Forex News
- NZD/USD remains subdued as risk aversion persists due to the Middle East conflict.
- Rising oil prices have fueled domestic inflation concerns, supporting growing RBNZ rate hike bets for 2026.
- President Trump said the Middle East conflict could end soon, though US officials reported intensifying military operations in Iran.
NZD/USD remains in the negative territory after giving up daily gains, trading around 0.5930 during the Asian hours on Wednesday. However, the pair advanced as the New Zealand Dollar (NZD) strengthened amid rising Reserve Bank of New Zealand (RBNZ) rate hike bets in 2026. This could be attributed to domestic inflation concerns, driven by the recent surge in oil prices.
Crude oil prices remain volatile due to growing uncertainty surrounding the Iran conflict and shipping through the vital Strait of Hormuz. The Wall Street Journal reported that the International Energy Agency (IEA) is considering its largest-ever oil reserve release to stabilize markets, although shipping disruptions through the crucial Strait of Hormuz persist.
Market analysts expect inflation in New Zealand to remain more persistent than the central bank anticipates. This has reinforced expectations of a Reserve Bank of New Zealand (RBNZ) interest-rate hike, with markets now pricing in rate hikes in 2026. The outlook marks a shift from last month, when the RBNZ signaled that the official cash rate would likely stay around 2.25% throughout the year.
The US Dollar (USD) edges lower after posting modest gains in the previous session. The Greenback could regain ground on increased safe-haven demand amid rising uncertainty surrounding the Middle East conflict.
US President Donald Trump said late Monday that the Middle East conflict could end soon. However, US officials indicated on Tuesday that military operations were intensifying in Iran, with limited prospects for diplomatic negotiations, Reuters reported.
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.
- USD/CAD edges lower as easing inflationary concerns and a positive risk tone weigh on the USD.
- Retreating Crude Oil prices undermine the Loonie and help limit the downside for spot prices.
- Traders now look to the US CPI report for a fresh impetus amid the ongoing Middle East conflicts.
The USD/CAD pair continues with its struggle to register any meaningful recovery from a nearly one-month low, around the 1.3525 zone, set earlier this week, and remains on the back foot through the Asian session on Wednesday. Spot prices, however, lack bearish conviction and currently trade around the 1.3570 region, down less than 0.10% for the day, amid mixed cues.
The International Energy Agency (IEA) has proposed the largest release of Oil reserves in its history to bring down crude prices that have soared during the US-Israel war with Iran. This exerts some downward pressure on Crude Oil prices, which, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. However, the emergence of some US Dollar (USD) selling keeps bullish traders on the defensive.
Meanwhile, Crude Oil prices retreated sharply following a massive rally early this week and eased inflationary concerns. This, along with a generally positive tone around the equity markets, is seen weighing on the safe-haven buck. However, concerns about the economic consequences of a further escalation of geopolitical tensions in the Middle East and the closure of the Strait of Hormuz might continue to benefit the USD's global reserve currency status.
Traders might also opt to wait for the release of the latest US consumer inflation figures amid worries that a continuous rise in energy prices would rekindle inflationary pressure. Hence, the crucial US Consumer Price Index (CPI) might influence market expectations about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the USD demand. Apart from this, Oil price dynamics should provide some impetus to the USD/CAD pair.
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.
- USD/JPY gains ground to near 158.30 in Wednesday’s early Asian session.
- Japan's Takaichi faces fresh scrutiny over BoJ policy stance.
- Traders await the US inflation data later on Wednesday for fresh impetus.
The USD/JPY pair gathers strength to around 158.30 during the early Asian session on Wednesday. The Bank of Japan (BoJ) policy uncertainty weighs on the Japanese Yen (JPY) against the US Dollar. Traders brace for the release of key US inflation data later on Wednesday, which will likely determine the next major move.
Speculation that Japanese Prime Minister Sanae Takaich would pressure the BoJ to go slow on rate hikes heightened after a report that she had voiced reservations about additional tightening in a meeting with BoJ Governor Kazuo Ueda last month.
BoJ Governor Kazuo Ueda last week signaled a likely prolonged hold on interest rates due to the potential economic impact of the Middle East conflict. The Japanese Yen central bank is expected to maintain its policy rate at the policy meeting next week. Uncertainty about the BoJ's willingness to aggressively raise rates could drag the JPY lower against the US Dollar (USD).
The US February Consumer Price Index (CPI) inflation data will take center stage later in the day. The headline CPI is estimated to show an increase of 2.4% YoY in February, while the core CPI is expected to show a rise of 2.5% during the same period. Any signs of softer inflation in the US could undermine the USD in the near term.
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.
The International Energy Agency (IEA) has proposed the largest release of oil reserves in its history in an effort to lower crude prices that have soared during the US-Israel conflict with Iran, the Wall Street Journal reported on Wednesday.
The release would surpass the 182 million barrels of oil that IEA member nations put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 3.25% on the day at $82.09, retreating from over three-year highs of $113.28 reached earlier this week.
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.
The Islamic Revolutionary Guard Corps (IRGC) on Wednesday escalated its operations against the United States (US) and Israel. IRGC announced the start of targeting the enemy's technological infrastructure in the region.
Key quotes
We announce the start of targeting the enemy's technological infrastructure in the region.
Continuing Wave 37, the launch of new-generation Khorramshahr missiles towards US bases in the region.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 3.62% on the day at $82.20, retreating from over three-year highs of $113.28 reached earlier this week.
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.
- Silver attracts some buyers for the fourth straight day, though it lacks follow-through.
- The broader technical setup favors bullish traders and backs the case for further gains.
- Any corrective pullback could be seen as a buying opportunity near the 100-hour EMA.
Silver (XAG/USD) trades with a positive bias for the fourth straight day on Wednesday, though it lacks bullish conviction and remains below a one-week high set the previous day. The white metal currently trades just below the $89.00 mark, up nearly 2% for the day, and seems poised to climb further.
Against the backdrop of this week's breakout above the 100-hour Exponential Moving Average (EMA), the range-bound price action could be categorized as a bullish consolidation phase and validates the constructive outlook. That said, it will be prudent to wait for a sustained move beyond the trading range hurdle, around the $90.00 psychological mark, before positioning for an extension of the weekly uptrend witnessed over the past three days.
The Relative Strength Index (RSI) holds near 55, indicating momentum has cooled from overbought readings without yet shifting into outright bearish territory, consistent with a cautious, mildly bullish bias while the XAG/USD holds above the key average. The Moving Average Convergence Divergence (MACD) line remains below its signal and below the zero line, while the negative histogram narrows, suggesting bearish momentum persists but loses intensity.
Moreover, the near-term tone has softened after failing to extend gains above the recent highs, with the XAG/USD now slipping back toward the rising 100-hour EMA, which still underpins a broader upside bias. The said EMA around $86.20 emerges as an immediate support and protects a lower shelf at $86.00. However, a clear break beneath the latter would expose $85.50 as the next downside level.
On the upside, initial resistance stands at $89.20, the vicinity of recent intraday peaks, followed by a more important cap at $89.50, where previous advances stalled. A sustained move above $89.50 would reopen the path toward the $90.00 region, while repeated failures below $89.20 would keep the focus on whether the $86.20–$86.00 band can maintain the prevailing upward bias.
(The technical analysis of this story was written with the help of an AI tool.)
XAG/USD 1-hour chart
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.
- Australian Dollar gains support from growing expectations of an RBA rate hike in March.
- RBA’s Hauser said oil price volatility and Middle East tensions pose a genuine challenge for central banks.
- The US Dollar may recover amid rising safe-haven demand.
AUD/USD extends its winning streak for the fourth successive session, trading around 0.7130 during the Asian hours on Wednesday. The pair advances as the Australian Dollar (AUD) gains support from growing expectations of a Reserve Bank of Australia (RBA) rate hike next week.
RBA Deputy Governor Andrew Hauser said on Tuesday that volatility in oil prices and tensions in the Middle East pose a genuine challenge for central banks. Hauser added that the policy response depends on the magnitude and persistence of the price shock, which remains highly uncertain. He also noted that the Australian economy is in relatively good shape, with recent data indicating the economy has limited spare capacity.
Australia’s headline inflation stands at 3.8% and may exceed 4% as petrol prices rise, while core inflation remains at 3.4%, above the RBA’s 2–3% target band.
The AUD/USD pair also advances as the US Dollar (USD) edges lower after posting modest gains in the previous session. The Greenback may regain its ground amid increased safe-haven demand, which could be attributed to mounting uncertainty over the Middle East conflict.
US President Donald Trump said late Monday that the conflict could end soon. However, US officials indicated on Tuesday that military operations were intensifying and that there were limited prospects for diplomatic negotiations, Reuters reported.
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 regains positive traction following the overnight pullback from the 1.3500 neighborhood.
- A positive risk tone and easing inflationary concerns weigh on the USD, lending support to the pair.
- Persistent geopolitical uncertainties could limit deeper USD losses ahead of the key US CPI report.
The GBP/USD pair attracts fresh buyers during the Asian session on Wednesday and stalls the previous day's retracement slide from the 1.3485 region, or over a one-week high. Spot prices currently trade around the 1.3430 region, up 0.10% for the day.
Crude Oil prices retreated sharply following a massive rally early this week and eased inflationary concerns. This, along with a generally positive tone around the equity markets, weighs on the safe-haven US Dollar (USD), which, in turn, is seen as a key factor acting as a tailwind for the GBP/USD pair.
The British Pound (GBP), on the other hand, benefits from the repricing of the Bank of England (BoE) interest rate expectations. In fact, bets for three rate cuts by the BoE have now been replaced with a roughly 70% probability of a rate hike by year-end. This offers additional support to the GBP/USD pair.
However, a further escalation of geopolitical tensions in the Middle East and economic consequences of the closure of the Strait of Hormuz could underpin the USD's global reserve currency status. This might hold back traders from placing aggressive bullish bets around the GBP/USD pair and cap the upside.
Despite US President Donald Trump's remarks that the war could be over soon, the fighting showed no signs of slowing down. The Israel Defense Forces said that it had unleashed a new wave of strikes on Iran, and launched more missiles at Lebanon, targeting infrastructure that belongs to Iran-backed Hezbollah.
This might keep a lid on any optimism in the markets and help limit deeper USD losses. Traders might also opt to wait for the release of the latest US consumer inflation figures before placing fresh directional bets. Nevertheless, the broader fundamental backdrop seems tilted in favor of the GBP/USD bulls.
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.
On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8917 compared to the previous day's fix of 6.8982 and 6.8824 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- EUR/USD gains ground to near 1.1620 in Wednesday’s early Asian session.
- Trump’s comments that the conflict would be over “very soon” support riskier currencies, such as the Euro.
- ECB’s Lagarde said the degree of uncertainty and volatility is very surprising and will take necessary steps to control inflation.
The EUR/USD pair holds positive ground around 1.1620 during the early Asian session on Wednesday. The Euro (EUR) rebounds from a four-month low of 1.1507 against the Greenback as safe-haven demand softens. The final reading of the Harmonized Index of Consumer Prices (HICP) from Germany and the US Consumer Price Index (CPI) data will be released later on Wednesday.
US President Donald Trump said on Tuesday that the conflict is “very complete, pretty much” and the military operation is “very far” ahead of its initial four- to five-week timeframe, per Bloomberg. His comments eased concerns about a prolonged war in the Middle East and improved market sentiment.
However, uncertainty remains as Trump gave no clear timeline for halting attacks that have rattled the Middle East and global markets. Meanwhile, the Israel Defense Forces said that it had unleashed a new wave of strikes on Iran and also launched more missiles at Lebanon. The Israeli military said it's targeting infrastructure that belongs to Iran-backed Hezbollah in the south of the Lebanese capital. Signs of the ongoing tensions in the Middle East could boost safe-haven demand for the US Dollar and create a headwind for the major pair.
The European Central Bank (ECB) President Christine Lagarde said late Tuesday that the degree of uncertainty and volatility is very surprising, making it hard to manage the situation. She further stated that the central bank will take the necessary measures to control inflation.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
Forex Market News
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.
