Forex News
BNY’s Geoff Yu highlights that selling of Canadian Dollar (CAD) accounts has eased ahead of the Bank of Canada (BoC) meeting, allowing light CAD purchases after prolonged pressure. He notes USD/CAD selling by CAD-based investors and sees valuations and positioning as supportive, but warns that domestic selling and weak Canadian asset flows still cap upside, arguing for only selective CAD exposure.
Flows improve but upside constrained
"Ahead of today’s BoC decision, our data show that selling of CAD-denominated accounts has finally eased, allowing light aggregate CAD purchases to emerge after a long period of pressure. BoC pricing will continue to weigh on performance, but flows and asset holdings now appear to reflect that policy backdrop more fully, creating room for value to emerge. Higher energy prices may help at the margin, though CAD and Canadian equity flows rarely align closely with crude swings."
"The key question is whether this can develop into a more durable purchase trend. CAD’s two-month rolling flow average remains extremely weak at close to -1.5, a level usually associated with severe risk aversion. If the bad news is already reflected in the price and onshore investors now see grounds to add hedges on overseas assets, the path is open for a more meaningful reversal."
"USD/CAD selling has driven much of the improvement, suggesting CAD-based investors are no longer adding USD exposure after extreme inflows in late June. We would add CAD exposure selectively, not aggressively, given that valuations and positioning are supportive but domestic selling and weak underlying Canadian asset flows are still limiting upside."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s (BBH) Elias Haddad highlights broad Norwegian Krone (NOK) underperformance after Norway’s underlying inflation dropped to an 18‑month low, below Norges Bank and consensus projections. BBH doubts one soft print will derail the Bank’s hawkish bias, expecting one more rate hike to 4.50% by year-end, which they see as a headwind for NOK given policy is already above neutral.
One more hike seen then pause
"NOK underperformed across the board. Norway underlying inflation cooled sharply in June, weighing on Norges Bank rate expectations. Underlying CPI unexpectedly dropped to an 18-month low at 2.7% y/y vs. 3.4% in May. That was below the 3.3% y/y projection by both the Norges Bank and consensus."
"Nevertheless, we doubt one month of softer inflation will be enough to curb the Norges Bank’s hawkish bias. Inflation has run above target for several years, arguing for tighter monetary policy."
"At its last June 17 meeting, the Norges Bank left the policy rate unchanged at 4.25% and flagged a hike “at one of the forthcoming monetary policy meeting.” The next policy decision is on August 13, and markets price in 42% odds of a 25bps hike and rates to peak at 4.50% by year-end."
"One more rate increase and done seems appropriate in our view, which is a headwind for NOK. The policy rate is already above the Norges Bank’s neutral rate estimate (between 2.25% and 3.75%) and Norway’s output gap is slightly below zero."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Volkmar Baur notes that softer US inflation has reduced expectations for Federal Reserve rate hikes and pressured the US Dollar. June headline and core inflation fell more than consensus, leading markets to price out roughly half a hike by year-end. Baur argues that improving productivity and AI-related investment support a wait-and-see Fed stance, keeping the Dollar under pressure, though higher Oil prices may slow adjustment.
Lower inflation shifts Fed pricing
"The lower inflation figures also had an impact on the fx market. On a trade-weighted basis, the US dollar lost about 0.3% yesterday, and it also gave up a similar amount against the euro. While the market had previously anticipated about 1.7 interest rate hikes by year-end, by the end of the day that figure had dropped to just 1.2."
"Although Waller’s speech the previous day was interpreted as hawkish in some news reports, Waller stated explicitly that while inflation was too high in his view, the situation was clearly different from that in 2022 (when interest rates were raised). He noted that the labor market is currently nowhere near as tight as it was back then, and that inflation expectations remain low."
"He also said that a wage increase of currently around 3.5% is consistent with inflation of around 2%, because productivity is improving accordingly. And this is likely to be the main argument for a wait-and-see monetary policy in the coming months."
"In this regard, it’s still reasonable to assume that the market will have to continue adjusting its expectations of the Fed, which will weigh on the US dollar. However, given the renewed flare-up of the Iran conflict and the resulting rise in oil prices, this is likely to take some time yet."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD retreats to 1,3390 from session highs near 1.3420.
- Market concerns about the consequences of the escalating Middle East tensions are boosting the US Dollar's recovery.
- The Greenback took a hit on Tuesday as US CPI cooled hopes of immediate Fed rate hikes.
The British Pound (GBP) has retraced previous gains against the US Dollar (USD) on Wednesday, returning to the 1.3390 area from session highs of 1.3420 and turning negative on the daily chart. The safe-haven US Dollar has bounced up during the London session amid the risk-averse sentiment as US and Iran escalate their threats following the resumption of hostilities.
Risk aversion is weighing on the Pound on Wednesday with tensions in the Middle East simmering and Oil prices 17% above early July highs. Iranian authorities said that 30 people have been killed in the latest round of US strikes, and US President Trump has threatened to target civilian infrastructure, including power plants.
Iran’s Islamic Revolutionary Guard Corps (IRGC), in turn, threatened to block other energy routes and halt all Middle East energy exports, in response to the US blockade of Iranian ports.
Soft US inflation data cools Fed tightening expectations
These tensions have offset the US Dollar’s weakness seen in Tuesday's and Wednesday’s Asian sessions, as softer-than-expected US Consumer Price Index (CPI) figures dampened expectations that the US Federal Reserve might hike interest rates as soon as July.
Later on the day, the focus will shift to the US Producer Prices Index (PPI) figures, to confirm with markets looking for confirmation of the disinflationary trend pointed by Tuesday’s CPI data.
In the UK, Andrew Burnham has practically confirmed his nomination as the new leader of the Labour Party, with the backing of 349 MPs. He still needs the support from at least three organisations of the Labour Party, but this will not be an obstacle, as it is mathematically impossible for a rival to beat him.
After that, the former mayor of Manchester is expected to be nominated as Prime Minister on July 20. Markets remain calm about it, especially after his efforts to convey a responsible fiscal policy, which has contributed to the 2% GBP/USD appreciation since the former Prime Minister, Keir Starmer, stepped down in late June.
Economic Indicator
Producer Price Index (MoM)
The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
Read more.Next release: Wed Jul 15, 2026 12:30
Frequency: Monthly
Consensus: 0%
Previous: 1.1%
Source: US Bureau of Labor Statistics
Economic Indicator
Producer Price Index (YoY)
The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
Read more.Next release: Wed Jul 15, 2026 12:30
Frequency: Monthly
Consensus: 6.2%
Previous: 6.5%
Source: US Bureau of Labor Statistics
- NZD/USD remains firm near 0.5820 amid an upbeat market mood.
- Traders trump hawkish Fed bets following soft US CPI data.
- Investors await the US PPI data for June.
The New Zealand Dollar (NZD) clings to Tuesday’s gains around 0.5820 during the European trading session on Wednesday. The Kiwi pair reflects strength in a risk-on market environment, driven by easing fears of Federal Reserve (Fed) interest rate hikes this year.
In the European trade, S&P 500 futures trade 0.25% higher around 7,563, indicating strong demand for riskier assets.
According to the CME FedWatch tool, the odds of the Fed raising interest rates in the policy meeting this month have eased to 16.6% from 31% seen last week.
Market participants have scaled back hawkish Fed bets as the United States (US) inflation cooled down at a faster-than-expected pace in June.
Meanwhile, investors await the US Producer Price Index (PPI) data for June, which will be published at 12:30 GMT. Ahead of the US producer inflation data, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 101.00 after recovering early losses.
NZD/USD technical analysis
NZD/USD trades marginally higher at around 0.5820. The pair has edged back above the 50.00% Fibonacci retracement at 0.5810 while holding over the 20-day exponential moving average (EMA) at 0.5746, which together hint at a constructive near-term tone.
A rising Relative Strength Index (RSI) at 60.8 reinforces improving bullish momentum, though prices are still capped by the 61.80% retracement at 0.5853 just overhead.
On the topside, immediate resistance is located at the 61.80% Fibonacci retracement at 0.5853, followed by the 78.60% retracement at 0.5915, with the recent swing high at the 100.00% level of 0.5994 acting as a stronger barrier if gains extend. On the downside, initial support is seen at the reclaimed 50.00% retracement at 0.5810, ahead of a minor floor around the 38.20% level at 0.5766 and the 20-day EMA at 0.5746, while deeper declines would expose the 23.60% retracement at 0.5712 and the structural anchor near 0.5625.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- The Indian Rupee rebounds against the US Dollar as hawkish Fed bets ease.
- US headline and core CPI growth cooled faster than expected in June.
- Oil price rally halts while US-Iran military aggression continues.
The Indian Rupee (INR) gains ground against the US Dollar (USD) on Wednesday after rising significantly in the last three trading days. The USD/INR pair drops to near 96.11 as the US Dollar comes under selling pressure, with traders repricing Federal Reserve (Fed) interest rate expectations following the release of the softer-than-expected United States (US) Consumer Price Index (CPI) data for June.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% lower to near 100.80.
Hawkish Fed bets ease
On Tuesday, the US CPI report for June showed that the headline inflation cooled down at a faster-than-expected pace to 3.5% Year-on-Year (YoY) from 4.2% in May. In the same period, the core CPI – which excludes volatile food and energy items – grew at a moderate pace of 2.6% YoY against 2.8% estimates and the previous reading of 2.9%.
Signs of decelerating price pressures have eased fears of Federal Reserve (Fed) interest rate hikes in the near term.
According to the CME FedWatch tool, the odds of the Fed raising interest rates at the policy meeting this month have eased to 16.6% from 41.7% recorded on Monday.
Meanwhile, Fed Chairman Kevin Warsh has reiterated the need to bring price stability in his testimony before Congress on Tuesday. Warsh said in his prepared remarks, “The Fed has no tolerance for persistently elevated inflation.” "If we get policy right - and we will- the inflation surge of the last five years will be a thing of the past," Warsh added.
Oil price rally hits pause
Over-a-week-long rally in oil prices appears to have paused for a while as US President Donald Trump has rolled back the idea of charging a 20% toll fee from cargo ships transiting through the Strait of Hormuz, a vital passage to almost 20% of global energy supply.
However, the continued aggression between the US and Iran will keep the energy supply disrupted, a scenario that is favorable for the oil price.
FIIs dump Indian shares again
Foreign Institutional Investors (FIIs) turned out to be net sellers in the Indian stock market for the second consecutive trading day on Tuesday, paring their stake worth Rs. 739.69 crore. FIIs also sold shares worth Rs. 3,062.27 crore.
Technical Analysis: USD/INR sees more upside to near 97.10
USD/INR trades subduedly at around 96.15 at press time. However, the near-term bias of the pair remains bullish as it holds above the 20-day Exponential Moving Average (EMA), which is at 95.37.
The positive slope of the EMA hints at a constructive underlying trend, while the Relative Strength Index (RSI) at 62.1 stays in bullish territory without yet reaching overbought, suggesting buyers still have room to press the move higher.
On the downside, immediate support is seen at the 20-day EMA at 95.37, where dip-buying interest could emerge if a corrective pullback unfolds. Looking up, the pair aims to revisit the all-time high at 97.10.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
The Canadian Dollar (CAD) is facing an upward correction, with the USD/CAD currency pair sliding below the critical 1.4100 mark. This retreat comes after lower-than-expected US CPI data and as the Bank of Canada (BoC) is widely anticipated to hold its policy rate steady at 2.25% for the sixth consecutive meeting.
Beneath the surface of this rate pause lies a quite resilient domestic economy, emerging geopolitical triggers in the Middle East, and shifting technical dynamics that could soon test key support levels for the pair.
Economic resilience keeps a year-end rate hike on the table
Analysts at Societe Generale expect the Bank of Canada (BoC) to keep rates on hold on Wednesday after recent data showed the country’s economic outlook has strengthened notably.
The Canadian economy rebounded in April and labor market conditions have improved. While falling gasoline prices may pull headline inflation below 3.0%, core measures remain anchored near the BoC’s 2.0% target. This combination of growth and still-high core inflation keeps the door open for further tightening.
Labor market conditions have improved of late, reflected in the decline of the unemployment rate by 0.4pp since April to 6.5% in June, the lower end of the BoC forecast range. Market pricing suggests a 25bp hike before year-end cannot be dismissed.
Oil, geopolitics, and USMCA trade risks dictate CAD momentum
External forces are heavily influencing the Canadian Dollar. ING highlights that while the BoC's Business Outlook Survey showed elevated inflation expectations, those surveys were conducted in May, prior to the reopening of the crucial Strait of Hormuz.
Recent re-escalations in the Middle East and higher Oil prices have provided a natural buffer for the Oil-sensitive Loonie. However, any structural upside for the Canadian currency remains capped by lingering trade concerns surrounding the United States-Mexico-Canada Agreement (USMCA).
We expect few changes in the policy tone by the BoC at this meeting, leaving CAD front-end rates primarily driven by developments in the Gulf. CAD should enjoy more short-term momentum if oil prices stay supported and the BoC doesn’t surprise on the dovish side.
Technical levels: Can USD/CAD break below 1.4000?
From a technical perspective, USD/CAD’s failure to consolidate above its previous range boundary of 1.4130 has triggered a breakdown. Societe Generale notes that gains were capped near interim resistance at 1.4250, leaving the pair vulnerable to further short-covering.
The immediate downside target is the 50-day moving average hovering near 1.3970, followed by stronger support at 1.3850. However, ING cautions that clearing the psychologically significant 1.4000 level permanently will require clear, dovish policy signals from the US Federal Reserve.
Banks anticipate tight trading range with downward bias
The banks project a near-term consolidation for the USD/CAD pair with a mild downward bias, targeting the 1.3970-1.4000 support corridor. Societe Generale expects the current technical pullback to extend lower in the absence of a bullish US PPI inflation surprise.
Meanwhile, ING maintains that while strong Oil prices and a hawkish-leaning BoC pause will keep the Canadian Dollar structurally supported, trade-related USMCA headwinds and a resilient US Dollar will prevent the pair from embarking on a deeper, sustained decline below 1.4000.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- . Gold ticks lower on Wednesday and remains trapped within a tight range above $4,000.
- Escalating tensions in Iran and high Oil prices are keeping precious metals weighed.
- The US Dollar lost ground after US CPI cooled expectations of immediate Fed rate hikes.
Gold (XAU/USD) edges lower on “inside trading” on Wednesday, with price action contained within Tuesday’s range, as the pair keeps looking for direction above the $4,000 level. Rising tensions in Iran and high Oil prices have offset the positive impact from the soft US Consumer Price Index (CPI) data.
US data released on Tuesday revealed that inflationary pressures eased beyond expectations in June. Yearly CPI slowed down to 3.5% from 4.2% in May, well below the 3.8% market consensus, and monthly inflation contracted 0.4%, its largest decline in nearly six years. These figures triggered a significant repricing of Federal Reserve (Fed) rate hikes and sent the USD lower across the board
Precious metals, however, have failed to capitalise on the US Dollar’s weakness amid escalating hostilities between the US and Iran. Threats of further attacks and the closure of more energy routes are underpinning OIil prices near one-month highs, fuelling expectations of higher inflationary pressures and global monetary tightening.
Technical Analysis: Bearish momentum fades with bulls still subdued
XAU/USD trades at $4,027, still capped below the downward trend-line barrier yet with the Relative Strength Index (14) on the daily chart showing a bullish divergence as it reaches the neutral territory in the 40 area. The Moving Average Convergence Divergence (MACD) remains in positive territory yet at levels suggesting that bullish attempts remain frail.
Gold bulls should break the mentioned trendline, now around $4,100 and the July 7 high, in the $4,200 area to confirm a trend shift and gain confidence to pursue a deeper correction. On the downside, the precious metal has a cluster of supports between Thursday's low in the $4,020 area and the late October 2025 lows near $3,885.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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