Forex News
United Overseas Bank’s (UOB) Quek Ser Leang notes GBP/USD invalidated a recent neutral call by breaking above 1.3555 and closing higher near 1.3532. Intraday, the British Pound (GBP) may extend toward 1.3570, with 1.3600 as firm resistance. Over the next 1–3 weeks, the upside bias remains intact while above 1.3495, though gains are expected to stall near 1.3600.
Sterling maintains constructive upside bias
"24-HOUR VIEW: We expected GBP “to trade between 1.3475 and 1.3515” last Friday. We were incorrect, as GBP soared to a high of 1.3561 before pulling back to close at 1.3532 (+0.33%). While upward momentum has slowed somewhat with the pullback, GBP could rise further toward 1.3570. We do not expect the major resistance at 1.3600 to come into view. To keep the momentum going, GBP must hold above 1.3510, with minor support at 1.3525."
"1-3 WEEKS VIEW: After holding a slightly positive GBP view for about two weeks, we revised our view to neutral last Friday (14 Aug, spot at 1.3490). We highlighted that “upward momentum has largely faded.” We also highlighted that “for the time being, GBP is likely to trade in a range between 1.3440 and 1.3540.” Our shift in view was premature, as GBP rose sharply, breaking above the major resistance at 1.3555 (high was 1.3561). While we would have preferred a more decisive break above 1.3555, the move is sufficient to indicate that the upward bias remains intact. That said, any advance is expected to face firm resistance at 1.3600. Overall, only a breach of 1.3495 (‘strong support’ level) would indicate that GBP is not ready to move toward 1.3600."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Canadian inflation is expected to rise by 2.9% YoY in July.
- The core CPI is still seen well above the BoC’s 2% target.
- The Canadian Dollar has been steadily appreciating vs the US Dollar.
Canada’s July Consumer Price Index (CPI) figures will be the focus of attention when published on Monday. Indeed, Statistics Canada data will provide markets with an update on price pressures following the Bank of Canada’s (BoC) July 15 gathering, when officials kept the interest rate steady at 2.25%, broadly in line with the consensus among analysts.
This time, economists expect the headline CPI to rise by 2.9% in the year to July, still above the central bank’s goal and up from June’s 2.8% annual increase. On a monthly basis, prices are expected to rise by 0.7%. The bank will also closely monitor its core measure (which strips food and energy costs), expected to rise by 2.2%, up from the 2.1% YoY gain recorded in the previous month.
In the current context of heightened geopolitical volatility, crude Oil dynamics are likely to keep inflationary pressures anything but abated. Adding to this scenario, we should not forget the impact of US tariffs on domestic consumer prices.
Still around data, the bank’s preferred gauges, CPI-Common, Trimmed Mean, and Median, receded in June to 2.6%, 1.8%, and 1.9%, respectively.
What can we expect from Canada’s inflation rate?
Inflation lost some momentum in June, although market participants remain somewhat sceptical about the continuation of this trend into July.
At its latest gathering, the BoC left its policy rate unchanged at 2.25%. While the reduced annual economic growth projection and current economic slack argue against extra tightening, the combination of higher anticipated inflation and confidence in the recent recovery, plus Governor Tiff Macklem’s specific caution against successive rises, means the BoC is attentive to continued oil-driven price pressures.
So far, market participants expect just over 18 basis points of tightening by year-end.
When is the Canada CPI data due, and how could it affect USD/CAD?
Markets will fully focus on Monday at 12:30 GMT, when Statistics Canada publishes July’s inflation prints. If inflation reverses the recent decline, bets on further rate hikes should likely increase, providing fresh legs for the Canadian Dollar (CAD).
Pablo Piovano, Senior Analyst at FXStreet, notes that USD/CAD has been in a steady downtrend since late July, almost entirely tracking developments in the Middle East conflicts and their impact on the Greenback.
Piovano points out that USD/CAD has recently broken below the 1.3900 support level for the first time since early June. In doing so, it has also left behind its provisional 100-day SMA in the 1.3920 region. Further losses carry the potential to confront the critical 200-day SMA in the mid-1.3800s.
If bulls regain control, the interim 55-day SMA around 1.4060 becomes the immediate target, followed by the August ceiling at 1.4080 (August 4) and the weekly peak at 1.4129 (July 28).
“Momentum could prompt some technical correction,” he adds, noting that the Relative Strength Index (RSI) is entering the oversold threshold near 29, while the Average Directional Index (ADX) around 30 suggests a firm trend.
Economic Indicator
BoC Interest Rate Decision
The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.
Read more.Last release: Wed Jul 15, 2026 13:45
Frequency: Irregular
Actual: 2.25%
Consensus: 2.25%
Previous: 2.25%
Source: Bank of Canada
Economic Indicator
BoC Consumer Price Index Core (YoY)
The BoC Consumer Price Index Core, released by the Bank of Canada (BoC) on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. It is considered a measure of underlying inflation as it excludes eight of the most-volatile components: fruits, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation and tobacco products. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Next release: Mon Aug 17, 2026 12:30
Frequency: Monthly
Consensus: -
Previous: 2.1%
Source: Statistics Canada
OCBC’s Sim Moh Siong and Christopher Wong highlight that September Bank of Japan (BoJ) hike odds have risen sharply, but the Japanese Yen (JPY) has reacted only modestly. They argue a sustained Yen recovery likely needs clearer commitment to faster policy normalisation. For now, they expect intervention risks to cap USD/JPY near 160.
Yen needs stronger policy normalisation signal
"Bloomberg reported that the Takaichi administration supports an early BoJ rate hike, helping lift market-implied odds of a September hike to 80%, from 50% at the start of August."
"This points to growing alignment between the BoJ, which remains concerned about inflationary pressures from a weak JPY, and the government, which is seeking to enhance the effectiveness of JPY-buying intervention."
"Despite the shift in expectations, the JPY's response has been muted. Should the BoJ deliver another rate hike in September, it would mark its third increase in nine months and the fastest pace of policy tightening since the collapse of Japan's asset bubble in 1989."
"However, it remains unclear how much appetite the government has for additional rate hikes beyond September or October."
"A more meaningful and sustained JPY recovery will likely require a stronger signal from the BoJ that policy normalisation can proceed at a faster pace. For now, intervention risks should help cap USD/JPY near 160..."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Indian Rupee remains steady despite the RBI’s decision to end its FCNR deposit FX swap early.
- USD/INR is projected to trade between 95.00 and 95.50 this week amid expected pre-August 31 FCNR deposit demand.
- The US Dollar struggles as weaker-than-expected US economic data fade Fed rate hike odds.
The Indian Rupee (INR) remains stronger against the US Dollar (USD) on Monday after two days of losses, with the USD/INR pair trading around 95.60 at the time of writing. However, the Indian Rupee (INR) may struggle in the coming period, potentially driving the pair higher, following the Reserve Bank of India’s (RBI) announcement to shut its FX swap facility for FCNR deposits a month ahead of schedule. Data released alongside the decision highlighted that the central bank's policy measures, including the deposit swap window, successfully attracted nearly $57 billion.
Market traders expect the USD/INR pair to fluctuate between 95.00 and 95.50 this week. Some anticipate a short-term rush among overseas clients aiming to secure FX deposits before the facility officially closes on August 31, while foreign portfolio flows and routine hedging activity will further direct currency movement.
Investors will closely monitor the release of the minutes from the RBI's August policy meeting, during which interest rates were kept unchanged. Looking ahead, most analysts project that the RBI will either initiate a shallow rate-hiking cycle starting in December or maintain its pause across the remainder of 2026.
India inflation uptick supports RBI’s steady policy stance
Analysts at Societe Generale highlight that India’s inflation backdrop remains broadly contained, noting that headline CPI “edged up modestly to 4.45% yoy in July from 4.38% in June,” a move they say “reinforc[es] the latest decision by the RBI to keep policy on hold.”
The USD/INR pair holds losses as the US Dollar (USD) declines amid weaker-than-expected US economic data and shifting central bank expectations. The US Census Bureau reported on Friday that Retail Sales fell by 0.6% month-over-month in July, following a 0.2% rise in June, coming in below the market consensus of 0.1% growth. On an annual basis, Retail Sales rose 5.0% in July compared to 6.8% in the previous month.
Traders have reduced their bets on Federal Reserve rate hikes following a slew of softer US data, including CPI, PPI, and Retail Sales. Markets are now pricing in a 33.1% chance of a rate hike next month, down from 44% last week according to the CME FedWatch tool.
Fed seen keeping hawks in check as disinflation evidence builds
Strategists at Scotiabank argue that last week’s data have likely provided sufficient reassurance on the inflation front to justify a more patient stance from policymakers. They highlight that “there is likely to have been enough evidence of disinflation in last week’s data (along with signs of slowing in the labour market) to allow Fed Chairman Warsh to keep the inflation hawks at bay,” reinforcing expectations that the Fed can resist pressure for an early shift back toward a more aggressive tightening bias.
Technical Analysis: USD/INR remains above moving averages within ascending channel
USD/INR holds losses after two days of gains, trading around 95.60 at the time of writing. The technical analysis of the daily chart indicates that the pair is remaining within the ascending channel, suggesting a prevailing bullish bias.
Additionally, the USD/INR pair holds a slight constructive bias as spot remains above both the nine-period Exponential Moving Average (EMA) at 95.4418 and the 50-period EMA at 95.3913, suggesting near-term dips are being cushioned by dynamic support.
The 14-day Relative Strength Index (RSI) hovers just below the 50 mark at 49.2, hinting at broadly balanced momentum after the recent pullback, while the latest FXS Fed Sentiment Index reading around 134.6 adds a modestly supportive macro backdrop without yet translating into a clear directional breakout on the chart.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- EUR/GBP inches higher on Monday to test 0.8550, after bouncing from 0.8530 lows last week.
- The Euro is attempting to retrace early August's losses, supported by ECB tightening bets.
- The Pound loses momentum on a dovish BoE ad UK's growing fiscal concerns.
The Euro (EUR) holds minor gains against the British Pound (GBP) for the third consecutive day on Monday, favoured by European Central Bank (ECB) - Bank of England (BoE) monetary policy divergence. Euro bulls, however, are struggling to find acceptance above 0.8550, with market volatility relatively low in a calm summer trading session.
The Euro is drawing some support from investors' growing confidence that the ECB is poised to hike interest rates after its September meeting.
Eurozone Gross Domestic Product (GDP) and Employment Change data seen last week endorsed this view. Economic growth bounced back in the second quarter after stagnating in the previous quarter, and employment grew, albeit at a moderate pace, allowing the ECB to hike interest rates by a quarter point in September to tame high inflationary pressures.
BoE dovishness, UK fiscal uncertainty keeps Pound's tone cautious
The case for the BoE, however, is less clear, with recent monetary policy decisions showing a split committee, while Governor Andrew Bailey's rhetoric leans towards the dovish side. UK GDP grew in Q2, but July's Industrial Production data hinted at an economic slowdown in the third quarter of the year, which, together with benign consumer inflation data in June, strengthens the case for a hold at next month's monetary policy meeting.
The political scenario is not encouraging for Pound bulls either. Rabobank analysts warn that “uncertainty about the budget could keep the UK market nervous into the autumn.”
Rabobank notes that while “the market may be more forgiving if the government is borrowing to invest, … extra gilt supply will still have to be absorbed, and infrastructure projects are likely to take years before they raise capacity.” The bank also stresses that, “either way, Burnham’s plans to ease the cost of living for the electorate still must be paid for,” underscoring the lingering concerns around how the UK’s looser fiscal stance will ultimately be financed.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
Here is what you need to know on Monday, August 17:
The US Dollar stays under pressure on Monday after posting losses against its major rivals to end the previous week. In the second half of the day, July Consumer Price Index (CPI) data from Canada will be watched closely by market participants, while the US economic calendar will not offer any high-impact data releases.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.37% | -0.53% | 0.76% | -0.64% | -0.81% | -0.48% | 0.38% | |
| EUR | 0.37% | -0.18% | 1.09% | -0.37% | -0.51% | -0.21% | 0.67% | |
| GBP | 0.53% | 0.18% | 1.21% | -0.20% | -0.34% | -0.03% | 0.81% | |
| JPY | -0.76% | -1.09% | -1.21% | -1.07% | -1.22% | -1.05% | -0.16% | |
| CAD | 0.64% | 0.37% | 0.20% | 1.07% | -0.15% | 0.02% | 1.07% | |
| AUD | 0.81% | 0.51% | 0.34% | 1.22% | 0.15% | 0.30% | 1.15% | |
| NZD | 0.48% | 0.21% | 0.03% | 1.05% | -0.02% | -0.30% | 0.84% | |
| CHF | -0.38% | -0.67% | -0.81% | 0.16% | -1.07% | -1.15% | -0.84% |
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).
Following the softer-than-expected producer inflation figures on Thursday, the data from the US showed on Friday that Retail Sales contracted by 0.6% on a monthly basis in Friday, missing the market expectation for an increase of 0.1% by a wide margin. Additionally, the University of Michigan's Consumer Sentiment Index dropped to 51 in August's flash estimate from 55.2 in July. The USD Index continues to stretch lower after closing in negative territory on Friday and it was last seen losing 0.2% on the day at 99.43.
Fed repricing builds as softer US data temper 2026 hike expectations
Analysts at BNY note that “softer US data over the last few weeks have reduced rate hike expectations for the rest of 2026,” with markets increasingly questioning the likelihood of any renewed tightening cycle. They argue that “further progress on inflation over the next few months could seal the view that there won’t be a tightening of policy,” effectively locking in the perception that the Federal Reserve (Fed) is done hiking.
Against this backdrop, BNY expects upcoming activity data and communications to play a more nuanced role. The bank says “the PMIs will be watched for confirmation that growth remains resilient even as inflation concerns have moderated, but unless they surprise meaningfully, we doubt they’ll move the rates complex materially.” In a similar vein, it judges that “the FOMC minutes should be useful for gauging the balance of views inside the Committee, but with recent data still fresh in investors’ minds, they’re unlikely to change the market’s broader Fed outlook.”
In the meantime, the Memorandum of Understanding (MoU) signed between Iran and the US is set to expire on Monday with no signs of a broader deal. Crude Oil prices stay relatively quiet in the European morning on Monday. As of writing, the barrel of West Texas Intermediate (WTI) was trading marginally lower on the day at around $81.
USD/CAD stays under modest bearish pressure on Monday and trades at its lowest level since early June near 1.3860.
The data from Japan showed earlier in the day that the Gross Domestic Product (GDP) expanded at an annual rate of 1.1% in the second quarter. This print followed the 1.8% growth recorded in the first quarter and came in well below the market expectation for an expansion of 2%. Despite the disappointing data, USD/JPY stays on the back foot in the European morning and trades in negative territory near 159.00.
EUR/USD preserves its bullish momentum and trades at its highest level in two months, near 1.1600.
GBP/USD continues to edge higher after ending the previous week with small gains and trades at around 1.3550.
Gold shows resilience following last week's choppy action and clings to gains at around $4,400.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Gold attracts some follow-through buyers on Monday, though it lacks bullish conviction.
- Receding Fed rate hike bets continue to undermine the USD and support the commodity.
- Geopolitical risks help limit deeper USD losses and cap the upside for the precious metal.
Gold (XAU/USD) builds on Friday's bounce from the $4,300 neighborhood and attracts some follow-through buyers at the start of a new week. The commodity is now looking to extend momentum above the $4,400 mark, though it remains below the highest level since June 5, touched last Thursday, amid mixed fundamental cues.
Data released on Friday showed that US Retail Sales dropped 0.6% in July, marking the first fall in nine months and the biggest monthly decline since May last year. Adding to this, the University of Michigan's Consumer Sentiment Index dipped in August to 51 from 55.2 in the previous month. This comes on top of signs of cooling US inflation and further tempers expectations for an immediate interest rate hike by the Federal Reserve (Fed), which continues to undermine the US Dollar (USD) and lends support to the non-yielding bullion.
Strategists at BNY note that “softer U.S. data over the last few weeks have reduced rate hike expectations for the rest of 2026,” with markets increasingly questioning the need for additional tightening late in the cycle. They add that “further progress on inflation over the next few months could seal the view that there won’t be a tightening of policy,” suggesting that incoming price data will be pivotal in cementing the market’s dovish shift.
Investors, however, remain worried that volatile energy prices could complicate the inflation outlook and force the Fed to stick to a hawkish stance. Moreover, persistent geopolitical uncertainties help limit deeper losses for the safe-haven USD, capping the upside for the Gold price. Treasury Secretary Scott Bessent said that the US is preparing to hit Iran with economic measures that have never been seen, as soon as this week. This, along with the US-Iran standoff, keeps the geopolitical risk premium in play and should support the buck.
In other developments, President Donald Trump said that he would soon declare the Strait of Hormuz a “territory of the United States.” Meanwhile, Iran’s Foreign Minister Abbas Araghchi said that the US must agree to Tehran's conditions in order for shipping to resume through the waterway and that there were no negotiations currently taking place. Apart from this, fresh Ukrainian attacks on Russian refineries remain supportive of higher oil prices, keeping inflation fears and bets for at least one Fed rate hike in 2026 on the table.
According to CME Group's FedWatch Tool, traders are still pricing in around a 65% chance that the US central bank will raise borrowing costs by the end of this year. This, in turn, warrants some caution for USD bears and before positioning for any further appreciating move in the Gold price as traders await further cues about the Fed's future policy path. Hence, the focus will remain glued to the release of FOMC Minutes on Wednesday. Apart from this, the incoming geopolitical headlines might influence the USD and the precious metal.
XAU/USD daily chart
Technical Analysis
From a technical perspective, the recent repeated failures to find acceptance above the $4,400 mark, or the 50% retracement level of the April-June decline, warrant some caution for XAU/USD bulls. Moreover, the precious metal remains below the 200-day Simple Moving Average (SMA), keeping the broader tone capped despite the recent recovery.
Meanwhile, the Relative Strength Index (RSI) at 64.43 leans toward bullish momentum, while the Moving Average Convergence Divergence (MACD) stays in positive territory. Improving momentum indicators, however, only hint that buyers are attempting a rebound within a still bearish, resistance-heavy backdrop.
Nevertheless, sustained strength and acceptance above the $4,400 mark (50% retracement level) should allow the Gold price to test the 200-day SMA near $4,506 and the 61.8% Fibonacci retracement at $4,509. Further barriers are seen at the 78.6% Fibo level at $4,666 and the cycle high zone at $4,865.
On the downside, initial support emerges at the 38.2% Fibo. retracement at $4,290, ahead of the 23.6% level at $4,154, while a deeper slide would expose the structural floor around the Fibonacci anchor near $3,935.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
TD Securities’ Robert Both and Emma Lawrence highlight that markets are watching Canadian CPI and potential US Section 338 tariffs on CAD exports. They expect headline CPI at 2.9% year-on-year in July with core at 1.85%, and see retail sales flat in June. The Bank of Canada is projected to hold its Overnight Rate at 2.25% through 2026 before gradual hikes in 2027.
CPI, tariffs and BoC expectations
"The market's focus will be divided between top-tier economic data and Wednesday's deadline for Section 338 tariffs. Canadian officials have spent the last three weeks negotiating with their US counterparts to find an off-ramp before the 50% tariff on $20bn (USD) of CAD exports comes into effect."
"We look for headline CPI to firm by 0.1pp to 2.9% y/y in July as prices rise by 0.4% m/m on positive contributions from food and energy products. Seasonal tailwinds to travel related components will provide another boost, although travel services should still see a modest pullback after the sharp acceleration into the World Cup."
"CPI-trim/median are forecast to hold stable at 1.85% y/y or 1.6% on a 3m annualized basis, which would leave core CPI tracking slightly below BoC projections from the July MPR and allow the Bank to stick to its recent messaging at the next policy decision on September 2nd."
"We look for the Bank of Canada to stay on hold at 2.25% through 2026 before a return to neutral (2.75%) next year, with 25bp hikes in January and March 2027."
"We look for retail sales to hold unchanged in June for a softer performance than implied by flash estimates for a 0.4% increase. Stronger motor vehicle sales will provide a tailwind to the headline print, leaving the ex-autos measure down 0.2% m/m, with softer gasoline prices exerting a heavy drag."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
China’s Retail Sales rose 0.6% year-over-year (YoY) in July vs. A rise of 1.5% expected and a 1.0% growth in June, the latest data released by the National Bureau of Statistics (NBS) showed Monday.
Chinese Industrial Production climbed 4.5% YoY in the same period, compared to the 5.0% forecast and 5.3% seen previously.
Meanwhile, the Fixed Asset Investment came in at -6.7% year-to-date (YTD) YoY in July, weaker than the expected decrease of 6.2%. The June reading was a decline of 5.7%.
Market reaction
The downbeat Chinese data have little to no impact on the China-proxy Australian Dollar (AUD). At the time of writing, the AUD/USD pair is trading 0.53% higher on the day at 0.7120.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.16% | -0.21% | -0.11% | -0.53% | -0.50% | -0.30% | |
| EUR | 0.22% | 0.04% | 0.02% | 0.09% | -0.28% | -0.29% | -0.07% | |
| GBP | 0.16% | -0.04% | -0.02% | 0.05% | -0.31% | -0.34% | -0.12% | |
| JPY | 0.21% | -0.02% | 0.02% | 0.10% | -0.31% | -0.29% | -0.06% | |
| CAD | 0.11% | -0.09% | -0.05% | -0.10% | -0.41% | -0.39% | -0.18% | |
| AUD | 0.53% | 0.28% | 0.31% | 0.31% | 0.41% | 0.00% | 0.19% | |
| NZD | 0.50% | 0.29% | 0.34% | 0.29% | 0.39% | -0.01% | 0.23% | |
| CHF | 0.30% | 0.07% | 0.12% | 0.06% | 0.18% | -0.19% | -0.23% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
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.
BNY's Wee Khoon Chong note Sweden’s Riksbank appears comfortable with its current policy stance as inflation stays below target, leaving two hikes in the repo path mainly as a risk acknowledgment. Despite favorable real-rate dynamics, Swedish Krona (SEK) performance is constrained by valuation concerns and a high KIX level. Chong expects the Riksbank to avoid aggressive SEK-supportive action while CPI remains anchored.
Riksbank comfortable despite weak krona
"We believe Sweden’s Riksbank – along with the Swiss National Bank – is the most “at ease” with its current policy path as inflation remains well below target levels."
"Given the favorable outlook on prices and real rates, SEK performance might leave much to be desired."
"The KIX, Sweden’s import-weighted exchange rate index, remains at the upper end of its recent range, which would normally prompt the Riksbank to state that the currency is undervalued."
"The June Monetary Policy Report envisaged the KIX at an annualized average of 116.18, which is already an adjustment to reflect a weaker SEK (i.e., import prices go up)."
"Swedish producer prices are clearly moving in tandem, but as long as CPI is anchored, we expect the Riksbank to hold off on being more assertive by bringing forward the two hikes currently in the repo path."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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