Forex News
- USD/CAD gains positive traction for the second straight day amid a pickup in the USD demand.
- Geopolitical uncertainty and hawkish Fed bets continue to act as a tailwind for the Greenback.
- Rebounding Oil prices offset dismal Canadian GDP, underpinning the Loonie and capping gains.
The USD/CAD pair attracts some buyers for the second consecutive day and reclaims the 1.3800 mark during the Asian session on Monday. Spot prices, however, lack bullish conviction and remain below the highest level since April 13, near the 1.3870 region, touched last week amid a combination of diverging forces.
The uncertainty over US-Iran talks to end a three-month-old conflict and Israel's incursion into Lebanon keeps geopolitical risk in play, underpinning the safe-haven US Dollar (USD) and acting as a tailwind for the USD/CAD pair. In fact, differences over Iran's nuclear program and the Strait of Hormuz continue to complicate efforts to reach a deal. Moreover, Iran’s chief negotiator, Mohammad Bagher Qalibaf, stated that the country will not accept any agreement until its national rights are fully secured.
Adding to this, reports suggest that the US has hardened its negotiating position with Iran. This, along with bets that the US Federal Reserve (Fed) will hike interest rates by the end of this year, assists the USD to build on Friday's modest bounce from a two-week low. The Canadian Dollar (CAD), on the other hand, is undermined by dismal domestic GDP figures, which showed that the economy contracted at 0.1% annualized pace in the first quarter of 2026, and further supports the USD/CAD pair.
Meanwhile, the latest development surrounding the Middle East crisis triggers a goodish recovery in Crude Oil prices, from over a one-month low touched on Friday. This, in turn, helps limit the downside for the commodity-linked Loonie and might keep a lid on any further appreciating move for the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through buying before positioning for the resumption of the recent well-established uptrend witnessed over the past month or so.
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.
Kuwait's armed forces said that the country's air defense systems were intercepting hostile missile and drone attacks after air raid sirens sounded and emergency alerts were issued nationwide, the Guardian reported on Monday.
US Central Command (Centcom) stated that it struck targets in Iran over the weekend, in a statement that came just minutes after it announced it was under attack.
Meanwhile, Iran’s Islamic Revolutionary Guards Corps (IRGC) said that it targeted an airbase used by the US to launch an attack on Sirik Island in southern Iran. Sirik Island is located in the Strait of Hormuz. The IRGC added that the US was targeting a telecoms tower on the island.
Market reaction
Crude oil prices attract some buyers following this headline. At the time of writing, the West Texas Intermediate (WTI) is up 2.05% on the day at $88.62.
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.
- USD/CHF rises as the Swiss Franc weakens ahead of key Swiss Retail, GDP, and PMI data.
- The US Dollar strengthens on safe-haven demand as investors closely monitor fluid US-Iran peace negotiations.
- Geopolitical uncertainty intensified after Israel ordered its troops to advance further into Lebanon.
USD/CHF gains ground after two days of losses, trading around 0.7830 during the Asian hours on Monday. The pair gains ground as the Swiss Franc (CHF) weakens ahead of the release of key economic data including, Swiss Real Retail Sales for April, Q1 Gross Domestic Product, and May’s SVME - Purchasing Managers' Index (PMI). Traders will shift their focus on the Institute for Supply Management’s (ISM) Manufacturing PMI, which provides a reliable outlook on the state of the US manufacturing sector.
The USD/CHF pair appreciates as the US Dollar (USD) maintains its strength on increased safe-haven demand, driven by market participants closely assessing the highly fluid developments surrounding United States (US)-Iran peace negotiations.
US President Donald Trump seeks to alter and reinforce several key terms of the proposal aimed at ending the US-Israel war on Iran. According to the BBC, these requested changes specifically target regulations surrounding the strategic Strait of Hormuz and the mandatory removal of highly enriched uranium.
Axios further reported that Trump wants to tighten multiple points of the deal he deems critical, particularly the handling and disposal of Iran’s nuclear material. A senior US official noted that Trump has been briefed that a formal response from Iran regarding these adjusted terms could take up to three days.
The geopolitical uncertainty continues to increase after Israel has ordered its troops to advance further into Lebanon, marking a tactical escalation in its conflict with the Iran-backed militant group Hezbollah. The military push comes despite a ceasefire agreement announced more than six weeks ago, severely threatening to unravel earlier diplomatic progress.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- Silver traded sideways as traders closely monitored fluid developments surrounding US-Iran peace negotiations.
- Trump seeks altering proposal terms regarding the Strait of Hormuz and removing Iran's highly enriched uranium.
- Israel ordered troops to advance into Lebanon intensified Middle East supply concerns.
Silver price (XAG/USD) holds gains after experiencing volatility, trading around $75.60 per troy ounce during the Asian hours on Monday. The non-yielding white metal traded sideways as market participants closely assessed the highly fluid developments surrounding United States (US)-Iran peace negotiations.
According to a BBC report, US President Donald Trump is seeking to alter and reinforce several key terms of a proposal aimed at ending the conflict. These requested changes specifically target regulations surrounding the strategic Strait of Hormuz and the mandatory removal of highly enriched uranium from Iran.
Iranian officials are projecting a mix of caution and firm resolve. Iranian Foreign Minister Abbas Araghchi confirmed that dialogue and message exchanges with Washington remain ongoing, though he dismissed current media commentary as mere speculation, emphasizing that the negotiations cannot be properly evaluated until a definitive outcome is reached. Meanwhile, Parliament Speaker and top negotiator Mohammad Bagher Ghalibaf established a strict boundary for the talks, asserting that Tehran will reject any agreement unless it explicitly ensures the rights of the Iranian people are secured.
This geopolitical uncertainty continues to weigh on the precious metal. Israel has ordered its troops to advance further into Lebanon, marking a tactical escalation in its conflict with the Iran-backed militant group Hezbollah. The military push comes despite a ceasefire agreement announced more than six weeks ago, severely threatening to unravel earlier diplomatic progress.
Silver has faced headwinds since late February, as the Middle East conflict drove energy prices sharply higher, fueling concerns about inflationary pressures and the prospect of higher-for-longer interest rates. With geopolitics hanging in the balance, investors are now awaiting the latest US monthly jobs report due later this week, which could offer fresh insight into labor market strength and the future path of Federal Reserve (Fed) policy.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- EUR/USD edges down to near 1.1645 as the US Dollar trades slightly higher.
- This week, major triggers will be the flash Eurozone HICP and the US NFP data for May.
- The removal of Iran’s uranium enrichment remains the key demand by the US for a permanent peace deal.
The EUR/USD pair trades slightly lower to near 1.1645 during the Asian trading session on Monday. The major currency pair faces marginal selling pressure as the US Dollar (USD) ticks up, with investors awaiting key United States (US) economic releases this week, especially the Nonfarm Payrolls (NFP) data for May.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 99.03.
Investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. Later in the day, market participants will focus on the US ISM Manufacturing PMI data for May, which will be published at 14:00 GMT.
In the Eurozone, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for May, which will be released on Tuesday. The inflation data will influence market expectations for the European Central Bank’s (ECB) monetary policy outlook.
On the geopolitical front, negotiations between the US and Iran regarding a permanent peace deal remain ongoing, with Washington hardening its stance on Tehran destroying its uranium dust and giving up its nuclear ambitions.
EUR/USD technical analysis
EUR/USD ticks lower at around 1.1645 in the Asian trade. The 20-day Exponential Moving Average (EMA) near 1.1646 acts as a key barrier for the Euro bulls. The pair holds just above the upward-sloping border of the Symmetrical Triangle formation near 1.1599.
The Relative Strength Index (14) has slipped to around 47, suggesting fading bullish momentum and reinforcing the idea of consolidation with a bearish lean rather than a decisive recovery.
On the topside, the 20-day EMA is the immediate resistance, followed by the downward-sloping border of the Triangle formation around 1.1719. On the downside, the first line of defense sits at the former ascending trend-line break at 1.1599; a sustained move below that support would expose a deeper pullback towards 1.1500.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the 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.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- US Dollar Index strengthens to around 99.05 in Monday’s early Asian session.
- Iran's Araghchi said talks and message exchanges with the US are ongoing.
- Traders await the US May employment report later on Friday for fresh impetus.
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 99.05 during the Asian trading hours on Monday. The DXY holds positive ground surrounding the US-Iran peace deal. The US ISM Manufacturing Purchasing Managers Index (PMI) report will be published later on Monday.
Iranian Foreign Minister Abbas Araghchi said on Sunday that talks and message exchanges with Washington were ongoing, but stressed that no assessment of negotiations could be made until a clear outcome was reached, per the BBC.
On Monday, US President Donald Trump has requested that edits be made to the US-Iran deal aimed at bringing an end to fighting that began earlier this year. The changes are related to the Strait of Hormuz and the removal of highly enriched uranium.
The US employment data for May will be in the spotlight on Friday. Analysts expect the US Nonfarm Payrolls (NFP) to increase by 96K in May, and the US Unemployment Rate is projected to remain steady at 4.3% during the same period. If the report shows stronger-than-expected outcomes, this could support the DXY in the near term.
Traders are now pricing in nearly a 41.2% probability that the Fed will raise interest rates by 25 basis points (bps) by year-end, according to the CME FedWatch tool.
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.
- AUD/JPY holds ground as mixed economic data from China, Australia, and Japan shaped market sentiment.
- China’s RatingDog Manufacturing PMI fell to 51.8 in May, slowing down but beating expectations of 51.4 to show resilience.
- Japan’s May Manufacturing PMI declined to 54.5 from April's peak, but still signaled expansion through steady output growth.
AUD/JPY extends its gains for the third successive day, trading around 114.60 during the Asian hours on Monday. The currency cross holds its ground as a wave of mixed economic data from China, Australia, and Japan shaped market sentiment.
China’s RatingDog Manufacturing Purchasing Managers Index (PMI) slipped to 51.8 in May from the previous month's 52.2 reading. While this indicates a slight deceleration in expansion, it still managed to beat market expectations of 51.4, offering a layer of resilience to the regional outlook.
In Australia, the labor market showed signs of recovery as the ANZ–Indeed Australian Job Ads rebounded by 1.8% month-on-month (MoM) in May, marking the first gain since February and bouncing back from a 0.6% decline in April. However, the overarching trend continues to suggest that labor demand is gradually moderating as elevated borrowing costs weigh on broader economic activity.
Meanwhile, price pressures eased significantly, with Australia’s TD-MI Inflation Gauge dropping 0.3% month-on-month in May, completely reversing the previous month’s 0.6% increase to mark its first decline since February.
Over in Japan, the final S&P Global Japan Manufacturing PMI was confirmed at 54.5 for May 2026, matching preliminary estimates. Although this is down from April’s peak of 55.1, which was the highest since January 2022, the latest reading still signals expansion, albeit at a slower pace, supported by steady output growth.
On a weaker note, Japanese corporate Capital Spending flatlined in the first quarter, missing market expectations and marking a sharp deceleration from the 6.5% year-on-year growth seen in the final quarter of 2025.
Looking ahead, the AUD/JPY cross faces a potential cap on further upside due to shifting market dynamics. Persistent expectations that Japanese authorities will intervene to prop up the Japanese Yen are keeping JPY bears from placing aggressive bets, keeping the AUD/JPY cross relatively restrained.
Economic Indicator
RatingDog Manufacturing PMI
The RatingDog Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Mon Jun 01, 2026 01:45
Frequency: Monthly
Actual: 51.8
Consensus: 51.4
Previous: 52.2
Source: IHS Markit
- NZD/USD softens to near 0.5975 in Monday’s early Asian session.
- China's RatingDog Manufacturing PMI fell to 51.8 in May, but was stronger than expected.
- Traders brace for the US Manufacturing PMI data on Monday ahead of the highly anticipated NFP report.
The NZD/USD pair holds losses around 0.5975 during the early Asian session on Monday. The New Zealand Dollar (NZD) remains weak following the Chinese economic data. Traders will keep an eye on the US ISM Manufacturing Purchasing Managers Index (PMI) report later in the day. On Friday, the US Nonfarm Payrolls (NFP) data will be in the spotlight.
Data released by RatingDog on Monday showed that China's RatingDog Manufacturing Purchasing Managers' Index (PMI) fell to 51.8 in May from 52.2 in April. This reading came in better than the market expectations of 51.4. However, this report has no impact on the China-proxy Kiwi.
Traders will closely monitor the Middle East developments. Signs of ongoing tensions between the US and Iran could weigh on the riskier assets, such as the NZD against the USD. Iranian Foreign Minister Abbas Araghchi said that talks and message exchanges with Washington were ongoing, but emphasized that no assessment of negotiations could be made until a clear outcome was reached.
Former Federal Reserve (Fed) Chair Jerome Powell said the US central bank would damage public trust that’s required to support a strong and stable economy if any president were free to dismiss Fed officials over policy disagreements, per Bloomberg.
The US employment data for May will take center stage later on Friday. The US Nonfarm Payrolls (NFP) is expected to see 96K jobs added in May, while the US Unemployment Rate is projected to remain steady at 4.3% during the same period. In case of stronger-than-expected outcomes, this could lift the Greenback and create a headwind for the pair.
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.
- AUD/USD kicks off the new week on a subdued note and moves little after Chinese data.
- Geopolitical risks and hawkish Fed expectations underpin the USD, capping spot prices.
- The bullish technical setup warrants some caution before positioning for deeper losses.
The AUD/USD pair extends the range play below the 0.7200 mark and moves little following the release of China’s RatingDog Manufacturing PMI, which eased to 51.8 in May from 52.2 in the previous month. Meanwhile, spot prices remain close to a two-week high touched on Friday and seem poised to appreciate further amid a constructive technical setup.
Friday's breakout through the 0.7180 confluence hurdle – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 50% Fibonacci retracement level of the May downswing – was seen as a key trigger for the AUD/USD bulls. Moreover, the Relative Strength Index (RSI) near 60 hints at constructive but not overextended momentum. Adding to this, the Moving Average Convergence Divergence (MACD) hovers in positive territory with a slight bullish tilt, reinforcing a cautious upside tone.
However, persistent geopolitical uncertainties, along with hawkish US Federal Reserve (Fed) expectations, assist the safe-haven US Dollar (USD) to recover further from Friday's two-week through and could act as a headwind for the AUD/USD pair. Apart from this, reduced bets for a June interest rate hike by the Reserve Bank of Australia (RBA) might contribute to capping spot prices near the 61.8% Fibo. retracement at 0.7198. This is followed by the 78.6% level at 0.7230. and then the recent cycle high area around 0.7271.
On the downside, initial support is provided by the 100-period SMA at 0.7177 and the nearby 50% retracement at 0.7175, ahead of the 38.2% level at 0.7153. Deeper protection emerges at the 23.6% retracement at 0.7125 and the swing low region around 0.7079.
(The technical analysis of this story was written with the help of an AI tool.)
AUD/USD 4-hour chart
Economic Indicator
RatingDog Manufacturing PMI
The RatingDog Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Mon Jun 01, 2026 01:45
Frequency: Monthly
Actual: 51.8
Consensus: 51.4
Previous: 52.2
Source: IHS Markit
China's RatingDog Manufacturing Purchasing Managers' Index (PMI) declines to 51.8 in May from 52.2 in April the latest data published by RatingDog showed on Monday.
The market forecast was for a 51.4 reading.
AUD/USD reaction to China’s PMI data
At the time of writing, the AUD/USD pair is trading around 0.7183, up 0.01% on the day.
(This story was corrected on June 1 at 01:50 GMT to say China's RatingDog Manufacturing Purchasing Managers' Index (PMI) declined to 51.8 in May from 52.2 in April, not rose).
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.
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