Forex News
- Gold remains on the back foot below a two-week high amid a combination of factors.
- Geopolitical risks revive demand for the safe-haven USD and cap the precious metal.
- Hawkish Fed bets further act as a headwind for the commodity amid a bearish setup.
Gold (XAU/USD) extends its steady intraday descent through the first half of the European session and retreats further from the vicinity of the $4,600 mark, or a two-week high set on Friday. Persistent geopolitical uncertainties, along with hawkish Federal Reserve (Fed) expectations, assist the US Dollar (USD) in regaining positive traction. This, in turn, is seen as a key factor exerting pressure on the commodity, dragging it further below the $4,500 psychological mark. The precious metal, however, holds well above a two-month low touched last Thursday, as traders might opt to wait for further progress in US-Iran peace talks.
Iran's Foreign Minister, Abbas Araqchi, told state media on Sunday that talks and message exchanges with the US are ongoing, though he cautioned against reading too much into unconfirmed reports about the negotiations. Earlier, Iran’s chief negotiator, Mohammad Bagher Qalibaf, stated that the country will not accept any agreement until its national rights are fully secured. Apart from this, reports suggest that the US had hardened its negotiating position with Iran, raising fresh uncertainty over diplomatic efforts to end a three-month-old conflict in the Middle East.
Moreover, differences over Iran's nuclear program and the Strait of Hormuz continue to complicate efforts to reach a deal. US President Donald Trump reportedly requested that edits related to the strategic waterway and enriched uranium be made to the US-Iran deal aimed at bringing an end to the fighting. Proposals are still being exchanged through Pakistani and other regional mediators, but it remains unclear if the sides are making much progress. Meanwhile, Israel expanded its ground assault in Lebanon in the battle with the Iranian-backed Hezbollah militant group.
Reuters reported that Israeli forces seized the 900-year-old Beaufort Castle and are now operating past the Litani River. This expansion marks Israel’s deepest incursion into Lebanon since its withdrawal in the year 2000 and keeps geopolitical risk premium in play, underpinning the safe-haven USD. Meanwhile, the latest development triggers a goodish recovery in Crude Oil prices from over a one-month low, touched on Friday. This revives inflation fears and bolsters Fed rate hike bets. This further benefits the buck and contributes to capping the non-yielding Gold.
The market attention now shifts to the important US macro data, scheduled at the start of a new month. A rather busy week kicks off with the release of the US ISM Manufacturing PMI, due later today. The focus, however, will be on the crucial US Nonfarm Payrolls (NFP) report on Friday, which could influence market expectations about the Fed's policy path and drive the USD demand in the near term. Apart from this, developments surrounding the Middle East crisis might continue to infuse volatility across the global financial markets and influence the Gold price.
XAU/USD daily chart
Gold seems vulnerable to slide further as intraday break below $4,500 comes into play
From a technical perspective, the XAU/USD pair is holding a bearish near-term bias as it remains trapped inside a downward parallel channel and below the 50-day Simple Moving Average (SMA). Moreover, moderating Moving Average Convergence Divergence (MACD) histogram together with a sub-50 Relative Strength Index (RSI) around 44 suggest rallies are likely to be sold while momentum stays soft.
However, the commodity last week showed some resilience below the very important 200-day SMA, which still underpins the broader uptrend. This makes it prudent to wait for a convincing break and acceptance below the said MA at $4,411.29 before positioning for a fall towards the channel support near $4,303.42. On the topside, immediate resistance is clustered around the channel’s upper boundary near $4,627.52, reinforced by the 50-day SMA at $4,628.82. A sustained break above this confluence would be needed to ease the current downside pressure.
(The technical analysis of this story was written with the help of an AI tool.)
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.00% | -0.15% | 0.13% | 0.12% | 0.01% | 0.41% | 0.31% | |
| EUR | 0.00% | -0.13% | 0.09% | 0.13% | 0.08% | 0.43% | 0.30% | |
| GBP | 0.15% | 0.13% | 0.24% | 0.26% | 0.15% | 0.54% | 0.40% | |
| JPY | -0.13% | -0.09% | -0.24% | 0.02% | -0.08% | 0.32% | 0.16% | |
| CAD | -0.12% | -0.13% | -0.26% | -0.02% | -0.11% | 0.29% | 0.15% | |
| AUD | -0.01% | -0.08% | -0.15% | 0.08% | 0.11% | 0.34% | 0.24% | |
| NZD | -0.41% | -0.43% | -0.54% | -0.32% | -0.29% | -0.34% | -0.14% | |
| CHF | -0.31% | -0.30% | -0.40% | -0.16% | -0.15% | -0.24% | 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 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).
Iran's Foreign Ministry spokesperson Esmail Baghaei said in the European session on Monday that ‘aggressive action' by the United States (US) is a ceasefire violation, and it led Iranian armed forces to target positions from which US attacks originated.
On Israel-Lebanon conflicts, Iran’s Bahgaei said, “Ceasefire in Lebanon is integral part of any agreement to end war with US.” Bahgaei also condemned Washington’s revised terms of a peace deal, warning that they are causing a delay in the deal's finalization. “Lack of trust, constant change of positions by US and Israeli actions in Lebanon are causing delay in diplomatic process,” Baghaei said.
Regarding Iran’s attacks on Kuwait, Baghaei said, “Kuwait should clarify as soon as possible the situation of four detained Iranian citizens.”
Meanwhile, Kuwait’s Foreign Ministry also condemned Iranian attacks on its territory, saying they have “undermined efforts to reduce tensions in the region and affirmed that it has the full right to take all necessary measures to defend its territory”.
Market reaction
There seems to be no impact of Iran Baghaei's comments on risk-sensitive assets and the US Dollar (USD).
(This story was corrected at 08:45 GMT to say in the title that Israel-Lebanon conflicts cause delay in deal, and not Iran-Lebanon)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Dow Jones futures rise as relentless investor enthusiasm for artificial intelligence developments continues to boost market optimism.
- US index futures edge higher after a Wall Street's strong May momentum.
- The US and Iran agreed to a 60-day ceasefire memorandum, though geopolitical relations and diplomatic channels remain fluid.
Dow Jones futures advance 0.10% to near 51,130, while S&P 500 futures gain 0.22% toward 7,580. Meanwhile, Nasdaq 100 futures rises 0.48%, trading near 30,550 during the European hours on Monday, ahead of the US regular opening.
US stock futures edge higher following a strong May on Wall Street, continuing the momentum that saw the Dow Jones advance 2.79%, the S&P 500 climb 5.15%, and the Nasdaq 100 surge 8.36%.
Market sentiment improves, driven by the technology sector, where investor enthusiasm for artificial intelligence-related developments shows no signs of slowing down. Further bolstering market confidence is a highly successful first-quarter earnings season.
Meanwhile, the US and Iran agreed to a 60-day memorandum of understanding to maintain the ceasefire, although geopolitical landscape remains fluid as diplomatic channels between Washington and Tehran experience ongoing activity. Iranian Foreign Minister Abbas Araghchi confirmed that talks and message exchanges with the United States are currently underway. However, Araghchi maintained a cautious stance, emphasizing that it remains impossible to properly evaluate the trajectory of these negotiations until a definitive and clear outcome is officially reached.
US President Donald Trump has requested specific revisions to the proposed US-Iran deal. The agreement, which aims to permanently halt the hostilities that erupted earlier this year, is now facing adjustments centered on key security and non-proliferation issues. Specifically, the requested modifications focus on the strategic transit dynamics of the Strait of Hormuz and the management and removal of Iran's highly enriched uranium supplies.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The British Pound gains against its major peers despite BoE’s Bailey signaling no rush for tightening monetary conditions.
- BoE’s Bailey clarified that interest rate hikes would be needed if second-round effects of inflation start emerging.
- The US Dollar trades flat at the start of the US NFP data week.
The British Pound (GBP) trades higher against its major currency peers, but is broadly flat around 1.3455 against the US Dollar (USD), during the European trading session on Monday. The United Kingdom (UK) currency gains even as Bank of England (BoE) Governor Andrew Bailey has signaled that the central bank does not need to rush for interest rate hikes, while warning that the Middle East conflict-led shock has raised concerns over the economic outlook.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.08% | 0.13% | 0.13% | 0.04% | 0.34% | 0.27% | |
| EUR | -0.01% | -0.08% | 0.09% | 0.14% | 0.08% | 0.34% | 0.25% | |
| GBP | 0.08% | 0.08% | 0.17% | 0.19% | 0.10% | 0.39% | 0.31% | |
| JPY | -0.13% | -0.09% | -0.17% | 0.02% | -0.07% | 0.23% | 0.14% | |
| CAD | -0.13% | -0.14% | -0.19% | -0.02% | -0.09% | 0.20% | 0.12% | |
| AUD | -0.04% | -0.08% | -0.10% | 0.07% | 0.09% | 0.24% | 0.20% | |
| NZD | -0.34% | -0.34% | -0.39% | -0.23% | -0.20% | -0.24% | -0.08% | |
| CHF | -0.27% | -0.25% | -0.31% | -0.14% | -0.12% | -0.20% | 0.08% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
BoE Governor Bailey said at a conference in Reykjavik on Friday, “Softness in economy and uncertainty around Iran war shock means tolerating temporarily above target inflation is an appropriate way to approach the policy trade-off.”
However, BoE’s Bailey clarified that tolerance towards above-target inflation would start weakening if “signs of second-round effects begin to emerge”.
The scenario of the energy supply shock is unfavorable for an economy like the UK, which relies heavily on oil imports to meet its energy needs.
Meanwhile, the US Dollar trades flat at the start of the United States (US) data-packed week, especially the Nonfarm Payrolls (NFP) data for May, which will be released on Friday. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades calmly around 99.00.
Investors will pay close attention to the US official employment data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
In Monday’s session, investors will focus on the US ISM Manufacturing PMI data for May, which will be released at 14:00 GMT.
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.
- WTI Oil is trading above $89.00 on Monday, about $3 up from last week's close.
- US attacks on Iran and Israel's Operations in Lebanon cast doubt about the fragile ceasefire.
- The IEA has warned that commercial Oil reserves might deplete by mid-June.
Crude prices are trading higher on Monday, with the barrel of the US benchmark West Texas Intermediate (WTI) changing hands at $89.40 at the time of writing, nearly $3 higher than last week’s closing price. Recent skirmishes between the US and Iran and the extension of the Israeli occupation in Lebanon are triggering fears of further escalation of the war.
The peace process between Washington and Tehran remains stalled, with the memorandum of understanding still awaiting US President Donald Trump's signature since Friday, and tensions in the Gulf region escalating
The US announced a new wave of strikes on Iran’s Military sites, while Iranian authorities said that they targeted a US base, and Kuwait reported the interception of missiles and hostile drones.
Apart from that, Israel has stepped up its operations in Lebanon, and Prime Minister Benjamin Netanyahu announced attacks on Beirut’s southern suburbs, with the ceasefire reached in April still in place, and talks between Lebanon and Israel scheduled for this week.
Meanwhile, traffic through the Strait of Hormuz, a key waterway for about 20% of the global crude supply, remains practically blocked. Crude Oil is still below the key $100 level, but the International Energy Agency (IEA) has warned that accessible commercial Oil reserves could reach “operational stress levels” by mid June, which would, highly likely, push prices well above current levels.
(This story was corrected on June 1 at 08:09 GMT to say that Netanyahu is Israel's Prime Minister, and not President, as previously stated)
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.
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