Forex News
China’s Retail Sales rose 0.6% year-over-year (YoY) in July vs. A rise of 1.5% expected and a 1.0% growth in June, the latest data released by the National Bureau of Statistics (NBS) showed Monday.
Chinese Industrial Production climbed 4.5% YoY in the same period, compared to the 5.0% forecast and 5.3% seen previously.
Meanwhile, the Fixed Asset Investment came in at -6.7% year-to-date (YTD) YoY in July, weaker than the expected decrease of 6.2%. The June reading was a decline of 5.7%.
Market reaction
The downbeat Chinese data have little to no impact on the China-proxy Australian Dollar (AUD). At the time of writing, the AUD/USD pair is trading 0.53% higher on the day at 0.7120.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.16% | -0.21% | -0.11% | -0.53% | -0.50% | -0.30% | |
| EUR | 0.22% | 0.04% | 0.02% | 0.09% | -0.28% | -0.29% | -0.07% | |
| GBP | 0.16% | -0.04% | -0.02% | 0.05% | -0.31% | -0.34% | -0.12% | |
| JPY | 0.21% | -0.02% | 0.02% | 0.10% | -0.31% | -0.29% | -0.06% | |
| CAD | 0.11% | -0.09% | -0.05% | -0.10% | -0.41% | -0.39% | -0.18% | |
| AUD | 0.53% | 0.28% | 0.31% | 0.31% | 0.41% | 0.00% | 0.19% | |
| NZD | 0.50% | 0.29% | 0.34% | 0.29% | 0.39% | -0.01% | 0.23% | |
| CHF | 0.30% | 0.07% | 0.12% | 0.06% | 0.18% | -0.19% | -0.23% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
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.
BNY's Wee Khoon Chong note Sweden’s Riksbank appears comfortable with its current policy stance as inflation stays below target, leaving two hikes in the repo path mainly as a risk acknowledgment. Despite favorable real-rate dynamics, Swedish Krona (SEK) performance is constrained by valuation concerns and a high KIX level. Chong expects the Riksbank to avoid aggressive SEK-supportive action while CPI remains anchored.
Riksbank comfortable despite weak krona
"We believe Sweden’s Riksbank – along with the Swiss National Bank – is the most “at ease” with its current policy path as inflation remains well below target levels."
"Given the favorable outlook on prices and real rates, SEK performance might leave much to be desired."
"The KIX, Sweden’s import-weighted exchange rate index, remains at the upper end of its recent range, which would normally prompt the Riksbank to state that the currency is undervalued."
"The June Monetary Policy Report envisaged the KIX at an annualized average of 116.18, which is already an adjustment to reflect a weaker SEK (i.e., import prices go up)."
"Swedish producer prices are clearly moving in tandem, but as long as CPI is anchored, we expect the Riksbank to hold off on being more assertive by bringing forward the two hikes currently in the repo path."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD declines to near 1.3860 in Monday’s early European session.
- Lower Fed rate hike expectations weigh on the US Dollar.
- Major financial institutions expect the BoC to remain on hold for the remainder of 2026.
The USD/CAD pair edges lower to around 1.3860 during the early European session on Monday. The US Dollar (USD) extends the decline against the Canadian Dollar (CAD) as traders pare bets on the US Federal Reserve (Fed) rate hikes. Canada’s Consumer Price Index (CPI) inflation data for July will take center stage later on Friday.
The pair declines to the lowest since June 3 after a soft run of US economic data, including an unexpected drop in Retail Sales. Signs of easing inflation in the US have prompted the market to give up bets for an imminent rate hike from the US central bank. A rate hike next month is now priced at 30%, down sharply from about 40% a week earlier, according to the CME FedWatch tool.
"This points to a material slowdown in real consumer spending growth in the third quarter," said Sal Guatieri, a senior economist at BMO Capital Markets. "This, together with a weaker jobs report and subdued core CPI inflation, raises the odds of the FOMC staying patient again in September,” Guatieri added.
The Bank of Canada (BoC) left its key overnight interest rate unchanged at 2.25% during its July policy meeting, marking the sixth consecutive hold. BoC Governor Tiff Macklem emphasized that while the Canadian central bank is looking through near-term energy shocks, it "will not let higher energy prices become persistent inflation.”
The BoC will hold the next policy meeting on September 2. RBC Economics and CIBC expect that the central bank will remain on hold for the remainder of 2026 to fully monitor economic conditions.
Canada inflation seen contained as BoC pause expectations firm
Strategists at Brown Brothers Harriman expect the upcoming Canada July CPI report to underscore subdued underlying price pressures and support an extended BoC pause. They look for headline CPI to edge up to “2.9% y/y vs. 2.8% in June,” while stressing that “underlying inflation [is] contained under 2%.” BBH forecasts “core CPI (ex. food & energy) … at 1.8% y/y vs. 1.8% in June,” with “core CPI (average of trim and median) … projected at 1.85% for a second straight month,” reinforcing the view that core inflation remains firmly anchored below the BoC’s 2% threshold.
Technical Analysis: USD/CAD
In the daily chart, USD/CAD remains under pressure, holding beneath the 100-day simple moving average (SMA) and the Bollinger middle band, which keeps the near-term bias bearish despite a modest rebound off the lower band. Price is hovering just above the Bollinger lower band, while the Relative Strength Index (14) sits in oversold territory around 28, hinting that downside momentum is stretched but not yet reversed.
On the topside, initial resistance is located at the 100-day SMA around 1.3920, with a stronger cap at the Bollinger middle band near 1.4010; a daily close above these levels would be needed to ease the current downside bias, with the upper band at 1.4170 acting as a subsequent barrier. On the downside, immediate support is aligned with the Bollinger lower band at 1.3855; a clear break below this floor would open the way to further weakness, while holding above it would signal an attempt to consolidate after the recent slide.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Deutsche Bank strategists highlight a mixed global equity picture, with the Nikkei, CSI 300, Shanghai Composite and Hang Seng all advancing, while US equity futures, led by NASDAQ, also point higher. They note that underwhelming domestic growth has weighed on China’s main indices, which are flat year-to-date versus strong gains in the S&P 500, Stoxx 600 and Nikkei.
Regional stock indices show divergent trends
"European equities were more subdued, with the STOXX 600 (-0.36%, -0.21% Friday), the CAC (-0.90%, -0.16% Friday) and the FTSE 100 (-1.38%, -0.21% Friday) falling back, though the DAX (+0.46%, +0.53% Friday) reached a new record. And in Asia, we saw strong gains for the KOSPI (+11.49%) and Nikkei (+4.74%), which saw their best weeks since May and June respectively."
"While bonds struggled, US equities put in a more positive performance. The S&P 500 rose +0.36% despite a -0.17% pullback on Friday from Thursday’s record high, with the small cap Russell 2000 (+1.12%, +0.51% Friday) also reaching a record high. "
"Underwhelming domestic growth has also contributed to the underperformance in China’s equity market, with the main indices essentially flat YTD, in contrast to a +13.7% rise for the S&P 500, +11.1% for the Stoxx 600 and +36.5% for the Nikkei."
"Following Japan’s GDP data, the Nikkei (+0.30%) is slightly higher but underperforming gains in China’s markets including the CSI 300 (+0.76%) and Shanghai Composite (+0.84% ) as well as the Hang Seng (+1.61%) in Hong Kong."
"Equity futures are also advancing, with NASDAQ futures (+0.35%) leading those on the S&P 500 (+0.10%) and Europe’s Stoxx 50 (+0.30%) this morning."
"As the earnings season begins to wind down, the spotlight will be on the US retailers Home Depot (Tuesday), Target, TJX (Wednesday) and Walmart (Thursday) to gauge the health of the US consumer. Other names to watch include Analog Devices and Deere in the US and Alibaba and Baidu in China."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s (BBH) Elias Haddad says improving United Kingdom (UK) disinflation alongside solid Q2 Gross Domestic Product (GDP) should support the British Pound (GBP) against the US Dollar (USD) and Euro (EUR), but sees limited scope for a lasting rally. With spare capacity allowing markets to trim Bank of England (BoE) hike expectations, upcoming labour, Consumer Price Index (CPI) and retail sales data are expected to broadly match BoE projections.
Disinflation supports but caps Pound
"Signs the UK disinflation trend is gaining traction, following the recent solid Q2 real GDP print, would improve the growth-inflation mix and underpin GBP vs. USD and EUR. However, ample spare capacity in the UK economy leaves room for markets to trim BoE rate hike bets (60bps in the next twelve months) and argues against a sustained GBP rally."
"UK June labor market to show wage growth slowing (Tuesday). The unemployment rate is expected to dip to 4.8% vs. 4.9% in May and the policy-relevant private sector regular pay growth is seen slowing to 2.8% y/y vs. 2.9% in May. If so, both data would match the Bank of England’s forecast."
"UK July CPI to show underlying inflation easing (Wednesday). Headline CPI is expected at 2.9% y/y (BoE projection: 2.8%) vs. 2.6% in June, core CPI is seen at 2.5% y/y vs. 2.6% in June, and services CPI is projected at 3.4% (BoE projection: 3.4%) vs. 3.6% in June."
"UK July retail sales are set for payback after two unusually strong months (Friday). Total retail sales volumes are expected to fall -0.4% m/m vs. 1.0% in June."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Volkmar Baur says solid nominal growth and higher-than-expected inflation should keep pressure on the Bank of Japan (BoJ) to raise rates again as early as September or October. Alongside a potentially improving fiscal outlook, these factors support a modestly stronger Japanese Yen (JPY) despite continued market caution after recent interventions.
Higher inflation keeps BoJ under pressure
"The Japanese economy grew by 0.3% in real terms in the second quarter compared to the previous quarter, which was significantly slower than most analysts had expected. In nominal terms, however, the economy grew by 1.2% compared to the previous quarter, as expected, meaning that overall economic inflation (the deflator) was higher than anticipated."
"The Japanese yen has shown little reaction to this news this morning. However, there are two reasons why this should actually provide support for the yen:"
"First, growth of 0.3% compared to the previous quarter is still robust. Although the details were somewhat weaker, an annualized growth rate of 1.1% is still positive for Japan. The higher inflation should also keep up the pressure on the Bank of Japan to raise interest rates again as early as September or October, which should support the JPY."
"Furthermore, there have been regular reports in recent weeks suggesting that Japan’s fiscal problems and high debt levels are weighing on the Japanese yen. We consider this view to be exaggerated. After all, Japan has one of the lowest budget deficits among the G10 countries, and while its debt level is high, it is at least declining."
"However, rising yields on Japanese government bonds are making many market participants nervous. From this perspective, the high nominal growth should have a positive effect, as it should lead to higher tax revenues and thus an improved fiscal situation. The market remains cautious in the wake of the interventions. In our view, however, the fundamental improvements in the Japanese economy continue to point toward a slightly stronger Japanese yen."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
