Forex News
ING analysts Warren Patterson and Ewa Manthey note that Oil prices have surged as the Saudi East–West pipeline shutdown tightens supply and keeps ICE Brent near recent resistance around $110/bbl. They highlight persistent uncertainty over damage and outage duration, with Saudi storage at Yanbu only offering temporary relief and risks that port stocks deplete before flows resume, leaving prices well supported in the near term.
Saudi outage keeps Brent supported
"Oil prices surged yesterday amid broader escalation in the Middle East and the shutdown of Saudi Arabia’s 7m b/d East-West pipeline. ICE Brent traded to an intraday high of just below $110/bbl, a level at which the market has faced tough resistance over the last 3 days."
"Plenty of uncertainty remains over the extent of damage and the duration of the outage for the East-West pipeline in Saudi Arabia. Prices are likely to remain well supported until we get clarity."
"Reports suggest the pipeline could be offline for several weeks. The Saudis have oil in storage tanks at Yanbu, which should sustain exports for several days."
"The risk is that port stocks run out before the pipeline resumes. Some suggest the Saudis are looking to increase exports via the Strait of Hormuz amid the pipeline outage."
"Given the disruptions in the Strait of Hormuz, that may be easier said than done. Despite Trump stating that Russia and Ukraine agreed to halt hitting each other’s energy infrastructure, we’ve seen little relief in middle distillate cracks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The United Kingdom’s (UK) ILO Unemployment Rate stayed at 4.9% in the three months to July after reporting 4.9% in the previous reading, data published by the Office for National Statistics (ONS) showed on Tuesday. The data came in below the market consensus of 5.0%.
Additional details of the report showed that the number of people claiming jobless benefits climbed by 27.8K in August, compared with a revised decrease of 11.8K in July and the expected 8.3K gain.
The Employment Change data came in at 67K in July against 83K recorded in June.
Meanwhile, Average Earnings, excluding Bonus, in the UK ticked up by 3.5% three months year-over-year (3M YoY) in July versus a 3.5% growth booked previously. The market expectation was for a 3.5% print.
Another measure of wage inflation, Average Earnings, including Bonus, rose by 3.9% in the same period after increasing by 4.2% in the quarter through June (revised from 4.1%). The data matched the estimate of 3.9%.
GBP/USD reaction to the UK employment report
The British Pound (GBP) attracts some sellers in an immediate reaction to the UK employment report. At the time of writing, the GBP/USD pair is trading 0.16% lower on the day to trade at 1.3477.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
- USD/CAD tests the immediate barrier at the 50-day EMA of 1.3914.
- The 14-day Relative Strength Index is near 54, supporting a bullish breakout.
- The primary support lies at the nine-day EMA of 1.3861.
USD/CAD continues its winning streak for the fifth consecutive day, trading around 1.3910 during Asian hours on Tuesday. The technical analysis of the daily chart indicates that the price is positioned slightly above the top trendline of a descending channel; it primarily signals a potential bullish breakout. However, until a decisive confirmation occurs, a small move above the top boundary carries the risk of a false breakout, where sellers push the price back down into the channel.
The USD/CAD pair is holding above the nine-day Exponential Moving Average (EMA) but remains capped by the 50-day EMA, leaving the near-term tone broadly neutral with a mild topside bias. The 14-day Relative Strength Index (RSI) around 54 hints at recovering bullish momentum, yet the proximity of the 50-day EMA overhead suggests that bulls still need a clear daily close above this barrier to unlock further gains.
The USD/CAD pair is testing the immediate barrier at the 50-day EMA of 1.3914. A sustained break above the short-term price average would strengthen the bullish bias and support the pair in exploring the region around the nearly 17-month high of 1.4248, which was recorded on June 24, 2026.
On the downside, the initial support lies at the nine-day EMA of 1.3861. A pullback toward the descending channel would revive the bearish bias and put downward pressure on the USD/CAD pair to test the descending channel bottom at 1.3560, followed by 1.3481, the lowest level since October 2024.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.11% | 0.28% | 0.07% | 0.24% | 0.29% | 0.09% | |
| EUR | -0.11% | 0.00% | 0.14% | -0.04% | 0.13% | 0.17% | -0.02% | |
| GBP | -0.11% | -0.00% | 0.15% | -0.06% | 0.11% | 0.15% | -0.02% | |
| JPY | -0.28% | -0.14% | -0.15% | -0.20% | -0.02% | 0.01% | -0.17% | |
| CAD | -0.07% | 0.04% | 0.06% | 0.20% | 0.17% | 0.21% | 0.03% | |
| AUD | -0.24% | -0.13% | -0.11% | 0.02% | -0.17% | 0.04% | -0.15% | |
| NZD | -0.29% | -0.17% | -0.15% | -0.01% | -0.21% | -0.04% | -0.17% | |
| CHF | -0.09% | 0.02% | 0.02% | 0.17% | -0.03% | 0.15% | 0.17% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
- Gold struggles to register any meaningful recovery and hangs near a multi-week low.
- Fed rate hike bets and inflation risk keep US bond yields elevated, supporting the USD.
- Geopolitical risks further underpin the safe-haven buck, capping gains for the bullion.
Gold (XAU/USD) struggles to capitalize on its modest Asian session uptick on Tuesday and remains close to a one-month low, which it touched the previous day. The commodity currently trades just below the $4,300 mark as traders move to the sidelines ahead of the crucial two-day FOMC policy meeting, starting later today.
The US Federal Reserve (Fed) is scheduled to announce its decision on Wednesday, and the latest US inflation figures, released last week, lifted bets for an imminent interest rate hike. The focus, however, will be on updated economic projections, including the so-called dot plot, and Fed Chair Kevin Warsh's comments during the post-meeting press conference. Investors will look for more cues about the Fed's future policy path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding Gold.
Heading into the key central bank event, inflation risks stemming from higher energy prices underpin prospects for further Fed policy tightening. Adding to this, a surge in public and corporate borrowing contributed to an extended global bond selloff. This, in turn, lifted the yield on the benchmark 10-year US Treasury bond above the 5% threshold for the first time since 2023. Adding to this, persistent geopolitical uncertainties keep the safe-haven USD close to a nearly two-week high, touched on Monday, and should cap any further gains for Gold.
In the latest developments surrounding the Middle East crisis, Iran-backed Houthis in Yemen carried out a large-scale missile and drone attack on a Saudi air base in Khamis Mushait on Monday. Moreover, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met. This dampens hopes for a diplomatic solution to end the war, favoring USD bulls and warranting caution before positioning for any further upside for the Gold price.
XAU/USD daily chart
Technical Analysis
The XAU/USD pair holds a slight neutral-to-capped tone as it sits just under the 50.0% retracement level of the June-August upswing, while still trading above the 50-day Simple Moving Average (SMA), suggesting consolidation rather than a clear trend. Moreover, the Relative Strength Index (RSI) hovers around 45, hinting at subdued momentum. However, the Moving Average Convergence Divergence (MACD) remains in negative territory with a depressed histogram, reinforcing the idea that rallies may struggle unless buyers reclaim overhead Fibonacci resistance.
Meanwhile, a move above the 50.0% retracement around $4,323 could face a strong barrier at the 38.2% Fibo. retracement near $4,412 and then the 23.6% level close to $4,522 if upside pressure builds. On the downside, immediate support is provided by the 50-day SMA at about $4,275, ahead of the 61.8% Fibo. retracement around $4,234. A convincing break below this zone would expose the deeper structural supports at the 78.6% retracement near $4,108 and the prior anchor area around $3,947.
(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.
- The Indian Rupee continues to underperform against the US Dollar on the back strong hawkish Fed bets.
- Oil prices rise further as Saudi Arabia closes its major pipeline.
- India’s retail inflation accelerated to 4.82% YoY in August vs. 4.8% estimates.
The Indian Rupee (INR) extends its previous week’s downfall against the US Dollar (USD) on Tuesday, with the USD/INR rising to near 95.85 in the opening session. The Indian currency was expected to continue its underperformance as 10-year United States (US) Treasury Yields have hit record highs of 5% and the prolonged upside in oil prices.
Surging US Treasury Yields have also strengthened the US Dollar. At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is up 0.15% to near 99.62.
US Treasury Yields have extended their rally to a little over 5%, the level last seen in October 2023, on the back of firm expectations that the Federal Reserve (Fed) will hike interest rates in the policy announcement on Wednesday.
Hawkish Fed expectations are prompted by hotter-than-projected US Producer Price Index (PPI) and sticky Consumer Price Index (CPI) reports for August. While the Fed is almost certain to raise interest rates, investors will pay more attention to the monetary policy statement and Fed Chair Kevin Warsh’s press conference to get fresh cues regarding the interest rate outlook.
Fed seen hiking in September but stopping after one move
Economists at ING explain that they have "changed their view to a 25bp Federal Reserve rate hike in September in the wake of Chair Kevin Warsh’s address at the Jackson Hole symposium," adding that "the data since then has justified that decision." While they acknowledge that "ordinarily the assumption is that if the Fed hikes, they don’t just go once," and that "financial markets are now pricing two and a half further rate hikes after the all-but-assured 16 September move," the ING team argues that "this time around we think that one and done might be the case," with their projections for jobs and inflation suggesting "no need for a series of hikes."
Oil prices remain higher amid escalating energy supply concerns
In the opening session, the MCX Crude Oil contract expiring on September 21 is up 1.8% to near Rs. 9,900. The oil price is close to its multi-month high of Rs. 10,043 posted on Friday.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.
Analysts at Deutsche Bank highlight that the latest move in the oil price comes “following the precautionary shutdown of a major Saudi pipeline late on Friday following recent attacks, and the postponement of today's planned meeting between Iran and other Gulf states to discuss the creation of a temporary shipping corridor through the Strait of Hormuz.” They note that these developments have reinforced market concerns around regional supply security and key shipping routes.
India’s retail CPI rises at slightly faster-than-expected pace
On Monday, India’s Ministry of Statistics and Programme Implementation reported that the retail CPI grew by 4.82% Year-on-Year (YoY), faster than 4.8% estimates and the previous reading of 4.45%. Still, the CPI data remains inside Reserve Bank of India’s (RBI) tolerance band of 2%-6%.
A faster-than-projected growth in inflationary pressures at the retail level will likely increase expectations of an interest rate hike by the RBI in the near term.
USD/INR Technical Analysis
USD/INR trades sharply higher at around 95.85. The pair holds a bullish near-term bias as it trades above the 20-day exponential moving average (EMA) at 95.30, suggesting dips remain supported while buyers maintain control.
The Relative Strength Index (RSI) at 62.3 leans into bullish territory, hinting that upside momentum is firm but not yet overstretched.
On the downside, immediate support is seen at the 20-day EMA near 95.30, reinforcing a deeper demand zone on any corrective pullback, followed by 95.00. Looking up, the pair could aim to revisit the all-time high near 97.10.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- AUD/JPY holds steady near 110.20 in Tuesday’s early European session.
- BoJ is likely to raise its benchmark interest rate to 1.25% at its meeting on Friday.
- The negative outlook for the cross remains intact, with oversold conditions.
- The first upside barrier emerges at 112.45; the initial support level to watch is 109.35.
The AUD/JPY cross trades on a flat note around 110.20 during the early European trading hours on Tuesday. Markets might turn cautious ahead of the Bank of Japan (BoJ) interest rate decision later on Friday.
The BoJ is expected to raise its policy interest rate to 1.25%, the highest level in about 31 years, at its September policy-setting meeting on Friday. The Japanese central bank raised its benchmark interest rate to 1.0% at its recent June meeting.
Traders will keep an eye on BoJ Governor Kazuo Ueda about the pace of future rate hikes and how far the central bank could take rates under the current tightening cycle.
"A 25 bps hike is already almost fully priced," said MUFG analysts. ”For the yen to strengthen further, the BOJ will have to signal that they are planning to stick to the faster pace of hikes,” they added.
On the other hand, a hawkish stance from the Reserve Bank of Australia (RBA) keeps the possibility of further rate hikes alive, supporting the Aussie. RBA Assistant Governor Sarah Hunter said on Tuesday that the central bank may need to raise interest rates again if inflation proves more persistent than expected.
Markets are now pricing in nearly a 76% chance that the Australian central bank will raise the Official Cash Rate (OCR) to 4.60% at the next RBA Board meeting, according to RBA Rate Tracker.
Yen outlook firms as BoJ seen validating hawkish pricing
Analysts at Brown Brothers Harriman note that the Bank of Japan is “widely expected to raise the policy rate 25bps to 1.25% on Friday after pausing in July,” reflecting a backdrop in which “Japan underlying inflation is very close to the 2% target and the economy is running slightly above capacity.” They add that “a 50bps hike cannot be ruled out as it would help contain inflation expectations, and cap longer term JGB yields.”
Looking beyond this week’s decision, BBH highlights that “markets will look for indication that another 25bps hike is in store by year-end, and that rates can approach 2.00% over the next twelve months, as implied by the swaps curve.” In their view, the BoJ has scope to endorse that trajectory because “the policy rate is near the bottom of its estimated 1.10-2.50% neutral range,” leaving room for further tightening if the current macro backdrop persists.
Technical Analysis: AUD/JPY keeps a bearish vibe amid oversold RSI
In the daily chart, AUD/JPY remains under clear bearish pressure, holding well below the 100-day simple moving average (SMA) and the Bollinger middle band, which together suggest a market still dominated by sellers on rallies. The Relative Strength Index (14) hovers near 30, hinting at oversold conditions, but this only tempers rather than overturns the downside bias while price stays capped beneath the clustered daily averages.
On the topside, initial resistance emerges at the August 10 low of 112.45, en route to the Bollinger middle band near 112.65. Further north, the next hurdle to watch is the 100-day SMA around 112.95. The Bollinger upper band near 115.95 acts as a more distant barrier if a stronger rebound unfolds.
On the downside, the Bollinger lower band near 109.35 offers the first notable support. A decisive break below this zone would open the door to the August 3 low of 109.24, followed by the March 31 low of 108.79.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- WTI sticks to a positive bias for the second straight day amid geopolitical uncertainties.
- The bullish technical setup backs the case for an extension of the upward trajectory.
- Any meaningful corrective slides are more likely to be bought into and remain limited.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts fresh buyers following the previous day's two-way price swings and climbs back above the $99.00 mark during the Asian session on Tuesday. The black liquid remains close to its highest level since May 21, touched last Friday, and seems poised to climb further amid intensifying supply concerns due to the Middle East crisis.
In the latest developments, Iran-backed Houthis in Yemen carried out a large-scale missile and drone attack on a Saudi air base in Khamis Mushait on Monday. Furthermore, Iranian Supreme National Security Council Secretary Mohsen Rezaei rejected the prospect of immediate negotiations with the US, saying that Tehran will not return to talks until its conditions are met. This, in turn, dampens hopes for a diplomatic solution to end the war and keeps the geopolitical risk premium in play, validating the positive outlook for crude oil prices.
From a technical perspective, the recent breakout above the $91.00 horizontal barrier, which also represented the 61.8% Fibonacci retracement level of the May-July corrective fall, was seen as a fresh trigger for bullish traders. Adding to this, momentum stays constructive, with the Relative Strength Index hovering just below overbought territory around 69 and the Moving Average Convergence Divergence (MACD) remaining positive. This further points to persistent upside pressure while crude oil prices stay above the high-$90s area.
Meanwhile, the next notable resistance aligns with the prior cycle high near $107.23, which could cap the immediate bullish scope unless decisively broken. On the downside, initial support is now seen near $98.57 at the 78.6% retracement, followed by the 61.8% level around $91.78 and the 50% retracement near $87.01. Further pullbacks would encounter the 100-day SMA clustered around $85.39 before more substantial Fibonacci floors emerge at $82.24 and $76.33, which should provide additional layers of demand before the cycle low around $66.79.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI daily 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.
- USD/IDR gains as expectations for an upcoming US Federal Reserve interest rate hike boosted the US Dollar.
- CME FedWatch Tool indicates the odds for a Fed rate hike surged above 92%, driven by August's CPI inflation data.
- US 10-year Treasury yields approached 5%, placing heavy pressure on non-yielding metals like Silver.
Indonesian rupiah weakened as rising oil prices raised inflation fears and threatened the net oil importer's fiscal position.
USD/IDR extends its gains for the fourth consecutive day, trading around 17,730 during Asian hours on Tuesday. The pair rises as the US Dollar (USD) receives support from rising expectations for a US Federal Reserve interest rate hike this week.
Rising energy costs have intensified inflation concerns, placing greater pressure on the Fed to tighten monetary policy. As a result, money markets surged on Monday to reflect over a 92% chance of a rate hike, a sharp increase from roughly 60% just a week prior, based on data from the CME FedWatch tool.
USD firms as FOMC expectations tilt toward further tightening
Strategists at Scotiabank report that the USD is entering FOMC week “on a firm note,” as markets respond to the “shift in expectations around the policy decision on Wednesday following last week’s US inflation data.” They highlight that swaps now “reflect 21bps (or 85%) of tightening risk for Wednesday,” while the latest Bloomberg survey “shows only a very narrow majority of respondents favouring a hold,” underscoring how finely balanced market and survey-based expectations have become ahead of the meeting.
Friday's economic data revealed that the US Consumer Price Index (CPI) rose in August, with core inflation recording its largest gain in four months. Moreover, the US 10-year Treasury yield surged toward 5% due to broader inflation and fiscal worries.
The Indonesian Rupiah (IDR) also faces challenges amid rising oil prices, threatening to inflame domestic inflation and strain the fiscal balance of the net oil-importing nation. These inflationary fears mounted after August headline inflation accelerated to 3.19%, undercutting government measures aimed at curbing El Niño-driven food price volatility.
Technical Analysis:
In the daily chart, USD/IDR trades at 17,730, holding in a neutral near-term stance as it sits above the short-term nine-period Exponential Moving Average (EMA) but remains capped below the medium-term 50-period EMA. This push-pull configuration suggests consolidation rather than a clear trend, while the 14-day Relative Strength Index (RSI) at about 47 stays below the midline, hinting that upside momentum is still subdued even as selling pressure has eased.
On the topside, initial resistance aligns with the 50-period EMA near 17,797, and a daily close above this barrier would be needed to reopen a stronger recovery phase. On the downside, immediate support is seen at the nine-period EMA around 17,685; a break beneath this buffer would expose the recent lows and tilt the bias back toward the bears.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- USD/JPY attracts buyers for the second straight day, though the upside potential seems limited.
- Elevated US bond yields and geopolitical risks underpin the safe-haven USD, supporting the pair.
- A more hawkish repricing of the BoJ’s policy path could help limit JPY losses and cap spot prices.
The USD/JPY pair sticks to a positive bias for the second straight day and trades above mid-154.00s during the Asian session on Tuesday amid a broadly firmer US Dollar (USD). Spot prices, however, lack bullish conviction as traders seem hesitant ahead of this week's key central bank events.
The US Federal Reserve (Fed) and the Bank of Japan (BoJ) are scheduled to announce this policy decisions on Wednesday and Friday, respectively, amid firming expectations for an imminent rate hike. Hence, the focus will be on the central banks' policy outlook going forward, which, in turn, will play a key role in determining the next leg of a directional move for the USD/JPY pair.
In the meantime, a more hawkish repricing of the BoJ's policy normalization path might continue to underpin the Japanese Yen (JPY) and act as a headwind for the currency pair. However, the bullish sentiment surrounding the USD, bolstered by elevated US bond yields and persistent geopolitical uncertainties, might continue to lend some support to the USD/JPY pair and limit the downside.
Yen support builds as BoJ tightening expectations harden
Analysts at DBS note that speculative positioning has shifted meaningfully in favour of the Yen, with “speculators have unwound their short JPY positions following July’s joint US-Japan currency intervention and a shift in expectations towards further Bank of Japan tightening.” According to the bank, the policy debate has also moved, as “even former BoJ-tightening sceptics – including Takuji Aida, an economic adviser to Takaichi and a former vocal opponent of BOJ tightening – are now acknowledging the case for higher rates, strengthening expectations for a hawkish hike on September 18.”
Against the backdrop of rising Fed rate hike bets, inflationary concerns stemming from higher energy prices lift the yield on the benchmark 10-year US Treasury bond beyond the 5% threshold for the first time since 2023. Adding to this, the US-Iran standoff and the risk of a further escalation of tensions in the Middle East keep the safe-haven USD close to a nearly two-week high, set on Monday.
USD/JPY 4-hour chart
Technical Analysis
The USD/JPY pair is looking to build strength above the 154.60-154.65 confluence – comprising the 50-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement. This comes on top of the recent recovery from 153.00s and suggests buyers are attempting to build a base, though the broader advance remains shallow against a dense band of overhead retracements.
On the topside, initial resistance is seen at the 38.2% Fibo. retracement at 155.74, followed by the 50.0% retracement at 156.62 and the 61.8% level at 157.50, with higher barriers at 158.76 and the cycle high region near 160.35. On the downside, immediate support is aligned at the 23.6% retracement at 154.65, reinforced by the 50-period SMA at 154.62; a break below this area would expose the next structural floor around 152.89.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Gold prices remained broadly unchanged in India on Tuesday, according to data compiled by FXStreet.
The price for Gold stood at 13,262.34 Indian Rupees (INR) per gram, broadly stable compared with the INR 13,249.12 it cost on Monday.
The price for Gold was broadly steady at INR 154,689.50 per tola from INR 154,535.10 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,262.34 |
10 Grams | 132,623.60 |
Tola | 154,689.50 |
Troy Ounce | 412,505.20 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
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