Forex News

• USD./CAD struggles to gain any meaningful traction amid a combination of diverging forces.
• The USD recovers a part of the post-FOMC losses and acts as a tailwind for the currency pair.
• Supply worries support oil prices, underpinning the Loonie and capping gains for spot prices.

The USD/CAD pair is seen consolidating below mid-1.4000s during the Asian session on Thursday, though it remains close to an over one-week trough touched the previous day. However, a mixed fundamental backdrop warrants some caution before placing directional bets as the focus shifts to important US macro releases.

Thursday's US economic docket features the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index. The data will be looked for more cues about the US Federal Reserve's (Fed) policy path, which, in turn, will play a key role in influencing the US Dollar (USD) and provide some meaningful impetus to the USD/CAD pair. Apart from this, oil price dynamics should contribute to producing short-term trading opportunities.

In the meantime, the growing acceptance that the US central bank will hike interest rates by the end of this year amid inflation risks stemming from volatile oil prices supports the USD. Adding to this, escalating US-Iran tensions help the safe-haven buck to recover a part of the previous day's post-FOMC decline to an over one-week low. This, in turn, is seen acting as a tailwind for the USD/CAD pair and warrants some caution for aggressive bearish traders.

The US central bank refrained from adopting a more hawkish stance at the end of a two-day policy meeting on Wednesday. That said, three members voted for a 25 basis points (bps) rate hike amid concern that inflation remains stubbornly above the Fed's 2% target. Moreover, the CME Group's FedWatch Tool indicates that traders have nearly priced in at least one interest rate hike by the end of this year, which favors USD bulls and supports the USD/CAD pair.

Meanwhile, US President Donald Trump said that he will order heavy strikes on Iran in retaliation for its “surprise attack” on US forces on Tuesday. Adding to this, the US-Iran standoff over the Strait of Hormuz and Yemen’s Iran-backed Houthi attacks in the Red Sea fuel concerns about significant disruptions to global energy supplies. This acts as a tailwind for crude oil prices, which could benefit the commodity-linked Loonie and cap the USD/CAD pair.

• WTI price tumbles to $82.80 in Thursday’s early Asian session. 
• Fears of wider conflict in the Middle East and concerns over oil supply disruption could lift the WTI price. 
• US crude oil inventories fell by 7.167 million barrels last week, EIA said. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $82.80 during the early Asian trading hours on Thursday. WTI falls amid some profit-taking despite escalating conflicts in the Middle East. 

Traders book some profits following the US Federal Reserve (Fed) interest rate decision. The US central bank decided to keep the interest rates unchanged at a range of 3.5% to 3.75% at its July policy meeting on Wednesday, as widely expected. Fed Chairman Kevin Warsh said during the press conference that while the Fed won’t provide hints on where rate policy is heading, it will take necessary steps to meet its 2% inflation target.

However, renewed military escalation in the Middle East could raise concerns over crude flows from the region and boost the WTI price. US President Donald Trump said on Wednesday that the US would strike back at Iran after a recent attack that targeted a military base in Jordan. 

The Iranian military fired ballistic missiles overnight at a US airbase and command center in Jordan, all of them intercepted, per Bloomberg. The US and Saudi Arabia also struck Tehran-backed militias in Iraq, ending a days-long pause in hostilities. 

Meanwhile, Yemen’s Iran-backed Houthi rebels are also tightening pressure on Red Sea oil flows. Reuters reported that the Houthis are considering imposing fees on commercial ships sailing through the narrow Bab el-Mandeb gateway, which links the southern Red Sea with the Gulf of Aden.  

US crude oil inventories fell more than expected last week. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending July 24 dropped by 7.167 million barrels, compared to a rise of 2.011 million barrels in the previous week. The market consensus was for a decline of 2.5 million barrels.

(This story was corrected on July 30 at 01:35 GMT to say that the US central bank decided to keep the interest rates unchanged at a range of 3.5% to 3.75% at its July policy meeting on Wednesday, as widely expected, not Thursday.)

Brent slides as US extends pause on Iran strikes

Rabobank’s Senior Market Strategist Benjamin Picton highlights that active Brent crude futures “fell by almost 5% yesterday as the US extended its pause on striking Iran.” He notes that Donald Trump framed the decision as an opportunity to give diplomacy another chance, indicating that the lull was underway to allow “very deep talks” with Iran, but stressing that his patience was limited, saying “either it goes fast or not at all.”

• AUD/USD may depreciate as the US Dollar could find support, as three policy members dissented in favor of a rate hike.
• Australia’s 10-year yield fell to 4.9% as cooling June inflation reduced rate hike expectations.
• Markets cut the probability of a 2026 RBA rate increase to 50% following softer inflation data.

AUD/USD inches higher after two days of losses, trading around 0.6960 during the Asian hours on Thursday. The currency pair may face potential downside pressure as the US Dollar (USD) could gain strength following a hawkish interest rate pause by the Federal Reserve (Fed).

Although the Fed kept rates steady in the 3.5%–3.75% range at its July policy meeting, an outcome widely anticipated by the markets, the decision revealed underlying hawkish sentiment.

Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack, and Minneapolis Fed chief Neel Kashkari all dissented, advocating instead for a 25 basis point rate hike. Reinforcing this stance during the post-meeting press conference, Fed Chairman Kevin Warsh stated that while the central bank will not offer forward guidance on future rate paths, it remains committed to taking all necessary actions to achieve its 2% inflation target.

Fed’s warsh doubles down on 2% goal, keeping Dollar bulls engaged

Warsh’s press conference tone is clearly more forceful than the established baseline, with the FXS Speechtracker score at 7/10 versus a historic 6/10, underscoring a firmer commitment to the inflation fight. The repeated insistence that “only one target and it is 2%” and that “inflation cannot be cured in 9 weeks” signals a resolute, patient stance on tightening conditions, even as Warsh highlights “impressive resilience” in the economy and solid labor markets. The emphasis on trend over short-term data, the rejection of any tolerance for a higher inflation target, and the pledge that the Committee “will not hesitate to act” collectively reinforce a hawkish bias supportive of the Dollar.

The FXS Fed Sentiment Index jumped by +18.94 points to 147.58, firmly in hawkish territory and consistent with the stronger tone captured by the FXS Speechtracker. This elevated reading, well above the neutral 100 mark, suggests markets should continue to price a persistent anti-inflation stance, with upside risks for the Dollar as Warsh stresses resolve on delivering the 2% target.

The Australian Dollar (AUD) may encounter headwinds as Australia's 10-year government bond yield retreats toward 4.9%, backing off multi-week highs following weaker inflation data. Headline inflation unexpectedly slowed to a four-month low of 3.8% in June, underperforming both May's figures and market forecasts of 4.0%. Although inflation remains above the Reserve Bank of Australia's (RBA) 2%–3% target range, the cooler readings led markets to drastically slash expectations for another rate increase this year, dropping probabilities to around 50%, down from over 90% prior to the data release.

These softer economic readings have largely cemented expectations that the RBA will keep policy on hold at its upcoming August 11 meeting. However, the downside for the Australian Dollar may find some support, as the RBA governor recently cautioned that additional rate hikes cannot be entirely ruled out if necessary to return inflation to its target.

Australia inflation holds firm as RBA focus stays on underlying pressures

Strategists at BNY highlight that Australia’s inflation pulse showed little sign of easing in June, with "Australia’s headline CPI rose 3.8% y/y in June 2026, unchanged from May." They add that underlying price pressures also remained stubborn, noting that "underlying inflation, measured by the trimmed mean, was steady at 3.6% y/y, also flat on the previous month." This combination of unchanged headline and core readings underscores persistent inflation dynamics that keep attention firmly on RBA policy and the Aussie’s performance.

The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7892 compared to the previous day's fix of 6.7899.

• GBP/USD meets with a fresh supply as the USD regains positive traction after the post-FOMC fall.
• Fed rate hike remains on the table amid inflation fears, supporting the USD amid Mideast tensions.
• Traders now look forward to the key BoE rate decision and important US macroeconomic releases.

The GBP/USD pair struggles to capitalize on the previous day's strong move up to the weekly high and drifts lower during the Asian session on Thursday. Spot prices currently trade around mid-1.3300s, down over 0.10% for the day, and, for now, seem to have stalled the recovery move from a nearly four-week low, touched on Tuesday.

The US Dollar (USD) regains some positive traction following the previous day's post-FOMC slide to an over one-week low and turns out to be a key factor exerting downward pressure on the GBP/USD pair. As was widely expected, the US Federal Reserve (Fed) held interest rates steady at the end of a two-day meeting on Wednesday. The central bank, however, refrained from adopting a more aggressive stance on monetary policy, which, in turn, weighed heavily on the Greenback.

Meanwhile, the on-hold rate decision was far from unanimous, featuring three dissents in a 9–3 vote, which reflected a deeply divided central bank. Furthermore, traders are still pricing in a greater chance of at least one interest rate hike by the end of this year amid rapidly shifting inflationary dynamics due to volatile oil prices. This, along with a further escalation of tensions in the Middle East, helps the safe-haven USD to attract some dip-buyers and is seen weighing on the GBP/USD pair.

Traders, however, might refrain from placing aggressive directional bets and opt to wait for the crucial Bank of England (BoE) policy decision, due later today. This will be followed by important US macro releases – the Advance Q2 GDP report and the Personal Consumption Expenditures (PCE) Price Index. Apart from this, the incoming geopolitical headlines will play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities around the GBP/USD pair.