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Forex News

News source: FXStreet
Apr 09, 13:53 HKT
Iran confirms sending team to Pakistan for negotiations with US

Iranian ambassador Reza Amiri Moghadam confirms, through a tweet on X during early European trading hours on Thursday, that a team is scheduled to visit Pakistan at night for the first round of talks on the 10-point proposal plan with the United States (US). Moghadam added that Iran is sending delegates despite Israel violating the ceasefire terms by attacking Lebanon.

“Despite skepticism of Iranian public opinion due to repeated ceasefire violations by Israeli regime to sabotage the diplomatic initiative, invited by Hon. PM Shehbaz Sharif, Iranian delegation arrives tonight in Islamabad for serious talks based on 10 points proposed by Iran,” Iranian ambassador Moghadam wrote.

Market reaction

There seems to be no immediate impact of Iran's confirmation to send a team of delegates to Pakistan for negotiations on the 10-point proposal on risk sentiment. Market mood is slightly risk-averse in the early European trade.

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.

Apr 09, 13:46 HKT
Silver Price Forecast: XAG/USD trades flat around $74 ahead of US-Iran talks
  • Silver price flattens around $74.00 as investors await US-Iran talks on permanent ceasefire.
  • Iran criticizes the US for violating three clauses of the 10-point proposal.
  • The Fed is expected to keep interest rates steady at their current levels this year.

Silver price (XAG/USD) trades calmly near $74.00 during the late Asian trading session on Thursday. The white metal struggles for direction amid uncertainty surrounding the first round of talks on a permanent ceasefire between the United States (US) and Iran in Pakistan on Saturday.

On late Wednesday, White House press secretary Karoline Leavitt stated that US President Donald Trump will send Vice President (VP) JD Vance-led team in Pakistan on Saturday to discuss the 10-point peace proposal shared by Iran as demands for a permanent ceasefire.

Ahead of US-Iran talks, Iran’s parliament speaker and chief negotiator, Mohammad Bagher Qalibaf has criticized the US, through a post on X, for violating three clauses of the 10-point proposal. Qalibaf alleged the US for attacking Lebanon, referring the first clause, which is “an immediate ceasefire everywhere, including Lebanon and other regions, effective immediately”.

The Silver price remained under pressure in the past few weeks, as oil prices gained sharply due to the closure of the Strait of Hormuz by Iran, as part of retaliation against military actions from the US and Israel.

Higher oil prices had prompted traders to raise hawkish bets for global central banks; however, they have eased significantly, following the announcement of the two-week ceasefire between the US and Iran.

According to the CME FedWatch tool, traders see a 76.4% chance that the Fed will keep interest rates steady this year, a sharp turnaround from expectations of two interest rate hikes built during the war.

Rising hopes of tight monetary conditions by the Fed bode poorly for non-yielding assets, such as Silver.

Silver technical analysis

XAG/USD trades almost flat at around $74.00 as of writing, maintaining a bearish near-term bias as it holds beneath the 20-period Exponential Moving Average (EMA) at $74.89. The metal continues to consolidate near recent lows, with the modestly soft 14-day Relative Strength Index (RSI) around 46 suggesting subdued bullish momentum and leaving the path of least resistance tilted to the downside while price remains capped by the overhead EMA.

On the topside, initial resistance is defined by the 20-period EMA at $74.89, and a sustained break above this level would be needed to ease immediate downside pressure and open the way for a more meaningful recovery toward the April 2 high of $81.13. But until price reclaims the EMA, rallies are likely to be viewed as corrective within a weak short-term structure.

Looking down, the psychological level of $70.00 is the key support for the price, followed by the March 26 low of $66.70.

(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.

Apr 09, 13:40 HKT
WTI holds gains near $92.00 as Strait of Hormuz remains constrained
  • WTI rebounds on supply concerns, with Hormuz constrained amid US-Iran ceasefire uncertainty.
  • Iran’s Ghalibaf said the US breached three clauses of Iran’s proposal, calling further talks “unreasonable.”
  • Traders hesitate to unwind geopolitical risk premiums amid uncertainty over how US-Iran talks will impact oil flows.

West Texas Intermediate (WTI) oil price advances after two days of losses, trading around $91.90 per barrel during the Asian hours on Thursday. Crude oil prices regain ground on renewed supply concerns, with the Strait of Hormuz still largely constrained amid uncertainty over the United States (US)-Iran ceasefire.

Iranian media reported a halt in tanker traffic through the Strait of Hormuz following fresh Israeli strikes in Lebanon. Officials said recent developments breach the terms of the less-than-day-old ceasefire, calling it “unreasonable” to continue talks for a permanent deal with the United States.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the US breached three key clauses of Iran’s 10-point proposal, calling further talks “unreasonable.” Meanwhile, US Vice President JD Vance signaled that the strait could begin reopening as he leads a US delegation to Islamabad for direct talks with Iran this weekend.

Reuters reported that analysts said traders are reluctant to fully unwind geopolitical risk premiums, given the lack of clarity on how US-Iran talks will affect oil flows. The Strait of Hormuz remains a critical chokepoint, linking exports from Gulf producers like Iraq, Saudi Arabia, Kuwait, and Qatar to global markets, and typically carrying about 20% of global oil and gas supply.

Analysts at Standard Chartered said logistical disruptions, security concerns, high insurance costs, and operational constraints will likely limit additional energy flows through the Strait of Hormuz over the next two weeks. Iranian media reported that authorities have issued navigation maps and designated safe routes around potential mines, coordinated with the Revolutionary Guards.

WTI Oil FAQs

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

Apr 09, 13:40 HKT
Asian stocks trade lower amid fragile Iran ceasefire, Japan’s Nikkei slips

Most Asian equities trade in negative territory on Thursday as traders remain cautious about whether a fragile two-week ceasefire between the United States and ‌Iran would hold.

US President Donald Trump said on Thursday that US forces will remain deployed around Iran until a final agreement is fully implemented. Earlier Thursday, Reuters reported that the ceasefire deal appeared to be on thin ice, as Israel continued its parallel war against the Iran-aligned militia Hezbollah in Lebanon. 

Iranian officials stated that both Israel and the US had breached the terms of the ceasefire deal, adding that proceeding with peace talks would be “unreasonable.”

The Nikkei 225, Japan’s benchmark, tumbles by 0.81% to 55,865. Bank of Japan (BoJ) Governor Kazuo Ueda said that real interest rates are clearly negative and keeping the country's financial conditions accommodative, Reuters reported on Thursday.

Meanwhile, South Korean stock, the benchmark KOSPI, fell by 1.73% to 5,770 as traders moved to secure profits, particularly in heavyweight technology stocks.

China and Hong Kong stock markets lost momentum on Thursday, with the SHANGHAI, China’s main stock market index, slumping by 0.88% to 3,960. The Hong Kong Stock Exchange declined by 0.27% to 25,822. 

India’s Nifty50 was down 0.55% to trade at 23,850 on Thursday. In Taiwan, the Taiex decreased 0.20% to 34,700. Other markets in Southeast Asia were lower.  

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.

Apr 09, 13:37 HKT
USD/JPY Price Forecast: Remains below 159.00 as bulls stay cautious amid softer USD demand
  • USD/JPY attracts some buyers during the Asian session, though it lacks bullish conviction.
  • The Fed’s dovish outlook counters Middle East tensions, capping the USD and spot prices.
  • The mixed technical setup warrants some caution before placing aggressive directional bets.

The USD/JPY pair fails just ahead of the 159.00 mark during the Asian session on Thursday, stalling the previous day's modest recovery from sub-158.00 levels or a nearly three-week low. Spot prices, however, stick to modest intraday gains and currently trade near the 158.70-158.75 region, up around 0.10% for the day.

Despite a temporary US-Iran truce, escalation risks remain firmly on the table amid disruptions to shipping traffic through the Strait of Hormuz and accusations of ceasefire violations from multiple parties. This is seen as a key factor behind the US Dollar's (USD) relative outperformance against its Japanese counterpart and acts as a tailwind for the USD/JPY pair, though bulls seem hesitant amid the Federal Reserve's (Fed) dovish outlook.

From a technical perspective, the USD/JPY pair holds above the 158.25-158.20 horizontal support, which now coincides with the 200-period Exponential Moving Average (EMA), retaining a constructive near-term bias. Meanwhile, the Relative Strength Index (RSI) around 42 suggests momentum is stabilizing rather than deeply oversold. This leaves room for further recovery amid persistent uncertainties surrounding the Middle East conflict.

That said, the negative Moving Average Convergence Divergence (MACD) reading hints that any upside attempts could face fading momentum unless price accelerates decisively away from the 158.22 floor. A sustained break below the said support would weaken the current positive structure and expose a deeper correction.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY 4-hour chart

Chart Analysis USD/JPY

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.

Apr 09, 12:57 HKT
BoJ’s Ueda says Japan's financial conditions remain accommodative

Bank of Japan (BoJ) Governor Kazuo Ueda said that real interest rates are clearly negative and keeping the country's financial conditions accommodative, Reuters reported on Thursday.

Key quotes

Short- and medium-term interest rates are clearly negative. 

Accommodative financial conditions are maintained, leading to moderate increase in capital expenditure. 

Market reaction

As of writing, the USD/JPY pair is up 0.10% on the day at 158.73.

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.

Apr 09, 12:47 HKT
India Gold price today: Gold steadies, according to FXStreet data

Gold prices remained broadly unchanged in India on Thursday, according to data compiled by FXStreet.

The price for Gold stood at 14,172.22 Indian Rupees (INR) per gram, broadly stable compared with the INR 14,170.15 it cost on Wednesday.

The price for Gold was broadly steady at INR 165,302.00 per tola from INR 165,277.80 per tola a day earlier.

Unit measure

Gold Price in INR

1 Gram

14,172.22

10 Grams

141,722.20

Tola

165,302.00

Troy Ounce

440,803.30

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.)

Apr 09, 12:42 HKT
AUD/USD Price Forecast: Consolidates below 0.7050; remains close to three-week high
  • AUD/USD struggles to lure buyers as the fragile US-Iran ceasefire supports the safe-haven USD.
  • The Fed’s dovish outlook keeps the USD bulls on the defensive and lends support to spot prices.
  • The technical setup suggests that the path of least resistance for the pair remains to the upside.

The AUD/USD pair struggles to capitalize on its weekly gains registered over the past three days and oscillates in a range below mid-0.7000s during the Asian session on Thursday. Nevertheless, spot prices remain close to a nearly three-week high, touched the previous day, and remain at the mercy of geopolitical developments.

Iran once again shut down shipping traffic through the critical Strait of Hormuz and threatened to withdraw from the ceasefire with the US following Israel's large wave of air strikes across Lebanon. This acts as a tailwind for the safe-haven US Dollar (USD) and caps the AUD/USD pair. However, the US Federal Reserve's (Fed) dovish outlook keeps a lid on the USD upside, which, in turn, is seen as a key factor lending some support to the currency pair.

From a technical perspective, spot prices currently trade around the 61.8% Fibonacci retracement level of the March downfall. A move beyond this will be seen as a fresh trigger for bulls against the backdrop of the recent rebound from the 100-day Simple Moving Average (SMA). Moreover, the Relative Strength Index is around 57, and a positive, rising Moving Average Convergence Divergence (MACD) hints that upside momentum is gradually improving.

Meanwhile, a decisive break above the 61.8% Fibo. retracement at 0.7046 would open the way toward the 78.6% level at 0.7106, ahead of the recent swing high at 0.7182. On the downside, initial support is seen at the 50% retracement near 0.7004, followed by the 38.2% level at 0.6962 and the 23.6% Fibo. retracement at 0.6910. The 100-day SMA is pegged at 0.6855 ahead of the March low at 0.6826, which reinforces a broader demand zone on deeper pullbacks.

(The technical analysis of this story was written with the help of an AI tool.)

AUD/USD daily chart

Chart Analysis AUD/USD

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.

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