Forex News
St Louis Fed President Alberto Musalem crossed the wires on Tuesday, saying that central bankers needn’t make promises but should tell the public how and why the central bank makes policy decisions.
Musalem added that the delegated power over interest rates also obligates the Fed to explain “how and why that power is used.”
Recently, he said that the economy is very strong, that “about half of inflation now is from persistent demand pressure,” and that policy “remains somewhat accommodative even after the last rate hike.”
Key highlights:
Right now the AI CAPEX boom is resulting in demand pressure, with productivity and "Supply relief" not yet apparent
The economy is very strong now, but predicated on continued growth
About half of inflation now is from persistent demand pressure
Inflation expectations remain consistent with 2% inflation over the long run
The Fed's SEP could be improved by anonymously connecting rate "dots" with economic projections
Monetary policy remains somewhat accommodative even after the last rate hike.
Clear framework helps policy transmission
Fed should communicate how it turns info into policy
Framework doesn't promise a specific interest rate path
if the public understands the framework, private expectations line up with the Fed's intentions, improving trade-offs between inflation and employment
Central banks should also avoid 'exiting the conversation altogether', would pose risks in terms of inflation
A central bank that keeps its framework to itself forces market participants to guess at its reaction, rather than focus on data
Central bankers needn't make promises, but should tell the public how and why the central bank makes policy decisions
A predictable, explained framework, is part of what makes a central bank democratically legitimate.
Delegated power over interest rates also obligates the Fed to explain 'how and why that power is used
If the public understands the framework, private expectations line up with the fed's intentions, improves trade-offs between inflation and employment
The 'Hall of Mirrors' occurs when the Fed announces a forecast, not a framework.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.29% | 0.20% | -0.09% | 0.04% | 0.48% | 0.45% | 0.21% | |
| EUR | -0.29% | -0.09% | -0.37% | -0.27% | 0.19% | 0.15% | -0.09% | |
| GBP | -0.20% | 0.09% | -0.29% | -0.15% | 0.27% | 0.24% | -0.00% | |
| JPY | 0.09% | 0.37% | 0.29% | 0.14% | 0.56% | 0.54% | 0.30% | |
| CAD | -0.04% | 0.27% | 0.15% | -0.14% | 0.42% | 0.40% | 0.16% | |
| AUD | -0.48% | -0.19% | -0.27% | -0.56% | -0.42% | -0.03% | -0.27% | |
| NZD | -0.45% | -0.15% | -0.24% | -0.54% | -0.40% | 0.03% | -0.24% | |
| CHF | -0.21% | 0.09% | 0.00% | -0.30% | -0.16% | 0.27% | 0.24% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- The US Dollar Index approaches its year-to-date high as expectations of further Fed rate hikes support the Greenback.
- Elevated Oil prices amid the Middle East conflict keep inflation risks tilted to the upside.
- Traders now await US PCE inflation, ISM PMI and Nonfarm Payrolls for fresh clues on the Fed’s next move.
The US Dollar Index (DXY) extends gains on Tuesday, approaching its year-to-date high as expectations of further Federal Reserve (Fed) interest-rate hikes drive strong demand for the Greenback. At the time of writing, the DXY, which tracks the US Dollar’s value against a basket of six major currencies, trades around 101.40, up 0.20% on the day.
The Fed delivered a 25-basis-point (bps) rate hike earlier this month, lifting the federal funds target range to 3.75%-4.00%. The updated Summary of Economic Projections placed the median policy rate at 4.1% for this year, suggesting that officials expect to deliver one more increase.
The US central bank remains focused on inflation, which continues to run stubbornly above its 2% target. Its inflation fight is becoming increasingly challenging as the war in the Middle East keeps Oil prices elevated. The United States and Iran remain far apart on key issues, leaving shipping through the Strait of Hormuz disrupted.
Recent Fed communication also suggests that policymakers remain open to further monetary policy tightening. Fed Governor Michael Barr said on Tuesday that “inflation is a key concern” and that the central bank has been “knocked off course” from its 2% goal.
“I see us not getting to the 2% inflation target in a timely way unless we adjust our policy,” Barr said. He added that the labour market remains “solid,” supported by business investment and consumer spending.
Separately, New York Fed President John Williams said that he sees “no need for urgency” following September’s rate hike. However, he added that “if the economy meets expectations, one further hike is likely this year.” According to the CME FedWatch Tool, markets are pricing in around a 68% probability of another interest-rate increase at the Fed’s October meeting.
Expectations of higher US interest rates and heightened inflation risks have pushed Treasury yields to multi-year highs. The benchmark 10-year US Treasury yield climbs to around 5.28%, its highest level since 2007, while the rate-sensitive 2-year yield holds near 4.93%, levels last seen in 2024. Higher Treasury yields increase the appeal of US Dollar-denominated assets and provide additional support to the Greenback.
The US Dollar’s strength is visible across major currency pairs. The Euro falls to its lowest level since late June, with EUR/USD trading near 1.1340. The British Pound remains close to a three-month low, while the Canadian Dollar weakens to levels last seen in early July. The Japanese Yen holds relatively firm following renewed warnings that Japanese authorities could intervene in the currency market again.
Traders largely shrugged off weaker-than-expected second-tier US economic data released on Tuesday. JOLTS Job Openings fell to 7.079 million in August, below the market forecast of 7.23 million. The previous reading was revised higher to 7.335 million from 7.271 million.
The Conference Board Consumer Confidence Index also declined to 81.9 in September, missing expectations of 89.0. The August reading was revised lower to 88.6 from 89.4.
Attention now turns to the US Personal Consumption Expenditures (PCE) Price Index, ISM Manufacturing Purchasing Managers’ Index (PMI) and Nonfarm Payrolls (NFP) report later this week. Strong inflation or labour-market figures could reinforce expectations of further Fed tightening and push the US Dollar Index toward fresh yearly highs.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.31% | 0.21% | -0.09% | 0.07% | 0.50% | 0.48% | 0.23% | |
| EUR | -0.31% | -0.09% | -0.37% | -0.25% | 0.20% | 0.17% | -0.09% | |
| GBP | -0.21% | 0.09% | -0.29% | -0.13% | 0.28% | 0.26% | 0.00% | |
| JPY | 0.09% | 0.37% | 0.29% | 0.17% | 0.59% | 0.57% | 0.31% | |
| CAD | -0.07% | 0.25% | 0.13% | -0.17% | 0.41% | 0.40% | 0.15% | |
| AUD | -0.50% | -0.20% | -0.28% | -0.59% | -0.41% | -0.03% | -0.28% | |
| NZD | -0.48% | -0.17% | -0.26% | -0.57% | -0.40% | 0.03% | -0.26% | |
| CHF | -0.23% | 0.09% | -0.00% | -0.31% | -0.15% | 0.28% | 0.26% |
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 New York Fed Governor John Williams said that he “sees no need for urgency after September rate hike,” a dovish statement that pushed the US Dollar Index (DXY) modestly lower, though it remains positive in the day.
Williams added that more data will help with future policy decisions, and that “if the economy meets expectations, one further hike is likely this year.” He stated that inflation would likely end at 3.5% this year and hit the Fed’s 2% goal by 2028.
Key highlights:
Sees ‘no need for urgency’ after September rate hike
More data will help the fed decide what’s next for rate policy
If economy meets expectations, one further hike likely this year
Fed will respond to data when setting monetary policy
Imperative to get inflation back to 2%
Fed must make sure high inflation does not become entrenched
Sees inflation at 3.5% this year, hit 2% target in 2028
Fed policy can make sure impact of supply shocks not long lasting
Sees us GDP at 2.25% this year, unemployment at 4% over 2027
AI investment issues are an increasingly big issue for inflation
Us economic momentum strong and may be strengthening
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.21% | -0.08% | 0.08% | 0.50% | 0.47% | 0.23% | |
| EUR | -0.30% | -0.09% | -0.39% | -0.25% | 0.19% | 0.17% | -0.09% | |
| GBP | -0.21% | 0.09% | -0.29% | -0.13% | 0.27% | 0.26% | -0.00% | |
| JPY | 0.08% | 0.39% | 0.29% | 0.17% | 0.58% | 0.56% | 0.30% | |
| CAD | -0.08% | 0.25% | 0.13% | -0.17% | 0.41% | 0.39% | 0.14% | |
| AUD | -0.50% | -0.19% | -0.27% | -0.58% | -0.41% | -0.02% | -0.30% | |
| NZD | -0.47% | -0.17% | -0.26% | -0.56% | -0.39% | 0.02% | -0.26% | |
| CHF | -0.23% | 0.09% | 0.00% | -0.30% | -0.14% | 0.30% | 0.26% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Chicago Federal Reserve (Fed) President Austan Goolsbee, a voter in the Federal Open Market Committee (FOMC) in 2027, said Tuesday that “the fact that we have been 5 ½ years above inflation target is playing with fire,” adding that “massive deficits” can overheat the economy.
He said inflation in 2023 and 2024 was headed toward the Fed’s 2% goal but stalled out, confirming that “we have to get evidence that inflation is coming back down.”
Key highlights:
Expectation of productivity gains from AI in the future creates a high danger of overheating now
Nothing in the federal reserve act says make sure bond market is happy, stock markets aren't surprised
Need to revisit the logic of looking through supply shocks
The fact we have been 5-1/2 years above inflation target is playing with fire
Price of oil could go down relatively quickly, but deeper problem is getting refineries back online
Keep your eye on productivity
Massive deficits are a form of stimulus, can overheat economy
In '23 and '24 felt inflation was headed back to 2%, then stalled out
In dot plot I'm one of more optimstic folks at fed
We have to get evidence inflation is coming back down
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.35% | 0.26% | -0.03% | 0.11% | 0.58% | 0.55% | 0.27% | |
| EUR | -0.35% | -0.09% | -0.36% | -0.26% | 0.23% | 0.20% | -0.09% | |
| GBP | -0.26% | 0.09% | -0.29% | -0.15% | 0.30% | 0.27% | -0.00% | |
| JPY | 0.03% | 0.36% | 0.29% | 0.15% | 0.60% | 0.59% | 0.30% | |
| CAD | -0.11% | 0.26% | 0.15% | -0.15% | 0.45% | 0.44% | 0.16% | |
| AUD | -0.58% | -0.23% | -0.30% | -0.60% | -0.45% | -0.02% | -0.30% | |
| NZD | -0.55% | -0.20% | -0.27% | -0.59% | -0.44% | 0.02% | -0.29% | |
| CHF | -0.27% | 0.09% | 0.00% | -0.30% | -0.16% | 0.30% | 0.29% |
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 US Dollar (USD) has accelerated its recovery, adding to the positive start to the week and clinching new multi-week tops, always helped by the persistent advance in US Treasury yields and unabated geopolitical concerns.
Here is what you need to know on Wednesday, September 30:
The US Dollar Index (DXY) has approached the 101.60 zone for the first time since late July, as investors continued to assess the lack of progress in the Middle East conflict and the ongoing rise in US Treasury yields across the curve. The usual MBA Mortgage Applications are due, seconded by the ADP Employment Change, PCE, Personal Income/Spending, the Chicago PMI, the final Q2 GDP Growth Rate and the EIA’s weekly report on crude oil stockpiles. In addition, the Fed’s Goolsbee and Barkin will also speak.
EUR/USD has declined to three-month lows, coming just pips away from the key 1.1300 support level amid the firmer bias in the US Dollar and persistent geopolitical jitters from the US-Iran conflict. Germany will be in focus tomorrow with the release of Retail Sales, the labour market report and the preliminary Inflation Rate. Additionally, the ECB’s Schnabel is due to speak.
GBP/USD has followed the sentiment surrounding the rest of its risk-linked peers, challenging the 1.3200 region, or fresh three-month lows. Next on tap on the UK docket will be the Q2 Current Account results, Nationwide Housing Prices, quarterly Business Investment figures and the final Q2 Growth Rate.
USD/JPY has traded with a modest upside bias, adding to Monday’s gains near 157.50 following the improvement in the Greenback and US yields. The flash Industrial Production prints are due on September 30 alongside Retail Sales, Housing Starts and Construction Orders.
AUD/USD has come under fresh and quite marked downside pressure on Tuesday, breaching below the critical 0.7000 yardstick while reversing two daily advances in a row. The key Inflation Rate is due on September 30, seconded by flash Building Permits, Private House Approvals and Private Sector/Housing Credit figures.
Front-month WTI futures have lost further ground, putting the key $90.00 mark per barrel to the test amid the third consecutive daily drop, always amid the resurgence of geopolitical tensions in the US-Iran-Hormuz conflict.
Gold has managed to partially regain ground lost at the beginning of the week, although another test of the $4,200 mark per troy ounce has remained elusive. The better tone in the US Dollar and the strong rebound in US Treasury yields across the curve have continued to weigh on the precious metal.
Federal Reserve (Fed) Governor Michael Barr said Tuesday that he sees “elevated wage rates in the skilled trades,” and added that the resilience of the US economy is “striking.”
He said that the Fed is data-dependent and focused on the balance of risks to achieve the dual mandate, and that the last hike was “appropriate.”
Key highlights:
Seeing some elevated wage rates in the skilled trades
Taking the longer view, we need to be sure we do what it takes to bring supply and demand into balance
The resilience of the US economy is striking
Momentum seems to be building in the economy
All we're focused on is what the data tell us about the evolving outlook and balance of risks to achieving our congressional mandate
I see us not getting to the 2% inflation target in a timely way unless we adjust our policy
Last hike was appropriate, and I think we will likely need further adjustments.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Silver retreats to around $60.75 on Tuesday, losing 0.38% on the day.
- US Treasury yields surge as tensions surrounding the Strait of Hormuz fuel inflation concerns.
- Markets expect another interest rate hike in October after the 25-basis-point increase delivered earlier this month.
Silver (XAG/USD) retreats on Tuesday and trades around $60.75 at the time of writing, down 0.38% on the day. The white metal comes under pressure from the sharp rise in US Treasury yields and a stronger US Dollar (USD), as persistent tensions surrounding the Strait of Hormuz keep Oil prices elevated and revive inflation concerns.
The benchmark 10-year US Treasury yield climbed to 5.28%, its highest level since 2007. The recent bond sell-off is largely driven by concerns that higher energy prices could keep inflationary pressures elevated in the United States (US) and force the Federal Reserve (Fed) to maintain a restrictive monetary policy stance.
On the geopolitical front, Iranian Foreign Minister Abbas Araghchi said Tehran held indirect talks with the United States through Qatari mediators in New York. Iran is now awaiting a formal response from Washington to its proposal regarding the reopening of the Strait of Hormuz.
However, US President Donald Trump denied reports that his administration offered Iran sanctions relief and access to frozen funds. Trump said Washington has offered Tehran “nothing” to end the conflict.
The two sides remain far apart on several key issues, while Tehran stressed that it does not intend to soften its conditions. The lack of significant progress therefore leaves the risk of prolonged disruptions around the Strait of Hormuz, which could keep energy prices elevated and continue to fuel inflation expectations.
Against this backdrop, markets expect further rate hikes from the Fed after the 25-basis-point (bps) increase delivered earlier in September. According to the CME FedWatch tool, traders price in around a 70% chance of another rate hike at the October meeting.
These expectations also support the US Dollar. The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, trades around 101.50, near its highest levels in two months. The combination of a stronger US Dollar and elevated Treasury yields creates an unfavorable environment for Silver, which offers no interest.
US economic data released on Tuesday nevertheless came in weaker than expected. The Conference Board Consumer Confidence Index fell to 81.9 in September, below the 89 expected, while the August reading was revised down to 88.6 from 89.4 initially reported. JOLTS Job Openings also declined to 7.079 million in August, below the 7.23 million forecast, while the previous reading was revised higher to 7.335 million.
Meanwhile, Fed Governor Michael Barr said on Tuesday that monetary policy needs to be “recalibrated” and that his base case is that further adjustments will likely be needed. Barr also noted that the labor market remains solid and expects economic growth to pick up after Gross Domestic Product (GDP) expanded by around 2% in the first half of the year.
Investors now turn their attention to the Personal Consumption Expenditures (PCE) Price Index, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) and the Nonfarm Payrolls (NFP) report due later this week. These releases could provide fresh clues about the Fed’s interest rate path and, consequently, the outlook for US Treasury yields, the US Dollar and Silver.
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.
Federal Reserve (Fed) Governor Michael Barr said on Tuesday that “there is a need to recalibrate policy” and that the base case is that “further policy adjustments” are likely needed.
In his speech, Barr added that he expects GDP to pick up from 2% in the first half of the year, and stated that the labor market is solid, “supported by business investment and consumer spending.”
Money markets have priced in a nearly 66% chance of a rate hike by the Federal Reserve at the October meeting, according to Prime Terminal. For the December meeting, the odds for a rate increase are at 94%.
Key highlights:
He expects GDP growth to 'pick up a bit' in second half of year, from 2% pace in first half
Risks to achieving inflation target have increased, risks to labor market have receded
There is a need to recalibrate policy; base case is that further policy adjustments likely to be needed
Labor market solid, supported by business investment and consumer spending
Inflation is a key concern; fed has been 'knocked off course' to 2% goal
Does not see a clear trend toward a timely return to 2% inflation
Makes sense to pencil in AI productivity boost in medium term, but difficult to project how or when
Says he is optimistic AI will boost productivity in the longer term
Too early to know if AI will push up neutral rate of interest
AI buildout likely to be a strong boost to us economic activity in next year or so
Should be prepared for serious short-term disruptions in labor market from AI
Broad productivity gains from AI may take some time
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.46% | 0.36% | 0.06% | 0.17% | 0.74% | 0.70% | 0.43% | |
| EUR | -0.46% | -0.10% | -0.41% | -0.31% | 0.27% | 0.25% | -0.04% | |
| GBP | -0.36% | 0.10% | -0.31% | -0.18% | 0.36% | 0.34% | 0.06% | |
| JPY | -0.06% | 0.41% | 0.31% | 0.13% | 0.68% | 0.64% | 0.37% | |
| CAD | -0.17% | 0.31% | 0.18% | -0.13% | 0.55% | 0.52% | 0.25% | |
| AUD | -0.74% | -0.27% | -0.36% | -0.68% | -0.55% | -0.03% | -0.31% | |
| NZD | -0.70% | -0.25% | -0.34% | -0.64% | -0.52% | 0.03% | -0.26% | |
| CHF | -0.43% | 0.04% | -0.06% | -0.37% | -0.25% | 0.31% | 0.26% |
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).
Alexander DeMarco, the Governor of the Central Bank of Malta and member of the Governing Council of the European Central Bank (ECB), crossed the wires on Tuesday, saying that “stronger core inflation” could be a reason for the central bank to act, and that he supports a rate hike in October.
In the September 10 meeting, the ECB decided to lift rates in the three key ECB interest rate facilities by 25 basis points, mentioning that the “Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.”
As of writing, money markets have priced in a 57% chance that the ECB will hold rates unchanged at the October 29 meeting, while the odds of a December rate hike are 84%, according to Prime Terminal.
Key highlights:
Stronger core inflation could be grounds to act
I would not exclude a rate hike in October
Recent rise in L-T bond yields quite worrying
The economic situation is quite fragile.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- GBP/USD retreats as the US Dollar extends gains despite weak confidence.
- Ten-year yield hits 2004 levels, reinforcing US policy advantage.
- Split BoE rhetoric leaves Sterling waiting for clearer inflation signals.
The Pound Sterling (GBP) drops some 0.38% against the US Dollar (USD) on Tuesday as the latter continues to appreciate, even though US Consumer Confidence deteriorated and jobs data confirmed the strength of the US labor market. At the time of writing, GBP/USD trades at 1.3205, after peaking at 1.3258.
Sterling weakens as resilient US jobs offset collapsing consumer confidence
The Conference Board reported that confidence fell to 81.9 in September, below estimates and the lowest level since 2014. The survey showed households' anxiety about the high cost of living as gasoline prices rise. Dana Peterson, the chief economist of the Conference Board, wrote, “References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights.”
Other data showed that job openings fell in August, though layoffs remained low, reaffirming that the US labor market could withstand further tightening by the Federal Reserve (Fed).
In this backdrop, the US Dollar Index (DXY), which measures the performance of the Greenback against a basket of six currencies, is up 0.29% at 101.47, a headwind for Sterling, which has failed to be underpinned, despite money markets expecting a rate hike by the BoE.
Also, US Treasury yields continued to rise, with the US 10-year Treasury yield reaching levels last seen in 2004 at 5.285%, up five basis points.
BoE members split between holding or raising
Across the pond, the UK Prime Minister said his government would honor the Labour Party’s manifesto pledge to keep pensions unchanged, but warned that the triple lock would be adjusted by 2030 after the next general election.
Two Bank of England (BoE) Monetary Policy Committee (MPC) members crossed the wires, with Alan Taylor saying that the case for a rate hike “is not compelling" unless energy prices remain high and “generate clearer signals of a transmission into broader inflation persistence.”
BoE’s Catherine Mann said that “inflation staying above 2% is a credibility problem.”
Ahead, the US economic docket will feature the release of the Fed’s favorite inflation gauge, the Core PCE, GDP figures, and further Fed speaking. In the UK, the schedule will feature the release of economic growth data.
GBP/USD Price Forecast: Technical Outlook
In the daily chart, GBP/USD trades at 1.3213, extending a bearish near-term bias as spot remains decisively under the cluster of major simple moving averages (SMA) and broken trend levels. The 50-, 100- and 200-day SMAs, grouped around 1.3459, sit well above current price and reinforce the idea of a capped market, while the downward-sloping resistance trend lines projecting from 1.3869 and 1.3653 keep the pair locked beneath their respective break levels at 1.3320 and 1.3438. Momentum is stretched on the downside, with the Relative Strength Index (RSI) at 27.6, hinting at oversold conditions that could slow the decline but not yet overturn the prevailing bearish structure.
On the topside, initial resistance emerges at the prior break level near 1.3320, where the earlier descending trend line was pierced, followed by the more recent resistance trend line break at 1.3438. Above these, the grouped 50/100/200-day SMAs around 1.3459 form a dense technical barrier, ahead of the higher former support trend break at 1.3532 and the more distant structural level near 1.3735. With no nearby technical supports mapped below spot in the current dataset, any recovery would likely need to reclaim 1.3320 first to ease immediate downside pressure, while a sustained move above the 1.3438–1.3459 band would be required to challenge the broader bearish outlook.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.39% | 0.18% | 0.08% | 0.36% | 0.51% | 0.53% | 0.79% | |
| EUR | -0.39% | -0.27% | -0.25% | -0.04% | 0.12% | 0.12% | 0.38% | |
| GBP | -0.18% | 0.27% | -0.17% | 0.20% | 0.37% | 0.36% | 0.62% | |
| JPY | -0.08% | 0.25% | 0.17% | 0.18% | 0.34% | 0.35% | 0.59% | |
| CAD | -0.36% | 0.04% | -0.20% | -0.18% | 0.18% | 0.14% | 0.43% | |
| AUD | -0.51% | -0.12% | -0.37% | -0.34% | -0.18% | 0.02% | 0.27% | |
| NZD | -0.53% | -0.12% | -0.36% | -0.35% | -0.14% | -0.02% | 0.26% | |
| CHF | -0.79% | -0.38% | -0.62% | -0.59% | -0.43% | -0.27% | -0.26% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
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