Forex News
- GBP/USD prolongs its downtrend for the third straight day amid a combination of negative factors.
- The UK political turmoil undermines the GBP amid reduced bets for aggressive rate hikes by the BoE.
- The Fed’s hawkish tilt and the Iran uncertainty boost the USD, further exerting pressure on the pair.
The GBP/USD pair attracts some follow-through selling for the third straight day and weakens further below the 1.3200 mark, hitting a fresh low since April during the Asian session on Friday. Spot prices remain on track to register heavy weekly losses, and the fundamental backdrop suggests that the path of least resistance remains to the downside.
The British Pound (GBP) continues with its relative underperformance in the wake of lingering domestic political risks, which, along with a bullish US Dollar (USD), validates the near-term negative outlook for the GBP/USD pair. Greater Manchester Mayor Andy Burnham cleared a path to attempt to oust British Prime Minister Keir Starmer after winning a parliamentary seat in northern England on Friday. In his victory speech, Burnham said the result could be a "turning point" for British politics and told his party that this was a final chance to change direction.
Meanwhile, traders have scaled back expectations for more aggressive interest rate hikes by the Bank of England (BoE) following the release of softer inflation figures earlier this week. Furthermore, the US-Iran peace deal eased concerns about the energy shock, endorsing the view that the BoE will hold interest rates steady. This is seen as another factor undermining the GBP. The USD, on the other hand, stands firm near its highest level since late March amid the US Federal Reserve's (Fed) more hawkish tilt, signaling the possibility of at least one rate hike by the year-end.
On the geopolitical front, US Vice President JD Vance canceled his planned trip for talks with Iran in Switzerland, saying that the meeting wasn’t yet finalized. Adding to this, Israeli air strikes in Lebanon threaten to unravel the US-Iran deal. This further benefits the safe-haven USD and backs the case for an extension of the GBP/USD pair's steep downfall from the weekly swing high, near the 1.3460 region. This, in turn, suggests that any attempted recovery could be seen as a selling opportunity as traders now look to UK monthly Retail Sales data for a fresh impetus.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.17% | 1.70% | 0.74% | 1.14% | 0.66% | 1.61% | 1.32% | |
| EUR | -1.17% | 0.50% | -0.42% | -0.03% | -0.53% | 0.43% | 0.14% | |
| GBP | -1.70% | -0.50% | -1.09% | -0.52% | -1.03% | -0.07% | -0.35% | |
| JPY | -0.74% | 0.42% | 1.09% | 0.39% | -0.10% | 0.89% | 0.56% | |
| CAD | -1.14% | 0.03% | 0.52% | -0.39% | -0.52% | 0.50% | 0.16% | |
| AUD | -0.66% | 0.53% | 1.03% | 0.10% | 0.52% | 0.96% | 0.69% | |
| NZD | -1.61% | -0.43% | 0.07% | -0.89% | -0.50% | -0.96% | -0.28% | |
| CHF | -1.32% | -0.14% | 0.35% | -0.56% | -0.16% | -0.69% | 0.28% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- Gold prolonged its downtrend for the third straight day on Friday amid a bullish US Dollar.
- The Fed’s hawkish tilt continues to underpin the buck and weigh on the non-yielding bullion.
- US Vice President cancels trip to Switzerland for Iran talks, further benefiting the Greenback.
Gold (XAU/USD) attracts sellers for the third straight day on Friday and weakens further below the $4,200 mark, hitting a fresh weekly low during the Asian session. The US Dollar (USD) stands firm near its highest level since May 2025 in the face of the US Federal Reserve's (Fed) hawkish tilt, which, in turn, is seen driving flows away from the non-yielding bullion. Furthermore, the uncertainty surrounding the next round of US-Iran negotiations turns out to be another factor that underpins the USD's reserve currency status and exerts additional pressure on the commodity.
The US central bank decided to keep the benchmark interest rate unchanged in its current 3.5% to 3.75% target range at the end of the first meeting under the new Fed Chair, Kevin Warsh. However, the so-called dot plot indicated that nine of the Fed's 19 committed members believed that they would need to raise the policy rate this year if inflation remains sticky. Furthermore, Kevin Warsh’s comments during the post-meeting press conference focused strongly on price stability, suggesting that the Fed might not rush to cut interest rates even in the face of declining growth.
According to the CME Group's FedWatch Tool, traders are now pricing in a 70% chance that the US central bank will hike rates in September. This keeps US Treasury bond yields elevated and continues to support the buck. Meanwhile, the optimism led by an interim US-Iran peace deal fades as key issues between the two countries remain unresolved. Moreover, US Vice President JD Vance canceled his planned trip for talks with Iran in Switzerland, saying that the meeting wasn’t yet finalized. Adding to this, Israeli air strikes in Lebanon threaten to unravel the US-Iran deal.
Any signs of renewed escalation of tensions in the Middle East and the lack of progress in US-Iran negotiations could further boost the safe-haven USD. Meanwhile, the liquidity is likely to remain low amid a US bank holiday in observance of Juneteenth National Independence Day. Nevertheless, the Gold seems poised to register losses for the third straight week as the market focus remains glued to further geopolitical developments.
XAU/USD daily chart
Gold bears have the upper hand while below 100-day EMA strong hurdle
From a technical perspective, this week's repeated failures to breakout through the 100-day Exponential Moving Average (EMA) and the subsequent slide favor the XAU/USD bears. Adding to this, the Relative Strength Index (RSI) hovers near 36, reflecting weak demand rather than outright oversold conditions. Furthermore, the Moving Average Convergence Divergence (MACD) indicator stays in negative territory with the line below its signal and a subdued histogram, which suggests ongoing downside pressure.
Meanwhile, the 200-day EMA at $4,358.53 is the first meaningful resistance, and bulls would need a daily close above this level to ease the current downside bias and hint at a more sustained recovery phase. Until then, the XAU/USD pair remains vulnerable to further declines, and further fresh selling is likely to be driven by momentum rather than by interaction with a specific technical floor on the daily chart.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- Silver declines as traders price in a more hawkish Federal Reserve policy outlook.
- Fed Chairman Kevin Warsh stressed that price stability remains the central bank's ultimate guiding principle.
- The US and Iran signed an initial agreement, starting 60 days of negotiations for a final peace deal.
Silver price (XAG/USD) extends its losses for the third successive day, trading around $64.40 per troy ounce during the Asian hours on Friday. Silver prices fall as the traders price in the hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. Higher borrowing costs increase the opportunity cost of holding non-yielding assets like Silver, reducing their appeal.
In his debut press conference, newly appointed Federal Reserve (Fed) Chairman Kevin Warsh emphasized that "price stability" remains the Fed's ultimate guiding principle. The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to hold its benchmark overnight borrowing rate steady at a range of 3.5%–3.75%. However, the decision carried a hawkish tone, with nearly half of the officials signaling that at least one rate hike could be required later this year.
The hawkish Fed signals outweigh the positive impact of the US-Iran peace agreement, which pushed oil prices lower and eased inflation concerns. The US and Iran signed an initial agreement, kicking off 60 days of negotiations on a final deal to end the war, per CNN.
Additionally, the US military earlier confirmed it had ended its blockade on Iranian ports near the Strait of Hormuz, as officials claim millions of barrels are once again flowing through the vital waterway. Positive developments surrounding the US-Iran peace deal could boost riskier assets, such as the shared currency, in the near term. However, traders remained cautious, expecting it to take months for shipping and energy flows to recover to pre-conflict levels.
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.
Greater Manchester Mayor Andy Burnham could now challenge UK Prime Minister Keir Starmer for the leadership of the governing Labour Party and the country after winning a parliamentary seat in northern England on Friday, CNN reported on Friday.
Burnham won the contest in Makerfield in northwest England with 24,927 of the votes, while Nigel Farage's anti-immigration Reform UK party came second with 15,696 votes.
Market reaction
At the time of writing, the GBP/USD pair is down 0.01% on the day to trade at 1.3205.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- US Dollar Index may rise as traders price in the Federal Reserve's hawkish policy outlook.
- The Greenback may weaken as easing safe-haven demand follows an initial peace agreement between the US and Iran.
- CENTCOM has lifted all maritime restrictions on traffic traveling to and from Iranian ports and coastal waters.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, remains flat after two days of gains and is trading around 100.83 during the Asian hours on Friday.
The Greenback may further advance as the traders price in the hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. In his debut press conference, newly appointed Federal Reserve (Fed) Chairman Kevin Warsh emphasized that "price stability" remains the Fed's ultimate guiding principle.
The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to hold its benchmark overnight borrowing rate steady at a range of 3.5%–3.75%. However, the decision carried a hawkish tone, with nearly half of the officials signaling that at least one rate hike could be required later this year.
The US Dollar (USD) may face challenges amid easing safe-haven demand, which could be attributed to the United States (US)-Iran initial agreement. The deal has kicked off 60 days of negotiations on a final deal to end the war, per CNN.
Additionally, the US military earlier confirmed it had ended its blockade on Iranian ports near the Strait of Hormuz, as officials claim millions of barrels are once again flowing through the vital waterway. Positive developments surrounding the US-Iran peace deal could boost riskier assets, such as the shared currency, in the near term.
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.
- NZD/USD remains on the defensive as the Fed’s hawkish tilt continues to underpin the USD.
- US Vice President JD Vance cancels his trip for talks with Iran, keeping a lid on the optimism.
- Bets for more aggressive RBNZ rate hikes could support the NZD and limit losses for the pair.
The NZD/USD pair turns lower for the third straight day following a modest Asian session uptick to the 0.5775 region and touches a fresh low since April 8 in the last hour. Spot prices currently trade just below mid-0.5700s and seem poised to register heavy weekly losses amid a bullish US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, preserves its recent strength to the highest level since May 2025 in the face of the US Federal Reserve's (Fed) hawkish tilt. In fact, policymakers projected the fed funds rate at 3.8% by the end of this year, up from 3.4% in March, implying at least one 25-basis-point (bps) rate hike in the coming months. This, to a larger extent, overshadows the US-Iran peace deal and continues to underpin the buck, which, in turn, is seen acting as a headwind for the NZD/USD pair.
Meanwhile, CNN reported that US Vice President JD Vance canceled his trip to talks with Iran in Switzerland. This further keeps a lid on the latest optimism and turns out to be another factor supporting the Greenback. However, the Reserve Bank of New Zealand's (RBNZ) hawkish shift might hold back traders from placing aggressive bearish bets around the New Zealand Dollar (NZD) and limit losses for the NZD/USD pair. In fact, the RBNZ indicated that the OCR could reach roughly 2.85% by the end of this year, implying up to three rate hikes.
Moving ahead, the liquidity and trading volumes could remain low in the face of a US bank holiday in observance of Juneteenth National Independence Day. This further makes it prudent to wait for strong follow-through selling before positioning for an extension of the recent retracement slide from the vicinity of the 0.6000 psychological mark, or the May monthly swing high.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.04% | 1.60% | 0.66% | 1.11% | 0.55% | 1.41% | 1.14% | |
| EUR | -1.04% | 0.52% | -0.37% | 0.06% | -0.51% | 0.36% | 0.09% | |
| GBP | -1.60% | -0.52% | -1.06% | -0.44% | -1.04% | -0.17% | -0.44% | |
| JPY | -0.66% | 0.37% | 1.06% | 0.45% | -0.11% | 0.79% | 0.47% | |
| CAD | -1.11% | -0.06% | 0.44% | -0.45% | -0.60% | 0.33% | 0.02% | |
| AUD | -0.55% | 0.51% | 1.04% | 0.11% | 0.60% | 0.88% | 0.60% | |
| NZD | -1.41% | -0.36% | 0.17% | -0.79% | -0.33% | -0.88% | -0.27% | |
| CHF | -1.14% | -0.09% | 0.44% | -0.47% | -0.02% | -0.60% | 0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- AUD/USD weakens to around 0.7010 in Friday’s Asian session.
- US Vice President cancels trip to Switzerland for Iran talks.
- Fed's hawkish hold leads to rate-hike bets, supporting the US Dollar.
The AUD/USD pair loses momentum to near 0.7010 during the Asian trading hours on Friday. The Australian Dollar (AUD) softens against the US Dollar (USD) after reports that US Vice President JD Vance canceled his trip to talks with Iran in Switzerland, raising concerns about the US-Iran peace deal.
CNN reported on Friday that the White House indicated that the first round of technical talks with Iran under the memorandum of understanding signed this week will not take place on Friday. Vance said that the meeting wasn’t yet finalized, as it’s difficult for the Iranian officials to get out of Iran. Vice President added that he thought he would travel to Switzerland at some point this weekend.
Traders will closely monitor the developments surrounding the peace agreement. A lack of progress in US-Iran or any signs of renewed tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair.
Furthermore, the hawkish stance of the US Federal Reserve (Fed) might contribute to the USD’s upside. The US central bank on Wednesday decided to hold the interest rates steady in a 3.50% to 3.75% range as Kevin Warsh began his era in charge with a sweeping policy review. Fed officials signaled the chance of higher rates as they assess the impacts of the Iran war on inflation.
"We've seen very spectacular data in the U.S. that's been surprising to the upside since late April, then the Fed was as hawkish as market expectations could ever have been, so we've seen more dollar upside," said Sarah Ying, head of FX strategy at CIBC Capital Markets.
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.
- USD/CAD rises as falling oil prices weaken the commodity-dependent Canadian Dollar.
- CENTCOM has lifted all maritime restrictions on traffic traveling to and from Iranian ports and coastal waters.
- A hawkish Fed pause saw nearly half of the officials signaling another rate hike later this year.
USD/CAD rises for the third consecutive day, trading around 1.4140 during the Asian hours on Friday. The pair appreciates as the commodity-linked Canadian Dollar (CAD) struggles amid lower oil prices. Canada is a major net exporter of crude oil, primarily sending its supply to the United States (US). Lower oil prices weigh on Canada's export revenues, which fundamentally pressure the CAD down.
West Texas Intermediate (WTI) oil price edges lower, slipping to around $75.10 per barrel at the time of writing and reversing the modest gains recorded in the previous session. The US oil benchmark is now on track to lock in a steep weekly loss of roughly 9.5% as energy investors react to rapidly improving shipping conditions in the Strait of Hormuz after US President Donald Trump signed a deal with Iran to end the war.
The US and Iran signed an initial agreement, kicking off 60 days of negotiations on a final deal to end the war, per CNN. Additionally, the US military earlier confirmed it had ended its blockade on Iranian ports near the Strait of Hormuz, as officials claim millions of barrels are once again flowing through the vital waterway. Positive developments surrounding the US-Iran peace deal could boost riskier assets, such as the shared currency, in the near term.
The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to hold its benchmark overnight borrowing rate steady at a range of 3.5%–3.75%. However, the decision carried a hawkish tone, with nearly half of the officials signaling that at least one rate hike could be required later this year.
This hawkish pause by the central bank could bolster the US Dollar (USD) and provide a tailwind for the USD/CAD pair. In his debut press conference, newly appointed Federal Reserve (Fed) Chairman Kevin Warsh emphasized that "price stability" remains the Fed's ultimate guiding principle.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
US Vice President JD Vance canceled his trip to talks with Iran in Switzerland, CNN reported on Friday.
A spokesman stated, “As the Vice President said at his press conference, the plans for the upcoming technical talks have not been finalized, and the U.S. delegation has been prepared to depart at the first available opportunity. But the logistics of these negotiations have never been simple or predictable. As of now the Vice President is not departing tonight. We will let you know as soon as we have a concrete update about next steps.”
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 0.23% on the day at $75.28.
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 drifts lower as hawkish BoJ Minutes leave the door open for further policy tightening.
- Intervention fears also benefit the JPY and contribute to the slide amid subdued USD demand.
- The US-Japan rate differential warrants some caution before positioning for any further losses.
The USD/JPY pair is seen extending the previous day's late pullback from the 161.80 region, or a fresh high since July 2024, and drifting lower during the Asian session on Friday. Spot prices slide to the 161.00 mark in the last hour and, for now, seem to have snapped a five-day winning streak, though the near-term bias seems tilted in favor of bullish traders.
The Japanese Yen (JPY) strengthened following the release of Minutes of the Bank of Japan's (BoJ) April meeting, which showed that some board members called for raising interest rates more swiftly to avoid underlying inflation from overshooting. This comes on top of an expected pickup in inflation over the coming months as higher input prices for businesses will eventually be passed on to consumers, and keeps further BoJ policy normalisation firmly on the table. Moreover, BoJ Deputy Governor Himino said that the central bank is likely to keep hiking rates based on economic, price, and financial trends.
Himino added that currency fluctuation is among the key factors influencing Japan’s economy and prices. Meanwhile, Japan's Chief Cabinet Secretary Minoru Kihara said on Thursday that the government is ready to respond appropriately to exchange-rate moves at any time. This, in turn, fuels intervention fears and lends additional support to the JPY, offsetting softer inflation figures from Japan. In fact, the Japan Statistics Bureau reported that the National Consumer Price Index (CPI) rose by 1.5% YoY in May, while a gauge excluding Fresh food arrived at 1.4%.
Meanwhile, a core reading that excludes both fresh food and energy prices slowed from the 1.9% YoY rate in April and rose 1.8% last month, remaining below the BoJ’s 2% annual target for a fourth straight month and marking its weakest level in four years. The data, however, does little to provide any impetus to the JPY. The US Dollar (USD), on the other hand, consolidates its strong weekly gains to the highest level since May 2025 and further contributes to the offered tone surrounding the USD/JPY pair, though any meaningful depreciating move still seems elusive.
The persistently wide interest rate differential between Japan and the US keeps the JPY carry trade active. In fact, the BoJ raised interest rates to 1.00%, or the highest since 1995, on Tuesday, while the US Federal Reserve (Fed) maintained its interest rate target range of 3.5% to 3.75% on Wednesday. This gap might hold back the JPY bulls from placing aggressive bets and help limit the downside for the USD/JPY pair. Hence, it will be prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near-term and positioning for a deeper corrective pullback.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.01% | -0.18% | 0.04% | 0.02% | -0.04% | 0.00% | |
| EUR | 0.03% | 0.01% | -0.15% | 0.07% | 0.06% | -0.03% | 0.04% | |
| GBP | 0.01% | -0.01% | -0.17% | 0.04% | 0.07% | -0.02% | 0.03% | |
| JPY | 0.18% | 0.15% | 0.17% | 0.20% | 0.22% | 0.12% | 0.17% | |
| CAD | -0.04% | -0.07% | -0.04% | -0.20% | 0.04% | -0.08% | -0.03% | |
| AUD | -0.02% | -0.06% | -0.07% | -0.22% | -0.04% | -0.11% | -0.03% | |
| NZD | 0.04% | 0.03% | 0.02% | -0.12% | 0.08% | 0.11% | 0.05% | |
| CHF | -0.00% | -0.04% | -0.03% | -0.17% | 0.03% | 0.03% | -0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
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