Forex News
- USD/CAD eases as the commodity-linked Canadian Dollar strengthens on recovering Oil prices.
- WTI upside may be capped as the US and Iran agreed to hold talks in Oman on Friday.
- The US Dollar Index stays near two-week highs as markets price a slower pace of potential Fed rate cuts.
USD/CAD remains steady after paring daily gains, trading around 1.3700 during the Asian hours on Friday. The pullback reflects support for the commodity-linked Canadian Dollar (CAD) as Oil prices recover. West Texas Intermediate (WTI) Oil price has rebounded to around $63.50 at the time of writing, though upside may be capped after the United States (US) and Iran agreed to hold talks in Oman on Friday.
Tehran is expected to focus discussions on its long-running nuclear dispute with Western powers, while Washington wants talks to also cover Iran’s ballistic missile program, regional proxy support, and human rights issues.
The USD/CAD pair may regain its ground as the US Dollar Index (DXY) remains near two-week highs, supported by the slowing pace of potential Federal Reserve (Fed) rate cuts. Fed Governor Lisa Cook said she would not back another cut without clearer evidence that inflation is easing, stressing greater concern over stalled disinflation than labor market weakness.
Investors also weighed the implications of Kevin Warsh’s nomination as Fed chair, citing his preference for a smaller balance sheet and a less aggressive approach to rate reductions. The nomination also eased concerns about the Fed’s independence.
Meanwhile, a run of US labor data this week signaled a cooling job market, reinforcing dovish Fed expectations. Markets now price two rate cuts this year, starting in June, with another possibly in September.
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.
- WTI price edges lower to $62.85 in Friday’s Asian session.
- Traders brace for the upcoming US-Iran talks and ongoing Russia-Ukraine negotiations.
- US crude inventories fell by 3.455 million barrels last week, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.85 during the Asian trading hours on Friday. The WTI price declines after the United States (US) and Iran agreed to hold talks in Oman on Friday.
Tehran aims to focus talks on its long-standing nuclear dispute with Western powers, while the US wants the agenda to include Iran's ballistic missile program, its alleged backing of armed groups across the Middle East, and its domestic human rights record. US President Donald Trump warned last month that he could order strikes on Iran if Tehran fails to agree to a deal around its nuclear program. Traders will closely monitor the developments surrounding the US-Iran negotiations.
Easing concerns of a potential military conflict between them could weigh on the WTI price in the near term. “There is still scepticism that any reasonable deal can be made with Iran, so even though the market right now is giving talks the benefit of the doubt, we still don’t know what the outcome will be of those talks,” said Phil Flynn, senior analyst with Price Futures Group.
According to the US Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending January 30 fell by 3.455 million barrels, compared to a decline of 2.296 million barrels in the previous week. The market consensus was for a decrease of 2 million barrels. The significant drop in crude inventories might help limit the WTI’s losses.
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.
Bank of Japan (BoJ) policy board member Kazuyuki Masu said on Friday that Japan has shifted into inflation as policy normalization continues.
Key quotes
Must be vigilant as inflation driven by weak yen pushes up overall prices and affects underlying inflation.
BOJ is closely monitoring FX market moves and their impact on economy and prices.
BOJ expected to continue increasing interest rates if economic and price forecasts materialize.
Underlying inflation remains below 2 percent but approaches that level considerably.
It is clear deflationary customs are being eradicated as Japan enters a period of inflation.
What is important is to raise rates in timely and appropriate fashion to ensure underlying inflation does not exceed 2%.
BOJ must also move cautiously to avoid excessive rate hikes destroying cycle of moderate rises in inflation and wages that is just starting to roll.
BOJ must scrutinize market developments while examining future pace of its bond buying.
I am personally focusing on how prices of processed food excluding rice would move since that would be key to Japan's inflation outlook.
We also need to look carefully at whether Japan inflation is driven only by supply factors or by a combination of supply and demand factors.
Japan's real interest rate remains deeply negative.
Neutral rate estimate is only one reference in setting monetary policy.
As BOJ's policy rate nears estimated range of neutral, BOJ must more thoroughly examine price, jobs, financial market conditions.
BOJ needs to proceed with further rate hikes to complete policy normalization.
Market reaction
As of writing, the USD/JPY pair is down 0.28% on the day at 156.60.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- NZD/USD weakens to near 0.5940 in Friday’s early Asian session.
- Expectations that Warsh would pursue a more restrictive policy compared to other candidates support the US Dollar.
- US Job Openings fell to the lowest since 2020.
The NZD/USD pair attracts some sellers to around 0.5940 during the early Asian session on Friday, pressured by a stronger US Dollar (USD). The rising Unemployment Rate in New Zealand weighs on the Kiwi, dragging the pair to the lowest level in almost two weeks. Traders will keep an eye on the preliminary reading of the Michigan Consumer Sentiment Index report for February, which will be released later on Friday.
The Greenback receives some support as traders turn more risk-averse and markets assess shifts in Federal Reserve (Fed) leadership expectations. Analysts expect Warsh would pursue a "more gradual path lower" compared to other "dovish" candidates. Financial markets are pricing in nearly a 75.3% chance that the Federal Reserve (Fed) will hold interest rates steady at its March policy meeting, with anticipation of a first rate reduction in June, according to the CME FedWatch tool.
New Zealand's Unemployment Rate climbed to 5.4% in the fourth quarter (Q4) of 2025, the highest since 2015, Statistics New Zealand reported on Wednesday. This reading came in worse than the estimations of 5.3%.
This report has led markets to push back expectations for further Reserve Bank of New Zealand (RBNZ) rate hikes to later in 2026, which could undermine the Kiwi against the USD. Swaps markets are now pricing in over a 60% probability of a rate reduction by the May policy meeting.
On the other hand, weaker-than-expected US labor market data might weigh on the USD and cap the downside for the pair. US job openings unexpectedly fell in December to the lowest level since 2020 and layoffs rose. Companies revealed the most job cutbacks in January since the Great Recession in 2009, while applications for US unemployment benefits rose more than forecast last week.
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.
On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.9590 compared to the previous day's fix of 6.9570 and 6.9517 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- GBP/USD attracts sellers for the third straight day and is pressured by a combination of factors.
- The risk-off impulse and expectations for a less dovish Fed continue to lend support to the USD.
- The BoE’s dovish signal on Thursday undermines the GBP and also contributes to the offered tone.
The GBP/USD pair adds to the previous day's dovish Bank of England (BoE)-inspired heavy losses and drifts lower for the third straight day on Friday. The downward trajectory is sponsored by sustained US Dollar (USD) buying and drags spot prices to a two-week low during the Asian session, with bears now awaiting a break below the 1.3500 psychological mark before placing fresh bets.
The nomination of Kevin Warsh as the next Federal Reserve (Fed) chair fueled speculations that the US central bank will be less dovish than expected. This, along with a rise in volatility, benefits the USD's status as the global reserve currency. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to a fresh high since January 23 and turns out to be a key factor exerting pressure on the GBP/USD pair.
The British Pound (GBP), on the other hand, is undermined by the 5-4 MPC vote split to leave rates unchanged at the end of the February policy meeting on Thursday and the BoE's dovish outlook. In fact, the central bank signaled a future cut if inflation continued to slow. Moreover, BoE Governor Andrew Bailey, addressing reporters during the post-meeting press conference, said that inflation is set to reach the target level sooner than expected.
Traders were quick to react and are now pricing in a 50 basis points (bps) rate cut by the BoE this year, which further contributes to the offered tone surrounding the GBP/USD pair. Meanwhile, the US Fed is also expected to lower borrowing costs two more times in 2026. This, in turn, holds back the USD bulls from placing aggressive bets and offers some support to the currency pair, though the fundamental backdrop backs the case for further losses.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- Gold price faces some selling pressure near $4,680 in Friday’s early Asian session, down 2.70% on the day.
- Traders book some profits amid broader market weakness, weighing on the Gold price.
- Potential diplomatic talks between the US and Iran in Oman contribute to the downside of precious metals.
Gold price (XAU/USD) tumbles to around $4,680 during the early Asian session on Friday. The precious metal extends the decline as traders cover losses from equities and adjust positions. The preliminary reading of the Michigan Consumer Sentiment Index report for February is due later on Friday.
The Chicago Mercantile Exchange Group (CME), the world's leading derivatives marketplace, has raised initial margin requirements for Gold and Silver futures contracts again, increasing the amount of collateral traders must post to open and maintain positions. Additionally, falling technology stocks have forced some traders to liquidate gold positions to meet margin requirements, exerting some selling pressure on the yellow metal.
Easing geopolitical tensions also undermines the safe-haven demand for bullion. Irian and US officials confirmed that the two sides will hold talks in Oman on Friday. Market participants will closely monitorgeopolitical developments surrounding the negotiation.
On the other hand, renewed concerns over the Federal Reserve (Fed) independence could drag the US Dollar (USD) lower and provide some support to the USD-denominated commodity price. US President said on Thursday that he would have passed on Kevin Warsh as his nominee to lead the US central bank if Warsh had expressed a desire to hike interest rates.
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.
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.
