Forex News
RaboResearch Global Economics & Markets discusses how the Federal Reserve’s new task force on inflation frameworks under Chair Warsh may elevate trimmed inflation in policy decisions. The report argues that, despite higher energy prices, trimmed inflation’s stability since the war could justify further rate cuts, aligning with President Trump’s rate preferences, while warning that trimmed measures can also imply hawkishness and slow Fed reactions.
Fed focus shifts to trimmed inflation
"With the Fed’s new task force on inflation frameworks – announced at Warsh’s first press conference as Fed Chair – we could see trimmed inflation measures gain increased prominence in monetary policy decision-making."
"In the current circumstances, despite a sharp rise in energy prices, trimmed inflation – which has barely moved since the outbreak of the war – could actually support additional rate cuts rather than a hike."
"This is where Warsh’s preferred measure of inflation aligns with President Trump’s preferences for rate policy."
"However, trimmed inflation is not inherently dovish."
"By discarding extremely inflationary items, trimmed inflation suppresses not only noise but also signals."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
BNP Paribas analysts assess recent European Central Bank (ECB) communication from Sintra, highlighting Christine Lagarde’s cautious stance and shift toward “framework guidance” in a volatile environment. Despite softer inflation data and easing energy prices, they still expect one more ECB rate increase in September, while noting that inflation risks have shifted slightly to the downside but not enough to change the policy path.
ECB weighs risks after energy shock
"We maintain our scenario of an additional ECB rate hike in September, despite the easing of inflation risks, which makes such a move less likely."
"Faced with this uncertainty, the ECB president advocated for a communication style she referred to as “framework guidance”: an approach centred around scenarios and less prescriptive regarding the future rate paths compared to traditional “forward guidance”."
"For her part, Christine Lagarde, participating in a panel discussion alongside Andrew Bailey (Bank of England), Kevin Warsh (U.S. Fed) and Tiff Macklem (Bank of Canada), defended the June rate hike as fully justified, while acknowledging that the risks to inflation and growth now appear more balanced (less upside risks to inflation, less downward risks to growth). "That does not mean the June hike was a mistake."."
"In summary, the overall balance of inflation risks now appears to lean slightly more towards the downside than it did a few weeks ago, but not enough to warrant a change in monetary policy direction."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale’s Kenneth Broux highlights that USD/CAD has broken out of a large consolidation and extended gains towards 1.4250, with the upper part of the prior range at 1.4130 now acting as key support. CFTC data show short CAD positions at their most bearish since December 2025, while Canadian labour data and BoC surveys shape the near-term outlook.
Breakout holds with stretched positioning
"USD/CAD recently broke out from a large consolidation and extended its up move towards 1.4250. A brief pause has materialized after this test, however, signals of an extended pullback are not yet visible. The upper part of previous range at 1.4130 has so far acted as support."
"Only if this is breached would there be a risk of a deeper down move. The next objectives could be located at projections of 1.4335 and 1.4425."
"Elsewhere in G10, there aren’t many currencies as tactically oversold like the CAD but there’s no sign that stretched levels beyond 1.42 are enticing opportunistic buyers, positioning for mean reversion."
"The Loonie traded last up here at the tail end of Liberation Day tariffs in April 2025 but 2y rate differentials have widened perceptibly to 142bp since then, reflecting the repricing of the outlook for the Fed."
"Short CAD positions climbed to 43.5% of OI, the most bearish since mid December 2025. Technically, the pair broke out from a large consolidation recently; upper part of this range at 1.4130 is an important support."
"According to the BoC 2Q business outlook survey published yesterday, the Gulf war caused a spike in inflation expectations and is leading Canadian oil producers to boost their investment and production plans. Attention will turn to the labour market data on Friday. After the blowout gain of 87.8k in May (3m average of 28k is first positive reading since January), employment growth is forecast to have moderated to 10k."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Silver prices (XAG/USD) fell on Tuesday, according to FXStreet data. Silver trades at $60.95 per troy ounce, down 1.79% from the $62.06 it cost on Monday.
Silver prices have decreased by 14.26% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 60.95 |
1 Gram | 1.96 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 67.75 on Tuesday, up from 67.11 on Monday.
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.
(An automation tool was used in creating this post.)
Brown Brothers Harriman’s (BBH) Elias Haddad reports USD/JPY is consolidating around 162.00 after touching a 40‑year high near 162.84. Japan’s May wage data softened, and underlying Bank of Japan (BoJ) Consumer Price Index (CPI) indicators eased further below 2%, suggesting limited inflation pressure. Haddad concludes the bar for a hawkish BoJ repricing is high, which should cap Japanese Yen relief rallies despite current rate expectations.
JPY relief rallies seen as limited
"USD/JPY is consolidating around 162.00 after surging to a 40-year high at 162.84 last week. 30-year JGB yields dropped as much as 10bps to 4.00% on solid buying interest from investors. The 30-year bond sale's average bid-to-cover ratio was 4.55 vs. 2.94 in June, the highest since May 2019."
"Japan’s May labor cash earning data was soft due to calendar effect. Total nominal wage growth slowed more than expected to 3.2% y/y (consensus: 3.4%) vs. 3.6% in April. The less volatile scheduled pay growth for full-time workers cooled to a five-month low of 2.4% y/y vs. 2.5% in April."
"Overall, Japan wage growth is not a major source of inflation pressure given annual total factor productivity growth of about 1%. Indeed, most of the BoJ’s underlying CPI indicators eased further below 2% in May."
"The bar for a hawkish BoJ repricing is high, limiting JPY relief rallies. The swaps curve price in nearly 50bps of hikes to 1.50% in the next twelve months, which looks broadly appropriate."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Indian Rupee rebounds against the US Dollar despite oil prices finding buying interest.
- Iran fires missiles at commercial ships transiting through the Strait of Hormuz.
- Investors keenly await the FOMC Minutes of the June policy meeting.
The Indian Rupee (INR) gains against the US Dollar (USD) in India's afternoon trading hours on Tuesday. The USD/INR pair drops to near 95.10 even as Iran’s attacks on commercial tankers transiting through the Strait of Hormuz, a vital passage for almost 20% of global energy supply, have lifted oil prices.
At press time, the MCX Crude Oil contract expiring on July 20 trades 1.3% higher to near 6,640. However, they are still close to their multi-month low of 6,435 posted last week.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform when oil prices rebound.
According to an Axios reporter, Iran fired at least two missiles at commercial ships transiting through the Hormuz. Two commercial ships were hit and suffered significant damage, but no casualties were reported, Bloomberg reported.
However, the impact of the sudden rebound in oil prices is expected to be limited, as the ceasefire between the United States (US) and Iran remains intact.
All eyes on FOMC Minutes
This week, the major trigger for the USD/INR pair will be the Federal Open Market Committee (FOMC) minutes of the June policy meeting, which will be released on Wednesday. Market participants will likely pay close attention to the minutes for cues on the possible reasons officials avoided delivering forward guidance on monetary policy.
In the policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75%, and the Fed’s dot plot showed that nine of 19 policymakers were in favor of an interest rate hike by the year-end.
Currently, the CME FedWatch tool shows that the odds of the Fed delivering at least one interest rate hike by the September policy meeting are 55.2%.
FIIs remain net buyers for second straight day
Foreign Institutional Investors (FIIs) turned out to be net buyers for the second straight trading day on Monday; however, the amount invested was significantly lower than the amount bought on Friday. On Monday, FIIs increased their stake in the Indian stock market worth Rs. 243.03 crore, lower than the Rs. 1,355.33 crore investment seen on Friday.
It appears that the return of oil prices to pre-Middle East war levels has improved the sentiment of overseas investors toward the Indian stock market.
Going forward, foreign investors will closely track India Inc.’s earnings to decide on their forward investment decisions. From the Nifty 50 basket, Tata Consultancy Services (TCS) will be the first to release its Q1FY27 earnings on Thursday.
Technical Analysis: USD/INR holds Descending Triangle breakout
USD/INR drops to near 95.10, but still holds a mildly bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at 95.00 and holds the Descending Triangle breakout.
The Relative Strength Index (RSI) around 51.6 suggests constructive momentum rather than overbought conditions, hinting at a gradual recovery while price stays supported above the short-term EMA.
On the downside, initial support is seen at the 20-day EMA at 95.00, followed by the May 7 low at 94.03. On the topside, the pair aims to revisit the all-time high around 97.10.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- US Dollar Index strengthens as a safe-haven asset after Iran reportedly fired missiles at commercial ships.
- Cooling jobs and business growth curb the Greenback's rise, as traders drop expectations for Fed interest rate hikes.
- The June ISM Services PMI eased to 54.0 from 54.5, signaling slightly slower growth in the services sector.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding gains after two successive flat days and trading around 100.90 during the European hours on Tuesday. The Greenback received support from safe-haven demand amid renewed geopolitical tensions.
Strait of Hormuz tensions emerged after reports that Iran fired at least two missiles at commercial vessels transiting the strategic waterway late Monday. While two ships sustained significant damage, no casualties were reported. Separately, the UK Maritime Trade Operations (UKMTO) confirmed that a southbound tanker was struck on its port side by an unknown projectile, which ignited a fire on board.
However, the upside of the Greenback could be restrained as traders price out any Federal Reserve rate hikes this month and in September. This shift in sentiment followed a cooling employment report that revealed fewer jobs added across April, May, and June than Wall Street had anticipated.
Additionally, business activity in the US service sector cooled slightly; it remained firmly in expansionary territory, with the June ISM Services Purchasing Managers’ Index (PMI) easing to 54.0 from 54.5, as expected, in line with consensus estimates. Within the sub-components of the report, the Prices Index dipped from 71.3 to 67.7, while the Employment Index saw a notable improvement, climbing out of contractionary territory from 47.9 to 51.2.
The Greenback could find baseline support from hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller and resilient domestic economic data.
Waller underscores forward guidance limits while reaffirming Fed’s inflation resolve
Fed’s Waller delivers a moderately more impactful speech than usual, with a 7.1/10 FXS Speechtracker score compared to the established baseline of 6.4/10, focused on the nuanced role of forward guidance. The emphasis that forward guidance can both accelerate policy transmission and become a hindrance when too rigid or used amid highly uncertain outcomes signals a preference for flexibility and data dependence rather than pre-commitment. Later remarks reaffirm the credibility of the 2% inflation pledge, reject using low rates to ease U.S. deficit financing, and highlight shifting risks as inflation “taking off” and a stabilized labor market alter the policy calculus, all of which lean modestly hawkish for the Dollar.
The FXS Fed Sentiment Index rises by 1.83 points to 125.72, reinforcing a clear hawkish stance well above the neutral 100 threshold. The combination of a stronger-than-baseline FXS Speechtracker score and an index level firmly in hawkish territory suggests markets will continue to price a vigilant Fed reaction function, supportive of the Dollar against the Euro and Yen.
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.
According to data from the People's Bank of China (PBoC), world’s second-largest economy China increases its Gold reserves again.
In June, China Gold reserves at the end of June 2026 were recorded at 75.44 million troy ounce, 0.48 million higher from a month earlier.
In value terms, country's Gold reserves amounted to $303.72 billion at the end of June, down from $340.75 billion in May.
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.
Frantisek Taborsky at ING highlights Hungarian inflation falling to 1.7%, below market and National Bank of Hungary (NBH) forecasts, cementing rate cuts in July and August. Markets price around 150bp of easing and a 4.50% terminal rate, with scope for additional cuts. He sees limited FX impact from rates, expecting EUR/HUF to stay in a 350–356 range while the forint benefits from summer carry demand.
More NBH easing with stable forint
"Hungarian inflation dropped further from 1.8% to 1.7%, below market expectations. This is also below the National Bank of Hungary's forecast in its June Inflation Report (2.0%). This will therefore cement the rate cuts in July and August."
"Based on yesterday’s pricing, the market was pricing around 150bp of easing and a 4.50% terminal rate, in line with our forecast, assuming BUBOR remains above the policy rate at the end of the cycle."
"While this appears sizeable in a global comparison, relative to 2024 there is still room for the market to price in at least one additional rate cut in our view. Conditions are much more favourable than they were two years ago, so we expect the dovish inflation path to push pricing further towards additional easing."
"This should mechanically be negative for FX. However, we think the rate differential has only a limited impact on EUR/HUF at the moment, with the market more focused on domestic politics and the euro adoption story."
"In the short term, the forint may come under some pressure as more cuts are priced in, but over the medium term we expect EUR/HUF to stabilise within the current 350-356 range. At the same time, the forint may continue to benefit from summer carry demand."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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