Forex News
Brown Brothers Harriman’s (BBH) Elias Haddad expects the National Bank of Hungary (MNB) to keep its policy rate at 6.25% for a third straight meeting. Haddad highlights the euro-convergence trade as a structural tailwind for the Hungarian Forint (HUF), noting Hungary’s new government aims to meet Euro adoption conditions by 2030, supporting a constructive medium-term HUF outlook.
Stable policy with structural HUF support
"MNB is widely expected to keep rates steady at 6.25% for a third consecutive meeting."
"The euro-convergence trade will continue to be an important structural tailwind for HUF."
"Hungary’s new government plans to meet euro adoption conditions by 2030."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
HSBC Asset Management discusses how rising global bond yields, including higher US 10-year Treasuries, are affecting global equities. The report argues that current yield moves are still consistent with an environment stocks can tolerate, as real yields remain low and profit growth is strong. It also notes recent softness in global equities as valuation concerns offset robust US earnings.
Stocks digest higher global yields
"Global bond yields are on the rise, with US 10-year Treasury yields up around 0.2% in recent weeks, and investors are asking whether this spike is finally what kills the stock market? The answer is that it depends on whether the bond move is “good” or “bad”."
"So, which is it now? The answer is: it’s not too bad. Since February, most of the move in bond yields has been at the short end, with a big shift in central bank policy expectations."
"But while nominal yields are up, inflation adjusted “real” yields remain low across the curve. That’s good news for stocks, which are naturally inflation hedged, and sensitive to real rates."
"It is worth keeping a close eye on bond yields… but right now, it’s a move that stocks can live with, albeit with some volatility. The weapon is blunt."
"Global equities softened as renewed concerns over high valuations offset strong Q1 US earnings. In the US, the S&P 500 and Nasdaq indices retreated, with Nikkei 225 also weak and Euro Stoxx 50 index little changed."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- XAU/USD reaches session highs near $4,580 from last week's lows near $4,450.
- Comments of avances in the US-Iran negotiations have hit the safe-haven US Dollar.
- An inverted Head & Shoulders hints at further recovery.
Gold (XAU/USD) is trading higher on Monday, favoured by a moderate risk appetite amid recent comments from the US and Iran hinting at progress in peace negotiations. Gold has extended its recovery from last week’s lows, near $4,450, to session highs at $4,579 on Monday, as the US Dollar Index retreated to the bottom of last week’s trading range.
US President Donald Trump and Secretary of State Marco Rubio have reported some advances in the negotiations with Tehran, yet discarding an immediate breakthrough and warning that the US blockade of the Strait of Hormuz will remain in place until the deal is signed and sealed.
On Monday, a spokesperson from Iran’s Foreign Ministry affirmed that both parties are negotiating the end of the war and assured that nuclear negotiations are off the table, which feeds hopes of a swifter agreement. He also reiterated that the Strait of Hormuz should be managed by coastal countries.
Technical Analysis: A bullish Head & Shoulder is in progress
XAU/USD trades at $4,572, keeping a mildly bullish near-term tone, with price action forming an inverted Head and Shoulders (H&S) pattern, which is considered a bullish figure. The Relative Strength Index (RSI) at 58.93 leans toward positive momentum, and the Moving Average Convergence Divergence (MACD) has turned decisively higher in positive territory, which together suggest buyers are gradually regaining control.
The precious metal, however, will not be out of the woods until the H&S neckline, now around $4,575, and the top of last week's trading range, at the $4,590 area, are broken. Further up, the next targets would be the previous support level around $4,640, and May's top at the $4,770 area.
On the downside, session lows are at the $4,530 area, which is likely to hold bears ahead of last week's lows at the mentioned $4,450 area. A break below here negates this view and exposes the March 23 lows near $4,350.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- The Indian Rupee strengthens following RBI Malhotra’s comments regarding further intervention and US-Iran deal hopes.
- RBI Governor Malhotra states that the central bank has more means to ensure INR’s orderly price discovery.
- US President Trump said that an agreement with Iran has “largely negotiated”.
The Indian Rupee (INR) opens on a strong note against the US Dollar (USD) at the start of the week. The USD/INR pair extends its losing streak for the fourth trading day on Monday, sliding to near 95.20, the lowest level seen in almost two weeks.
The Indian currency has appreciated due to hopes of further Reserve Bank of India’s (RBI) intervention in forex markets. Also, a significant decline in oil prices at open due to improved hopes of the United States (US)-Iran deal strengthened the Indian Rupee. While there has been a sharp recovery move in oil prices after Iran stated that the Strait of Hormuz issue belongs to coastal countries.
RBI Governor Malhotra keeps door open for further intervention in forex markets
In an interview with Mint, earlier in the day, RBI Governor Sanjay Malhotra assured that the central bank is ready to intervene against one-way excessive moves against the domestic currency. Malhotra added the central bank has enough tools in its kit, including nearly $700 billion in reserves to quell any undue speculative movement, which backs his confidence.
RBI’s Malhotra also expressed confidence that the Indian Rupee would start appreciating once the Middle East situation will start normalizing.
A significant Indian Rupee’s recovery after RBI Governor Malhotra’s interview suggests that his comments have brought at least an immediate improvement in investors’ sentiment toward the domestic currency. The Indian Rupee’s performance in the last year has been the worst among its Asian peers due to several reasons, especially the trade war with the US, elevated oil prices and significant Gold imports.
Iran says Hormuz issue belongs to coastal countries
In India's afternoon trading hours, the WTI Oil price recovers to near $91.60 after sliding over 6% at around $89.50, following Tehran's comments that issues relating to the Strait of Hormuz belong to costal nations. "Management of the Strait belongs to the coastal countries," the Iranian Foreign Ministry said, adding, that the potential MoU in disussion with the US has "no specific details about the Hormuz management
In the opening trade, oil prices cracked after US President Donald Trump expressed confidence, through post on Truth Social, that the agreement is “largely negotiated” with Iran and the Strait of Hormuz will be reopened soon. Trump added, “In addition to many other elements of the Agreement, the Strait of Hormuz will be opened.”
However, later in a post, US President Trump said that Washington is in “no rush for a deal” as “time is on our side”, adding, “The negotiations are proceeding in an orderly and constructive manner.”
Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, attract bids following a sharp correction in oil prices.
FIIs remained net sellers for straight fourth trading day
Foreign Institutional Investors (FIIs) are turning out to be net sellers in the Indian stock market for the last four trading days, and have offloaded their stake worth Rs. 10,386.52 crore. Overseas investors continue to pare their stake in the Indian equity market due to growing concerns over India Inc.’s projected earnings amid energy price shock.
Lower US Dollar also hurts USD/INR
A decent correction in the US Dollar amid hopes of a breakthrough in the US-Iran negotiations has also hurt the USD/INR pair. During the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.3% lower to near 99.00. Lower oil prices and hopes of the US-Iran resolution have diminished US Dollar’s safe-haven appeal and hawkish Federal Reserve (Fed) prospects for the year.
According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike this year are almost 57%, down from 67% recorded on Friday.
Technical Analysis: USD/INR could slide towards 95 if fails to hold 20-day EMA
USD/INR trades weakly at around 95.20 during the day. There has been a mean-reversion move in the pair toward the 20-day exponential moving average (EMA), which is at 95.3719, after a strong rally.
The Relative Strength Index (RSI) around 53 suggests neutral-to-slightly positive momentum, hinting that buyers still retain a modest edge while price action stabilizes above short-term trend support.
On the downside, the pair could slide toward 95.00 if it fails to hold the intraday low at 95.20. A downside move below 95.00 would open the door for further correction toward 94.00. Looking up, the pair needs to recover above the May 22 high at 96.37 to ease the downside pressure; and it could return toward 97.00 if it manages to do so.
(The technical analysis of this story was written with the help of an AI tool.)
According to Iran's official news agency, Iranian central bank chief travels to Qatar after Qatari delegation visited Tehran regarding frozen funds.
United States (US) President Donald Trump said in a post on Truth Social during the European trading session on Monday that the deal with Iran will “either be a great and meaningful one, or there will be no deal”. Trump added that any Iran deal will be 'exact opposite’ of the Joint Comprehensive Plan of Action (JCPOA) disaster negotiated by the failed Obama Administration, which was a direct and open path to a Nuclear Weapon for Iran.
Market reaction
There seems to be no impact on the market risk profile and the US Dollar (USD) after Trump's post. As of writing, the US Dollar Index (DXY) trades close to the intraday low at around 99.00
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- EUR/USD jumps from last week's lows but remains capped below 1.1650.
- Comments about progress in the US-Iran peace process are feeding a moderate risk appetite.
- Later this week, ECB's Lagarde and the US PCE Prices Index are likely to set the pair's direction.
The Euro (EUR) remains practically flat against the US Dollar (USD) on Monday, capped below the top of last week’s range, in the 1.1660-1.1675 area, with seven-week lows, at 1.1575 relatively close. The pair jumped at the Asian session opening, fuelled by hopes of a Middle East peace agreement, although it remains unable to extend gains in thinned holiday markets.
US President Trump said this weekend that an agreement between Washington and Tehran is possible, but also warned that the US military will not lift the blockade of the Strait of Hormuz until a deal is signed, which pushes down hopes of an immediate deal. Along the same lines, US Secretary of State Marco Rubio said on Monday that the US will give diplomacy every chance before pursuing other means.
Also on Monday, a spokesperson of Iran’s Foreign Ministry confirmed that Tehran is negotiating the end of the war, but reiterated that the management of the Strait belongs to coastal countries.
The economic docket is void on Monday, and trading volumes remain low with US markets closed for Memorial Day. In the Eurozone, European Central Bank President Lagarde’s speech on Wednesday and a string of European Commission sentiment indicators will attract attention. In the US, all eyes will be on the US Personal Consumption Expenditures (PCE) Price Index, due on Thursday.
Technical Analysis: Sideways trading near seven-week lows
EUR/USD trades at 1.1644, trapped within last week's trading range, and still close to seven-week lows at 1.1575 despite some strengthening shown by momentum indicators. The 4-hour Relative Strength Index (RSI) hovers around 58, and the Moving Average Convergence Divergence (MACD) is trending upwards, with the histogram showing widening green bars. Both gauges highlight an improving upside momentum, yet not strong enough to force a clean breakout.
Immediate resistance emerges at 1.1660, a key support level in April, that capped bulls last week. Further hurdles are at the May 14 high, near 1.1720, and May's peak, at 1.1796. Downside attempts, on the other hand, are contained at the mentioned 1.1775 area (May 21 low). A confirmation below here would clear the path towards April lows between 1.1505 and 1.1525.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on May 25 at 10:22 GMT to say a spokesperson from Iran's Foreign Ministry, and not Finance Ministry, as previously stated.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
UOB’s Quek Ser Leang and Lee Sue Ann note USD/JPY pulled back sharply after closing at 159.19, with scope to test 158.70 while a sustained drop below that level and 158.40 strong support is seen as unlikely. They maintain a positive medium-term view, noting that a rise above 159.45 is possible, though any further advance is unlikely to threaten the 2024 high at 162.00.
Dollar-Yen holds gains as support watched
"24-HOUR VIEW: Last Thursday, USD rose to 159.34 and then pulled back to close largely unchanged at 158.96 (+0.03%). When USD was at 159.05 on Friday, we indicated that “the brief advance did not result in any increase in upward momentum,” and we expected USD to “trade between 158.80 and 159.25.” We were not wrong, even though USD traded within a narrower range than expected (158.87/159.23). USD closed at 159.19 (+0.14%) but it dropped sharply today. Despite the decline, downward momentum has not increased much. That said, there is a chance for USD to test 158.70. A continued decline below this level is unlikely, and the strong support at 158.40 is unlikely to come under threat. Resistance levels are at 159.05 and 159.25."
"1-3 WEEKS VIEW: We have held a positive USD view since the middle of the month. In our most recent narrative from last Thursday (21 May, spot at 158.85), we highlighted that “upward momentum continues to slow, and a breach of 158.40 (‘strong support’ level) would shift the outlook for USD from positive to neutral.” We continue to hold the same view for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
MUFG’s Lloyd Chan highlights that higher United States (US) 2-year yields and elevated Brent prices are weighing on Indonesian Rupiah (IDR), Philippine Peso (PHP) and Indian Rupee (INR). Chan argues that meaningful relief would likely require a de-escalation in geopolitical risks, especially a US–Iran agreement securing Strait of Hormuz transit, while individual domestic factors leave PHP and INR particularly sensitive to sustained US Dollar (USD) strength and high Oil prices.
Higher yields weigh on Asia FX
"Higher US 2-year yields and still-elevated Brent prices are likely to remain a drag on IDR, PHP, and INR. A meaningful easing in pressure on these currencies would likely require a de-escalation in geopolitical risks, most notably a US–Iran agreement that ensures transit through the Strait of Hormuz."
"For IDR, momentum remains skewed towards further USD/IDR upside, with rising fiscal and current account pressures, alongside weak investor sentiment around government policies, reinforcing rupiah vulnerability. However, there is risk of a reversal with USDIDR already in overbought territory, and particularly if there is a breakthrough in US–Iran negotiations. On valuation, the rupiah appears cheap on a REER basis, while higher-yielding SRBI instruments offer some compensation for the elevated risk premium."
"PHP appears particularly vulnerable, given the sharp rise in inflation and a BSP [Bangko Sentral ng Pilipinas] policy rate of just 4.50% that is insufficient to compensate for the rising risk premium."
"For INR, the recent USD/INR rally could extend towards the 100.00 level should the Iran conflict persist, and oil prices remain above $100/bbl. That said, RBI [Reserve Bank of India] intervention and the possibility of rate hikes could offer intermittent support."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Brown Brothers Harriman’s (BBH) Elias Haddad notes that the Dollar index (DXY) risks overshooting the top of its 96.00-100.00 range in the near term as resilient United States (US) growth outpaces peers. Haddad highlights strong US GDPNow estimates and PMI data, and argues that robust US activity outweighs any Dollar drag from improving Iran-related sentiment.
Dollar index seen testing range highs
"We are sticking to our view the dollar index (DXY) risks overshooting the upper end of its nearly one year 96.00-100.00 range in the near term. Resilient US economic activity in both absolute and relative terms outweighs the drag to USD from improving sentiment tied to the Iran war."
"The Atlanta Fed GDPNow model estimates annualized US real GDP growth of 4.3% in Q2 vs. 2.0% in Q1 while the May PMI data points to a widening US growth edge over peers."
"US April PCE (Thursday) is this week’s data highlight. Headline PCE is seen rising 0.5% m/m or 3.8% y/y vs. 0.7% m/m or 3.5% y/y in March. Core PCE is expected at 0.3% m/m or 3.3% y/y vs. 0.3% m/m or 3.3% y/y in March. Both headline and core PCE inflation are overshooting the FOMC’s 2026 projection of 2.7%, underscoring pricing for a more restrictive Fed stance."
"Fed Chair Kevin Warsh said during his Senate confirmation hearing he preferred to follow “trimmed averages” inflation as opposed to core PCE price index. The Dallas Fed trimmed mean PCE and the Cleveland Fed 16% trimmed mean CPI are currently below core PCE, implying room for the Fed to loosen policy."
"Regardless, the center of gravity on the FOMC has shifted from an easing to a more neutral bias raising the risk that Warsh becomes the first modern Fed chair to be outvoted on policy."
"Even dovish-leaning Fed Governor Christopher Waller pumped the brakes on cuts last week highlighting “my current policy position is to hold rates steady for the near term…But I can no longer rule out rate hikes further down the road if inflation does not abate soon.”."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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.
