Forex News
Danske Bank analysts discuss US political risk around Federal Reserve (Fed) leadership, noting Kevin Warsh’s Senate hearing is scheduled for 21 April as part of his confirmation process as Fed chair. They highlight Senator Tillis’ opposition linked to an investigation into Powell, Polymarket’s roughly 60% confirmation probability, and the contingency that Miran could become acting chair if Warsh is not confirmed before May.
Warsh hearing and succession scenarios
"In the US, Kevin Warsh's hearing in the Senate has been set for 21 April."
"While the hearing is an important step in the process to be confirmed as Fed chair, the sticking point remains Republican Senator Tillis' opposition to vote for his approval as long as an ongoing criminal investigation into Powell over cost overruns at the Fed's headquarters continues."
"Polymarket sees about a 60% chance that Kevin Warsh is confirmed before Powell's term ends in May."
"If Warsh has not been confirmed by then, Miran might be appointed acting Fed chair, while Powell may continue to serve as FOMC chair as his position on the board of governors runs until 2028."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
TD Securities strategists report that United Kingdom (UK) Gross Domestic Product (GDP) for February significantly beat expectations, with broad-based strength across services, production and construction. The data point to a stronger Q1 than the MPC’s (Monetary Policy Committee) forecast, but the authors emphasize that this is pre-conflict information and therefore unlikely to materially influence the Bank of England’s (BoE) April policy decision, tempering Pound implications.
Broad-based GDP beat versus MPC view
"February showed a clear acceleration in economic momentum in the UK. Headline GDP surprised to the upside at 0.5% m/m (TDS/mkt: 0.1%), reflecting simultaneous strength in services, production and construction."
"Services output increased by 0.5% m/m (TDS/mkt: 0.2%), providing the largest contribution to growth, with 12 out of 14 subsectors showing growth and notable strength across wholesale and retail trade, alongside gains in professional and administrative services."
"Taken together, the February data indicate a genuinely broad‑based pickup in activity, improving both the pace and composition of growth compared with the subdued and uneven pattern seen late in 2025. The 3m/3m measure also increased to 0.5%, setting Q1 up to finish above the MPC forecast of 0.2%."
"However, as this is pre-conflict data, while it may provide some comfort of demand dynamics to the MPC, it is unlikely to steer their decision in April."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The European Central Bank kept interest rates unchanged and reiterated a meeting-by-meeting approach.
- The war in the Middle East increases upside risks to inflation and downside risks to growth.
- Policymakers focus on potential second-round effects through wages, prices and inflation expectations.
The European Central Bank (ECB) kept its interest rates unchanged in March, and the meeting accounts released on Thursday show a central bank determined to preserve flexibility in an environment marked by heightened uncertainty. Policymakers stressed that it is still too early to draw firm conclusions about the macroeconomic consequences of the war in the Middle East, while warning that the energy shock could still pose inflation risks.
The tone of the accounts remains cautious but firm. The ECB noted that “the option value of waiting was high”, which justified leaving policy rates unchanged at this stage. At the same time, policymakers reiterated that they stand ready to act if the medium-term inflation outlook deteriorates. In practice, the Governing Council continues to avoid committing to a specific rate path and maintains a data-dependent, meeting-by-meeting approach.
The ECB said the war creates “upside risks for inflation and downside risks for growth”, mainly through higher Oil and Gas prices, potential disruptions to supply routes and the negative impact on real incomes. Policymakers also highlighted that a longer or more intense conflict could prolong the energy shock well beyond what current Futures markets suggest.
The March staff projections reflect this shift in tone. Headline inflation is now expected to average 2.6% in 2026, 2% in 2027 and 2.1% in 2028. The upward revision for 2026 mainly reflects higher energy prices, while underlying inflation was also revised slightly higher, suggesting that the ECB does not rule out a broader pass-through of the shock.
Looking ahead, the key issue for future meetings will be the extent of indirect and second-round effects. The accounts show that policymakers intend to closely monitor wage developments, firms’ pricing behaviour, household inflation expectations and potential supply-chain disruptions. Several members noted that memories of the 2022 inflation surge could lead workers and firms to react more quickly if energy prices remain elevated.
At the same time, the ECB does not believe that the current shock necessarily mirrors the situation seen in 2022. The starting point is considered more favourable, with inflation already close to the 2% target, long-term inflation expectations still well anchored and weaker demand conditions compared with the previous energy shock. This explains why policymakers prefer to wait for more data before adjusting the policy stance.
Overall, the meeting accounts send a clear signal that the ECB is not shifting toward tightening for now, but its level of vigilance has increased significantly. As long as the energy shock proves temporary and second-round effects remain limited, the current policy stance may hold. However, a more persistent rise in energy prices or stronger spillovers into wages and broader prices could quickly alter the balance of the monetary policy debate.
Market reaction
The release had little impact on the Euro, with EUR/USD down 0.14% on Thursday, trading around 1.1780 at the time of writing.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- The Australian Dollar trades higher against its peers as market sentiment remains positive.
- Pakistan denies having any information on the location and time of the US-Iran second round of talks.
- The Australian Unemployment Rate remained steady at 4.3% in March, as expected.
The Australian Dollar (AUD) outperforms its major currency peers, except the Canadian Dollar (CAD), during the European trading session on Thursday. The antipodean gives back its early gains against the US Dollar (USD) after posting a fresh multi-year high around 0.7200 and is marginally higher near 0.7170.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.11% | -0.03% | -0.11% | -0.05% | 0.30% | 0.17% | |
| EUR | -0.13% | -0.03% | -0.15% | -0.24% | -0.18% | 0.14% | 0.03% | |
| GBP | -0.11% | 0.03% | -0.11% | -0.23% | -0.17% | 0.17% | 0.05% | |
| JPY | 0.03% | 0.15% | 0.11% | -0.10% | -0.02% | 0.27% | 0.19% | |
| CAD | 0.11% | 0.24% | 0.23% | 0.10% | 0.07% | 0.40% | 0.28% | |
| AUD | 0.05% | 0.18% | 0.17% | 0.02% | -0.07% | 0.32% | 0.24% | |
| NZD | -0.30% | -0.14% | -0.17% | -0.27% | -0.40% | -0.32% | -0.11% | |
| CHF | -0.17% | -0.03% | -0.05% | -0.19% | -0.28% | -0.24% | 0.11% |
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).
The Australian currency remains firm as the market sentiment remains favorable for riskier assets amid hopes that the United States (US) and Iran will call a permanent ceasefire soon.
S&P 500 futures extend session gains in the European trade, reflecting an improvement in investors’ risk appetite. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 98.15 after recovering early losses.
On Wednesday, White House press secretary Karoline Leavitt said that Washington is very much engaged in negotiations with Iran, and another round of talks is very likely to be scheduled in Pakistan, according to The Guardian.
However, Pakistan’s foreign ministry has clarified that it has no information on the venue of the second round of US-Iran talks.
On the domestic front, Australian labor market data for March have come almost in line with estimates. According to the report, the Australian economy created 17.9K new jobs, slightly lower than estimates of 20K and the previous reading of 49.7K. The Unemployment Rate remained steady at 4.3%, as expected.
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.
Commerzbank analysts highlight that India’s March trade deficit narrowed more than expected as imports slumped, but warn this may reverse as Oil prices rise and exports face Middle East-related disruptions. Export declines are broad-based, with sharp falls to key Middle Eastern partners and the US, while lower petroleum import volumes hint at emerging energy supply constraints.
Exports slump as oil and conflict bite
"March trade deficit narrowed more than expected to USD20.7bn (Bloomberg consensus: USD28.5bn) vs USD27.1bn in February. This was driven by a steep fall in imports amid the global economic uncertainty. The trade deficit could widen in the coming months as global oil prices rise, leading to a higher import bill. Exports may also face headwinds from supply chain disruptions due to the conflict in the Middle East."
"Exports fell for the second consecutive month, contracting 7.8% yoy vs -0.8% in February, the sharpest decline since October 2025. Chemical exports fell 2.0% vs +6.9%, while pharmaceutical shipments dropped 23.2% vs +3.4%. This was likely driven by disruptions to the supply of petrochemical feedstock due to the conflict in the Middle East. Electronic exports also declined 3.3% vs +10.4% previously."
"By destination, shipments to the Middle East faced significant headwinds as the military conflict disrupted supply chains. Exports to Saudi Arabia fell 45.7% yoy vs -10.5% in February while shipments to the United Arab Emirates sank 61.9% vs -0.3% previously. On the other hand, exports to China helped to cushion the overall decline. They rose 28.1% vs 32.4% previously. Shipments to the US fell 21.0% vs -12.9% in February due to high base effects, as it rose 35.1% in the same period last year."
"Imports fell 6.5% yoy vs +24.1% in February, the sharpest decline since October 2025. This was largely due to petroleum imports declining 35.9% vs +9.1%. Given the elevated global oil prices, the decline suggests a sharp drop in petroleum import volume, pointing to potential energy supply bottlenecks."
"Despite some easing in oil prices in recent days, INR remains under pressure due to USD demand from importers as commodity prices remain above pre-conflict levels. The structural issues persist for INR, including elevated oil prices, a widening trade deficit, and a cautious risk backdrop for emerging markets."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold trades broadly unchanged above $4,800, with upside attempts limited below $4,850.
- Hopes of a new round of US-Iran negotiations keep precious metals buoyed.
- Frictions around the blockade in the Strait of Hormuz are weighing on risk appetite.
Gold’s (XAU/USD) nurses minor gains in an “inside day” on Thursday, trading at around $4,820, with price action constrained within Wednesday’s ranges. Hopes of new peace talks between the US and Iran keep precious metals buoyed, but the XAU/USD pair is failing to break resistance at the $4,850 area.
US President Donald Trump boosted market sentiment on Wednesday by confirming that negotiations with Tehran are underway and expressing confidence that the peace talks might resume in the coming days.
Investors’ optimism, however, has been curbed as the standoff over the Strait of Hormuz blockade continues. The US Central Command (Centcom) announced on Wednesday that it has closed traffic in and out of Iran’s ports, in an attempt to force Tehran to close a deal. In response, Iran’s military threatened to shut sea traffic in the Red Sea, the Persian Gulf, and the Sea of Oman, casting doubts about the ongoing ceasefire.
Technical Analysis: Above $4,850, the target is the $5,000 area
XAU/USD maintains a near-term bullish bias, but price action remains capped below the top of the last two weeks' horizontal channel at around $4,850.
Momentum indicators are showing mixed trends. The 4-hour Relative Strength Index is hovering around 59, in positive territory, but the Moving Average Convergence Divergence (MACD) hints at consolidation rather than a clear reversal.
Bulls need to break resistance at the $4,850 area (April 8, 14 and 15 highs), which would expose a previous support-turned-resistance right above $5,000. Further up, the next upside target would be the March 10 high at $5,235.
On the downside, Wednesday's lows right below $4,800 are holding bears for now. The key support level, however, is the bottom of the recent range around $4,600. A confirmation below here would negate the bullish view and add pressure toward the March 26 lows at the $4,350 area.
(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.
Lee Hardman at MUFG observes that both Euro (EUR) and Pound (GBP) have fully reversed their initial Middle East conflict losses versus the US Dollar (USD), helped by falling European energy prices and stronger United Kingdom (UK) Gross Domestic Product (GDP) data. He adds that hawkish Bank of England (BoE) and European Central Bank (ECB) rhetoric has supported EUR and GBP, although a likely delay of ECB tightening to June or July could temper further Euro upside.
Euro and Pound regain conflict losses
"The euro and pound have now fully recovered all of their initial losses against the US dollar since the Middle East conflict."
"The easing of safe haven demand triggered by the outbreak of the conflict has triggered a reversal of US dollar strength which has occurred much more quickly than we had been expecting."
"The euro and pound have been supported as well by falling energy prices reflecting optimism that risks from energy supply disruption will ease if a lasting peace deal can be reached soon."
"There was also some good news this morning from the UK where the latest monthly GDP report for February revealed that economy was growing much more strongly than expected heading into the energy price shock. Monthly GDP can be volatile but expanded strongly by 0.5%M/M in February which was the strongest monthly reading since last April."
"At the same time, the euro and pound have derived support recently from hawkish comments from BoE and ECB officials indicating that they are preparing the ground for rate hikes in response to the energy price shock. In contrast, Fed officials have indicated they are more prepared to look through higher inflation in the near-term."
"However, there has been some back tracking from the both the BoE and ECB suggesting that they want to take more time to assess the fallout from the energy price shock before hiking rates."
"We still expect the ECB to deliver 50bps of tightening but the timing of the first hike is likely delayed until June or July which could help dampen the euro’s upward momentum."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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