Forex News
- NZD/USD may fall toward the lower boundary of the rectangle around 0.5810.
- The 14-day Relative Strength Index hovers just below the 50 mark, signaling that bearish momentum still maintains control.
- The immediate barrier lies at the 50- and nine-day EMAs of 0.5884 and 0.5896, respectively.
NZD/USD extends its losses for the fourth successive day, trading around 0.5860 during the European hours on Thursday. The technical analysis of the daily chart shows the spot price moving sideways within a rectangle pattern, indicating a period of market consolidation and indecision.
The NZD/USD pair is keeping a mild bearish bias as it holds beneath the short-term and medium-term Exponential Moving Averages (EMAs), clustering just above the spot as immediate overhead supply, suggesting rallies are likely to meet selling interest while price trades below this band.
Momentum is soft, with the 14-day Relative Strength Index (14) hovering just under the 50 line, hinting that downside pressure still dominates even if selling lacks a strongly oversold tone.
The NZD/USD pair may fall toward the lower boundary of the rectangle around 0.5810, followed by the seven-week low of 0.5794, recorded on April 13. A break below this confluence support zone would put downward pressure on the pair to navigate the region around a six-month low of 0.5681, which was recorded on April 6.
On the upside, the NZD/USD pair may rebound toward the immediate barrier at the 50-day EMA of 0.5884, followed by the nine-day EMA at 0.5896. A successful break above these moving averages could support the pair to test the upper boundary of the rectangle around 0.5990, followed by the three-month high of 0.6014, which was reached on February 26.
(The technical analysis of this story was written with the help of an AI tool.)
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.04% | -0.11% | 0.17% | -0.03% | -0.02% | -0.03% | |
| EUR | 0.06% | 0.01% | -0.06% | 0.23% | 0.00% | -0.05% | 0.03% | |
| GBP | 0.04% | -0.01% | -0.06% | 0.22% | 0.00% | -0.07% | 0.00% | |
| JPY | 0.11% | 0.06% | 0.06% | 0.28% | 0.06% | -0.01% | 0.08% | |
| CAD | -0.17% | -0.23% | -0.22% | -0.28% | -0.21% | -0.28% | -0.20% | |
| AUD | 0.03% | -0.00% | -0.00% | -0.06% | 0.21% | -0.05% | 0.03% | |
| NZD | 0.02% | 0.05% | 0.07% | 0.01% | 0.28% | 0.05% | 0.07% | |
| CHF | 0.03% | -0.03% | -0.01% | -0.08% | 0.20% | -0.03% | -0.07% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- XAG/USD remains capped below $74.00, on track for a four-week losing streak.
- Geopolitical tensions and strong US macroeconomic figures are hurting precious metals this week.
- Silver has a cluster of supports around the $71.00 level.
Silver (XAG/USD) ticks higher on Thursday, but maintains its bearish near-term tone intact, with upside attempts capped below the $74.00 area, and on track for a four-week decline. Precious metals are struggling this week, as recent developments in the Middle East have hammered hopes of a swift end to the war, boosting demand for the safe-haven US Dollar.
Risk aversion eased somewhat on Thursday, amid news of an agreement between Israel and Lebanon to implement the ceasefire. Investors, however, remain reluctant to take excessive risks after so much back-and-forth, and with the negotiations between the US and Iran showing a lack of progress.
Beyond that, US data has been USD-supportive, adding negative pressure on precious metals. ISM Services Purchasing Managers’ Index (PMI) figures released on Wednesday showed a solid expansion of the sector’s activity, while the prices padr subindex rose at its fastest pace in nearly four years, highlighting the inflationary pressures of higher energy prices and endorsing the view that the Federal Reserve (Fed) will be forced to hike rates in late 2026 or early 2027.
Technical Analysis: Nearing a key support area around $71.00
XAG/USD trades at $73.16, keeping a bearish near-term tone, with price action contained within a descending channel. Momentum indicators in 4-hour charts endorse the bearish view, as the Relative Strength Index (RSI) hovers near 38, and the Moving Average Convergence Divergence (MACD) histogram remains at negative levels.
The mild recovery attempt witnessed on Thursday remains capped below a previous support area, at $73.90 (June 1 low), which so far is closing the path towards the weekly high, at the $77.00 area and the channel top, now around $77.50.
Downside attempts remain contained above session lows near $72.50 for now. Further down, the pair has a significant cluster of supports between the May 28 low, at $71.79, the base of the channel, around $71.55, and the late April low, at $70 86, which is likely to attract sellers.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- GBP/JPY extends its retracement slide from over a one-month top for the second straight day.
- Intervention fears prompt some short-covering around the JPY, exerting pressure on the cross.
- An intraday breakdown below the 100-hour SMA backs the case for a further depreciating move.
The GBP/JPY cross attracts sellers for the second straight day on Thursday and slides back closer to the lower boundary of the weekly range, though it lacks follow-through. Spot prices remain depressed through the first half of the European session and currently trade near mid-214.00s, down nearly 0.15% for the day.
As the USD/JPY pair hovers near the critical 160.00 threshold, traders are on high alert amid speculations that authorities will step in again to prop up the Japanese Yen (JPY). This, in turn, is seen as a key factor exerting some downward pressure on the GBP/JPY cross. The JPY bulls, however, seem hesitant and refrain from placing aggressive bets amid worries that Japan's economy will remain under strain due to the Middle East conflict and the continued disruption of supplies through the Strait of Hormuz.
The British Pound (GBP), on the other hand, benefits from a softer US Dollar (USD), weighed down by the Israel-Lebanon truce, and further helps limit the downside for the GBP/JPY cross. Meanwhile, traders have been dialing back their expectations for more aggressive policy tightening by the Bank of England (BoE) and are now pricing in the possibility of only one 25-basis-point (bps) rate hike by the end of this year. This could cap any meaningful appreciating move for the GBP and the GBP/JPY cross.
Moreover, growing acceptance that the Bank of Japan (BoJ) will raise interest rates at its upcoming policy meeting on June 15-16 could offer some support to the JPY and weigh on the GBP/JPY cross. Even from a technical perspective, an intraday breakdown below the 100-hour Simple Moving Average (SMA) backs the case for an extension of the recent pullback from the 215.50 region, or over a one-month high touched earlier this week.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.01% | -0.13% | 0.18% | -0.01% | 0.02% | -0.03% | |
| EUR | 0.04% | 0.03% | -0.06% | 0.22% | 0.00% | -0.03% | 0.02% | |
| GBP | 0.00% | -0.03% | -0.09% | 0.19% | -0.01% | -0.06% | -0.02% | |
| JPY | 0.13% | 0.06% | 0.09% | 0.29% | 0.10% | 0.04% | 0.09% | |
| CAD | -0.18% | -0.22% | -0.19% | -0.29% | -0.20% | -0.25% | -0.21% | |
| AUD | 0.01% | -0.01% | 0.01% | -0.10% | 0.20% | -0.03% | 0.01% | |
| NZD | -0.02% | 0.03% | 0.06% | -0.04% | 0.25% | 0.03% | 0.04% | |
| CHF | 0.03% | -0.02% | 0.02% | -0.09% | 0.21% | -0.01% | -0.04% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Deutsche Bank’s Early Morning Reid note reports that US equities have broken a nine-day winning streak as higher Oil prices, hawkish Fed pricing and negative AI news hit risk sentiment. The S&P 500 and NASDAQ both fell, with the Magnificent 7 underperforming, while Asian indices and Bitcoin also declined, reflecting broader risk-off positioning across global equities.
AI disappointment triggers equity pullback
"Nevertheless, even as the geopolitical news looks more positive, equities have taken a hit this morning after Broadcom’s forecast for AI chip revenue was beneath estimates, which pushed their share price down over -13% in overnight trading."
"That combination of negative geopolitical headlines and more hawkish rates pricing meant US equities finally stumbled after a long run of gains. So the S&P 500 (-0.74%) and the NASDAQ (-0.89%) both fell back after 9 consecutive moves higher. The declines were fairly broad, with the equal-weighted S&P 500 (-0.42%) also seeing a decent pull back."
"But it was the Magnificent 7 (-1.25%) that saw a particular underperformance, dragging US equities more broadly, even as the Philly Semiconductor index (+1.39%) reached another record high."
"Over in Europe, there were more broad-based equity declines, with the STOXX 600 (-0.66%) falling back, alongside losses for the DAX (-1.31%), the CAC 40 (-0.71%) and the FTSE MIB (-1.07%)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
According to sources, the Bank of Japan (BoJ) will raise interest rates in the June policy meeting, Reuters reports. The report also states that the central bank is leaning towards pausing or slowing the pace of its bond-buying taper from Fiscal 2027.
Market reaction
No immediate action seen in the Japanese Yen (JPY), following headlines from Reuters. As of writing, USD/JPY trades 0.13% lower at around 159.90.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Here is what you need to know on Thursday, June 4:
The US Dollar (USD) gathered strength against its rivals midweek, supported by the upbeat macroeconomic data releases from the United States and a lack of progress in the United States (US) - Iran negotiations. On Thursday, the European economic calendar will feature April Retail Sales data. In the second half of the day, weekly Initial Jobless Claims data from the US will be watched closely by market participants ahead of Friday's critical Nonfarm Payrolls (NFP) report for May.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.49% | 0.35% | 0.35% | 0.90% | 0.63% | 1.86% | 1.43% | |
| EUR | -0.49% | -0.15% | -0.15% | 0.42% | 0.13% | 1.39% | 0.94% | |
| GBP | -0.35% | 0.15% | 0.02% | 0.55% | 0.28% | 1.54% | 1.08% | |
| JPY | -0.35% | 0.15% | -0.02% | 0.57% | 0.32% | 1.52% | 1.07% | |
| CAD | -0.90% | -0.42% | -0.55% | -0.57% | -0.28% | 0.95% | 0.51% | |
| AUD | -0.63% | -0.13% | -0.28% | -0.32% | 0.28% | 1.26% | 0.80% | |
| NZD | -1.86% | -1.39% | -1.54% | -1.52% | -0.95% | -1.26% | -0.46% | |
| CHF | -1.43% | -0.94% | -1.08% | -1.07% | -0.51% | -0.80% | 0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The data from the US showed on Thursday that employment in private sector rose by 122K in May. This reading followed the 105K increase reported in April and came in better than the market expectation of 117K. Additionally, the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) improved to 54.5 in May from 53.6, highlighting an ongoing expansion in the service sector's business activity at an accelerating pace. The USD Index climbed to its highest level since early April above 99.50 following the strong US data before going into a consolidation phase near that level early Thursday. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes closed deep in negative territory on Wednesday.
Israel and Lebanon on Wednesday agreed to renew a ceasefire but said it would require a "complete cessation" of fire by Iran-backed Hezbollah. The agreement was announced in a joint statement after US-led talks in Washington. In the meantime, Iran’s Foreign Minister Abbas Araghchi said that while contact with the US had not been cut off, he added that negotiations to end the Middle East war had made "no tangible progress,” as reported by Aljazeera.
EUR/USD moves sideways at around 1.1600 in the eary European session after losing about 0.3% on Wednesday.
USD/JPY corrects lower and trades below 160.00 following a four-day rally. Japanese Prime Minister Sanae Takaichi said on Wednesday that the authorities stand ready to respond to exchange-rate moves as needed.
Gold stages a rebound and trades above $4,450 after losing more than 1% on Wednesday.
GBP/USD lost more than 0.3% on Wednesday, pressured by the broad-based USD strength. The pair finds it difficult to stage a rebound and trades within a touching distance of 1.3400 in the European morning on Thursday.
While testifying before the Senate Economics Legislation Committee, Reserve Bank of Australia (RBA) Governor Michele Bullock noted that inflation is too high and reiterated that the the board will do what it considers necessary to achieve their mandate to deliver price stability and full employment. Following Wednesday's sharp decline, AUD/USD stays relatively quiet and fluctuates above 0.7100 early Thursday.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- The Indian Rupee opens flat at around 95.72 against the US Dollar, with investors awaiting the RBI’s monetary policy.
- US President Trump said that Iran has agreed to give up its nuclear ambitions.
- The Indian government approves scrapping the capital gains tax on foreign investment in government bonds.
The Indian Rupee (INR) trades flat against the US Dollar (USD) on Thursday after a strong Wednesday. The USD/INR pair holds onto the previous day’s gains around 95.72 even as the Indian administration decides to scrap capital gains tax on overseas investment in government bonds.
India approves scrapping capital gains tax on foreign investment in government bonds
Earlier in the day, the Cabinet meeting had approved the scrapping of capital gains tax on foreign portfolio investment in government bonds, aiming to improve the condition of foreign flows in the Indian economy.
The move was highly anticipated by the Indian government as significant Foreign Institutional Investors (FIIs) selling in the Indian stock market has been one of the key reasons behind Indian Rupee’s sharp depreciation.
On Monday, FIIs also remained net sellers in the Indian equity markets, offloading their stake worth Rs. 5,616.56 crore. So far in June, overseas investors have remained net sellers in all three trading days.
US President Trump remains confident of early deal with Iran
US President Donald Trump said in The New York Post’s "Pod Force One" program on Wednesday that Iran has agreed not to have nuclear weapons, adding, “Iran's Ayatollah [referring to Supreme Leader Mojtaba Khamenei] is involved in negotiations with Washington” and he will meet him at some time. However, Trump warned that Iran could change its mind and pursue its nuclear ambitions.
When asked about the timeframe in which the US and Iran could reach a deal, Trump said a memorandum of understanding (MoU) between the nations could reopen the Strait of Hormuz as early as this week; however, there is a possibility that the US blockade on Iranian sea ports could last till Labor Day, September 7.
If the US-Iran negotiations fail to reach a breakthrough, oil prices would remain higher, and act as a major hurdle for the Indian Rupee.
In India's afternoon trading hours, MCX Crude Oil price opens 1.2% lower to near 9,120, but is close to its 10-day high of 9,290 posted on Wednesday.
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.
RBI’s policy and US NFP data awaited
Going forward, the major trigger for the Indian Rupee will be the Reserve Bank of India’s (RBI) monetary policy, which will be announced on Friday. The RBI is expected to hold the Repo Rate steady at 5.25% and guide a hawkish monetary policy outlook, as higher energy prices have de-anchored inflation expectations.
In the US, investors will pay close attention to the Nonfarm Payrolls (NFP) data for May, which will be released on Friday. The impact of the US NFP data will be significant on the Federal Reserve’s (Fed) monetary policy outlook.
Technical Analysis: USD/INR holds recovery move above 20-day EMA
USD/INR trades almost flat at around 95.72 in the opening trade. The pair maintains a modest bullish bias as it stays above the 20-day Exponential Moving Average (EMA) at 95.47. The price action consolidates near recent highs while the Relative Strength Index (RSI) at about 54.8 sits slightly above the neutral territory, suggesting steady but not overextended upward momentum.
On the downside, immediate support is aligned with the 20-day EMA around 95.47, which reinforces the underlying demand zone and would need to give way to signal a deeper corrective phase towards the June 2 low at 95.00, followed by the May 7 low at around 94.00. Looking up, the pair could reclaim the all-time high of 97.09 if it manages to rise above the May 28 high at 96.65.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
RBI Interest Rate Decision (Repo Rate)
The RBI Interest Rate Decision is announced by the Reserve Bank of India. If the bank is hawkish about the inflationary outlook of the economy and rises the interest rates, it is seen as positive, or bullish, for the INR, while a dovish outlook for the economy (or a rate cut) is seen as negative, or bearish, for the currency.
Read more.Next release: Fri Jun 05, 2026 04:30
Frequency: Irregular
Consensus: 5.25%
Previous: 5.25%
Source: Reserve Bank of India
Danske Research Team notes that stronger US data and rising energy prices are supporting the US Dollar and weighing on EUR/USD. The bank highlights Fed member Logan’s concern that higher rates may be needed later in 2026 and maintains a forecast for Fed hikes in December and March. They project EUR/USD to trend lower towards 1.12 over the coming year.
Fed hikes and energy support Dollar
"In the US, ADP's National Employment Report for May landed close to expectations at 122k (cons: 117k), but it was noteworthy how the jobs growth was very broad-based across sectors and firm sizes. Moreover, the ISM services index ticked higher to 54.5 (cons: 53.8, prior: 53.6), driven largely by accelerating growth in new orders. The prices subindex reached its highest level since August 2022, while higher oil prices add to the upside risks for inflation."
"In the euro area, the final May services PMI was revised significantly up to 47.7 from 46.4 in the flash estimate, lifting the composite PMI to 48.5 from 47.5. While still in contractionary territory and pointing to weak underlying activity, the outturn is less negative than suggested by the flash release."
"In the US on Friday, the May Jobs Report is released in the afternoon. We forecast nonfarm payrolls at +110k, slightly above consensus, the unemployment rate at 4.2%, and average hourly earnings at 0.3% m/m. A solid report could tilt the Fed's balance of risks further towards a tightening bias."
"Against this backdrop, Fed member Lorie Logan noted she is increasingly concerned that higher interest rates could be necessary later this year, echoing recent similar language from other FOMC participants. We continue to expect Fed hikes in December and March and forecast EUR/USD trending lower towards 1.12 over the coming year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
The Japanese Yen (JPY) is hovering around the critical 160.00 threshold against the US Dollar, keeping markets on high alert for official currency interventions. Despite a record-breaking intervention effort by Japanese authorities at the end of April and beginning of May, high global bond yields and rising energy risks continue to push the USD/JPY pair higher.
However, a distinctly hawkish shift from the Bank of Japan (BoJ) and growing market expectations for upcoming interest rate hikes are beginning to provide a crucial floor for the Yen, analysts say.
Hawkish Bank of Japan pivot offers fundamental support for the Yen
Strategy analysts at Brown Brothers Harriman (BBH) note that the psychological 160.00 level represents a clear line in the sand for Japanese authorities, who have already deployed massive capital to defend it. They emphasize that recent remarks from BoJ Governor Kazuo Ueda suggest that monetary policy is shifting in a way that fundamentally favors a stronger Japanese Yen.
BoJ may need to tighten more than expected, which is JPY positive. The swaps curve price in 86% odds of a 25 basis points BoJ rate hike to 1.00% at the next June 16 meeting and a total of nearly 75 basis points of tightening in the next twelve months.
Psychological resistance at 160 keeps intervention risk elevated
Analysts at Scotiabank observe that while the broader market momentum for USD/JPY remains technically bullish, the currency pair is stabilizing just below key resistance at 160.00. This consolidation is largely driven by the imminent threat of official currency management, even as the market factors in meaningful BoJ rate hikes by the end of the year.
Near-term risk remains centered on official currency management (intervention) as USD/JPY approaches the psychologically important 160 level.
Aggressive central bank action expected to contain Yen losses
Analyzing the limits of unilateral market interventions, MUFG points out that previous government actions had short-lived results due to unsupportive external factors like rising Oil prices. However, they argue that because the BoJ is now actively stepping in with aggressive rate hike pricing for its upcoming meetings, further dramatic losses for the Yen are likely to be contained.
We expect the BoJ to hike, although US yields will remain important and USD/JPY could still gain although BoJ action will help contain any move. We still see upside USD/JPY scope as limited to a few big figures.
A tipping point for the Japanese Yen?
Analysts anticipate a supportive trend for the Japanese Yen, indicating that its sharpest depreciation phase may be nearing its limit. Brown Brothers Harriman explicitly projects a positive outlook for the JPY driven by aggressive rate hike expectations, while Scotiabank and MUFG agree that a combination of official state interventions and imminent BoJ tightening will effectively put a lid on further USD/JPY upside, restricting the pair's ability to break significantly past the 160.00 threshold.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
China's commerce ministry said during the European trading session on Thursday that it opposes all forms of United States (US) unilateral tariffs. The statement from the Commerce Ministry is in response to Washington’s proposed forced labor tariffs. On Wednesday, Washington said that it plans to impose fresh tariffs of at least 10% on imports from major trading partners due to forced-labor practices.
On negotiating the reduction of US tariffs, the Commerce Ministry said that it will discuss this within the China-US trade council. The ministry added that negotiating teams remain in close communication and will agree on specifics asap.
Market reaction
No major impact seen in the Australian Dollar (AUD), being a liquid proxy to the Chinese economy, following comments from China's Commerce Ministry.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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.
