Forex News
- EUR/USD struggles to gain any meaningful traction as Iran tensions underpin the safe-haven USD.
- Rallying Oil prices revive inflation fears, bolstering Fed hike bets and further supporting the buck.
- Traders now look to the release of the June FOMC meeting Minutes for some meaningful impetus.
The EUR/USD pair defends the 1.1400 mark during the Asian session on Wednesday, though it struggles to attract any meaningful buyers on the back of renewed US-Iran hostilities. Traders also seem hesitant and opt to wait for FOMC Minutes for more cues about the Federal Reserve's (Fed) policy path before placing fresh directional bets.
The US military launched unleashed a new wave of strikes against Iran on Tuesday following reports of attacks on three oil tankers in the Strait of Hormuz, jeopardizing the already fragile ceasefire. Traders were quick to price in the geopolitical risk premium amid concerns about a further escalation of tensions, which is seen underpinning the safe-haven US Dollar (USD) and acting as a headwind for the EUR/USD pair.
Meanwhile, the US also moved to withdraw a key concession that allowed Iran to sell oil on international markets, triggering a sharp rally in Crude Oil prices and energy-driven inflation fears. This lifts market expectations that the Fed will hike interest rates at least once by the end of this year. The outlook, in turn, triggers a fresh leg up in US Treasury bond yields, which is seen as another factor supporting the Greenback.
The USD bulls, however, refrain from placing aggressive bets as the market focus remains glued to the release of the Minutes of the June 16–17 FOMC meeting, due later during the US session. Investors will look for further insight into the Fed's monetary policy outlook, which, in turn, will play a key role in influencing the near-term USD price dynamics and providing some meaningful impetus to the EUR/USD 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.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8077 compared to the previous day's fix of 6.8054 and 6.8018 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.
- The Reserve Bank of New Zealand is expected to raise the key interest rate to 2.50% on Wednesday.
- RBNZ Governor Breman’s words could offer fresh cues on the interest rate outlook.
- The RBNZ policy announcements are set to rock the New Zealand Dollar.
The Reserve Bank of New Zealand (RBNZ) is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) from 2.25% to 2.50% on Wednesday, snapping a three-consecutive-meeting pause.
Economists are deeply divided about how the Kiwi central bank will proceed this time after the last decision to hold the cash rate steady was a very close call, increasing the chances of higher volatility around the decision.
The RBNZ interest rate announcement is due at 02:00 GMT, accompanied by the Monetary Policy Review (MPR) and the Minutes of the meeting, followed by Governor Dr. Anna Breman’s press conference at 03:00 GMT.
The New Zealand Dollar (NZD) faces a key test this week as the RBNZ looks to hike the OCR against a backdrop of still-elevated inflation concerns, soft domestic economic activity, and sharply lower global Oil prices.
What to expect from the RBNZ interest rate decision?
Following May’s hawkish hold, Governor Breman cast the deciding vote after a 3-3 split between members favoring a hold and those backing an immediate hike.
That split was critical because it suggested the debate inside the Committee was more about when the tightening cycle should begin.
The case for a July lift-off remains strong as Breman said during the May post-policy meeting press conference that “current OCR is still a little bit on the accommodative side.”
Markets initially priced in an over 80% chance of a July hike after the May meeting. However, the sharp retracement in global Oil prices since then, alongside softer manufacturing and services readings, has prompted some analysts to push back their expectations for the RBNZ to initiate its rate-hiking cycle in September.
Further, the Committee voiced its concerns over increased costs not feeding elevated inflation over the medium term, adding that “the OCR will most likely need to increase sooner and by more than envisaged in the February monetary policy statement.”
Domestic fuel prices remain elevated relative to pre-Middle East war levels, limiting the near-term disinflation risks, even as lower Oil prices may reduce the urgency for an aggressive tightening cycle.
As a result, the key question for markets may not be whether the RBNZ hikes, but whether it will be a one-off increase or the beginning of a tightening cycle.
How will the RBNZ interest rate decision impact the New Zealand Dollar?
A July rate increase accompanied by cautious guidance would reinforce the view that the RBNZ is shifting toward a slower, more measured tightening path. That could weigh heavily on the NZD and, in turn, on the NZD/USD pair,
Conversely, the Kiwi Dollar could receive an additional boost to its recovery if policymakers signal that another move in September remains firmly on the table, as traders rebuild expectations for a more sustained hiking cycle.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“The pair extends its decline below all major moving averages. The 21-day simple moving average (SMA) at 0.5729 is the first cap overhead, while the longer-term 200-day, 50-day and 100-day SMAs clustered between 0.5820 and 0.5845 reinforce a broader topside barrier. The Relative Strength Index around 40 suggests weak momentum, hinting that sellers retain control but without immediate oversold conditions.
Sellers further remain hopeful as a Death Cross is in the making. The 50-day SMA is on the verge of crossing the 200-day SMA from above, which, if materialized on a daily closing basis, will confirm a strong bearish signal.
On the downside, strong support is seen at the June low of 0.5626. Below that, the November 2025 low of 0.5580 will be tested. Deeper declines will challenge the 0.5550 psychological level.”
Economic Indicator
RBNZ Press Conference
Following the Reserve Bank of New Zealand's (RBNZ)monetary policy decision, the Governor gives a press conference explaining the rationale behind the decision. The comments may influence the volatility of the New Zealand Dollar (NZD) and determine a short-term positive or negative trend.
Read more.Next release: Wed Jul 08, 2026 03:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Anna Breman's press conference.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter said on Wednesday that the central bank will act as needed to bring inflation back to target, even as the recent oil shock has yet to produce a marked slowdown in economic activity.
Key quotes
The recent oil shock has led to falls in consumer and business confidence but there are so far few signs of a marked slowdown in activity.
It is not always correct to look through supply shocks and that a period of low inflation and higher unemployment might be needed if inflation expectations start to drift up.
Supply shocks create difficult trade-offs but do not lessen the importance of maintaining low and stable inflation.
The board will continue to act as needed to ensure inflation returns to target and the labour market to sustainable full employment.
Market reaction
At press time, the AUD/USD pair trades 0.09% higher at around 0.6934.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- WTI rises following fresh US airstrikes on Iran and the revocation of its international oil-sale waiver.
- Iran targets commercial vessels in the vital Strait of Hormuz, striking a Qatari LNG carrier and a Saudi oil tanker.
- Expected supply glut from increased OPEC+ and Middle Eastern production reverses.
West Texas Intermediate (WTI) oil price continues to advance after registering nearly 5% gains in the previous day, trading around $72.20 per barrel during the Asian hours on Wednesday. Global crude oil prices surged after the US military launched fresh airstrikes against Iran and revoked a key sanctions waiver that had allowed the country to sell oil internationally.
The escalation comes on the heels of a series of Iranian attacks targeting commercial vessels in the vital Strait of Hormuz waterway, including a Qatari LNG carrier and a Saudi oil tanker. This renewed friction directly threatens a fragile, interim US-Iran peace agreement and raises the risk of severe global energy supply disruptions as wary shipowners and regional producers avoid the route.
The sudden instability marks a sharp reversal from previous market forecasts of a supply glut, which had been expected after OPEC+ raised production quotas and Middle Eastern producers prepared to ramp up output.
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.
- USD/JPY posts modest losses around 162.35 in Wednesday’s early Asian session.
- Weaker-than-expected US jobs data prompted traders to reduce expectations for Fed rate hikes this year.
- Japanese authorities have warned they are prepared to intervene in currency markets if excessive volatility threatens financial stability.
The USD/JPY pair trades with mild losses near 162.35 during the early Asian session on Wednesday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) as traders continue to watch for signs of possible intervention by Japanese authorities to support the currency. The Federal Reserve’s (Fed) June meeting minutes will be released later on Wednesday.
Expectations for further US rate increases have eased following weaker-than-expected Nonfarm Payrolls (NFP) data, weighing on the Greenback. Federal Reserve (Fed) Bank of New York President John Williams said on Tuesday that he has grown a little less worried about the state of price pressures in the economy due to the recent retreat in energy prices, which he expects to continue.
Meanwhile, Fed Governor Christopher Waller stated on Monday that forward guidance can be a valuable tool under the right circumstances but can also be a problem when used improperly.
Traders will keep an eye on the Fed Minutes, the first under new Chairman Kevin Warsh, on Wednesday for more clues about the US interest rate outlook.
Markets are now pricing in about 26 basis points (bps) worth of Fed rate hikes by December, down from about 38 bps a week ago, according to LSEG data.
Traders are on high alert for possible intervention by Japanese authorities, which might cap the upside for the pair. Finance Minister Satsuki Katayama reiterated that authorities stand ready to intervene at any time to support the currency. Katayama further stated that Japan and the US remain in close communication on foreign exchange policy.
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 declines to near $4,100 in Wednesday’s early Asian session.
- Renewed tensions between the US and Iran weigh on the Gold price.
- Traders scale back Fed rate hike bets after weaker US NFP data.
Gold price (XAU/USD) loses ground to around $4,100 during the early Asian session on Wednesday. The precious metal faces new selling pressure after the US vows a response against Iran following reports of attacks on three oil tankers in and around the Strait of Hormuz. Traders await the release of the Federal Reserve’s (Fed) June meeting minutes later on Wednesday.
“US Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway,” Centcom said on Tuesday.
The US military added that the strikes were in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz.
Renewed tensions threaten to further destabilize relations between Washington and Tehran after both countries inked an interim peace deal last month that ended fighting on all fronts and reopened the strait. This, in turn, could raise energy-driven inflation fears and weigh on the non-yielding bullion.
A disappointing June US Nonfarm Payrolls (NFP) report has prompted traders to scale back Federal Reserve (Fed) rate hike bets, which might help limit the non-yielding metal’s losses. Data last week showed the US economy added 57,000 jobs in June, less than the downwardly revised 129,000 added in May and lower than the market expectations of 110,000.
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.
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