Forex News
- Silver advances to near $66.35 in Monday’s early European session.
- The negative outlook prevails under the 100-day SMA, with bearish RSI momentum.
- The first upside barrier emerges at $70.18; the initial support level to watch is $61.80.
Silver (XAG/USD) rises to around $66.35 during the early European trading hours on Monday. The precious metal attracts some buyers amid progress of US-Iran peace deal, easing tension in the Middle East.
Mediators Qatar and Pakistan said on Monday that the first round of negotiations between the US and Iran to reach a final deal to end the war has ended with "encouraging progress,” per BBC. The negotiation began on Sunday in Switzerland, after last week's initial agreement between the US and Iran. Technical talks will continue throughout the week.
Technical Analysis:
In the daily chart, XAG/USD remains under pressure, sitting well below the 20-period Bollinger simple moving average and the 100-day moving average (MA), which together suggest a capped market within a broader corrective phase. The Relative Strength Index (14) hovering just above 40 hints at subdued downside momentum rather than outright capitulation, but the price structure favors sellers while spot holds beneath these layered resistances.
On the topside, initial resistance emerges at the Bollinger middle band around $70.18, a recovery above which would ease immediate bearish pressure and open the way toward the June 17 high of $71.56. The next hurdle to watch is the 100-day MA at roughly $76.90. A further extension could test the upper Bollinger band near $78.55. On the downside, the lower Bollinger band around $61.80 offers the next meaningful support, and a break below this floor would expose the June 11 low of $61.50.
(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.
- The Indian Rupee reflects strength against the US Dollar as oil prices have fallen back.
- Iran confirms the establishment of a “de-confliction” cell to ensure a ceasefire in Lebanon.
- The odds of the Fed raising interest rates twice this year have increased to 58.5%.
The Indian Rupee (INR) trades firmly against the US Dollar (USD) in the opening session on Monday. The USD/INR pair holds onto losses near its over six-week low at around 94.25 as oil prices resume their downside journey, following positive commentary from Iran towards ongoing negotiations over the peace deal with the United States (US).
At press time, the MCX Crude Oil contract expiring on July 20 is down 1.25% to near 7,171 in the opening trade.
Currencies from economies, such as India, which rely heavily on imports to meet their energy needs, outperform when oil prices remain lower.
Iran hails great progress in talks with US
Iran’s Foreign Minister Abbas Araghchi has described the talks with the US in Switzerland as having delivered “major progress,” CNBC reported. Araghchi said that Tehran had secured what he described as waivers for oil and petrochemical exports, the lifting of the US blockade on its seaports, the release of some frozen assets, and the launch of a reconstruction and development plan.
Iran’s Foreign Minister Araghchi has also confirmed the establishment of a “de-confliction” cell with the US, facilitated by the mediating countries Qatar and Pakistan, to ensure a ceasefire in Lebanon.
Positive commentary from Iran has dashed fears of the Strait of Hormuz closure again and renewed hostilities in the Middle East. Over the weekend, US President Donald Trump threatened to "take over" the Hormuz, in an interview with Fox News, and hit the nation hard if Iran closes the waterway again. Trump’s threats came after Iran’s news agency reported that Tehran had closed the Hormuz again in response to a ceasefire violation in Lebanon.
FIIs made significant investment in Indian stock market on Friday
Lower oil prices and hopes of continued progress in the US-Iran peace talks have improved the sentiment of foreign investors toward the Indian stock market. On Friday, Foreign Institutional Investors (FIIs) purchased shares worth Rs. 4,859.07 crore, the highest amount of one-day investment seen in months.
US Dollar trades firm on hawkish Fed bets
The USD/INR pair seems under pressure despite the US Dollar’s outperformance in the wake of the accelerating hawkish Federal Reserve (Fed). As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 100.90.
According to the CME FedWatch tool, the odds of the Fed delivering at least two interest rate hikes this year are 58.5%, a sharp increase from the 17.1% seen a week ago.
Hawkish Fed bets have accelerated following the monetary policy announcement on Wednesday, in which the Economic Projections report showed that nine of 19 policymakers believe they will need to raise the Fed's policy rate this year.
Technical Analysis: USD/INR sees support near 94.00
USD/INR trades lower at around 94.26, extending a corrective phase with a bearish near-term bias as price holds well below the 20-day Exponential Moving Average (EMA) at 94.9904. The Relative Strength Index (RSI) at about 40 suggests subdued momentum, hinting that the pair remains under pressure without yet reaching oversold conditions.
On the downside, the pair could slide to 93.00 if it extends its decline below the May 7 low at 94.03. Looking up, the pair could advance to the June 12 high at 95.76 if it rebounds above the 20-day EMA.
(The technical analysis of this story was written with the help of an AI tool.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- Gold snaps a three-day losing streak to over a one-week low, though it lacks bullish conviction.
- Easing concerns about inflation and higher interest rates offer some support to the commodity.
- The Iran uncertainty and a hawkish Fed underpin the USD, capping gains for the precious metal.
Gold (XAU/USD) trims a part of its strong intraday gains to levels beyond the $4,200 mark, though it retains positive bias for the first time in four days. Crude Oil prices turn lower following a modest bullish weekly gap after mediators Qatar and Pakistan announced a formal 60-day roadmap aimed at securing a final US-Iran peace deal. This, in turn, helps ease concerns around inflation and higher interest rates, offering some support to the precious metal. The commodity, however, remains well within striking distance of a more than one-week low set on Friday.
That said, traders are still pricing in a nearly 90% chance that the US Federal Reserve (Fed) will raise borrowing costs by the end of this year. The bets were lifted by the Fed's hawkish forecast last week, signaling that it will need to raise the policy rate this year if inflation remains sticky. Furthermore, the new Fed Chair, Kevin Warsh, focused on price stability during the post-meeting press conference, suggesting that the central bank might not rush to cut rates even in the face of declining growth. Apart from this, geopolitical developments over the weekend act as a tailwind for the US Dollar (USD), which should cap further gains for the Gold.
Iran accused the US and Israel of violating the ceasefire and announced that it had again closed the Strait of Hormuz, citing the continued Israeli strikes in Lebanon. Moreover, US President Donald Trump threatened fresh military action against Iran if Hezbollah continued attacks on Israel. This underscores the fragility of the diplomatic process and keeps the geopolitical risk premium in play. Adding to this, Russia has intensified attacks on major Ukrainian cities in recent weeks, which helps the safe-haven Greenback to stall Friday's pullback from its highest level since May 2025 and keeps a lid on the Gold, warranting caution for bulls.
Moving ahead, all eyes remain on US-Iran headlines, which might continue to infuse volatility across global financial markets. Apart from this, comments from influential FOMC members will drive the USD demand and provide some impetus to the precious metal. Nevertheless, the aforementioned fundamental backdrop suggests that an attempted recovery might still be seen as a selling opportunity and fizzle out rather quickly.
XAU/USD daily chart
Gold bears have the upper hand while below the 200-day EMA support-turned resistance
From a technical perspective, last week's failed attempts to clear the 200-day Exponential Moving Average (EMA) support-turned-resistance, and the subsequent fall, favor the XAU/USD bears. Moreover, the Relative Strength Index (RSI) hovers in the upper-30s, hinting at subdued buying interest. Adding to this, the Moving Average Convergence Divergence (MACD) remains in negative territory with a modestly negative histogram, suggesting that downside momentum is easing but not yet reversed.
Meanwhile, the 200-day EMA near $4,334 should act as the first key level that bulls need to reclaim to alleviate the current bearish pressure. Until that level is recovered on a daily closing basis, rebounds are likely to be viewed as corrective within a broader consolidative decline, with momentum signals implying that further tests of lower levels cannot be ruled out.
(The technical analysis of this story was written with the help of an AI tool.)
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 Indonesian Rupiah weakens as an MSCI warning over market transparency has sparked capital flight.
- The US Dollar rises on increased safe-haven demand amid renewed US-Iran peace deal concerns.
- Risk aversion could ease following a Qatar-Pakistan joint statement that the US and Iran agreed to a formal peace roadmap.
USD/IDR rebounds after registering modest losses in the previous trading day, hovering around 17,870 during the Asian hours on Monday. The Indonesian Rupiah (IDR) struggles against the US Dollar (USD) after Morgan Stanley Capital International’s (MSCI) warning directly triggers capital flight and complicates the central bank's efforts to stabilize the currency. However, traders expect the Indonesia to retain its emerging markets status in a high-stakes review this week.
The USD/IDR pair rises as the US Dollar (USD) strengthens amid increased safe-haven demand, which could be attributed to renewed concerns over a US-Iran peace deal. CNBC reported on Sunday that US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel.
Trump’s warning has severely clouded the outlook for diplomatic progress between Washington and Tehran, completely dismantling the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.
However, risk aversion could ease after mediators Qatar and Pakistan announced in a joint statement from Switzerland that both the US and Iran have agreed to a formal roadmap aimed at securing a final peace agreement within the next 60 days.
The Greenback receives support from the hawkish sentiment surrounding the Federal Reserve’s (Fed) policy outlook. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.
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.
- Asian stocks open mixed on Monday amid signs of progress in US-Iran peace talks.
- Geopolitical risks premium remains in play after Iran closed the Strait of Hormuz.
- The Fed’s hawkish tilt further contributes to keeping a lid on the market optimism.
Asian stocks kick off the new week on a downbeat note, though signs of progress in US-Iran pace negotiations eased concerns over a potential escalation in geopolitical tensions and limited deeper losses. At the time of writing, South Korea’s KOSPI is seen treading water, while Hong Kong’s Hang Seng and Indonesia's IDX Composite are trading with a loss of over 1% for the day.
Meanwhile, Japan's Nikkei 225 surged over 2% as the sentiment got a boost after mediators Qatar and Pakistan announced a formal 60-day roadmap aimed at securing a final US-Iran peace deal. This eases fears over a breakdown in diplomatic efforts, led by the closure of the Strait of Hormuz on Saturday and US President Donald Trump's threats of military action against Iran if Hezbollah continued attacks on Israel.
Iran announced that it had closed the strategic waterway again after accusing the US and Israel of violating the ceasefire. Iran added that the decision came over the continued Israeli strikes in Lebanon. This underscores the fragility of the diplomatic process and keeps the geopolitical risk premium in play. Apart from this, the US Federal Reserve's (Fed) hawkish tilt continues to undermine investors' appetite for riskier assets.
In fact, traders ramped up their bets that the US central bank will deliver at least one 25-basis-points (bps) interest rate hike in 2026 following the Fed's forecast that it will need to raise the polity rate if inflation remains sticky. Nevertheless, all eyes remain on the US-Iran headlines, which might continue to infuse volatility across the global financial markets.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
- AUD/USD softens to around 0.7005 in Monday’s early European session.
- Uncertainty clouded the US-Iran peace deal following threats from Trump.
- RBA hawkish pause could underpin the Aussie.
The AUD/USD pair loses traction to near 0.7005 during the early European trading hours on Monday, pressured by risk-off sentiment. Traders continue to assess the developments surrounding the US-Iran peace deal following fresh threats from US President Donald Trump.
The US-Iran peace talks took place on Sunday in Bürgenstock, Switzerland, with delegations from Iran, the US, Qatar, and Pakistan participating. On Monday, Qatar and Pakistan issued a joint statement on the conclusion of negotiations, saying that talks were conducted in a positive, constructive atmosphere.
Earlier on Monday, the Tasnim news agency cited an Iranian Foreign Ministry spokesman as saying that “a formal transit mechanism was successfully arranged to guarantee the safe passage of commercial vessels through the vital Strait of Hormuz waterway.”
However, markets remain cautious since Trump over the weekend threatened strikes on Iran if Hezbollah keeps attacking Israel. Uncertainty surrounding the US-Iran peace agreement could weigh on the riskier asset, such as the Australian Dollar (AUD) against the US Dollar (USD).
On the other hand, a hawkish interest rate hold from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. The RBA decided to leave the Official Cash Rate (OCR) unchanged at 4.35% after its June monetary policy meeting last week. This is a pause following three consecutive 25 basis points (bps) rate hikes earlier this year.
Despite leaving the interest rate unchanged, the board members signaled that further rate hikes might be necessary to achieve its goals.
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.
Gold prices rose in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 12,718.67 Indian Rupees (INR) per gram, up compared with the INR 12,653.13 it cost on Friday.
The price for Gold increased to INR 148,349.40 per tola from INR 147,583.70 per tola on friday.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,718.67 |
10 Grams | 127,188.10 |
Tola | 148,349.40 |
Troy Ounce | 395,583.50 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
- USD/CAD reached a 14-month high of 1.4191 on Monday.
- The Greenback rises on increased safe-haven demand amid renewed US-Iran peace deal concerns.
- The Canadian Dollar falls as Oil prices drop following a 60-day US-Iran peace roadmap brokered by Qatar and Pakistan.
USD/CAD extends its gains for the fifth successive day, trading around 1.4190 during the Asian hours on Monday. The pair hits a 14-month high of 1.4191 as the US Dollar (USD) receives support from safe-haven demand, which could be attributed to renewed concerns over a US-Iran peace deal. Traders will likely observe Canada’s Consumer Price Index (CPI) data due later in the North American session.
CNBC reported on Sunday that US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel. This warning has severely clouded the outlook for diplomatic progress between Washington and Tehran, completely dismantling the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.
Meanwhile, Tehran simultaneously announced it had once again closed the strategic Strait of Hormuz. While Iranian state media reported that Tehran had completely suspended negotiations in response to Trump's remarks, sources close to the matter indicated that discussions are quietly ongoing.
Moreover, the Greenback receives support as the Federal Reserve (Fed) adopted a decidedly hawkish tone after keeping interest rates steady last week. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.
As Canada’s largest crude exporter to the United States (US), the commodity-linked Canadian Dollar (CAD) faced downward pressure from falling oil prices. Crude surrendered its daily gains following positive developments in the US-Iran peace talks. Mediators Qatar and Pakistan announced in a joint statement from Switzerland that both nations have agreed to a formal roadmap aimed at securing a final peace agreement within the next 60 days.
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 regains positive traction on Monday and climbs back closer to a nearly two-year peak.
- Economic risks due to the Middle East conflict counter intervention fears and undermine the JPY.
- The US-Japan rate differential further weighs on the JPY and supports the pair amid a bullish USD.
The USD/JPY pair attracts fresh buyers at the start of a new week and climbs back above mid-161.00s during the Asian session. Spot prices remain well within striking distance of the highest level since July 2024, touched last Thursday, and seem unaffected by speculation of imminent intervention by Japanese authorities.
In fact, Japan’s Finance Minister Satsuki Katayama reiterated on Monday that the officials are ready to respond appropriately to the currency moves at any time as needed. The Japanese Yen (JPY), however, continues with its relative underperformance in the wake of worries that Japan's economy will remain under strain due to the Middle East conflict and the continued energy supply disruptions through the Straight of Hormuz.
Iran announced that it had closed the strategic waterway again after accusing the US and Israel of violating the ceasefire. Iran added that the decision came over the continued Israeli strikes in Lebanon. Moreover, US President Donald Trump threatened fresh military action against Iran if Hezbollah continued attacks on Israel, underscoring the fragility of the diplomatic process and keeping the geopolitical risk premium in play.
This overshadows prospects for further policy tightening by the Bank of Japan (BoJ), undermining the Japanese Yen (JPY) and supporting the USD/JPY pair. Minutes of the April BoJ meeting showed that some board members called for raising rates more swiftly to avoid underlying inflation from overshooting. Moreover, BoJ Deputy Governor Himino said that the central bank will keep hiking rates based on economic, price, and financial trends.
Despite the BoJ's hawkish outlook, Japan's borrowing costs remain lower than those of peer nations like the US. The BoJ raised policy rates to 1.00%, or the highest since 1995, last Tuesday, while the US Federal Reserve (Fed) maintained its interest rate target range of 3.5% to 3.75% last Wednesday, which continues to fuel the JPY carry trade. This, along with the bullish sentiment surrounding the US Dollar (USD), supports the USD/JPY pair.
Traders ramped up their bets that the US central bank will deliver at least one 25-basis-point (bps) rate hike in 2026 following the Fed's hawkish forecast, signaling that it will need to raise the policy rate if inflation remains sticky. Moreover, geopolitical developments over the weekend assists the safe-haven USD to stall Friday's pullback from its highest level since May 2025, which turns out to be another factor pushing the USD/JPY pair higher.
Japanese Yen Price This Month
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this month. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.77% | 1.89% | 1.42% | 2.83% | 2.45% | 4.34% | 3.55% | |
| EUR | -1.77% | 0.12% | -0.33% | 1.04% | 0.67% | 2.55% | 1.75% | |
| GBP | -1.89% | -0.12% | -0.43% | 0.92% | 0.55% | 2.43% | 1.62% | |
| JPY | -1.42% | 0.33% | 0.43% | 1.42% | 1.06% | 2.90% | 2.09% | |
| CAD | -2.83% | -1.04% | -0.92% | -1.42% | -0.39% | 1.46% | 0.69% | |
| AUD | -2.45% | -0.67% | -0.55% | -1.06% | 0.39% | 1.87% | 1.11% | |
| NZD | -4.34% | -2.55% | -2.43% | -2.90% | -1.46% | -1.87% | -0.80% | |
| CHF | -3.55% | -1.75% | -1.62% | -2.09% | -0.69% | -1.11% | 0.80% |
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).
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