Forex News
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Thursday at 6.8349 compared to the previous day's fix of 6.8397 and 6.7955 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- WTI stalls the previous day’s sharp fall amid mixed signals over a potential US-Iran peace deal.
- Trump flagged progress in talks with Iran but warned of military action if a deal is not reached.
- A fall in US Crude inventories on strong demand further acts as a tailwind for the black liquid.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – steadies following the previous day's downfall of nearly 5% amid mixed signals over a potential US-Iran peace deal. The commodity currently trades near the $98.30 region, unchanged for the day, as traders await further developments surrounding the Middle East crisis.
US President Trump said on Wednesday that the US is in the "final stages" of talks with Iran, fueling hopes for a de-escalation in the Iran conflict. Adding to this, US Vice President JD Vance also struck an optimistic tone and stated that Iran wanted to make a deal. This, in turn, led to the overnight decline in Crude Oil prices, though the downfall stalled in the wake of Trump's warning of more military action if Iran did not agree to a peace deal.
In response, Iran criticised Trump's threat and warned against renewed US and Israeli attacks, saying that any such move could greatly escalate the war. Furthermore, investors remain skeptical about an elusive US-Iran peace deal amid major disagreements over Tehran's nuclear program and a standoff over the critical Strait of Hormuz. In fact, Iran launched a new “Persian Gulf Strait Authority” to control traffic through the strategic waterway.
This keeps geopolitical risks premium in play and helps limit further losses for Crude Oil prices. Moreover, the Energy Information Administration reported on Wednesday that US Crude and gasoline stockpiles fell last week as demand remained elevated. This, in turn, makes it prudent to wait for strong follow-through selling before confirming that the commodity has topped out in the near-term and positioning for any further depreciating move.
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/CAD edges higher as the Canadian Dollar struggles, with WTI price steadying after a nearly 5% plunge on Wednesday.
- Crude oil prices declined after President Donald Trump said US-Iran negotiations are in their final stages.
- FOMC Meeting Minutes showed a majority of Fed officials warned they might raise interest rates if inflation stays above 2%.
USD/CAD inches higher for the third consecutive day, trading around 1.3750 during the Asian hours on Thursday. The commodity-linked Canadian Dollar (CAD) struggles against the US Dollar as the West Texas Intermediate (WTI) oil price remains steady after registering a nearly 5% losses in the previous day. Crude oil prices declined after a Bloomberg report on Wednesday, indicating that US President Donald Trump characterized the ongoing negotiations with Iran as being in their final stages.
However, President Trump also reiterated a firm pledge to resume military actions within days if Iran rejects his terms. In response, Iranian President Masoud Pezeshkian emphasized that Tehran has no intention of capitulating, stating on the social media platform X that attempting to force a surrender through coercion is nothing more than an illusion.
Tehran is currently evaluating Washington’s latest draft response to its 14-point proposal, delivered via Pakistani intermediaries. A potential diplomatic breakthrough would likely resolve the "dual blockade" crisis by prompting both nations to lift their respective naval restrictions on commercial shipping through the Strait of Hormuz, where vital tanker traffic has faced severe disruptions since March.
The USD/CAD pair gains ground as the US Dollar (USD) holds steady, as traders are closely monitoring the economic implications of peace negotiations between the United States (US) and Iran, alongside heightened threats to the critical Strait of Hormuz shipping lane.
The Greenback may receive support as the Minutes of the April Federal Open Market Committee (FOMC) meeting were released on Wednesday, indicating a hawkish tone surrounding the Fed outlook. The majority of Federal Reserve (Fed) officials warned the central bank would likely need to consider raising interest rates if inflation continued to run persistently above their 2% target. The minutes highlighted the deepening concern among Fed officials about inflationary pressures driven by the Iran war.
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.
- EUR/USD holds steady around 1.1625 in Thursday’s early Asian session.
- Trump said talks with Iran are in the final stages, but warned of attacks if the deal fails.
- The Fed has shifted to a hawkish tone, and more officials see a rate hike scenario.
The EUR/USD pair trades flat near 1.1625 during the early Asian session on Thursday. The potential upside for the major pair might be limited, as uncertainty surrounding US–Iran talks could boost the safe-haven assets. The preliminary readings of the Purchasing Managers' Index (PMI) for May from the Eurozone, Germany and the US are due later on Thursday.
US President Donald Trump said on Wednesday that negotiations with Iran were in the final stages, while warning of further attacks unless Iran agrees to a deal.
Meanwhile, Iranian President Masoud Pezeshkian stated that Tehran was not on the brink of giving in and threatened to retaliate for any strikes with attacks beyond the Middle East. Signs of escalating tensions between the US and Iran could boost a safe-haven currency such as the US Dollar (USD) and create a headwind for the major pair.
Additionally, a hawkish tone from the US Federal Reserve (Fed) could contribute to the USD’s upside. According to the April meeting minutes released on Wednesday, a majority of officials stated that interest rate hikes could become necessary if inflation remains persistently above the 2% target.
Across the pond, the majority of economists from the Reuters poll, around 85%, indicated that the European Central Bank (ECB) would raise its deposit rate by 25 bps to 2.25% in June, up from just over half expecting that before the April meeting.
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.
- USD/JPY depreciates as the Japanese Yen holds gains following stronger-than-expected domestic trade balance data.
- Japan’s Trade Balance unexpectedly swung to a JPY 301.9 billion surplus in April, beating expected decline of JPY 29.7 billion.
- Trump stated US-Iran negotiations are in their final stages, threatening military action within days if Iran rejects his terms.
USD/JPY remains subdued for the second successive day, trading around 158.90 during the Asian hours on Thursday. The pair depreciates as the Japanese Yen (JPY) holds gains following the release of Japan’s Merchandise Trade Balance Total data.
Japan’s trade balance swung to a surplus of JPY 301.9 billion in April 2026, reversing a deficit of JPY 149.5 billion from the same period last year and significantly outperforming the market's projected JPY 29.7 billion shortfall.
Japan’s Exports surged by 14.8% year-on-year to a near-record JPY 10,507.3 billion, accelerating from an 11.5% increase in March and recording the strongest growth in three months. Over the same period, Imports grew by 9.7% to JPY 10,205.4 billion. While this represents a slight deceleration from the 10.9% gain seen in March, the figure still surpassed market expectations of an 8.3% increase.
The USD/JPY pair maintains its recent losses as the US Dollar (USD) holds steady following a decline the previous day. Market participants are closely monitoring the economic implications of stalled peace negotiations between the United States (US) and Iran, alongside heightened threats to the critical Strait of Hormuz shipping lane.
A Bloomberg report on Wednesday indicated that US President Donald Trump characterized the ongoing negotiations with Iran as being in their final stages. However, President Trump also reiterated a firm pledge to resume military actions within days if Iran rejects his terms. In response, Iranian President Masoud Pezeshkian emphasized that Tehran has no intention of capitulating, stating on the social media platform X that attempting to force a surrender through coercion is nothing more than an illusion.
Economic Indicator
Merchandise Trade Balance Total
The Merchandise Trade Balance Total released by the Ministry of Finance is a measure of balance amount between import and export. A positive value shows a trade surplus while a negative value shows a trade deficit. Japan is so much dependant on exports that the Japanese economy heavily relies on a trade surplus. Therefore, any variation in the figures influences the domestic economy. If a steady demand in exchange for Japanese exports is seen, that would turn into a positive.
Read more.Last release: Wed May 20, 2026 23:50
Frequency: Monthly
Actual: ¥301.9B
Consensus: ¥-29.7B
Previous: ¥667B
Source: Ministry of Finance of Japan
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