Forex News
The preliminary reading of Australia's S&P Global Manufacturing Purchasing Managers Index (PMI) jumped to 51.0 in April versus 49.8 prior, the latest data published by S&P Global showed on Thursday.
The Australia’s S&P Global Services PMI climbed to 50.3 in April from the previous reading of 46.3, while the Composite PMI rose to 50.1 in April versus 46.6 prior.
Market reaction
At the press time, the AUD/USD pair is up 0.08% on the day to trade at 0.7160.
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.
MUFG’s Senior Currency Analyst Lloyd Chan argues that while geopolitical risks stay elevated, valuation metrics such as REER now show meaningful Rupiah undervaluation versus the US Dollar. The bank’s base case is for near-term Rupiah stabilisation, with USD/IDR seen at 17,000 by end-Q2 and gradually improving Rupiah performance as policy support and flows strengthen.
MUFG sees scope for gradual recovery
"Geopolitical risks remain elevated, but valuations are turning more compelling, with REER pointing to meaningful rupiah undervaluation versus the US dollar."
"Active policy intervention has helped suppress FX volatility and slow the pace of USDIDR gains, while Indonesia’s sovereign CDS spreads have narrowed."
"USDIDR has also moved into overbought territory, reducing the risk-reward of chasing USD upside at current levels."
"Our base case is for near‑term rupiah stabilisation rather than a disorderly depreciation."
"We maintain our end‑Q2 USDIDR forecast at 17,000 and expect a gradual improvement in rupiah performance in subsequent quarters as stabilisation forces build."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- UK headline CPI rose 0.7% MoM in March, beating the 0.6% forecast, while core CPI cooled to 3.1% YoY from 3.2% prior.
- Thursday's UK flash PMIs are seen slipping into contraction, with Manufacturing forecast at 49.9 and Composite at 49.8.
- Friday's UK retail sales and US UoM inflation expectations round out a busy week for both currencies.
GBP/USD was little changed on Wednesday, settling close to 1.3510 after a choppy session that reached 1.3540 in London hours before fading toward 1.3490. Price has been pinned inside a 65-pip band through midweek, with long upper and lower wicks pointing to two-way uncertainty.
UK inflation data dominated Wednesday's London session. Headline Consumer Price Index (CPI) rose 0.7% MoM in March, slightly above the 0.6% consensus, with the annual rate edging up to 3.3% YoY, though core CPI cooled to 3.1% YoY against the 3.2% expected, tempering the hawkish read. The UK calendar stays busy from Thursday, with flash Purchasing Managers Index (PMI) surveys expected to show Manufacturing and Composite activity slipping into contraction at 49.9 and 49.8 respectively, and GfK Consumer Confidence seen deteriorating to -25 from -21. Friday's UK Retail Sales are forecast at 0.2% MoM, a tentative rebound from the -0.4% print in February.
On the US side, Thursday brings flash PMIs, with Services expected to return to the 50 threshold after a brief dip into contraction and Manufacturing holding near 52.5, alongside Initial Jobless Claims at 212K against 207K prior. Friday's University of Michigan (UoM) sentiment and inflation expectations cap off the week, with one-year inflation expectations seen steady at 4.8%. Broader direction for the US Dollar stays anchored by the Strait of Hormuz closure and elevated crude, while market hopes for a US-Iran resolution have softened as goalposts continue to shift.
GBP/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, GBP/USD trades at 1.3506, holding a mildly bearish near-term bias as it remains under the day’s open at 1.3517, which now acts as immediate intraday resistance. The Stochastic RSI has retreated from earlier overbought readings toward mid-range levels near 40, suggesting fading upside momentum after the latest pullback.
On the topside, the day’s open at 1.3517 is the first hurdle bulls need to reclaim to ease the current downside pressure and open the way to a more constructive recovery. On the downside, the absence of nearby mapped supports leaves the pair vulnerable to further slippage, with traders likely to monitor psychological round levels below 1.3500 as potential areas where dip-buying interest could emerge.
In the daily chart, GBP/USD trades at 1.3501. The pair holds a bullish near-term bias as price stands above both the 50-day and 200-day exponential moving averages (EMAs), which trend higher and suggest an underlying constructive tone. The elevated Stochastic RSI around 87 signals overbought conditions, hinting that upside momentum is stretched even as the broader setup remains supported by the rising medium-term averages.
On the downside, initial support emerges at the 50-day EMA near 1.3427, with the 200-day EMA around 1.3357 reinforcing a deeper demand zone on pullbacks. As long as the pair holds above these moving averages, buyers are likely to defend dips, though the overbought Stochastic RSI warns that consolidation or a corrective pause could precede any sustained extension of the uptrend.
(The technical analysis of this story was written with the help of an AI tool.)
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 March trade surplus hit ¥667B as exports rose 11.7% YoY, though imports came in hot at 10.9% on energy costs.
- Elevated crude tied to the Strait of Hormuz closure continued to pressure Yen amid Japan's reliance on imported energy.
- Thursday's Japan CPI and US PMI data will test Yen direction, with Friday's UoM inflation expectations also in focus.
USD/JPY was little changed on Wednesday, hovering close to 159.50 in a narrow session after Tuesday's push to 159.64. Price has been confined between 159.10 and 159.60 through the midweek stretch, with overlapping small-bodied candles pointing to indecision.
Japan's March trade data released late Tuesday showed a ¥667 billion surplus, coming in well below the ¥1,106 billion consensus as imports ran hot at 10.9% YoY versus a 7.1% forecast. Exports climbed 11.7% YoY, outpacing expectations, but the Strait of Hormuz closure has kept crude oil prices high, inflating Japan's energy import bill and weighing on Yen. Market hopes for a resolution to the US-Iran conflict have softened as goalposts continue to shift, though any genuine de-escalation would likely spark a risk-on rotation and broad US Dollar weakness.
On the US side, Thursday brings Initial Jobless Claims (consensus 212K, prior 207K) alongside preliminary April S&P Global Purchasing Managers Index (PMI) figures, with Services forecast to return to the 50 threshold after a brief dip into contraction and Manufacturing seen near 52.5. Japan's National Consumer Price Index (CPI) also lands Thursday, with the core measure excluding fresh food expected at 1.8% YoY versus 1.6% prior, a hotter print likely to fuel renewed BoJ hike speculation. Friday's University of Michigan (UoM) sentiment and inflation expectations round out the week, with one-year inflation expectations forecast steady at 4.8% amid the supply-shock impulse from elevated crude.
USD/JPY 15-minute chart
Technical Analysis
In the fifteen-minute chart, USD/JPY trades at 159.48. The pair is consolidating in a tight range around the intraday area, with no nearby moving averages or structural levels to provide clear directional cues. The Stochastic RSI has retreated toward lower readings near 30, hinting that bearish momentum has cooled after earlier overbought conditions, but price action remains broadly range-bound for now.
With no major exponential moving averages or Fibonacci levels in play on this timeframe, short-term traders are likely to focus on price behavior around the 159 handle and the recent intraday highs and lows to gauge a breakout or continuation. A sustained move away from the current consolidation band, accompanied by a turn higher or lower in the Stochastic RSI from its subdued zone, would help define the next directional impulse in USD/JPY on the very short-term horizon.
In the daily chart, USD/JPY trades at 159.48, holding a constructive bullish bias as spot remains above both the 50-period Exponential Moving Average (EMA) at 158.25 and the 200-period EMA at 154.93. The configuration of price above these key trend EMAs suggests that the broader uptrend remains intact, although the Stochastic RSI near 31.9 hints that upside momentum has cooled after the recent advance, leaving the pair vulnerable to bouts of consolidation or shallow pullbacks within the prevailing bullish structure.
On the downside, initial support is seen at the 50-day EMA around 158.25, with a deeper cushion at the 200-day EMA near 154.93 should sellers gain traction. As long as USD/JPY holds above the 50-day EMA on closing bases, dips are likely to be treated as corrective within the broader uptrend, while a sustained break beneath this level would be needed to signal a more meaningful deterioration in the bullish outlook.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- Kiwi capped as the US Dollar holds firm on safe-haven flows tied to ongoing tensions around the Strait of Hormuz.
- Softer US yields are capping gains in NZD/USD, while weakening risk appetite continues to restrict further upside.
- Oil-driven inflation fears support the greenback, while markets scale back bets on Fed easing.
The NZD/USD pair is trading with a cautious tone around the 0.5910 region on Thursday, as the US Dollar (USD) maintains a firm footing despite a modest pullback in US Treasury yields.
The Greenback continues to benefit from safe-haven demand, with markets remaining on edge following fresh developments in the Middle East. Although a ceasefire extension between the United States and Iran initially provided some relief, renewed disruptions in the Strait of Hormuz and rising Oil prices have kept risk sentiment fragile, limiting demand for higher-beta currencies like the New Zealand Dollar (NZD).
At the same time, US yields drifting lower have prevented a more aggressive upside in the USD, allowing NZD/USD to stabilize after recent losses. However, this support has proven shallow, as investors continue to reassess the outlook for Federal Reserve policy. Expectations for rate cuts remain limited, with markets still pricing a relatively cautious easing cycle.
Short-term technical analysis:
On the four-hour chart, NZD/USD trades at 0.5907, holding a constructive near-term bias as it sits above both the 20-period Simple Moving Average (SMA) around 0.5897 and the 100-period SMA near 0.5825. The clustering of short- and medium-term SMAs below spot suggests underlying demand, while the Relative Strength Index (RSI) around 54 signals modest bullish momentum without venturing into overbought territory.
On the downside, initial support emerges at 0.5902, ahead of 0.5897, a level reinforced by the nearby 20-period SMA, with the 100-period SMA down at 0.5825 marking a more distant floor. On the topside, immediate resistance is seen at 0.5921, followed by 0.5924; a break above these hurdles would open the way toward 0.5965.
(The technical analysis of this story was written with the help of an AI tool.)
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