Forex News
- The Pound Sterling edges up against the US Dollar to near 1.3365 ahead of the US NFP data release.
- Dovish Fed bets trimmed after upbeat US ADP Employment data for February.
- Suring energy prices are expected to discourage BoE officials from reducing interest rates on March 19.
The Pound Sterling trades marginally higher to near 1.3365 against the US Dollar (USD) during the Asian trading session on Friday. The GBP/USD pair edges up as the US Dollar ticks down ahead of the United States (US) Nonfarm Payrolls (NFP) data for February, which will be published at 13:30 GMT.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% down around 99.00.
The impact of the US official employment data is expected to be significant on the Federal Reserve’s (Fed) monetary policy outlook as traders trimmed dovish bets for the July policy meeting after the release of the upbeat ADP Employment data for February on Wednesday.
The CME FedWatch tool shows that the odds of the Fed holding interest rates steady in the July policy meeting have increased to 47.4% from 33.4% seen a week before.
The US NFP report is expected to show that employers hired 59K fresh workers, significantly lower than 130K in January. The Unemployment Rate is seen steady at 4.3%.
Broadly, the risk-off market sentiment amid the war in the Middle East involving the US, Israel, and Iran continues to support the US Dollar.
On the United Kingdom (UK) front, market experts start doubting that the Bank of England (BoE) will cut interest rates in the policy meeting on March 19, as the Middle East conflict has boosted energy prices, a scenario that will likely prompt inflationary pressures further. Given that the UK inflation has been well above the 2% target, a further increase in price pressures would discourage BoE officials from easing monetary conditions.
“Unless tensions in the Middle East swiftly de-escalate, we doubt the Bank will cut rates on March 19 as we previously thought," analysts at Capital Economics said, Reuters reported.
Economic Indicator
ADP Employment Change
The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Last release: Wed Mar 04, 2026 13:15
Frequency: Monthly
Actual: 63K
Consensus: 50K
Previous: 22K
Source: ADP Research Institute
Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.
- AUD/USD bounces back after Thursday’s losses and rises to near 0.7040 in the Asian trade on Friday.
- Soaring global oil prices are expected to prompt inflationary pressures further in Australia.
- Investors await the US NFP data for fresh cues on the Fed’s monetary policy outlook.
The AUD/USD pair trades 0.4% higher to near 0.7040 during the Asian trading session on Friday. The Aussie pair demonstrates strength as the Australian Dollar (AUD) outperforms across the board on expectations that the Reserve Bank of Australia (RBA) could deliver another interest rate hike soon.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.08% | -0.05% | -0.06% | -0.38% | -0.19% | -0.08% | |
| EUR | 0.12% | 0.04% | 0.07% | 0.06% | -0.26% | -0.07% | 0.03% | |
| GBP | 0.08% | -0.04% | 0.04% | 0.02% | -0.30% | -0.11% | -0.01% | |
| JPY | 0.05% | -0.07% | -0.04% | -0.01% | -0.33% | -0.15% | -0.04% | |
| CAD | 0.06% | -0.06% | -0.02% | 0.00% | -0.33% | -0.14% | -0.02% | |
| AUD | 0.38% | 0.26% | 0.30% | 0.33% | 0.33% | 0.19% | 0.29% | |
| NZD | 0.19% | 0.07% | 0.11% | 0.15% | 0.14% | -0.19% | 0.10% | |
| CHF | 0.08% | -0.03% | 0.00% | 0.04% | 0.02% | -0.29% | -0.10% |
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).
In February’s policy meeting, the RBA hiked its Official Cash Rate (OCR) by 25 basis points (bps) to 3.85%, and Governor Michele Bullock clarified that monetary conditions were needed to tighten as risks to inflation are tilted to the upside.
Meanwhile, surging oil prices due to the war in the Middle East that involves the United States (US), Israel, and Iran have prompted expectations of an RBA interest rate hike in the near term.
According to a report from Reuters, there is a 33% chance that the RBA may have to raise rates again to 4.1% in the policy meeting on March 17. A hike is fully priced in for May, with another one to come by the end of the year.
During the press time, the US Dollar (USD) trades calmly, with the US Dollar Index (DXY) wobbling around 99.00, as investors await the US Nonfarm Payrolls (NFP) data for February, which will be published at 13:30 GMT. Investors will pay close attention to the US official employment data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook.
Broadly, the US Dollar has been outperforming its peers as the market sentiment remains risk-averse amid conflicts in the Middle East.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
- NZD/USD gains ground to around 0.5910 in Friday’s Asian session.
- Trump said major combat operations aim to demolish Iran's military capabilities.
- US February jobs data will take center stage later on Friday.
The NZD/USD pair gathers strength to near 0.5910 during the Asian trading hours on Friday. The potential upside might be limited amid the ongoing conflict in the Middle East. The US employment report for February will be the highlight later on Friday.
Iran has retaliated by firing missiles and drones across the Gulf region, striking oil facilities and US assets in several countries. The conflict has spilled over into neighboring countries, the United Arab Emirates, Bahrain, Qatar, Lebanon and Kuwait. US President Donald Trump said that Iranian officials reached out to him in an attempt to reach an agreement to end the war, but he insisted it was too late and that the US is pushing to completely destroy Iran.
Signs of a prolonged conflict in the Middle East trigger a "flight to safety," which could boost the US Dollar and create a headwind for the pair.
Furthermore, a dovish tone from the Reserve Bank of New Zealand (RBNZ) could undermine the Kiwi. The New Zealand central bank held rates steady at its February meeting and signaled an accommodative stance, with markets pricing in a low probability of hikes until late 2026.
Traders will take more cues from the US February employment data on Friday. This report could offer some clues about the interest rate path. Analysts expect to see 59,000 jobs added in the US economy in February, while the Unemployment Rate is projected to hold steady at 4.3% during the same period. In case of weaker-than-expected outcomes, this could drag the Greenback lower against the New Zealand Dollar (NZD).
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.
- EUR/USD may navigate the region around the seven-month low of 1.1468.
- The 14-day Relative Strength Index near 35 signals sustained bearish pressure.
- The initial resistance lies at the nine-day EMA of 1.1686.
EUR/USD gains ground after registering modest losses in the previous session, trading around 1.1620 during the Asian hours on Friday. The technical analysis of the daily chart suggests an ongoing bearish bias as the pair remains within the descending channel pattern.
The near-term bias is mildly bearish as spot holds below the short-term nine-day Exponential Moving Average (EMA) and presses under the flattening 50-day group.
The momentum indicator 14-day Relative Strength Index (RSI) around 35 stays below the 50 midline, indicating persistent bearish pressure rather than oversold capitulation, which keeps the focus on further downside as long as price remains capped beneath the short-term averages.
On the downside, the EUR/USD pair may navigate the region around the seven-month low of 1.1468, followed by the lower boundary of the descending channel around 1.1440.
The EUR/USD may target the initial resistance at the nine-day EMA of 1.1686, followed by the 50-day EMA at 1.1753 and the upper descending channel boundary around 1.1790.
Further advances above the descending channel would cause the emergence of the bullish bias and support the EUR/USD pair to explore the area around 1.2082, the highest level since June 2021.
(The technical analysis of this story was written with the help of an AI tool.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.08% | -0.03% | -0.09% | -0.35% | -0.19% | -0.07% | |
| EUR | 0.10% | 0.02% | 0.09% | -0.01% | -0.25% | -0.09% | 0.03% | |
| GBP | 0.08% | -0.02% | 0.06% | -0.03% | -0.27% | -0.11% | 0.00% | |
| JPY | 0.03% | -0.09% | -0.06% | -0.08% | -0.33% | -0.18% | -0.05% | |
| CAD | 0.09% | 0.00% | 0.03% | 0.08% | -0.25% | -0.09% | 0.03% | |
| AUD | 0.35% | 0.25% | 0.27% | 0.33% | 0.25% | 0.16% | 0.27% | |
| NZD | 0.19% | 0.09% | 0.11% | 0.18% | 0.09% | -0.16% | 0.12% | |
| CHF | 0.07% | -0.03% | -0.01% | 0.05% | -0.03% | -0.27% | -0.12% |
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- Canadian Dollar’s upside may be limited as Oil prices retreat after the Trump administration signaled options to curb the spike.
- Trump administration may announce insurance guarantees and naval escorts to ensure safe passage for Oil tankers through the Strait of Hormuz.
- US Dollar may further strengthen as Fed officials consider further rate hikes if inflation stays above target.
USD/CAD struggles after registering modest gains in the previous session, trading around 1.3660 during the Asian hours on Friday. However, the downside of the USD/CAD pair could be restrained as the Canadian Dollar (CAD) could face challenges amid lower Oil prices, given Canada’s status as the largest crude exporter to the United States (US).
West Texas Intermediate (WTI) Oil price declines after three days of gains, trading around $77.60 at the time of writing. Crude Oil prices retreated after the US President Donald Trump administration signaled it is weighing several options to address the recent price surge caused by supply disruptions linked to the US-Israeli war with Iran.
Bloomberg reported on Friday that US Interior Secretary Doug Burgum said the administration is reviewing multiple measures before announcing plans to provide insurance guarantees and naval escorts to ensure safe passage for Oil tankers and other vessels through the Strait of Hormuz.
The US Dollar (USD) strengthens against its major peers, with Federal Reserve (Fed) officials continuing to consider the possibility of further rate hikes if inflation remains above target, despite calls from some policymakers who argue that the time to begin rate cuts has arrived.
Market participants are also awaiting Friday’s US Nonfarm Payrolls (NFP) report, where consensus expectations are around 59K for February, following January’s above-trend reading of 130K. Additionally, Retail Sales are expected to fall 0.3% month-over-month in January, after a flat reading in the previous month.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- Silver price edges higher to around $82.20 in Friday’s early Asian session.
- No signs of easing as Iran war continues to boost the Silver price.
- The US February employment report will be in the spotlight later on Friday.
Silver price (XAG/USD) holds positive ground near $82.20 during the early Asian session on Friday. The ongoing US-Israeli campaign against Iran provides safe-haven support, boosting the white metal. Traders await the release of the key US employment report for February for fresh impetus.
Iran launched a fresh wave of missile and drone strikes across the Gulf on Thursday, with attacks reported in the United Arab Emirates, Bahrain, Qatar, and Kuwait, per Bloomberg. US President Donald Trump said that Iranian officials reached out him in an attempt to reach an agreement to end the war, but he insisted it was too late and that the US was pushing to destroy Iran.
Meanwhile, Iranian Foreign Minister Abbas Araghchi stated that his country hadn’t requested a ceasefire and had no intention of negotiating. Rising tensions between the US and Iran and fears of a prolonged war in the Middle East could boost a safe-haven asset such as Silver in the near term.
Traders will closely monitor the US February employment data on Friday for more hints about the US interest rate path. The US Nonfarm Payrolls (NFP) is expected to increase by 59,000 jobs in February, while the Unemployment Rate is projected to hold steady at 4.3%. Any signs of improvement in the US labor market could lift the US Dollar (USD) and undermine the USD-denominated commodity price.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- Japanese Yen may struggle amid Japan’s economic challenges, as the Iran war heightens external risks.
- BoJ’s Kazuo Ueda warned the Middle East conflict may hurt Japan’s economy; Ryozo Himino signaled policy adjustments amid volatility.
- US Dollar strengthens as Fed officials consider further rate hikes if inflation stays above target.
USD/JPY edges lower after posting modest gains in the previous session, trading around 157.40 during the Asian hours on Friday. However, the pair’s downside may remain limited as the Japanese Yen (JPY) faces pressure from Japan’s ongoing economic challenges, including subdued growth and elevated inflation driven by external risks. These conditions are prompting traders to reassess expectations for the Bank of Japan’s (BoJ) rate policy.
BoJ Governor Kazuo Ueda warned that the Middle East conflict could materially affect Japan’s economy, signaling that the central bank may keep interest rates on hold for an extended period. Meanwhile, BoJ board member Ryozo Himino said the central bank would still make necessary policy adjustments amid market volatility, indicating that rates could move toward neutral if underlying inflation accelerates toward the BoJ’s target.
The USD/JPY pair may find support as the US Dollar (USD) strengthens, with Federal Reserve (Fed) officials continuing to consider the possibility of further rate hikes if inflation remains above target, despite calls from some policymakers who argue that the time to begin rate cuts has arrived.
Market participants are also awaiting Friday’s Nonfarm Payrolls (NFP) report, where consensus expectations are around 59K for February, following January’s above-trend reading of 130K. A weaker-than-expected print could revive expectations for Fed rate cuts and weigh on the Greenback.
The US Dollar is also drawing support from rising geopolitical tensions in the Middle East. Iran launched a new wave of missile and drone strikes across the Gulf on Thursday, with attacks reported in the United Arab Emirates, Bahrain, Qatar, and Kuwait.
Iranian Foreign Minister Abbas Araghchi said Tehran has not sought a ceasefire and has no intention of negotiating, while Iran’s Islamic Revolutionary Guard Corps warned that retaliatory strikes would intensify in the coming days.
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.
Federal Reserve Bank of Chicago President Austan Goolsbee said on Fridya that Federated structure of central bank has worked well, adding that Fed independence is critically important to controlling inflation.
Key quotes
Institutions facing a crisis of trust.
Federated structure of Federal Reserve has worked well.
Everyone on Fed takes the job very seriously.
Central bank independence is critically important to controlling inflation.
Market reaction
At the time of press, the US Dollar Index (DXY) is down 0.03% on the day at 99.01.
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.
- WTI price climbs to near $78.10 in Friday’s early Asian session.
- A widening conflict between the US, Israel, and Iran severely disrupts global energy supplies, boosting the WTI price.
- The EIA reported a 3.475 million barrel build last week.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $78.10 during the early Asian trading hours on Friday. The WTI gains momentum following an 8.5% single-day gain, the largest since 2020. The rally of black gold is bolstered by an escalating conflict between the United States (US) and Iran.
Growing disruption to global oil supplies caused by the US-Israeli war with Iran could boost the WTI price in the near term. Iran on Tuesday has effectively halted traffic in the Strait of Hormuz, where about one-fifth of global oil shipments pass.
Furthermore, attacks on oil tankers continued on Thursday in the Gulf, as the Bahamas-flagged crude oil tanker Sonangol Namibe reported its hull was breached after a blast near Iraq's port of Khor al Zubair.
“Crude oil markets remained on edge as they face ongoing risks to supply following the attacks in the Middle East, and concerns are centred on the flow of supply through the Strait of Hormuz," said ANZ analysts.
On the other hand, bearish inventory reports from the Energy Information Administration (EIA) might cap the upside for the WTI. According to the EIA weekly report, crude oil stockpiles in the US for the week ending February 27 climbed by 3.475 million barrels, compared to a rise of 15.989 million barrels in the previous week. The market consensus was for 2.2 million barrels.
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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Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
