Forex News
- EUR/JPY strengthens to around 183.90 in Wednesday’s early European session.
- The BoJ is likely to raise rates by the end of June, with expectations unchanged by the Middle East war, according to a Reuters poll.
- Escalation of conflict in the Middle East might help limit the Japanese Yen’s losses.
The EUR/JPY cross gains ground to near 183.90 during the early European session on Wednesday. The Japanese Yen (JPY) softens against the Euro (EUR) amid market doubt about the speed of the Bank of Japan (BoJ) normalization. Traders will keep an eye on the final reading of the Harmonized Index of Consumer Prices (HICP) from Germany, which is due later on Wednesday.
A Reuters poll showed on Wednesday that all 64 respondents said the BoJ would keep rates unchanged at 0.75% at its upcoming policy meeting next week. Nonetheless, 60% of economists anticipate the policy rate will reach 1.00% by the end of June, largely unchanged from 58% in February's poll.
Last week, BoJ Governor Kazuo Ueda signaled a likely prolonged hold on interest rates due to the potential economic impact of the Middle East conflict.
Rising geopolitical tensions in the Middle East, particularly threats to the Strait of Hormuz, could boost a safe-haven currency such as the Japanese Yen and act as a headwind for the cross.
Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that if US and Israeli attacks continue, Iran could block regional oil exports. On Wednesday, the IRGC announced the start of targeting the enemy's technological infrastructure in the region, raising fears of a prolonged war in the region.
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.
- AUD/JPY attracts strong buying for the fourth straight day amid a combination of supporting factors.
- Bets for an imminent RBA rate hike next week continue to boost the Aussie and fuel the momentum.
- Concerns that surging Oil prices could weaken Japan’s economy and lift inflation weigh on the JPY.
The AUD/JPY cross gains strong positive traction for the fourth consecutive day and climbs to its highest level since 1990 during the Asian session on Wednesday. Spot prices currently trade around mid-113.00s, up 0.90% for the day, and seem poised to prolong the recent well-established uptrend.
The Australian Dollar (AUD) continues to outperform on the back of increasing confidence that the Reserve Bank of Australia (RBA) will raise interest rates as soon as next week. In fact, RBA Deputy Governor Andrew Hauser said on Tuesday that there will be a genuine debate on whether or not to raise interest rates when the central bank meets next week amid concerns about a potential war-driven surge in inflation. This has been a key factor behind the AUD/JPY pair's recent upsurge.
The Japanese Yen (JPY), on the other hand, is weighed down by diminishing odds for an immediate interest rate hike by the Bank of Japan (BoJ) amid worries that surging Oil prices could weaken economic growth. Given that Japan is one of the world’s largest energy importers, rising energy prices could drive up inflation and create a stagflationary environment, complicating the BoJ's normalization efforts. This undermines the JPY and supports the AUD/JPY cross.
However, speculations that Japanese authorities would step in to stem further weakness in the domestic currency might hold back bulls from positioning for any further appreciating move. Nevertheless, the supportive fundamental backdrop suggests that any corrective pullback might be seen as a buying opportunity and remain limited. The market focus now shifts to the crucial RBA policy meeting next Tuesday, which should provide a fresh impetus to the AUD/JPY cross.
(This story was corrected on March 11 at 08:18 GMT to say that AUD/JPY rallied to its highest level since 1990, not all-time peak.)
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.71% | -0.82% | 0.03% | -0.31% | -2.61% | -1.31% | -0.30% | |
| EUR | 0.71% | -0.13% | 0.75% | 0.39% | -1.94% | -0.62% | 0.40% | |
| GBP | 0.82% | 0.13% | 0.89% | 0.52% | -1.81% | -0.49% | 0.52% | |
| JPY | -0.03% | -0.75% | -0.89% | -0.31% | -2.62% | -1.31% | -0.31% | |
| CAD | 0.31% | -0.39% | -0.52% | 0.31% | -2.33% | -1.01% | -0.00% | |
| AUD | 2.61% | 1.94% | 1.81% | 2.62% | 2.33% | 1.34% | 2.37% | |
| NZD | 1.31% | 0.62% | 0.49% | 1.31% | 1.01% | -1.34% | 1.02% | |
| CHF | 0.30% | -0.40% | -0.52% | 0.31% | 0.00% | -2.37% | -1.02% |
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).
- EUR/USD may navigate the region around the seven-month low of 1.1468.
- The 14-day Relative Strength Index at 38 indicates persistent bearish pressure.
- Primary resistance lies at the nine-day EMA around 1.1656.
EUR/USD pares its recent losses registered in the previous session, trading around 1.1630 during the Asian hours on Wednesday. Daily chart technical analysis indicates a bearish bias as the pair continues to trade within a descending channel pattern.
The EUR/USD pair retains a mildly bearish near-term bias as price holds below the nine- and 50-day Exponential Moving Averages (EMAs), signalling fading upside momentum within a broader consolidative context.
The 14-day Relative Strength Index (RSI) momentum indicator at 38 shows bearish pressure persisting but not yet in oversold territory, which limits evidence of exhaustion on the downside. Together, these signals point to sellers keeping the upper hand while any rebounds remain capped by the short-term average.
The EUR/USD pair may find primary support at the seven-month low of 1.1468. Further declines would put downward pressure on the pair to test the lower boundary of the descending channel near the nine-month low of 1.1391.
On the upside, the EUR/USD may target the initial resistance at the nine-day EMA of 1.1656. A break above the short-term average would improve the market bias and support the pair to test the 50-day EMA at 1.1739, followed by the upper descending channel boundary around 1.1760. Further advances above the channel would lead the pair to explore the region around 1.2082, the highest level since June 2021.
(The technical analysis of this story was written with the help of an AI tool.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.27% | 0.08% | -0.16% | -0.83% | -0.27% | -0.20% | |
| EUR | 0.19% | -0.08% | 0.24% | 0.04% | -0.64% | -0.08% | 0.00% | |
| GBP | 0.27% | 0.08% | 0.34% | 0.12% | -0.56% | 0.00% | 0.08% | |
| JPY | -0.08% | -0.24% | -0.34% | -0.22% | -0.90% | -0.35% | -0.27% | |
| CAD | 0.16% | -0.04% | -0.12% | 0.22% | -0.68% | -0.11% | -0.04% | |
| AUD | 0.83% | 0.64% | 0.56% | 0.90% | 0.68% | 0.56% | 0.67% | |
| NZD | 0.27% | 0.08% | -0.00% | 0.35% | 0.11% | -0.56% | 0.08% | |
| CHF | 0.20% | -0.01% | -0.08% | 0.27% | 0.04% | -0.67% | -0.08% |
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
A Reuters poll showed on Wednesday that all 64 respondents said the Bank of Japan (BOJ) would keep rates unchanged at 0.75% next week.
However, 60% of economists, 37 of 62, anticipate the policy rate will reach 1.00% by end-June, largely unchanged from 58% in February's poll.
Of 44 economists who specified a month for the next rate hike, June was the most picked at 32%, while another 30% chose July and 27% selected April.
Market reaction
At the time of writing, the USD/JPY pair is up 0.10% on the day at 158.20.
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.
- WTI attracts fresh sellers on Wednesday, though it manages to hold above the 200-hour SMA.
- The broader technical setup has turned mildly bearish and backs the case for additional losses.
- A sustained strength beyond the $83.50 hurdle is needed to negate the intraday negative bias.
West Texas Intermediate (WTI) Crude Oil prices struggle to build on the overnight bounce from sub-$76.00 levels, or the weekly low, and meet with a fresh supply during the Asian session on Wednesday. The commodity currently trades just below the $82.00 mark, down nearly 4% for the day.
From a technical perspective, the black liquid stalled its sharp retracement slide from the highest level since June 2022, touched earlier this week, near the 200-hour Simple Moving Average (SMA) on Tuesday. The lack of follow-through buying, however, warrants some caution for bullish traders despite concerns about prolonged disruptions to oil supplies due to the closure of the Strait of Hormuz.
The Moving Average Convergence Divergence (MACD) histogram has contracted after a positive spell, and the green bars now flatten just above zero, hinting at fading upside momentum rather than strong selling pressure. The Relative Strength Index (RSI) at 42 stays below the 50 line, aligning with this corrective tone while avoiding oversold conditions. This suggests that the near-term bias is mildly bearish.
Crude Oil prices, however, still hold above the rising 200-SMA near $78.00 that anchors a broader uptrend context. Meanwhile, initial support emerges at $82.00, guarding the recent lows ahead of stronger backing at $81.00, where a break would expose the next downside level at $79.00.
On the topside, immediate resistance stands at $83.50, with a recovery above this area needed to ease bearish pressure and open the way toward $85.00, followed by the recent peak in the $88.00 region. The rising 200-period SMA beneath price reinforces the $81.00–$79.00 band as a key medium-term support zone should the current pullback extend.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on March 11 at 08:27 GMT to specify in the third para that the MACD green bars now flatten just above zero)
WTI 1-hour chart
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 prices rose in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 15,452.11 Indian Rupees (INR) per gram, up compared with the INR 15,404.18 it cost on Tuesday.
The price for Gold increased to INR 180,230.00 per tola from INR 179,671.30 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 15,452.11 |
10 Grams | 154,520.80 |
Tola | 180,230.00 |
Troy Ounce | 480,614.50 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- US Dollar Index drifts lower to around 98.80 in Wednesday’s early European session.
- Trump stated the war could end "very soon", but gave no clear timeline for halting attacks.
- The US February CPI inflation report will be in the spotlight later on Wednesday.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 98.80 during the early European trading hours on Wednesday. The DXY declines following US President Donald Trump's signal that the ongoing Middle East conflict could end soon.
Trump said during a press conference on Monday that the war against Iran will end “very soon" and also said that oil prices will drop. Additionally, the US indicated it was considering seizing control of the Strait of Hormuz to ensure the flow of tankers, easing fears of a spike in oil prices. This, in turn, drags the US Dollar lower against its rivals as safe-haven demand fades.
Nonetheless, Trump gave no clear timeline for halting attacks that have rattled the Middle East and global markets, and the Israeli military launched a fresh wave of strikes at Iran and Lebanon. Uncertainty surrounding the Middle East conflicts could underpin the DXY in the near term.
The US President said that the war would be over when Iran no longer had the capacity to use weapons against Washington, Israel, and other allies for a long time. Meanwhile, the Islamic Revolutionary Guard Corps (IRGC) escalated its operations against the US and Israel. The IRGC announced the start of targeting the enemy's technological infrastructure in the region.
Traders brace for the US February Consumer Price Index (CPI) inflation report later on Wednesday for more clues about the US interest rate path. The headline CPI is projected to show an increase of 2.4% year-over-year in February. The core CPI, which excludes the often-volatile food and energy categories, is expected to show a rise of 2.5% during the same period. If the reports show softer-than-expected outcomes, this could weigh on the Greenback.
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.
- NZD/USD remains subdued as risk aversion persists due to the Middle East conflict.
- Rising oil prices have fueled domestic inflation concerns, supporting growing RBNZ rate hike bets for 2026.
- President Trump said the Middle East conflict could end soon, though US officials reported intensifying military operations in Iran.
NZD/USD remains in the negative territory after giving up daily gains, trading around 0.5930 during the Asian hours on Wednesday. However, the pair advanced as the New Zealand Dollar (NZD) strengthened amid rising Reserve Bank of New Zealand (RBNZ) rate hike bets in 2026. This could be attributed to domestic inflation concerns, driven by the recent surge in oil prices.
Crude oil prices remain volatile due to growing uncertainty surrounding the Iran conflict and shipping through the vital Strait of Hormuz. The Wall Street Journal reported that the International Energy Agency (IEA) is considering its largest-ever oil reserve release to stabilize markets, although shipping disruptions through the crucial Strait of Hormuz persist.
Market analysts expect inflation in New Zealand to remain more persistent than the central bank anticipates. This has reinforced expectations of a Reserve Bank of New Zealand (RBNZ) interest-rate hike, with markets now pricing in rate hikes in 2026. The outlook marks a shift from last month, when the RBNZ signaled that the official cash rate would likely stay around 2.25% throughout the year.
The US Dollar (USD) edges lower after posting modest gains in the previous session. The Greenback could regain ground on increased safe-haven demand amid rising uncertainty surrounding the Middle East conflict.
US President Donald Trump said late Monday that the Middle East conflict could end soon. However, US officials indicated on Tuesday that military operations were intensifying in Iran, with limited prospects for diplomatic negotiations, Reuters reported.
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 edges lower as easing inflationary concerns and a positive risk tone weigh on the USD.
- Retreating Crude Oil prices undermine the Loonie and help limit the downside for spot prices.
- Traders now look to the US CPI report for a fresh impetus amid the ongoing Middle East conflicts.
The USD/CAD pair continues with its struggle to register any meaningful recovery from a nearly one-month low, around the 1.3525 zone, set earlier this week, and remains on the back foot through the Asian session on Wednesday. Spot prices, however, lack bearish conviction and currently trade around the 1.3570 region, down less than 0.10% for the day, amid mixed cues.
The International Energy Agency (IEA) has proposed the largest release of Oil reserves in its history to bring down crude prices that have soared during the US-Israel war with Iran. This exerts some downward pressure on Crude Oil prices, which, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. However, the emergence of some US Dollar (USD) selling keeps bullish traders on the defensive.
Meanwhile, Crude Oil prices retreated sharply following a massive rally early this week and eased inflationary concerns. This, along with a generally positive tone around the equity markets, is seen weighing on the safe-haven buck. However, concerns about the economic consequences of a further escalation of geopolitical tensions in the Middle East and the closure of the Strait of Hormuz might continue to benefit the USD's global reserve currency status.
Traders might also opt to wait for the release of the latest US consumer inflation figures amid worries that a continuous rise in energy prices would rekindle inflationary pressure. Hence, the crucial US Consumer Price Index (CPI) might influence market expectations about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the USD demand. Apart from this, Oil price dynamics should provide some impetus to the USD/CAD pair.
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.
- USD/JPY gains ground to near 158.30 in Wednesday’s early Asian session.
- Japan's Takaichi faces fresh scrutiny over BoJ policy stance.
- Traders await the US inflation data later on Wednesday for fresh impetus.
The USD/JPY pair gathers strength to around 158.30 during the early Asian session on Wednesday. The Bank of Japan (BoJ) policy uncertainty weighs on the Japanese Yen (JPY) against the US Dollar. Traders brace for the release of key US inflation data later on Wednesday, which will likely determine the next major move.
Speculation that Japanese Prime Minister Sanae Takaich would pressure the BoJ to go slow on rate hikes heightened after a report that she had voiced reservations about additional tightening in a meeting with BoJ Governor Kazuo Ueda last month.
BoJ Governor Kazuo Ueda last week signaled a likely prolonged hold on interest rates due to the potential economic impact of the Middle East conflict. The Japanese central bank is expected to maintain its policy rate at the policy meeting next week. Uncertainty about the BoJ's willingness to aggressively raise rates could drag the JPY lower against the US Dollar (USD).
The US February Consumer Price Index (CPI) inflation data will take center stage later in the day. The headline CPI is estimated to show an increase of 2.4% YoY in February, while the core CPI is expected to show a rise of 2.5% during the same period. Any signs of softer inflation in the US could undermine the USD in the near term.
(This story was corrected on March 11 at 03:05 GMT to say in the third paragraph that The Japanese central bank is expected to maintain its policy rate, not The Japanese Yen central bank.)
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.
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