Forex News
BNY highlights that European governments have raised a record USD 504 billion via syndicated bonds in 2026, driven by defense, infrastructure and energy-transition spending. Despite higher yields and rate uncertainty, demand remains strong, helping governments manage refinancing needs. Italy leads issuance, while Eurozone risk assets and EUR/USD show modest gains alongside Euro government bond yields.
Record Eurozone supply meets strong demand
"Governments have raised a record USD 504bn through syndicated bond sales so far in 2026, surpassing even the pace seen during the first half of the pandemic."
"Despite rising yields and uncertainty over the interest rate outlook, investor demand for sovereign debt remains strong, enabling governments to lock in funding and manage elevated borrowing needs."
"Market participants expect issuance to remain heavy through the second half of 2026 as refinancing pressures continue."
"BRL, USD and CAD recorded the largest outflows, while broad-based inflows favored the rest of the iFlow universe, led by CHF, SEK and EUR."
"Demand remained strongest for LatAm government bonds, followed by Canada and the Eurozone."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Brown Brothers Harriman’s (BBH) Elias Haddad reports that the Norwegian Krone is outperforming as underlying inflation overshot expectations in May, bringing forward rate hike bets from November to September. After a surprise 25 bps hike in May, Norges Bank keeps the door open for another increase, with elevated energy prices supporting a firmer NOK, the top major performer year‑to‑date.
Hot inflation and energy support stronger NOK
"NOK is up against most major currencies.Norway underlying inflation ran hot in May. The swaps curve brought forward bets of a follow-up 25bps Norges Bank rate hike from November to September."
"Underlying CPI unexpectedly increased to a four-month high of 3.4% y/y (consensus: 3.2%, Norges Bank forecast: 3.3%) vs. 3.2% in April, while headline CPI matched consensus at 3.1% y/y (Norges Bank forecast: 3.3%) vs. 3.4% in April."
"At its last May 6 meeting, the Norges Bank delivered a surprised 25bps rate hike to 4.25% and left the door open for another hike by year-end because “inflation is too high and has run above target for several years.” Bottom line: a hawkish Norges Bank and elevated energy prices continue to underpin a firmer NOK. NOK is the top performing major currency year-to-date."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
MUFG’s Hardman and Lockhart report that Brent Oil prices have shown a muted response to renewed US–Iran military exchanges, trading near recent lows after briefly dipping below USD 90 per barrel. They argue that market pricing reflects confidence that geopolitical fallout will be contained, even as Iran vows to respond to any attacks or threats.
Geopolitical tensions but subdued Brent pricing
"The main development overnight was the announcement from the US that it has carried out retaliatory military strikes against Iran."
"The choice of language suggests that the U.S. is seeking to contain the renewed confrontation with Iran."
"The initial market response to renewed military strikes between Iran and the US has been relatively muted suggesting confidence that the fallout will be contained."
"The price of Brent crude oil continues to trade close to recent lows after briefly falling back below USD90/barrel yesterday."
"Iran’s Foreign Minister Abbas Araghchi posted on social media that they “will leave no attack or threat unanswered”."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Canadian Dollar strengthens as US inflation data fails to provide fresh support for the US Dollar.
- USD/CAD pulls back from a six-month high ahead of the Bank of Canada's monetary policy decision
- Technically, USD/CAD maintains a bullish bias above key daily moving averages, while the RSI remains elevated near overbought levels.
The Canadian Dollar (CAD) strengthens against the US Dollar (USD) on Wednesday as traders digest the latest US Consumer Price Index (CPI) data and await the Bank of Canada's (BoC) interest rate decision. At the time of writing, USD/CAD is trading around 1.3925 after touching a six-month high of 1.3969 on Tuesday.
US inflation rose for a third straight month in May, with headline CPI increasing to 4.2% YoY and core CPI ticking up to 2.9%. Both readings came in broadly in line with market expectations. However, monthly core CPI eased to 0.2% from 0.4%.
The data failed to provide fresh support for the Greenback, although it remains underpinned by escalating tensions in the Middle East. US President Donald Trump said in a Truth Social post that Iran had "taken too long to negotiate a deal that would have been great for them" and warned that Tehran would now "have to pay the price." The remarks came after Washington and Tehran exchanged military strikes on Tuesday.
Meanwhile, traders may avoid taking aggressive directional positions ahead of the BoC's interest rate decision due at 13:45 GMT. The BoC is widely expected to keep its policy rate unchanged at 2.25% for a fifth consecutive meeting.
With the decision largely priced in, the focus will be on the central bank's forward guidance. Any signal that policymakers are considering raising interest rates in the coming months could help the Loonie recover some of its recent losses.
Technical Analysis:
On the daily chart, USD/CAD maintains a constructive bullish bias as spot holds well above key moving averages. The Relative Strength Index (RSI) hovers just below the overbought threshold near 69, while the Average Directional Index (RSI) above 30 hints that the bullish trend is gaining strength rather than merely oscillating.
On the downside, immediate support is seen at the 200-day SMA around 1.3816, with the 50-day SMA at 1.3765 and the 100-day SMA at 1.3724 reinforcing a deeper demand zone on pullbacks. As long as USD/CAD holds above these clustered daily moving averages, dips are likely to attract buyers, and the broader risk remains skewed toward further gains despite the increasingly stretched momentum backdrop.
(The technical analysis of this story was written with the help of an AI tool.)
Bank of Canada FAQs
The Bank of Canada (BoC), based in Ottawa, is the institution that sets interest rates and manages monetary policy for Canada. It does so at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening.
In extreme situations, the Bank of Canada can enact a policy tool called Quantitative Easing. QE is the process by which the BoC prints Canadian Dollars for the purpose of buying assets – usually government or corporate bonds – from financial institutions. QE usually results in a weaker CAD. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The Bank of Canada used the measure during the Great Financial Crisis of 2009-11 when credit froze after banks lost faith in each other’s ability to repay debts.
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 Bank of Canada purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the BoC stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Canadian Dollar.
Annual inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), rose to its highest level in three years at 4.2% in May, from 3.8% in April. This reading came in line with the market expectation. On a monthly basis, the CPI rose by 0.5%, matching analysts' estimates.
The core CPI, which excludes volatile food and energy prices, rose 0.2% and 2.9% on a monthly and yearly basis, respectively.
Market reaction to US CPI inflation data
The US Dollar's (USD) immediate reaction to US inflation data was largely muted. At the time of press, the USD Index was little changed on the day at 99.93.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.30% | -0.47% | 0.03% | -0.06% | 0.13% | -0.51% | 0.26% | |
| EUR | 0.30% | -0.20% | 0.43% | 0.24% | 0.43% | -0.22% | 0.56% | |
| GBP | 0.47% | 0.20% | 0.58% | 0.44% | 0.63% | -0.02% | 0.77% | |
| JPY | -0.03% | -0.43% | -0.58% | -0.15% | 0.07% | -0.61% | 0.26% | |
| CAD | 0.06% | -0.24% | -0.44% | 0.15% | 0.26% | -0.46% | 0.33% | |
| AUD | -0.13% | -0.43% | -0.63% | -0.07% | -0.26% | -0.64% | 0.14% | |
| NZD | 0.51% | 0.22% | 0.02% | 0.61% | 0.46% | 0.64% | 0.79% | |
| CHF | -0.26% | -0.56% | -0.77% | -0.26% | -0.33% | -0.14% | -0.79% |
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).
This section below was published as a preview of the US Consumer Price Index (CPI) data at 04:00 GMT.
- The US Consumer Price Index is expected to rise 4.2% YoY in May as energy prices remain persistently high.
- Annual core CPI inflation is expected to edge higher to 2.9%.
- EUR/USD bounced from a two-month low, but the bullish case is still limited.
The US Bureau of Labor Statistics (BLS) will publish the May Consumer Price Index (CPI) data on Wednesday.
The report is expected to show another step up in consumer inflation, driven by the persistently high Oil prices due to the ongoing crisis in the Middle East.
The monthly CPI is forecast to rise 0.5%, following the 0.6% increase recorded in April, while the annual reading is seen climbing to its highest level since May 2023 at 4.2%, from 3.8% in April. Core CPI figures, which exclude volatile food and energy prices, are expected to post an increase of 0.3% and 2.9%, on a monthly and yearly basis, respectively.
Crude Oil prices are up more than 50% since the beginning of the conflict in the Middle East on February 28. Although there was a sharp downward correction in Oil prices in late April after the United States (US) and Iran came to terms to stop military activity and start negotiations to permanently end the war, the lack of progress in talks and a renewed escalation of tensions allowed the West Texas Intermediate (WTI) prices to remain high.
In response to Israel’s heightened aggression in Lebanon, Iran fired missiles at Israel on Sunday, June 7. The Israeli military launched a retaliatory attack, hitting military targets in western and central Iran. This development marked the first exchange of strikes since the temporary ceasefire agreement was reached.
Previewing the inflation data, “we look for core CPI inflation to take a breather in May following the shelter-led jump that saw the series surge to 0.38% m/m in April. Services price normalization should more than offset a small pickup in goods inflation, despite our expectation for airfares to gain additional strength. Energy prices remained firm owing to the passthrough from still high oil prices,” said TD Securities analysts.
What to expect in the next CPI data report?
CPI figures for May will provide key clues regarding the impact of persistently high Oil prices on consumer inflation. Since this is largely anticipated, core inflation figures will help markets understand at what rate rising energy costs are spilling over into the broader economy and driving up the prices of other goods and services.
A reading above the market expectation of 0.3% in the monthly core CPI could feed into concerns over high inflation getting entrenched in the economy. Conversely, a print below analysts’ forecast could ease fears over prices getting out of control.
Still, even in this latter scenario, investors are unlikely to be convinced of a steady decline in inflation unless the US-Iran crisis ends and Oil prices return to pre-war levels. Even if the Strait of Hormuz reopens soon, it remains highly uncertain how long it will take for Oil supplies to hit full capacity and thus prices to fall to pre-war levels.
In the meantime, Federal Reserve (Fed) policymakers have room to stay focused on taming inflation after consecutive months of impressive labor market data. Hence, a soft print by itself is unlikely to alter market expectations of a hawkish policy shift in a significant way.
The latest data published by the BLS showed that Nonfarm Payrolls (NFP) rose by 172K in May. This print followed the 179K increase (revised from 115K) recorded in April and surpassed the market expectation of 85K by a wide margin.
How could the US Consumer Price Index report affect EUR/USD?
Markets currently see about a 70% chance that the Fed will hike the policy rate by 25 basis points (bps) at least once by the end of the year, according to the CME FedWatch Tool. Moreover, there is about a 38% chance that the rate hike might come as early as September.
A stronger-than-forecast monthly core CPI print for May could lift the odds of an interest rate increase in September. In this scenario, the US Dollar (USD) could gather strength with the immediate reaction.
On the other hand, a soft core CPI print could have the opposite effect on the USD’s valuation. Still, any negative impact on the USD could remain short-lived and cap any potential recovery gains in EUR/USD.
Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair found buyers around the 1.1500 mark and bounced, but the recovery fell short of erasing the bearish tone of the pair. Selling pressure receded, but a steeper recovery remains out of the picture, according to technical readings in the weekly chart, which shows that the pair develops well below a mildly bearish 20-week Simple Moving Average (SMA) at around 1.1670. The same chart shows technical indicators ticked higher, but remain below their midlines while lacking directional strength.”
Bednarik adds: “The immediate upward barrier is the 1.1600 threshold, ahead of the aforementioned dynamic resistance at 1.1670. Additional gains seem unlikely in the current scenario, yet the next area to watch should the advance continue is the 1.1740 price zone. The 1.1500 mark is an immediate support level, with a more relevant one at 1.1470, a long-term static support area. A clear break below the latter should open the door to a steeper decline towards the 1.1400 region.”
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Economic Indicator
Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Jun 10, 2026 12:30
Frequency: Monthly
Consensus: 2.9%
Previous: 2.8%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
(This story was corrected on June 10 at 12:00 GMT to say in the title that three-high inflation would reinforce Fed rate hike bets, not rate cut.)
Rabobank’s Senior FX Strategist Jane Foley highlights that the Australian Dollar (AUD) has fallen from a top G10 performer to the bottom of recent rankings as growth momentum fades and USD strength weighs. The bank notes market expectations for one more Reserve Bank of Australia rate hike this year, but with the hiking cycle nearing its peak, it expects AUD/USD to trade broadly sideways around 0.70–0.71 over three months.
Australian Dollar seen losing some shine
"As anticipated, USD strength has pushed AUD/USD back to the 0.70 area."
"Signs that the Australian economy has lost momentum have also shaken the market’s conviction in the outlook for further tightening from the RBA."
"It is RaboResearch’s view that one more RBA rate hike is likely in August, with the outlook dependent on price pressures stemming from the closure of the Strait of Hormuz, notwithstanding the softer outlook for domestic economic activity."
"We anticipate range trading in the AUD/USD 0.70 to 0.71 area on a 3-month view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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