Forex News
New Zealand's Prime Minister Christopher Luxon said that global uncertainties from the Middle East conflict reinforced the need for responsible economic management and fiscal discipline, Reuters reported on Wednesday.
Key quotes
We can't control the storm, but we can secure New Zealand's future within it.
Government committed to putting debt on a downward path towards 40% of GDP, returning to Obegalx surplus by FY 2028/29.
Net operating spending on new initiatives will total NZ$2.1 bln, about NZ$300 mln less than set in December.
Global uncertainties reinforced importance of responsible economic management and fiscal discipline.
Market reaction
At the time of writing, the NZD/USD pair is up 0.03% on the day at 0.5955.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/CAD holds steady around 1.3695 in Wednesday’s early Asian session.
- US CPI came in hotter than expected in April, rising by 3.8% YoY.
- Higher crude oil prices could support the commodity-linked Canadian Dollar.
The USD/CAD pair trades on a flat note near 1.3695 during the early Asian trading hours on Wednesday. Traders continue to assess hot US inflation data and ongoing tensions in the Middle East. The US April Producer Price Index (PPI) report will take center stage later on Wednesday.
In April, the US Consumer Price Index rose 0.6%, putting the annual inflation rate at 3.8%, according to the Bureau of Labor Statistics on Tuesday. That annual inflation rate was the highest since May 2023.
Meanwhile, the core CPI, which excludes volatile food and energy prices, rose 0.4% and 2.8% on a monthly and yearly basis, respectively. The hotter US inflation data has reinforced the hawkish outlook that the Federal Reserve (Fed) will keep interest rates elevated, which could lift the US Dollar (USD) against the Canadian Dollar (CAD).
On the other hand, rising crude oil prices due to concern over the prolonged closure of the Strait of Hormuz and Middle East uncertainty could underpin the commodity-linked Loonie. It is worth noting that Canada is a major oil-exporting country, and higher crude oil prices generally have a positive impact on the Canadian Dollar (CAD).
Traders will closely monitor the US President Donald Trump-Chinese President Xi Jinping meeting in Beijing on Thursday and Friday. It will be Trump’s first trip to China since 2017. According to Bloomberg, Trump said that he would prioritize trade discussions during his summit with Chinese President Xi Jinping and downplayed the amount of attention they would devote to the Iran war.
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.
US President Donald Trump said that he would prioritize trade discussions during his summit with Chinese President Xi Jinping and downplayed the amount of attention they would devote to the Iran war, Bloomberg reported on Tuesday.
Key quotes
We’re going to be talking to President Xi about a lot of things. I would say, more than anything, trade.
We have a lot of things to discuss. I wouldn’t say Iran is one of them, to be honest with you, because we have Iran very much under control.
We’re either going to make a deal or they’re going to be decimated one way or the other.
My relationship with President Xi is a fantastic one. We’ve always gotten along and we’re doing very well with China, and working with China has been very good, so we look forward to it.
Market reaction
At the time of writing, the AUD/USD pair is down 0.06% on the day at 0.7235.
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.
- EUR/USD softens to near 1.1735 in Wednesday’s early Asian session.
- US CPI rose 3.8% YoY in April, the highest since May 2023.
- ECB’s Nagel said rate hikes are increasingly likely.
The EUR/USD pair trades in negative territory around 1.1735 during the early Asian session on Wednesday. The US Dollar (USD) edges higher against the Euro (EUR) on hotter-than-expected US inflation data. Traders brace for the US April Producer Price Index (PPI) report, which will be released later on Wednesday.
Annual inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), jumped to 3.8% in April from 3.3% in March, according to the US Bureau of Labor Statistics (BLS) on Tuesday. This figure came in above the market consensus of 3.7% and registered the highest since May 2023. On a monthly basis, the CPI increased by 0.6% in April, compared to 0.9% in March, matching analysts' estimates.
Additionally, the core CPI, which excludes volatile food and energy prices, rose 0.4% and 2.8% on a monthly and yearly basis, respectively. This inflation report has fueled bets on Federal Reserve (Fed) interest rate hikes later this year, further supporting the Greenback and creating a headwind for the major pair.
Across the pond, hawkish remarks from the European Central Bank (ECB) officials could lift the shared currency. Bundesbank President Joachim Nagel said on Wednesday that the probability that the central bank will need to raise borrowing costs due to the Iran war is rising.
Meanwhile, ECB Governing Council member Martin Kocher said on Monday that there’s no need to delay the interest rate hikes if energy prices don’t improve swiftly. Financial markets are now pricing in a 92% chance of a 25 basis point (bps) hike at the June meeting, with a total of three hikes anticipated by the end of 2026, according to Reuters.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US President Donald Trump said that “we have Iran very much under control.” But also reiterated that “we’re either going to make a deal, or they’re going to be decimated,” the New York Times reported on Tuesday.
Meanwhile, Iran’s deputy foreign minister Kazem Gharibabadi stated that Iran’s position was that any peace deal must include reparations for Iran, Iranian sovereignty over the Strait of Hormuz and an end to US sanctions.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 0.31% on the day at $98.35.
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.
- WTI Crude Oil neared $100 in spot markets as Trump rejected Iran's peace offer.
- Trump dismissed Tehran's peace plan and called the ceasefire 'unbelievably weak,' reigniting Hormuz supply fears.
- Aramco CEO warned of around 100 million barrels of weekly supply loss, with normalization risking delay into 2027.
Wednesday's EIA inventory data will test how tight US crude supply has become amid the prolonged Hormuz closure.
WTI Crude Oil climbed about 3.3% on Tuesday, extending a multi-day rally that pushed price toward the $100 round figure in spot markets. The session printed a steady stepwise advance through European and US trade, marking a high close to $99.40 before consolidating around $98.70 just below the triple-digit level.
The Tuesday rally followed President Trump's rejection of Tehran's latest peace proposal, which he dismissed as 'garbage' while warning the existing ceasefire was on 'life support.' Reports suggested Trump is preparing to meet with his national security team to consider renewed military action and to discuss escorting commercial vessels through the Strait of Hormuz, further reducing the likelihood of a near-term reopening. Saudi Aramco CEO Amin Nasser warned this week that the global market is losing roughly 100 million barrels of supply each week, adding that any return to normal conditions could slip into 2027 if disruptions persist.
Looking ahead, Wednesday's weekly Energy Information Administration (EIA) inventory report will give markets a fresh read on US crude supply tightness amid the prolonged Hormuz closure, with last week's draw coming in lighter than expected at 2.3 million barrels against forecasts of 3.3 million. Traders will also watch this week's US-China dialogue for any signal that Beijing might lean on Tehran to accept Washington's terms, while Wednesday's US Producer Price Index (PPI) release offers a secondary lens on the oil shock's inflation feed-through.
WTI (spot) 15-minute chart
Technical Analysis
In the fifteen-minute chart, WTI US Oil trades at $98.30. The near-term bias stays bullish as prices hold well above the day’s open at $95.14, keeping the intraday structure underpinned despite the latest pullback from recent highs. The Stochastic RSI hovers around 42, pointing to neutral-to-moderate momentum and suggesting the market is consolidating rather than reversing decisively lower at this stage.
On the downside, immediate support is anchored at the psychological $98.30 area, with additional backing coming from the day’s open at $95.14, which marks a deeper intraday floor if selling extends. With no nearby technical resistance levels defined by moving averages or other indicators in this snapshot, traders may look to price action around these supports for cues on whether the bullish intraday bias can be maintained.
In the daily chart, WTI US Oil trades at $98.66. The contract holds a bullish near-term bias as price trades decisively above the 50-day exponential moving average (EMA) at roughly $90.30 and the 200-day EMA near $74.81, keeping the broader uptrend intact despite the recent pullback from the $105 area. However, the Stochastic RSI has rolled over toward the 40 region, hinting that upside momentum is cooling and that the market could consolidate or retrace before attempting another sustained advance.
On the downside, initial support is seen at the recent price pivot around $98.66, with a deeper cushion at the 50-day EMA near $90.30 if selling pressure accelerates. A more substantial structural floor emerges at the 200-day EMA around $74.81, where longer-term buyers would likely defend the trend if a larger correction unfolds.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- Gold price posts modest gains around $4,720 in Wednesday’s early Asian session.
- US CPI inflation rose to 3.8% in April, hotter than expected.
- Trump and China’s Xi Jinping are set to meet on Thursday and Friday.
Gold price (XAU/USD) trades with mild gains near $4,720 during the early Asian session on Wednesday. However, the potential upside for the precious metal might be limited due to hotter-than-expected US inflation and shifting geopolitical tensions. Traders will take more cues from the US April Producer Price Index (PPI) report, which is due later on Wednesday.
Data released by the Bureau of Labor Statistics on Tuesday showed that the US Consumer Price Index (CPI) climbed 3.8% YoY in April, compared to 3.3% in March. This figure came in hotter than the expectation of 3.7% and registered the highest since May 2023.
On a monthly basis, the headline CPI rose 0.6% in April versus 0.9% prior, matching analysts' estimate. Meanwhile, the core CPI, which excludes volatile food and energy prices, rose 0.4% and 2.8% on a monthly and yearly basis, respectively.
Following the hot US inflation data, traders raised the odds for a Federal Reserve (Fed) rate hike by the end of the year to about 30%, according to the CME FedWatch tool. This, in turn, could weigh on the yellow metal. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
Traders will keep an eye on US President Donald Trump and Chinese President Xi Jinping meeting in Beijing on Thursday and Friday. It will be Trump’s first trip to China since 2017. Trump said on Tuesday that he would prioritize trade discussions during his summit with Chinese counterpart Xi Jinping and downplayed the amount of attention they would devote to the Iran war.
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.
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