Forex News
Commerzbank’s Charlie Lay argues that elevated South Korean inflation strengthens the case for a 25bp Bank of Korea (BoK) hike to 2.75% on 16 July. USD/KRW has fallen from 1560 to 1506 on earlier Oil weakness, but the bank now expects the pair to trade in a 1500–1520 range, with Oil prices and global risk sentiment remaining key drivers.
Won pressured by inflation and Oil
"South Korea's inflation remained elevated in June, reinforcing the view that the Bank of Korea (BoK) is on course to hike rates next week. Headline CPI inflation was slightly higher at 3.2% yoy from 3.1% in May, marking the highest reading since December 2023. It remained well above BoK’s 2% target."
"Other factors expected to keep inflationary pressures firm include the weak won and robust wage growth linked to the AI-driven semiconductor boom."
"The latest inflation report strengthens the case for BoK to hike by 25bp to 2.75% at the next meeting on 16 July. Inflation has now been above target for several months, while exports continue to surprise on the upside thanks to booming semiconductor demand."
"For USD/KRW, external factors including the USD, global risk sentiment, and geopolitical developments will remain key drivers. USD/KRW has fallen from 1560 to 1506 in the past two weeks due to the pullback in oil prices."
"A rebound in oil prices could limit any further decline in USD/KRW for now. We look for the 1500-1520 range for now, with oil prices likely to remain the key driver in the near term."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver rebounds as a softer US Dollar and lower Treasury yields offer support.
- Hawkish Fed expectations keep Silver's upside limited.
- Technically, XAG/USD remains trapped within a downward parallel channel below key moving averages.
Silver (XAG/USD) snaps a three-day losing streak on Thursday as a mildly weaker US Dollar (USD) and a pullback in US Treasury yields lend support to the precious metal. At the time of writing, XAG/USD trades around $60.30, up 3.38% on the day.
Despite the intraday rebound, XAG/USD maintains a bearish structure, with a series of lower highs and lower lows since mid-May. The metal also trades below its key moving averages and is about 50% below its record high near $121 set in January.
The metal is struggling to stage a sustained recovery as macroeconomic headwinds cap the upside. Renewed hostilities in the Middle East have revived concerns over energy-driven inflation, reinforcing expectations that the Federal Reserve (Fed) may need to raise interest rates.
Higher borrowing costs tend to weigh on non-yielding metals because they become less attractive relative to interest-bearing investments.
Hawkish Fed expectations and heightened geopolitical tensions are expected to keep downside pressure on the US Dollar limited. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 100.94 after touching an intraday low of 100.79.
Technical Analysis
On the daily chart, XAG/USD keeps a bearish near-term bias as price holds within a downward parallel channel and below both the 200-day Simple Moving Average (SMA) at $70.25 and the 100-day SMA at $74.32.
The pair trades just under the channel top at $63.50, suggesting upside attempts remain capped for now, while the Relative Strength Index (RSI) around 41 points to subdued momentum even as the Moving Average Convergence Divergence (MACD) turns positive, hinting at only a modest recovery attempt within a broader corrective structure.
On the topside, initial resistance is located at the channel upper boundary near $63.50. A sustained break above this would be needed to challenge the 200-day SMA at $70.25 and the 100-day SMA at $74.32.
On the downside, first support emerges at the horizontal line around $55, with the channel floor near $45 expected to act as a stronger demand area if bearish pressure resumes.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
BNY’s Geoff Yu reports that the New York Fed’s latest Liberty Street Economics analysis warns many United States (US) firms still plan tariff-related price increases, implying persistent inflation pressures that matter for the US Dollar (USD) and Federal Reserve (Fed) policy. Nearly half of tariff-paying companies expect further hikes, with gradual pricing and fixed contracts extending adjustment and complicating disinflation.
Tariffs extend U.S. inflation timeline
"The New York Fed said in its July 8 Liberty Street Economics post that more tariff passthrough still lies ahead for many U.S. firms. Drawing on regional business surveys, the institution reported that nearly half of firms that pay tariffs directly are still planning further price increases, with some expecting to raise prices six months or more from now."
"It said roughly 47% of service firms and 44% of manufacturers that pay tariffs expect additional tariff-related price hikes. It also noted that gradual pricing, fixed contracts and policy uncertainty are extending the adjustment process, suggesting tariff-driven inflationary pressure may persist longer than many policymakers expected."
"Meanwhile, the Fed minutes did little to dent hawkish rate expectations, and the most reliable route to lower inflation is weaker demand – a path that offers little comfort for equities."
"For all the inflation vigilance, the Fed and its peers recognize that markets remain highly sensitive to supply shocks."
"This week’s energy volatility has already tightened financial conditions, reducing the need to reinforce the case for further rate hikes."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Australian Dollar edges higher on Thursday despite heightened geopolitical tensions.
- Markets continue to price in a return to negotiations between the US and Iran, limiting risk aversion.
- The US Dollar weakens after the Fed Minutes and despite stronger-than-expected US labor market data.
AUD/USD trades around 0.6940 on Thursday at the time of writing, up 0.16% on the day, as the weaker US Dollar (USD) supports the pair despite persistent tensions in the Middle East. Investors continue to view the latest exchange of attacks between the United States (US) and Iran as an attempt by both sides to strengthen their negotiating positions ahead of a potential return to peace talks, limiting demand for safe-haven assets for now.
The US Dollar remains under pressure on Thursday, with the US Dollar Index (DXY) down 0.11% near 100.95 at the time of press. The Greenback struggles to benefit from stronger-than-expected US economic data, as the US Department of Labor reported that Initial Jobless Claims fell to 215K in the week ending July 4, down from 217K previously, while Continuing Jobless Claims edged up slightly to 1.814M.
The US Dollar also remains weighed down by the market's reaction to the Minutes of the latest Federal Reserve (Fed) meeting. The Minutes showed that policymakers remain concerned about inflation risks but are divided over the future path of monetary policy, reinforcing expectations of future policy easing and weighing on the Greenback.
In Australia, investors continue to assess the outlook for the Reserve Bank of Australia (RBA). Assistant Governor Sarah Hunter recently reiterated that the central bank stands ready to act if necessary to return inflation to target while maintaining sustainable full employment. Those comments continue to limit expectations of a near-term easing cycle by the RBA.
Meanwhile, China's economic outlook remains a source of caution for the Australian Dollar. Recent data showed that inflation in China remains subdued, highlighting weak domestic demand in Australia's largest trading partner, a factor that could limit the Aussie's upside potential over the medium term.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.03% | -0.15% | -0.01% | -0.15% | -0.89% | -0.21% | |
| EUR | 0.15% | 0.13% | 0.00% | 0.15% | 0.02% | -0.69% | -0.05% | |
| GBP | 0.03% | -0.13% | -0.13% | 0.01% | -0.12% | -0.81% | -0.16% | |
| JPY | 0.15% | 0.00% | 0.13% | 0.12% | 0.03% | -0.74% | -0.05% | |
| CAD | 0.00% | -0.15% | -0.01% | -0.12% | -0.11% | -0.86% | -0.18% | |
| AUD | 0.15% | -0.02% | 0.12% | -0.03% | 0.11% | -0.74% | -0.07% | |
| NZD | 0.89% | 0.69% | 0.81% | 0.74% | 0.86% | 0.74% | 0.67% | |
| CHF | 0.21% | 0.05% | 0.16% | 0.05% | 0.18% | 0.07% | -0.67% |
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).
Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is flat on Thursday but modestly firmer versus the US Dollar (USD) this week, making it a mild outperformer. They argue much bad news is already priced into CAD and that short-term USD/CAD risk reversals and improving Canadian data support a more constructive near-term view as front-end spreads stabilize.
Overbought Dollar faces firm resistance
"The CAD is all but flat on the day but retains a modestly firmer tone on the USD overall through the week so far, leaving it as a modest outperformer since Monday."
"The shift lower in short-term USDCAD risk reversals reflects a general sentiment shift against the USD but we also note some recent improvement in relative economic reports (reflecting slightly better than forecast, but still soft, Canadian data) which has tilted the US/Canada surprise index spread lower from high seen in early June."
"That should bolster a somewhat more constructive view of the CAD in the short run at least as front-end spreads stabilize and perhaps retreat. We continue to think that a lot of bad news is already factored into the CAD at current pricing, leaving little or no room for additional losses."
"Neutral—The CAD’s technical condition is little changed overall. The USD remains extremely overbought and we are more confident that the 1.4250/00 range should continue to offer firm resistance to a USD advance."
"A break under support at 1.4150 would be a bearish signal and prompt spot to test important support at 1.4075/80."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD trades slightly higher as the US Dollar fails to gain strong traction despite supportive US jobless claims data.
- US Initial Jobless Claims fell to 215K, while Continuing Claims show layoffs remain limited but reemployment is slow.
- The FOMC Minutes kept the Fed hawk stance in focus, while the Pound Sterling remains supported by sticky UK inflation concerns.
GBP/USD trades higher near the 1.3400 area on Thursday, as the US Dollar (USD) fails to find support from stronger-than-expected United States (US) jobless claims data and hawkish signals in the latest Federal Open Market Committee (FOMC) Minutes.
United States (US) Initial Jobless Claims fell to 215K, below expectations of 218K and the previous revised 217K, while the four-week average eased to 218.75K from 222.5K. However, Continuing Jobless Claims rose slightly to 1.814 million from 1.806 million, suggesting that while layoffs remain limited, workers are still taking longer to find new jobs.
The Greenback also remained supported after the FOMC Minutes showed that policymakers were divided on the inflation outlook, with some officials seeing a case for tighter policy if price pressure remains elevated. A few Fed officials reportedly saw a case for a rate hike at the June meeting, reinforcing the view that the Fed is not ready to turn dovish while inflation remains above target.
On the United Kingdom (UK) side, the Pound Sterling (GBP) is supported by a cautious outlook from the Bank of England (BoE). The BoE has warned that inflation could remain elevated due to energy price effects, while noting that the UK labor market is loosening and growth remains fragile. This keeps traders cautious on GBP as markets balance sticky inflation risks against signs of softer economic momentum.
Short-term technical analysis:
On the 4-hour chart, GBP/USD trades at 1.3400 with a constructive near-term bias as the pair holds above both the 20-period Simple Moving Average (SMA) at 1.3377 and the 100-period SMA at 1.3278. Price is also trading over nearby horizontal supports at 1.3389 and 1.3385, reinforcing a positive structure, while the Relative Strength Index (RSI) around 59 stays in bullish but not overbought territory, suggesting room for further upside.
On the topside, initial resistance is seen at 1.3411, with a subsequent barrier at 1.3422 where recent supply has been located. On the downside, a first layer of support emerges at 1.3389, followed by 1.3385, while deeper pullbacks would look toward the 20-period SMA at 1.3377 and then the 100-period SMA at 1.3278 as more significant demand zones.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- Chinese investors pulled out around $2.22 billion of domestic Gold Exchange-Traded Funds in June, the largest monthly amount on record.
- Investors opted to take profits as risk appetite improved and the focus shifted to equities.
- Demand for Gold via ETFs from China remained significant in the first semester despite June’s pullback.
Chinese investors sharply trimmed their Gold ETF holdings in June, exacerbating global outflows for the month, as local investor risk appetite continued to improve amid equity market gains and a weaker Gold price, data from the World Gold Council (WGC) shows.
Physically-backed Gold ETFs in mainland China posted outflows of $2.22 billion in June, the highest monthly figure on record, according to data released on Wednesday. Over the month, Gold prices fell by more than 11%, similar to the pullback seen in January, as the US-Iran conflict continued to fuel inflation fears and central banks continued to signal potential interest-rate increases ahead.
“This anticipation contributed to rising real yields and a strengthening US Dollar, pushing up investors’ opportunity costs of holding gold,” the WGC said.
The pullback by Chinese investors is significant, as the country is the world’s largest market for the precious metal. The ETF facing the most outflows was Huaan Yifu Gold ETF with more than $1.1 billion.
Globally, Gold ETFs saw outflows of $8.9 billion in June, driven by Chinese investors’ pullback but also by those in the United States, with withdrawals of more than $5.3 billion.
Looking beyond June, data from the WGC shows that global Gold ETFs flows remained positive during the first semester at around $8 billion. Asia dominated global inflows (the region posted the strongest H1 on record), Europe also registered gains, while North America was the only region that recorded outflows.
Looking ahead, the WGC projects that Gold ETF flows could stabilize due to the relatively steady outlook for the precious metal for the second half of the year.
“Uncertainties surrounding geopolitics, economic growth and financial markets linger. This backdrop may continue to support investor demand for portfolio protection and sustain interest in gold ETFs as a strategic safe-haven allocation,” the report said.
Nordea’s Jan von Gerich argues that the European Central Bank (ECB) is likely to continue tightening policy, with the outlook heavily dependent on Middle East developments and energy prices. He notes that a July move is now unlikely after lower inflation and falling Oil, but sees a September rate hike as probable, in line with current market pricing.
ECB path tied to energy risks
"The ECB outlook still hinges to a large extent on the developments in the Middle East and in energy prices."
"While a July hike is likely to be off the table without a significant jump in energy prices, a September rate move looks much more likely."
"However, the account supported the view that even a quick end to the conflict would not automatically mean that the ECB would be done hiking rates."
"The major fall seen in energy prices on the back of hopes of a peace in the Middle East and lower-than-expected inflation numbers for June have given the ECB more time to monitor the situation, and the July hike we have had in our baseline forecasts does not look particularly likely anymore."
"However, the recent spike higher in the crude oil price on the back of renewed hostilities in the Middle East is a fresh reminder of the remaining uncertainties, and we do not think the ECB is done hiking, with also several Governing Council members recently commenting that upside price risks remain."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold gains remain limited as hawkish Fed expectations and geopolitical tensions keep the US Dollar broadly supported.
- US-Iran tensions revive concerns over energy-driven inflation.
- Technically, XAU/USD remains in a corrective phase, with upside capped below the 20-day Bollinger middle band.
Gold (XAU/USD) firms on Thursday as a mildly softer US Dollar (USD) and a modest pullback in US Treasury yields help the precious metal recover some ground after three consecutive days of losses.
At the time of writing, XAU/USD is trading around $4,123, up 1.16% on the day.
However, Gold's upside remains limited as renewed hostilities in the Middle East revive concerns over energy-driven inflation, reinforcing market expectations that the Federal Reserve (Fed) may need to raise interest rates.
The United States (US) and Iran exchanged another round of attacks overnight. US President Donald Trump said on Truth Social, "This is in retribution for yesterday's bombing of ships by Iran. If it happens again, it will get much worse!"
On Wednesday, Iran reiterated its threat to close the Strait of Hormuz if fresh attacks occur, raising concerns that global Oil flows could once again be disrupted after improving following last month's interim peace agreement.
The latest escalation has weakened hopes for a permanent peace agreement, hurting risk sentiment and keeping the US Dollar (USD) well supported despite some intraday weakness. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 100.90 after touching an intraday low of 100.79.
Meanwhile, hawkish Fed expectations are providing additional support to the USD. According to the CME FedWatch Tool, markets are pricing in a 63% chance of a rate hike at the September meeting. Higher borrowing costs tend to weigh on Gold because the metal does not offer yield.
New York Fed President John Williams said on Thursday, "Inflation is still far too high," adding that the Fed is "actively debating scenarios around inflation" and remains committed to bringing inflation back to its 2% target.
Analysts at OCBC Bank noted, "While geopolitics would normally offer some support for gold, the latest move has worked more through the oil, inflation and rates channel." They added, "Near term, unless oil stabilises or Fed/rates concerns ease, rallies in gold and silver may still struggle to sustain."
Technical analysis: Sellers retain control below the Bollinger middle band
On the daily chart, XAU/USD keeps a bearish near-term bias, with price sitting below the 20-day Simple Bollinger middle band at $4,135. The Relative Strength Index (RSI) at 43.12 remains below the neutral 50 mark, hinting at subdued upside momentum, while the Average Directional Index (ADX) around 37 suggests a reasonably strong prevailing trend despite the latest consolidation.
On the topside, initial resistance emerges at the Bollinger middle band around $4,135, followed by the horizontal barrier at $4,200 and then the Bollinger upper band near $4,326.
On the downside, immediate support is seen at the psychological $4,000 handle, ahead of the lower Bollinger band clustered around $3,944, where buyers could attempt to slow the current corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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