold prices rose in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 13,191.86 Indian Rupees (INR) per gram, up compared with the INR 12,863.27 it cost on Friday.
The price for Gold increased to INR 153,867.60 per tola from INR 150,034.60 per tola on friday.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,191.86 |
10 Grams | 131,917.40 |
Tola | 153,867.60 |
Troy Ounce | 410,311.10 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- AUD/JPY gathers strength to near 113.35 in Monday’s early European session.
- RBA is anticipated to leave the interest rate unchanged, while BoJ is set to raise its benchmark rate on Tuesday.
- The cross keeps the bullish vibe, but further consolidation cannot be ruled out with neutral RSI momentum.
- The first upside barrier emerges at 113.60; the initial support level to watch is 112.25.
The AUD/JPY cross trades in positive territory around 113.35 during the early European session on Monday. The reports that the United States (US) had agreed to a peace deal with Iran provide some support to the riskier assets, such as the Australian Dollar (AUD) against the Japanese Yen (JPY). All eyes will be on the Reserve Bank of Australia (RBA) and Bank of Japan (BoJ) interest rate decisions later on Tuesday.
CNN reported on Sunday that Washington and Tehran have reached an agreement that will take effect on Friday. US President Donald Trump said the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
On Tuesday, the RBA is expected to keep its key interest rate unchanged for the first time this year, with money markets paring bets on further tightening. Traders will take more cues from the press conference on whether RBA Governor Michele Bullock signals some comfort at the current rate or keeps the door open to further moves to counter stubborn price pressures. Fading expectations of additional interest rate hikes by the Australian central bank might cap the upside for the Aussie in the near term.
The BoJ is likely to raise its benchmark interest rate to the highest level since 1995, undeterred by the absence of its governor. A Reuters poll showed economists projecting the Japanese central bank to raise rates to 1.25% in the fourth quarter (Q4) after a hike in June to 1.0%.
Technical Analysis:
In the daily chart, AUD/JPY retains a constructive bias as it holds above the 100-day simple moving average (SMA) and the lower Bollinger Band, suggesting underlying demand on dips. Price, however, trades just under the Bollinger mid-line, while the Relative Strength Index (RSI) hovers near a neutral 50, hinting at a consolidative tone within an overall uptrend.
On the topside, initial resistance emerges at the Bollinger middle band around 113.60, with the upper Bollinger Band near 114.92 acting as the next barrier if buyers regain control. On the downside, support sits first at the lower Bollinger Band around 112.25, ahead of the 100-day SMA clustered near 111.90, where a break would weaken the current bullish structure and open the door to a deeper corrective slide.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- Gold price attracts some buyers to a weekly high in Monday’s Asian session.
- US and Iranian officials said they had agreed on a peace framework for a deal to end their war.
- The negative outlook remains intact, with the Gold price holding below the key 100-day SMA.
Gold price (XAU/USD) rises to a weekly high during the Asian trading hours on Monday. The precious metal rebounds after the United States (US) and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
Trump added that the agreement he reached with Iran would ultimately assure that the Strait of Hormuz is “permanently toll free,” per the New York Times. The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war. Hopes of a peace framework for a deal to end the US-Iran war provide some support to the yellow metal.
Meanwhile, Iran’s deputy foreign minister, Kazem Gharibabadi, said on Sunday that the 60-day negotiations between the US and Iran will hinge on the US meeting three commitments. Those commitments include “lifting and ending the naval blockade,” “ending the state of war and military operations,” and “releasing Iran’s frozen funds.”
Any signs of renewed tensions in the Middle East could lead to a rise in crude oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
Markets have priced in nearly a 64% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.
XAU/USD daily chart
Gold remains capped below the key 100-day SMA in daily chart
In the daily chart, XAU/USD remains in a corrective phase, holding well below the 100-day simple moving average (SMA) and also beneath the Bollinger middle band, which together suggest rallies are still capped within a broader downbeat structure. The Relative Strength Index (RSI) near 42 stays below the midline, hinting at subdued upside momentum and reinforcing the view that bounces are more likely to be sold into while price trades under these overhead levels.
On the topside, initial resistance emerges at the Bollinger middle band near $4,415, followed by the upper Bollinger band around $4,685, with the 100-day SMA higher up near $4,762 acting as a more strategic barrier if a stronger rebound unfolds.
On the downside, the first notable support is seen at the lower Bollinger band around $4,142, where a break would open the door to a deeper retracement toward prior lows, keeping the near-term bias tilted to the downside while price trades beneath the clustered daily resistance band.
(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.
- US Dollar Index declines on fading safe-haven demand as a US-Iran deal eases inflation and interest rate concerns.
- Washington and Tehran announced Sunday they have reached a peace agreement, which will officially take effect this coming Friday.
- The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground and trading around 99.50 during the Asian hours on Monday. The Greenback declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.
Iran's National Security Council confirmed a ceasefire agreement with the US, adding that final deal talks will start after the other party fulfills commitments under the memorandum of understanding. Iranian officials said the maritime blockade against Iran should end immediately and entirely.
The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.
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.
- Silver price surges 4% to near $70.80 as the US and Iran reach a peace deal.
- Oil prices nosedive almost 5% on the reopening of the Strait of Hormuz.
- The next trigger for the Silver price will be the Fed’s monetary policy announcement.
Silver price (XAG/USD) is up 4% to near $70.80 in the Asian trading session on Monday. The white metal rallies as the reopening of the Strait of Hormuz, a vital passage to almost 20% of global energy supply, followed by the confirmation of a peace deal between the United States (US) and Iran has pushed oil prices sharply lower.
In the past few months, higher oil prices due to Middle East concerns prompted inflationary pressures globally, and forced traders to price out dovish central bank bets, which diminished the appeal of non-yielding assets, such as Silver.
As of writing, the WTI Oil price is down 4.8% to near $78.85, the lowest level seen in over three months.
On Sunday, US President Donald Trump said in a post on Truth Social, “I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade.”
Meanwhile, Iran’s Deputy Foreign Minister Kazem Gharibabadi has also confirmed that a deal has been reached to end the US-Israeli war with the Islamic Republic, The Times of Israel reported.
Going forward, investors will pay close attention to the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, in which it is expected to leave interest rates unchanged in a range between 3.50%-3.75%.
Silver technical analysis
XAG/USD trades significantly higher at around $70.80 at press time. Still, the pair holds a mild bearish near-term bias as price trades below the 20-day Exponential Moving Average (EMA) at $71.70, suggesting rallies remain vulnerable while the broader corrective tone persists.
The Relative Strength Index (RSI) returns to the 40.00-60.00 zone after remaining below 40.00, signaling signs of a bullish reversal. However, it would be more reliable once it breaks above 60.00.
On the topside, a daily close back above the 20-day EMA would be an initial sign of stabilization, opening the door for a more sustained recovery towards the May 25 high at 78.83, followed by the round-level $80.00. On the downside, failure to reclaim the 20-day EMA keeps the focus on lower levels and the retest of the March 23 low at $61.01.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- NZD/USD holds strong despite New Zealand’s services sector contracting for a fourth straight month as May's PSI dropped to 47.5.
- The US Dollar declines as a US-Iran peace deal eases geopolitical tensions, lowering global inflation and interest rate concerns.
- Iran stated final talks depend on US compliance, demanding an immediate and complete end to the maritime blockade.
NZD/USD gains ground after registering minor losses in the previous day, trading around 0.5850 during the Asian hours on Monday. The pair remains stronger as the New Zealand Dollar (NZD) holds ground following the release of domestic economic data.
New Zealand's services sector continues to struggle, as the BusinessNZ Performance of Services Index (PSI) fell to 47.5 in May, down from a revised 48.7 in April. This marks the fourth consecutive month of contraction for the sector.
Concurrently, the broader economy is showing signs of a deeper slowdown. The Performance of Composite Index dropped from a revised 49.2 to 48.4, signaling its third straight month of contraction and its steepest decline since June 2025.
The NZD/USD pair appreciates as the US Dollar (USD) declines after the United States (US) and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.
Iran's National Security Council confirmed a ceasefire agreement with the US, adding that final deal talks will start after the other party fulfills commitments under the memorandum of understanding. Iranian officials said the maritime blockade against Iran should end immediately and entirely.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/JPY holds steady around 160.20 in Monday's Asian session.
- US and Iran said on Sunday they have reached an agreement that will take effect on Friday.
- BoJ is set to raise interest rates to a 31-year high on Tuesday.
The USD/JPY pair trades on a flat note near 160.20 during the Asian trading hours on Monday. The US Dollar (USD) softens against the Japanese Yen (JPY) after reports that the United States (US) had agreed to a peace deal with Iran. The Bank of Japan (BoJ) and Federal Reserve (Fed) interest rate decisions will take center stage later this week.
Reuters reported on Sunday that the US and Iran have agreed on a framework for a deal to end their war, halt the US blockade of Iran, and reopen the Strait of Hormuz. Also, the United Kingdom (UK), France, Germany and Italy stated that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program.
Nonetheless, caution lingered as US President Donald Trump said that if Iran failed to reach a final nuclear accord with the US, he would restart military attacks on Tehran.
"I think we'll see the dollar fall over the course of the next few sessions. We'll probably see some of the risk currencies like Aussie and yen appreciate a little bit. But I don't think we're going to see any huge moves," said Nick Twidale, chief market strategist at ATFX Global in Sydney.
The Fed is likely to keep its key interest rate unchanged at its June policy meeting on Wednesday as it remains in "wait-and-see" mode. Traders will closely watch how new Fed chair Kevin Warsh will lead the US central bank into its next era.
The Bank of Japan (BoJ) is widely expected to raise its benchmark interest rate to the highest level since 1995, undeterred by the absence of its governor. With a hike on Tuesday near fully priced in, markets will closely monitor the timing and pace of future increases. A Reuters poll showed economists projecting the Japanese central bank to raise rates to 1.25% in the fourth quarter (Q4) after a hike in June to 1.0%.
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.
The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the United States (US) and Iran reached a deal to end their conflict, Reuters reported on Sunday.
"Iran must never acquire a nuclear weapon. We stand ready to work with the US, Iran and the IAEA to this end," the leaders of the countries said in a joint statement.
Furthermore, the US will release $12 billion in frozen assets to Iran before the start of negotiations, per Mehr news agency, quoting a 14-point memorandum of understanding between the two nations.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 3.88% on the day at $79.70.
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.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
