Forex News
United Overseas Bank’s Quek Ser Leang and Lee Sue Ann highlight a sharp USD/CNH drop to 6.7691, shifting the short-term bias to the downside. They see scope for further weakness, though the 6.7600 support is unlikely to be reached immediately. Over 1-3 weeks, the pair is expected to trade with a downside bias toward 6.7600, while a move above 6.7860 would negate the bearish momentum.
Offshore Yuan strengthens as Dollar slips
"24-HOUR VIEW: We did not expect USD to drop sharply to 6.7691 (we had expected range-trading). The rapid increase in momentum suggests further USD weakness, even though the major support at 6.7600 is likely out of reach (there is another support level at 6.7660). On the upside, a breach of 6.7800 (minor resistance is at 6.7760) would indicate that the decline is stabilising."
"1-3 WEEKS VIEW: In our most recent narrative from last Friday (10 Jul, spot at 6.7930), we highlighted that “for the time being, we expect USD to trade in a range, most likely between 6.7700 and 6.8100.” Yesterday, USD broke below 6.7700 with a low of 6.7691. Downward momentum is increasing, and from here, USD is likely to trade with a downside bias toward 6.7600. To keep the momentum going, USD must not break above 6.7860 (‘strong resistance’ level)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Moses Lim highlights that USD/SGD fell 0.3% to 1.2910 on Dollar weakness, with the pair consolidating in a 1.29–1.30 range since mid-June. Singapore’s strong growth backdrop and benign inflation support the Singapore Dollar, which is the third-strongest Asian currency this year. The Monetary Authority of Singapore could consider tightening policy if inflation pressures rise.
Singapore Dollar holds firm in range
"Advance Q2 GDP grew faster than expected at 5.7% yoy (Bloomberg consensus: 5.5%) vs 6.3% in Q1, which was revised up from 6.0% previously. This implies growth of around 6.0% in H1 2026, above the government’s full-year forecast range of 2-4%. As such, the government may revise its 2026 growth forecast higher when the final Q2 GDP data is released in August."
"The economy should remain resilient through the rest of the year, supported by the ongoing semiconductor upcycle. Renewed Middle East tensions pose downside risks via higher commodity prices and weaker external demand, but resilient domestic consumption and AI-driven export growth should help cushion the impact."
"Attention now turns to the June CPI release on 23 July. Inflation remained benign at 1.8% yoy in May, although risks are tilted to the upside if supply bottlenecks and higher crude prices persist. Given the resilient growth backdrop, MAS could consider tightening policy if inflationary pressures pick up in June."
"In FX, USD-SGD fell 0.3% to 1.2910 yesterday, driven by a weaker USD. The pair has consolidated around the 1.29-1.30 range since mid-June and could remain within this range in the near term."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The US Central Command (CENTCOM) said that it has launched another wave of strikes against Iran in a further effort to keep the Strait of Hormuz open, the Guardian reported on Wednesday.
The US military also said US aircraft fired missiles into an oil tanker’s smokestack in the critical waterway, disabling the vessel. US President Donald Trump said that he does not like giving deadlines when asked by reporters if Iran has a deadline before the US starts attacking Iranian bridges.
Iran’s top negotiator and parliamentary speaker Mohammed Bagher Ghalibaf said that the country has “never welcomed war, nor do we now," adding that “we must always be prepared for battle and stand firm to protect our national security and interests."
Iran’s Islamic Revolutionary Guard Corps (IRGC) stated that it attacked US military assets in Bahrain, Kuwait, and Jordan and claimed heavy damage to the US Fifth Fleet headquarters.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 0.55% on the day at $79.60.
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.
- Gold price recovers to near $4,060 in Thursday’s early Asian session.
- The US PPI unexpectedly fell in June.
- The US military carried out another wave of strikes.
Gold price (XAU/USD) edges higher to around $4,060 during the early Asian session on Thursday. The precious metal rebounds as softer US inflation has fueled hopes that the US Federal Reserve (Fed) will hold rates steady at the upcoming July policy meeting.
Producer inflation in the United States, as measured by the change in the Producer Price Index (PPI), declined to 5.5% YoY in June from 6.0% in May (revised from 6.5%), the US Bureau of Labor Statistics (BLS) reported on Wednesday. This reading came in softer than the market expectation of 6.2%. On a monthly basis, the PPI declined by 0.3%, compared to the 0.6% increase seen in May (revised from 1.1%) and improved compared with the estimate for no change.
Traders see about a 10.2% probability of a rate hike at the Fed's July meeting, versus 16.6% before the data, according to the CME FedWatch Tool. Earlier on Tuesday, U.S. consumer inflation also slowed more than expected in June.
"Gold has pared losses from earlier this morning as PPI came in lower than expected and eased some of those concerns about the Fed having multiple interest rate hikes this year," said Phillip Streible, chief market strategist at Blue Line Futures.
On the other hand, escalating US-Iran hostilities and airstrikes around the Strait of Hormuz have pushed crude oil prices up and could prompt central banks to hold rates at elevated levels for longer, weighing on gold's appeal as a non-yielding asset.
The BBC reported that the US had launched fresh strikes against Iran on Wednesday evening as US President Donald Trump warned Tehran it "better behave”. Iran's top negotiator, Mohammad Bagher Ghalibaf, said that Tehran had "no reason" to abide by the deal if it did benefit from it. On Tuesday, Trump had threatened to attack bridges and power plants should Iran not return to talks next week.
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.
ING’s Chief Economist for Greater China, Lynn Song, notes that China’s second-quarter GDP growth slowed to 4.3% year-on-year from 5.0% in the first quarter, the weakest pace since late 2022. Despite growth averaging 4.7% in the first half, Song highlights increasingly weak domestic indicators and rising expectations that policymakers will step up fiscal and monetary support to keep full-year GDP within the 4.5–5.0% target range.
Growth slowdown raises policy pressure
"China's second quarter GDP saw a significant deceleration, down to 4.3% YoY from 5.0% in the first quarter, weaker than forecasts (market: 4.5%, ING: 4.6%). This was the slowest growth in any quarter since the lockdown-impacted fourth quarter of 2022. Through the first half of the year, growth remains within the target range at 4.7% YoY."
"The sharp weakening in monthly indicators, which was largely glossed over in the puzzling 5.0% YoY first‑quarter GDP print, showed up far more clearly in the second‑quarter release. Monthly indicators don’t map cleanly into GDP, but the underlying pulse is unmistakably weak: fixed‑asset investment has slipped deeper into negative YoY territory, retail sales are barely above zero, and net exports remain negative on a YoY basis — even with strong headline export growth — as a surge in imports overwhelms the trade balance.Inflation was also higher in the second quarter, reducing the data's support from the GDP deflator. We'll have to take a closer look at where the growth is coming from once the contribution to GDP data is released in the coming days."
"Overall, we expect China to be able to hit its full-year growth target of 4.5-5.0%. As things stand, risks to our 4.7% YoY full-year GDP forecast look balanced to the downside. It’s uncertain how long it will take to announce and roll out policy support to arrest the downward momentum."
"Without support, we're likely to see growth continue to grind lower. However, as we are in the first year of the 15th Five-Year period, it's likely that policymakers would prefer not to come in at the low end of this band, thereby raising the stakes for the upcoming Politburo meeting."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/USD trades near 19-day highs despite broader bearish bias.
- RSI turns bullish, signaling buyers are gaining recovery momentum
- Break above 1.1500 exposes 1.1542 and 1.1592 resistance.
The EUR/USD advances some 0.41% on Wednesday, trading at 1.1466 after US inflation data was softer than expected, weighing on the Greenback, as market participants expect a less hawkish Federal Reserve. Towards the end of the year.
EUR/USD Price Forecast: Technical outlook
From a technical perspective, the EUR/USD is downwardly biased, even though it trades near 19-day highs. Momentum turned bullish, as indicated by the Relative Strength Index (RSI), which could open the door to a recovery, with buyers eyeing key technical resistance levels.
The first resistance for EUR/USD is the psychological 1.1500 level. Above lies the 50-day Simple Moving Average (SMA) at 1.1542, followed by the 100-day SMA at 1.1592 ahead of the 1.1600 mark. Upwards lies the 200-day SMA at 1.1642.
On the other hand, if EUR/USD dives below 1.1400, the next support would be the July 13 low of 1.1377. On further weakness, the next support would be the June 24 daily low at 1.1324, ahead of 1.1300.
EUR/USD Price Chart — Daily
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.56% | -1.10% | 0.19% | -0.83% | -0.86% | -1.47% | -0.36% | |
| EUR | 0.56% | -0.56% | 0.80% | -0.27% | -0.35% | -0.92% | 0.22% | |
| GBP | 1.10% | 0.56% | 1.29% | 0.29% | 0.20% | -0.40% | 0.81% | |
| JPY | -0.19% | -0.80% | -1.29% | -1.12% | -1.07% | -1.72% | -0.62% | |
| CAD | 0.83% | 0.27% | -0.29% | 1.12% | 0.06% | -0.61% | 0.53% | |
| AUD | 0.86% | 0.35% | -0.20% | 1.07% | -0.06% | -0.57% | 0.47% | |
| NZD | 1.47% | 0.92% | 0.40% | 1.72% | 0.61% | 0.57% | 1.19% | |
| CHF | 0.36% | -0.22% | -0.81% | 0.62% | -0.53% | -0.47% | -1.19% |
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).
- USD/JPY trades near 162.00, flat on the session after a round trip between 162.42 and 161.90.
- A soft producer-price print buys the Yen half a figure; the 275-basis-point carry takes it back within hours.
- Tokyo's intervention silence keeps the topside honest below the cycle high at 162.84.
USD/JPY has spent Wednesday doing an impression of volatility without any of the substance. The pair climbed to 162.42 through the London morning, was knocked down to 161.90 by the New York afternoon, bounced back to 162.28, and trades at 162.11 at writing, which is precisely where it opened. The daily bounds sit comfortably inside the territory that has held since the Yen printed its weakest levels in almost four decades at the end of June, and a whippy session that resolves to zero is this range's signature move.
For all the intraday noise, the bigger picture has not moved a millimetre. The pair has spent July oscillating between roughly the 161.00 area and the 162.84 top after a two-month climb from below 158.00, and every dip inside that window has been bought at a higher level than the last. Momentum has cooled while price has refused to fall, which is what consolidation under a ceiling looks like rather than distribution ahead of a reversal.
A gift the Yen cannot hold
The June American Producer Price Index (PPI) fell 0.3% MoM and slowed to 5.5% YoY against a 6.2% consensus, and for roughly five hours the Yen traded like a currency with a pulse, dragging the pair from the mid-162s to the session low at 161.90 by 18:00 GMT. The Federal Reserve (Fed) Chair's Capitol Hill testimony at 14:00 GMT was scored neutral rather than hawkish, which gave the move room to breathe, and every other Dollar pair on the board was telling the same soft-Dollar story by mid-afternoon.
The market then remembered the arithmetic that has governed this pair all year. The Fed holds at 3.75% behind a dot plot that added hikes in June, the Bank of Japan (BoJ) sits at 1.00% after its own June increase, and a 275-basis-point gap pays Yen shorts every single day regardless of what one producer-price report says. A hawkish-scored Fed speech at 17:00 GMT was all the excuse required; the pair reclaimed the 162.00 handle within two hours, and the session's entire drama amounted to a rounding error.
Tokyo says nothing, which says plenty
The Finance Ministry burned a record 11.7 trillion Yen defending the currency between late April and late May, is suspected of a stealth follow-up in early July, and has stopped signalling operations in advance altogether. The market increasingly treats the low 162s as the ambush zone, which goes a long way toward explaining why rallies above 162.50 keep dying of natural causes while the cycle high at 162.84 stands untouched. Nobody wants to be the last short Yen position filled before the next unannounced sweep.
The war is doing Tokyo no favours on either side of the ledger. Renewed American strikes on Iran, a re-declared blockade of the Strait of Hormuz and elevated Crude Oil keep the safe-haven bid parked with the Dollar rather than the Yen, while inflating Japan's energy import bill in the process. One Wall Street desk lifted its twelve-month target on the pair to 165 this month, and the striking part is how little pushback the call attracted.
The docket ahead
Thursday's American Retail Sales at 12:30 GMT carry red-band weight, with consensus at 0.2% MoM after May's 0.9%, and Friday's preliminary Michigan consumer sentiment survey follows. A firm run of American data would rebuild the Fed-hike bid that Wednesday's PPI dented, and that is the cleanest available path to a test of the cycle high; a soft run merely re-rents the bottom of the range.
Japan's side of the ledger arrives next week: June trade data land on Tuesday, where the prior adjusted balance showed a 90.4 billion Yen deficit against export growth of 16.8% YoY, and national Consumer Price Index (CPI) figures follow on Thursday, July 23, last seen at 1.5% YoY with the ex-fresh-food core at 1.4%. Inflation running below the BoJ's 2% target is thin cover for another hike, and that gap between what Tokyo needs and what the data supply is precisely what the carry trade keeps pricing.
Levels and bias
Upside: The 162.50 region has capped every attempt this week, with the cycle high at 162.84 the level that matters. Through there, the intervention conversation stops being theoretical.
Downside: Wednesday's low at 161.90 guards the 161.50 shelf, and below that 161.00 is the last stop ahead of the 50-day Exponential Moving Average (EMA) down at 160.71.
Bias: Bullish drift. The carry grinds the pair higher while 161.50 holds, and Tokyo's silence controls the pace of the advance rather than its direction.
USD/JPY daily chart
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.
- AUD/USD trades near 0.7005 after tagging 0.7021, its first look above the 0.7000 handle since mid-June.
- China's second-quarter growth misses while industrial production and retail sales beat, and the optimistic read wins the day.
- The 50-day EMA caps the advance ahead of Thursday's inflation expectations and next week's employment report.
The Australian Dollar opened near 0.6975, ground higher through every session of the day, and poked above 0.7000 for the first time since mid-June before the momentum quietly left the room. The Aussie trades near 0.7005 at writing, up 0.44%, having stalled at 0.7021 and backed off the 50-day Exponential Moving Average (EMA) at 0.7016 almost to the pip. A range inside half a big figure makes this one of Wednesday's less dramatic majors; the level it played out at makes it one of the more important ones.
The round number carries a month of baggage. The Aussie slid from above 0.7050 in mid-June to a base near 0.6865 in early July, then ground its way back on a steady run of higher lows, and Wednesday's push was the first test of the declining 50-day average since the breakdown. Rejections at falling moving averages are what downtrends produce; a clean daily close through one is what ends them, and the pair sits a handful of pips shy of finding out which it gets.
Beijing serves a mixed plate
China's second-quarter Gross Domestic Product (GDP) grew 0.9% on the quarter, matching consensus but slowing from 1.3%, while the annual rate missed at 4.3% against 4.5% expected. The June activity data pulled the other way: industrial production beat at 5.3% YoY against a 4.6% consensus, and retail sales swung back to growth at 1% against expectations for a 0.1% decline. For an economy that spent the spring flirting with a consumer relapse, the retail swing is the number Australia's exporters actually care about.
The Aussie lives and dies on Chinese commodity demand, and on that score the activity beats matter more than a two-tenths growth miss. The currency held its overnight bid straight through the release and never looked back until the New York afternoon, which is about as clean a verdict as intraday price action delivers. Whether Beijing deserves top billing is another question, because the bulk of Wednesday's gain was manufactured in Washington rather than in China.
A soft-Dollar tide lifts a hesitant boat
The June American Producer Price Index (PPI) fell 0.3% MoM and slowed to 5.5% YoY against a 6.2% consensus, extending the week's run of cooler-than-feared inflation data and taking a bite out of Federal Reserve (Fed) hike pricing that stood near 70% for September earlier this month. The Fed Chair's Capitol Hill testimony at 14:00 GMT was scored neutral rather than hawkish, and the Dollar spent the New York session offered against everything with a heartbeat.
The Reserve Bank of Australia (RBA) sits at 4.35% after three hikes this year and a June hold, leaving the Aussie with positive carry against a Fed parked at 3.75%, yet the currency's high-beta character cuts both ways. Renewed American strikes on Iran, a re-declared blockade of the Strait of Hormuz and Washington floating a 20% transit toll keep global risk appetite on a leash, and the fade off 0.7021 arrived alongside a hawkish-scored Fed speech at 17:00 GMT. The Aussie rallied on the Dollar's bad day and hesitated on its own limitations.
The bar for follow-through
Thursday's consumer inflation expectations reading at 01:00 GMT, last printed at 5.5%, is the sort of number that keeps the RBA's tightening bias alive, and June American Retail Sales at 12:30 GMT carry red-band weight for the Dollar side of the ledger, with consensus at 0.2% MoM after May's 0.9%. Monday brings the People's Bank of China (PBoC) rate decision, where the benchmark sits at 3% and nothing in Wednesday's data screams urgency to move it.
The main event lands on Thursday, July 23, when June employment figures arrive against a prior report of 40.3K jobs added and a 4.4% unemployment rate, followed later that day by flash Purchasing Managers Index (PMI) surveys. A labour market that refuses to crack is the strongest argument for keeping the RBA's hike option on the table, and by extension the strongest argument the Aussie has for turning a one-day visit above 0.7000 into a change of address.
Levels and bias
Resistance: The 50-day EMA at 0.7016 is the immediate cap, validated by Wednesday's rejection from 0.7021. Above it, the 0.7050 region opens the door toward 0.7100, the next round-number objective.
Support: The 0.6950 zone is first reference on a dip, ahead of the 0.6900 base that absorbed every test through early July. The 200-day EMA sits well below near 0.6884.
Bias: Bullish while 0.6950 holds. A daily close above the 50-day EMA unlocks the path to 0.7100; a rejection here sends the Aussie back into the June range to think about what it has done.
AUD/USD daily chart
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.
- GBP/USD trades near 1.3540, up by better than 1% and through the 200-day EMA and the 1.3400 handle in a single session.
- A June producer-price miss guts the Federal Reserve hike bid while a September Bank of England hike stays fully priced.
- The advance stalls just under 1.3550 with a Westminster leadership handover due within days.
Cable spent the London morning drifting, printed the session low at 1.3381 shortly after 10:00 GMT, and then spent the New York afternoon repricing the entire Dollar complex. The Pound trades near 1.3540 at writing, up better than 1% in one of its strongest sessions of the year, after tagging 1.3558 and clearing both the 200-day Exponential Moving Average (EMA) and the 1.3400 handle in a single afternoon. The move answers a month of indecision around those levels with the subtlety of a brick.
The significance here is structural rather than cosmetic. The 50-day and 200-day EMAs sit clustered at 1.3376 and 1.3385, and most of July's price action had been compressed between that band and the 1.3400 shelf, a coil that has now released in one direction. A single session does not repair a downtrend that ran from late April into early July, but it does shift the burden of proof onto Dollar bulls for the first time in months.
A producer-price print does the heavy lifting
The June Producer Price Index (PPI) landed at 12:30 GMT with a headline monthly decline of 0.3% against expectations for a flat reading, while the annual rate slowed to 5.5% from 6%, undercutting the 6.2% consensus by a wide margin. The core measure missed as well, printing 4.7% YoY against 5.2% expected. Factory-gate inflation north of 5% would have been an emergency in any normal cycle; in this one it counted as relief, and the Dollar was sold accordingly across the board.
Markets came into the week pricing a Federal Reserve (Fed) hike by September at close to 70%, courtesy of a committee that spent June writing additional increases into its dot plot. Wednesday's data blunted that conversation, and the Fed Chair's Capitol Hill testimony at 14:00 GMT was scored neutral rather than hawkish, which by this cycle's standards reads as a stand-down. An Empire State manufacturing beat at the same timestamp as the PPI was ignored entirely, which says plenty about what the market wanted to trade. A hawkish-scored Fed speech at 17:00 GMT and the Beige Book trimmed the move late; they did not reverse it.
Nobody is buying Sterling for the politics
The Pound's own contribution is a Bank of England (BoE) that markets refuse to see standing still. A September hike is fully priced and a second increase this year is nearly so, with 10-year gilt yields hovering near 5% as war-driven energy costs feed through the inflation outlook. The rate story, not the political one, is what has Sterling outperforming every major on the session, and it is the same story that has carried Cable off the early-July base near 1.3150.
Westminster remains a live wire even as the currency ignores it. The Labour leadership contest closes on Friday, July 17, Andy Burnham is expected to be appointed Prime Minister on Monday, and gilt investors are already fretting over chatter that a fiscally expansive candidate leads the race for the Treasury. A better than 1% rally into that handover is a rate-differential trade, not a confidence vote; the new government's fiscal arithmetic will decide whether it survives the month.
A crowded fortnight of catalysts
Thursday brings May Gross Domestic Product (GDP) at 06:00 GMT, expected at 0.1% MoM after April's 0.1% decline, alongside industrial and manufacturing production figures. The American side answers at 12:30 GMT with June Retail Sales, where consensus looks for 0.2% MoM after May's 0.9% and the control group is seen at 0.5%. Friday's preliminary Michigan consumer sentiment survey rounds out the week's red-band slate.
The heavier British docket lands next week: labour-market figures on Tuesday, where the prior report showed a 31.2K claimant-count rise, 100K jobs added over three months and unemployment at 4.9%; June Consumer Price Index (CPI) data on Wednesday, last seen at 2.8% YoY with core at 2.6%; and Friday's run of retail sales plus flash Purchasing Managers Index (PMI) surveys on both sides of the Atlantic. The new Prime Minister's first full week in office runs straight through all of it, so the political and macro calendars converge at exactly the moment the chart demands a decision at 1.3550.
Levels and bias
Resistance: The 1.3550 area is the line in the sand for bullish momentum, reinforced by the session high at 1.3558. Through there, 1.3600 comes quickly, with the spring range top at 1.3658 the larger prize.
Support: The 1.3500 handle is first reference on a dip, ahead of the broken 1.3400 shelf, which now flips to support. The 200-day EMA near 1.3385 backstops the structure from below.
Bias: Bullish. A daily close above 1.3550 extends the breakout toward 1.3650; a slip back beneath 1.3400 voids it and hands the initiative straight back to Dollar bulls.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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