Forex News
- AUD/USD steadies despite stronger-than-anticipated key economic data from China.
- China’s Retail Sales rose 2.8% YoY in February, beating 2.5% forecasts and December’s 0.9%.
- The US Dollar weakened as risk aversion eased after reports that the Iran war could end within weeks.
AUD/USD edges higher after two days of losses, trading around 0.7010 during the Asian hours on Monday. The pair holds ground following the release of key economic data from China. It is worth noting that any change in the Chinese economy could affect the Australian Dollar (AUD), as China and Australia are close trading partners.
The National Bureau of Statistics (NBS) reported on Monday that China’s Retail Sales climbed 2.8% year-over-year (YoY) in February against 2.5% expected and 0.9% in December. Meanwhile, Industrial Production rose 6.3% YoY in the same period, compared to the 5.1% forecast and 5.2% seen previously.
The AUD/USD pair holds ground as the US Dollar (USD) weakens as risk aversion eases after a report from The Guardian indicated that US Energy Secretary Chris Wright expects the US-Israel conflict with Iran to end within “the next few weeks,” potentially allowing oil supplies to recover and energy prices to decline.
However, the Greenback could regain momentum as Middle East tensions intensify after US forces reportedly targeted every military site on Kharg Island over the weekend, a hub that handles nearly 90% of Iran’s oil exports. While US President Donald Trump said oil infrastructure was not struck, Iran has warned it could retaliate against any US-linked oil facilities in the region.
President Trump also called on allied nations, including the UK, France, China, and Japan, to help secure the Strait of Hormuz, with reports suggesting a potential White House announcement in the coming days. Meanwhile, European Union (EU) foreign ministers are meeting in Brussels to discuss a possible naval response to the effective closure of the Strait.
Traders’ attention now turns to US Federal Reserve policy meeting due on Wednesday. While no change to the federal funds rate is expected, investors will closely monitor policymakers’ guidance for the remainder of the year, particularly regarding inflation risks stemming from the recent surge in energy prices.
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.
- NZD/USD drifts higher to around 0.5805 in Monday’s Asian session.
- China’s Retail Sales rose 2.8% YoY in January-February, stronger than expected.
- Escalating conflict in the Middle East could boost safe-haven demand, supporting the US Dollar.
The NZD/USD pair gains traction to near 0.5805 during the Asian trading hours on Monday. The New Zealand Dollar (NZD) edges higher against the US Dollar (USD) after the release of the Chinese February Retail Sales and Industrial Production reports.
Data released by the National Bureau of Statistics (NBS) on Monday showed that China’s Retail Sales rose 2.8% YoY in January-February, compared to 0.9% in the previous reading. This figure came in better than the expectation of 2.5%. Meanwhile, Chinese Industrial Production climbed 6.3% YoY in January-February versus 5.2% prior, above the market consensus of 5.1%. The upbeat Chinese data dump has little to no impact on the China-proxy Kiwi.
The Reserve Bank of New Zealand held its Official Cash Rate (OCR) at 2.25% in its February policy meeting. RBNZ Governor Anna Breman said that monetary policy will likely remain accommodative for some time to support a fragile economy. Markets are now pricing in a 25-basis-point (bps) hike in September 2026.
Escalating Middle East geopolitical tensions, including disruptions in the Strait of Hormuz, could drive traders toward the Greenback as a safe-haven currency. US President Donald Trump said on Monday that he is talking with other countries about policing the Strait of Hormuz, adding that Israel is collaborating with the US on securing the vital shipping route.
Over the weekend, US forces targeted every military site on Kharg Island, a critical Iranian oil export hub. Iran has threatened to retaliate against any US-linked oil facilities in the region.
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.
China’s Retail Sales rose 2.8% year-over-year (YoY) in January-February vs. 2.5% expected and 0.9% in December, the latest data released by the National Bureau of Statistics (NBS) showed Monday.
Chinese Industrial Production climbed 6.3% YoY in the same period, compared to the 5.1% forecast and 5.2% seen previously.
Meanwhile, the Fixed Asset Investment came in at 1.8% year-to-date (YTD) YoY in January-February, stronger than the expected -0.4% figure. The December reading was -3.8%.
AUD/USD reaction to Chinese data
The upbeat Chinese data dump have little to no impact on the Australian Dollar (AUD). At the time of writing, the AUD/USD pair is trading 0.44% higher on the day at 0.7011.
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.
Japanese Prime Minister (PM) Sanae Takaichi said on Monday that “Japan has no plan currently to dispatch its navy to the Middle East to escort vessels.”
She further noted that the government is “exploring ways Japan can protect Japanese vessels in the Middle East, but no decision yet.”
Market reaction
USD/JPY was last seen trading at 159.47, down 0.16% on the day. The Japanese Yen (JPY) remains underpinned by cautious markets and looming forex intervention risks.
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.
- US Dollar Index retreats after touching a near 10-month high of 100.54 in the previous session.
- The Greenback weakens as risk aversion eases after reports the Iran war could end within weeks.
- WTI may further advance as Middle East tensions rise after US forces reportedly targeted Iranian military sites on Kharg Island.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, retreats after touching a near 10-month high of 100.54 in the previous session, trading around 100.20 during Asian hours on Monday.
The Greenback weakens as risk aversion eases after a report from The Guardian indicated that US Energy Secretary Chris Wright expects the US-Israel conflict with Iran to end within “the next few weeks,” potentially allowing oil supplies to recover and energy prices to decline.
West Texas Intermediate (WTI) crude oil price fell after opening with a gap higher, trading near $96.30 per barrel at the time of writing. However, crude prices could regain momentum as Middle East tensions intensify after US forces reportedly targeted every military site on Kharg Island over the weekend, a hub that handles nearly 90% of Iran’s oil exports. While US President Donald Trump said oil infrastructure was not struck, Iran has warned it could retaliate against any US-linked oil facilities in the region.
President Trump also called on allied nations, including the UK, France, China, and Japan, to assist in securing the Strait of Hormuz, with reports suggesting a potential White House announcement in the coming days. Meanwhile, European Union (EU) foreign ministers are meeting in Brussels to discuss a possible naval response to the effective closure of the Strait. Some officials have proposed expanding the existing maritime mission toward the Strait of Hormuz, though ministers are unlikely to approve a deployment immediately.
Traders’ attention now turns to the US Federal Reserve policy meeting due on Wednesday. While no change to the federal funds rate is expected, investors will closely monitor policymakers’ guidance for the remainder of the year, particularly regarding inflation risks stemming from the recent surge in energy prices.
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.
- WTI attracts some intraday sellers following a bullish gap opening to a one-week top on Monday.
- Efforts aimed at opening the Strait of Hormuz ease supply concerns and weigh on the commodity.
- The technical setup favors bullish traders and backs the case for the emergence of some dip-buying.
West Texas Intermediate (WTI) Crude Oil prices retreated from the vicinity of the $100.00 psychological mark, or a one-week high touched during the Asian session on Monday. The commodity slides below the $96.00 mark in the last hour and, for now, seems to have snapped a four-day winning streak, though the downside potential seems limited amid the ongoing conflicts in the Middle East.
French President Emmanuel Macron said on Sunday that freedom of navigation through the Strait of Hormuz must be restored as soon as possible. Adding to this, European Union (EU) foreign ministers are meeting in Brussels to debate a potential naval response to the effective closure of the Strait of Hormuz. Furthermore, US President Donald Trump said that he is discussing with other countries about policing the Strait of Hormuz. This, in turn, eases concern about disruption to global supplies and weighs on Crude Oil prices.
From a technical perspective, the commodity struggles to build on the recent bounce from sub-$76.00 levels beyond the 61.8% Fibonacci retracement level of the corrective pullback from a multi-year peak, touched last Monday. That said, the near-term bias leans bullish as Crude Oil prices hold well above the rising 200-period Simple Moving Average (SMA) on the 4-hour chart near $85.70, underscoring a firmly established uptrend on this timeframe.
The Moving Average Convergence Divergence (MACD) histogram has turned positive again with the MACD line lifting back toward the zero line, suggesting improving upside momentum after the recent pullback from the $97.90 area. The Relative Strength Index (RSI) around 56 stays above the 50 midline and below overbought territory, aligning with a controlled bullish tone rather than a stretched rally.
Immediate resistance emerges at the 61.8% Fibo. retracement level at $98.90, with a break above this level opening the door toward a retest of the psychological $100.00 region. On the downside, initial support is located at the 50.0% retracement at $94.62, which coincides with the latest consolidation area, while deeper weakness would expose $90.33 at the 38.2% retracement as the next key floor. The rising 200-period SMA reinforces the broader support backdrop below these Fibonacci levels and would underpin the bullish bias as long as WTI holds comfortably above it.
(The technical analysis of this story was written with the help of an AI tool.)
WTI 1-hour chart
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.
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