Forex News
- WTI price hits a six-week high of $59.90 on supply fears.
- President Trump said he will impose 25% tariffs on countries trading with Iran, escalating pressure amid domestic protests.
- Geopolitical tensions escalated after Russian forces struck Ukraine’s two largest cities early Tuesday.
West Texas Intermediate (WTI) Oil price extends its gains for the fourth successive session, trading around $59.70 per barrel during the European hours on Tuesday. WTI price climbs to six-week highs amid supply concerns after US President Donald Trump announced new tariffs targeting Iran’s trading partners.
President Trump said on Monday that he would impose 25% tariffs on goods from any country doing business with Iran, stepping up pressure on Tehran amid widespread domestic protests. He added that the measure would take effect immediately, without providing further details.
Iran, one of the Organization of the Petroleum Exporting Countries’ (OPEC) largest producers, is grappling with its biggest anti-government protests in years. Trump said on Sunday that Iran’s leadership had reached out seeking “to negotiate” after his threats of military action, but warned that “we may have to act before a meeting.”
Geopolitical tensions intensified after Russian forces attacked Ukraine’s two largest cities early Tuesday, Ukrainian officials said. Supply concerns also grew as Kazakhstan’s output faces headwinds from adverse weather, maintenance work, and damage to Russian infrastructure linked to Ukrainian strikes.
Reuters cited a source familiar with the matter saying Exxon Mobil remains interested in visiting Venezuela and is ready to send an assessment team, a day after US President Donald Trump said he might bar the company from the country. Exxon CEO Darren Woods said at a White House meeting on Friday that Venezuela would need to enact legal reforms and protect investments before Exxon commits to operating there.
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.
- Japanese Yen attracts heavy follow-through selling amid a combination of negative factors.
- BoJ uncertainty, Japan-China rift, and talks of a snap election in Japan undermined the JPY.
- A modest USD uptick further supports USD/JPY, though intervention fears warrant caution.
The Japanese Yen (JPY) maintains its heavily offered tone through the early European session and hangs near its lowest level since July 2024, touched against a firmer US Dollar (USD) this Tuesday. Reports that Prime Minister Sanae Takaichi may soon call a snap election to take advantage of strong approval ratings fueled hopes for more expansionary fiscal policy. This comes on top of the uncertainty over the likely timing of the next interest rate hike by the Bank of Japan (BoJ), which, along with deepening Japan–China diplomatic crisis, and a positive risk tone, continue to undermine the safe-haven JPY.
Meanwhile, the recent JPY decline might prompt some verbal intervention from Japanese authorities, which, in turn, warrants some caution before placing fresh bets. The USD, on the other hand, might struggle to attract follow-through buying amid worries about the US Federal Reserve's (Fed) independence, and further cap gains for the USD/JPY pair. Investors might also opt to wait for the release of the US consumer inflation figures, due later today, for more cues about the Fed's rate-cut path. The data will influence the near-term USD price dynamics and provide a fresh impetus to the currency pair.
Japanese Yen seems vulnerable as political risks add to BoJ uncertainty
- Reports suggest that Japan's Prime Minister Sanae Takaichi may call an early election in the first half of February to bolster her coalition government’s parliamentary majority, fueling hopes for additional stimulus.
- Last week, China prohibited some rare earth elements from being exported to Japan with immediate effect. The ban follows a diplomatic row over Taiwan and heightens supply-chain risk for Japanese manufacturers.
- Despite the Bank of Japan's (BoJ) hawkish outlook, investors remain uncertain about the likely timing of the next rate hike. This, along with the risk-on impulse, is seen undermining demand for the safe-haven Japanese Yen.
- Japan’s Finance Minister Satsuki Katayama said this Tuesday that she shared concerns over the JPY's recent one-sided decline with US Treasury Secretary Scott Bessent and added that the tolerance for weakness was limited.
- Concerns about the Federal Reserve's independence resurfaced on Monday after prosecutors opened a criminal investigation against Jerome Powell over his testimony about the central bank building renovation project.
- Powell, in a rate statement, called the probe unprecedented and said that he believed it was opened due to US President Donald Trump's anger over the Fed's refusal to cut interest rates despite repeated public pressure.
- This keeps the US Dollar bulls on the defensive despite firming expectations for a less aggressive monetary policy easing by the US central bank this year, bolstered by the latest monthly employment details released last Friday.
- Traders are pricing in the possibility of two more rate cuts by the Fed in 2026. This marks a significant divergence compared to expectations that the BoJ will stick to its policy normalization path and should cap the USD/JPY pair.
- BoJ Governor Kazuo Ueda reiterated last week that the central bank would continue to raise interest rates if economic and price developments move in line with forecasts, leaving the door open for further policy tightening.
- Investors might also refrain from placing aggressive directional bets and opt to wait for more cues about the Fed's rate-cut path. Hence, the focus will remain glued to the release of the latest US consumer inflation figures.
USD/JPY bulls have the upper hand amid a breakout through 158.00
The 50-day Simple Moving Average (SMA) continues to rise, with the USD/JPY pair holding above it, reinforcing a firm bullish bias. The SMA, around the 156.00 mark, offers nearby dynamic support as buyers retain control. The Moving Average Convergence Divergence (MACD) shows a bullish crossover near the zero line, with the histogram turning positive and momentum improving.
The Relative Strength Index (RSI) stands at 67.47, strong but not overbought, supporting the upside while leaving room before stretched conditions emerge. As long as USD/JPY holds above its rising SMA, pullbacks would remain contained, and the pair could extend higher; a close back below the average would hint at waning momentum and a move into consolidation.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- USD/CAD consolidates in a range as traders await the release of the crucial US CPI report.
- A modest USD uptick supports spot prices, though Fed independence fears cap the upside.
- Bullish Crude Oil prices underpin the Loonie and further act as a headwind for spot prices.
The USD/CAD pair lacks any firm intraday directional bias and oscillates in a narrow band below the 1.3900 mark heading into the European session on Tuesday. Spot prices, for now, seem to have stalled the previous day's pullback from the highest level since December 5, touched last Friday, as traders keenly await the release of the US inflation figures.
The US Consumer Price Index (CPI) is due later today and will be followed by the US Producer Price Index (PPI) on Wednesday. Heading into the key data risk, the US Dollar (USD) regains positive traction following the previous day's decline and turns out to be a key factor supporting the USD/CAD pair. However, concerns about the Fed's independence cap any further USD gains. Moreover, the recent rise in Crude Oil prices underpins the commodity-linked Loonie and acts as a headwind for the currency pair.
From a technical perspective, the USD/CAD pair trades beneath the 50-day Simple Moving Average (SMA), which is sloping downward and maintaining a bearish tilt. The said SMA is pegged near the 1.3890 region, and rebounds remain capped by it. The Moving Average Convergence Divergence (MACD) line stands above the Signal line and slightly above zero, while the positive histogram has begun to contract, hinting at moderating upside momentum. The Relative Strength Index (RSI) prints 59, above the midline, which reinforces a mildly bullish tone without reaching overbought.
Measured from the 1.4134 high to the 1.3646 low, Fibonacci retracements act as overhead barriers, with the 50% at 1.3890 and the 61.8% at 1.3948 capping rallies. A daily close above 1.3948 could expose the 78.6% retracement at 1.4030, whereas repeated failure below 1.3890 would keep the pair consolidating under resistance. Overall, momentum has improved, but the declining SMA and clustered Fibonacci levels constrain the advance, and bulls would need a decisive break of these overhead retracements to extend gains.
(The technical analysis of this story was written with the help of an AI tool.)
USD/CAD daily chart
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Jan 13, 2026 13:30
Frequency: Monthly
Consensus: 2.7%
Previous: 2.7%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
- US Dollar Index gains as traders adopt caution ahead of the US Consumer Price Index data.
- The Greenback may weaken as markets price in two Fed rate cuts this year, starting in June.
- New York Fed President John Williams said policy is well-positioned to curb inflation without harming jobs.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding gains after registering modest losses in the previous session. The DXY is hovering around 99.00 during the early hours on Tuesday. Traders await the Consumer Price Index (CPI) data for December due later in the North American session, which could offer clues on the Federal Reserve’s (Fed) policy path.
The Greenback faced challenges amid expectations of a dovish Federal Reserve (Fed). December’s slower-than-expected US jobs growth suggests the US central bank could hold interest rates steady later this month.
Markets are pricing in two Federal Reserve rate cuts this year, starting in June, though an upside inflation surprise could curb easing prospects. The CME Group's FedWatch tool indicates that the Fed funds futures price indicates a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
Federal Reserve Bank of New York President John Williams said late Monday that US monetary policy is “well-positioned” to steer inflation back to its target without damaging employment. Williams indicated there is no immediate need to resume interest-rate cuts as the central bank edges closer to a neutral policy stance.
The US Dollar also faced challenges amid rising concerns over the Fed’s independence after federal prosecutors threatened to indict Chair Jerome Powell over his congressional testimony on a building renovation, a move Powell has described as an attempt to undermine the central bank’s independence.
Traders are watching rising Middle East tensions after US President Donald Trump said Iran’s leadership sought to “negotiate” following his military threats, while warning that action may come before any meeting.
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.
- NZD/USD edges higher to around 0.5770 in Tuesday’s early European session.
- Fed’s Powell called subpoenas a pretext for interest rate influence.
- New Zealand’s Business Confidence jumped to 48% QoQ in Q4 2025, the highest level since March 2014.
The NZD/USD pair trades on a firmer note near 0.5770 during the early European trading hours on Tuesday. The US Dollar (USD) remains under selling pressure against the New Zealand Dollar (NZD) amid renewed concerns over the Federal Reserve’s (Fed) independence.
The “Sell America” trade resumes after Fed Chair Jerome Powell said he’s under criminal investigation, which traders see as a sign of US President Donald Trump’s interest in stripping away the central bank’s political independence. Powell said on Sunday that the Fed has received subpoenas from the Justice Department over statements he made to Congress last summer on cost overruns for a $2.5 billion building renovation project at the central bank's headquarters in Washington. He termed the threats a "pretext" for putting pressure on the Fed to lower interest rates.
According to the New Zealand Institute of Economic Research’s (NZIER) Quarterly Survey of Business Opinion, the country’s business confidence jumped to 48% QoQ in the fourth quarter (Q4) of 2025, the highest level since March 2014, lifting hiring and investment intentions. This reading provides some support to the Kiwi against the USD.
The release of the US December Consumer Price Index (CPI) inflation data will take center stage later on Tuesday. Both headline and core CPI are projected to show an increase of 2.7% year-over-year. Hotter-than-expected US CPI readings generally strengthen the Greenback against the NZD in the near term.
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.
Here is what you need to know on Tuesday, January 13:
Ahead of the European opening bells, the US Dollar (USD) pauses its late recovery seen in Monday’s North American session. The Greenback enters a consolidative mode as traders switch to the sidelines amid a typical market caution before the first US Consumer Price Index (CPI) report of this year.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | -0.05% | 0.38% | -0.03% | 0.09% | -0.13% | -0.01% | |
| EUR | -0.04% | -0.09% | 0.35% | -0.07% | 0.04% | -0.17% | -0.05% | |
| GBP | 0.05% | 0.09% | 0.43% | 0.02% | 0.14% | -0.08% | 0.04% | |
| JPY | -0.38% | -0.35% | -0.43% | -0.41% | -0.30% | -0.52% | -0.39% | |
| CAD | 0.03% | 0.07% | -0.02% | 0.41% | 0.11% | -0.10% | 0.01% | |
| AUD | -0.09% | -0.04% | -0.14% | 0.30% | -0.11% | -0.21% | -0.10% | |
| NZD | 0.13% | 0.17% | 0.08% | 0.52% | 0.10% | 0.21% | 0.12% | |
| CHF | 0.00% | 0.05% | -0.04% | 0.39% | -0.01% | 0.10% | -0.12% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Following a mixed December labor market report, the US inflation data is eagerly awaited to determine whether the US Federal Reserve (Fed) will opt for an interest rate cut in the first quarter of 2026 amid receding odds for such a move.
The US Core Consumer Price Index is expected to rise by 2.7% on an annual basis in December. The monthly core CPI is set to increase by 0.3% in the same period after reporting a 0.2% growth in November. The headline CPI inflation is expected to hold steady at 2.7%.
Meanwhile, the Trump administration’s criminal investigation into Chairman Jerome Powell’s comments on the central bank's renovation of its Washington headquarters and Powell’s retaliation deepen the feud and keep concerns over the Fed’s independence alive.
Markets also digest the latest geopolitical developments surrounding the Iranian civil unrest and the Greenland issue.
US President Donald Trump warned in a post on Truth Social on Monday,"effective immediately, any Country doing business with the Islamic Republic of Iran will pay a Tariff of 25% on any and all business being done with the United States of America.”
While speaking to reporters on Monday, Trump once again openly pushed for the US to acquire Greenland, dismissing Denmark’s role and warning that the Arctic island could otherwise fall under Russian or Chinese influence.
Across the G10 currency space, AUD/USD gyrates above 0.6700, staying better bid amid a pause in the USD upside and the hawkish expectations surrounding the Reserve Bank of Australia’s (RBA) rate outlook.
USD/JPY firms up and tests 159.00, sitting at the highest level since July 2024. The Japanese Yen (JPY) keeps falling amid intensifying Japanese political tensions. “Japanese Prime Minister Sanae Takaichi had conveyed to a ruling party executive her intention to dissolve parliament's lower house at the outset of its regular session scheduled to start on January 23,” per Reuters.
The JPY hits record low against Euro (EUR) and the Swiss franc (CHF).
EUR/USD trades with caution near 1.1650 amid a data-empty European calendar, while looking forward to the high-impact US CPI data.
GBP/USD hovers below 1.3500, with the upside attempts capped by a softer risk tone.
Gold is on a profit-taking decline below $4,600, with the daily technical setup still pointing to further bullish potential.
WTI is at monthly highs, testing offers at the $60 mark. Traders remain hopeful that heightened concerns surrounding Iran and potential supply disruptions will likely outweigh the potential crude oversupply from Venezuela.
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.
- Australian Dollar could gain amid cautious sentiment surrounding the RBA outlook.
- Westpac Consumer Confidence fell 1.7% MoM in January to a three-month low of 92.9, extending December’s 9.0% drop.
- The US Dollar receives support as traders adopt caution ahead of December's inflation data.
The Australian Dollar declines against the US Dollar on Tuesday following the release of Australia’s Westpac Consumer Confidence, which fell 1.7% month-over-month (MoM) in January to a three-month low of 92.9, extending December’s sharp 9.0% drop amid shifting rate expectations.
Reserve Bank of Australia (RBA) Governor Michele Bullock is expected to comment on concerns over the Fed’s independence after federal prosecutors threatened to indict Chair Jerome Powell over his congressional testimony on a building renovation, a move Powell has described as an attempt to undermine the central bank’s independence.
ANZ Job Advertisements declined 0.5% in December, following an upwardly revised 1.5% drop in the prior month. Meanwhile, household spending increased 1.0% month-on-month in November 2025, easing from a revised 1.4% rise in October, as consumers remained cautious amid elevated interest rates and persistent inflation.
Australia’s mixed November Consumer Price Index (CPI) left the Reserve Bank of Australia’s (RBA) policy outlook uncertain. However, RBA Deputy Governor Andrew Hauser said that the November inflation data was largely as expected. Hauser added that interest rate cuts are unlikely anytime soon. Focus now shifts to the quarterly CPI report due later this month for clearer guidance on the RBA’s next policy move.
US Dollar gains ahead of inflation data
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 98.90 at the time of writing. Traders await the Consumer Price Index (CPI) data for December due on Tuesday, which could offer clues on the Federal Reserve’s (Fed) policy path.
- The Greenback faced challenges amid expectations of a dovish Federal Reserve (Fed). December’s slower-than-expected US jobs growth suggests the US central bank could hold interest rates steady later this month.
- Markets are pricing in two Federal Reserve rate cuts this year, starting in June, though an upside inflation surprise could curb easing prospects. The CME Group's FedWatch tool indicates that the Fed funds futures price indicates a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
- US Nonfarm Payrolls (NFP) rose by 50,000 in December, falling short of November's 56,000 (revised from 64,000) and came in weaker than the market expectations of 60,000. However, the Unemployment Rate ticked lower to 4.4% in December from 4.6% in November, while the Average Hourly Earnings climbed to 3.8% YoY in December from 3.6% in the previous reading.
- Federal Reserve Bank of New York President John Williams said late Monday that US monetary policy is “well positioned” to steer inflation back to its target without damaging employment. He indicated there is no immediate need to resume interest-rate cuts as the central bank edges closer to a neutral policy stance.
- Richmond Fed President Tom Barkin said the decline in the unemployment rate was welcome and described job growth as modest but stable. Barkin added that it is difficult to find firms outside healthcare or AI that are hiring and said it remains unclear whether the labor market will tilt toward more hiring or more firing.
Australian Dollar remains above 0.6700, nine-day EMA
AUD/USD is trading around 0.6710 on Tuesday. Daily chart analysis shows the pair rebounded toward an ascending channel, signaling a renewed bullish bias. The 14-day Relative Strength Index (RSI) at 60.55 remains above the midpoint, supporting upside momentum.
The AUD/USD pair could target 0.6766, its highest level since October 2024. Further gains could see the pair test the upper boundary of the ascending channel near 0.6860.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6705, followed by the 50-day EMA at 0.6634. Further losses would open the downside toward 0.6414, the lowest since June 2025.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | -0.03% | 0.49% | -0.02% | 0.11% | -0.12% | 0.02% | |
| EUR | -0.08% | -0.11% | 0.41% | -0.10% | 0.03% | -0.20% | -0.06% | |
| GBP | 0.03% | 0.11% | 0.51% | 0.01% | 0.14% | -0.08% | 0.05% | |
| JPY | -0.49% | -0.41% | -0.51% | -0.49% | -0.37% | -0.60% | -0.45% | |
| CAD | 0.02% | 0.10% | -0.01% | 0.49% | 0.13% | -0.10% | 0.04% | |
| AUD | -0.11% | -0.03% | -0.14% | 0.37% | -0.13% | -0.22% | -0.08% | |
| NZD | 0.12% | 0.20% | 0.08% | 0.60% | 0.10% | 0.22% | 0.14% | |
| CHF | -0.02% | 0.06% | -0.05% | 0.45% | -0.04% | 0.08% | -0.14% |
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).
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.
- GBP/USD strengthens to around 1.3470 in Tuesday’s early European session.
- Renewed concerns over the Fed’s independence undermine the US Dollar against the Cable.
- Traders await the US December CPI inflation data on Tuesday for fresh impetus.
The GBP/USD pair edges higher to near 1.3470 during the early European session on Tuesday. The Greenback weakens against the Pound Sterling (GBP) following the US Department of Justice's threat to indict Federal Reserve (Fed) Chair Jerome Powell over comments to Congress about a building renovation project.
Powell said on Sunday that the Fed has received subpoenas from the Justice Department over statements he made to Congress last summer on cost overruns for a $2.5 billion building renovation project at the central bank's headquarters in Washington.
He termed the threats a "pretext" for putting pressure on the Fed to lower interest rates. This headline raises concerns about the independence of the Fed, which exerts some selling pressure on the US Dollar (USD) and creates a tailwind for the major pair.
The Bank of England (BoE) cut its interest rate to 3.75% in the December policy meeting and is expected to implement further reductions in 2026 as inflation eases and UK labor market conditions remain weak, though officials note future decisions will be "closer calls.”
A dovish stance from the BoE could weigh on the Cable against the USD. Many analysts believe the UK central bank will hold rates steady in February, with the next 0.25% cut most likely to occur in March or April this year.
Traders will take more cues from the US December Consumer Price Index (CPI) inflation data, which will be released later on Tuesday. The headline and core US CPI are expected to show an increase of 2.7% YoY in December. These figures could offer some hints about the US interest rate path.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
Japan's economy minister, Minoru Kiuchi, said on Tuesday that the government needs to aim for early parliamentary passage of fiscal budget 2026.
Key quotes
Takaichi administration's responsible, proactive fiscal policy takes into account fiscal discipline.
Need to aim for early parliamentary passage of fiscal budget 2026.
It does not mean reckless spending.
Cannot say that fiscal policy alone is what determines market developments.
Forex rates are determined by various factors.
Long-term interest rates are also determined by various factors in the market.
Need to carefully see various factors including sustainability of wage growth to make sure Japan does not return to deflation again.
But now not in a state to declare exit from deflation just yet.
Market reaction
As of writing, the USD/JPY pair is up 0.45% on the day at 158.90.
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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