Forex News
TD Securities reports that United States labor market data surprised slightly on the positive side, with initial jobless claims below expectations and continuing claims near consensus. This reinforces a picture of a still-resilient US economy. The backdrop of firm labor data may help underpin the Dollar as markets assess Federal Reserve communication.
Jobless claims beat expectations
"Rates moved higher on Thursday, moving higher with oil prices. Initial jobless claims came in below expectations at 207k, while continuing claims printing near-consensus at 1.818mn."
"Fed's Williams spoke, saying that a longer shock could cause a stagflationary impact. The Senate banking panel Democrats issued a statement that the Warsh hearing should be delayed, waiting for ongoing probes to be dropped."
"On Friday, no data is on the schedule, with only Daly, Barkin and Waller set to speak ahead of the Fed's blackout period which starts at midnight."
"Markets will remain focused on news coming from the Middle East as we head into the weekend."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/USD rises to near 0.7175 as the Australian Dollar outperforms amid the risk-on mood.
- Market sentiment remains favorable for riskier assets on Iran truce hopes.
- Traders expected the RBA to hike interest rates further by 55 bps this year.
The Australian Dollar (AUD) outperforms its major currency peers, trading 0.16% higher to near 0.7175 ahead of the opening of United States (US) markets during the European trading session on Friday. The Aussie pair trades firmly as Iran optimism-based broader risk rally has strengthened the antipodean.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.02% | 0.00% | -0.18% | -0.14% | 0.09% | -0.18% | |
| EUR | 0.15% | 0.12% | 0.11% | -0.05% | 0.00% | 0.22% | -0.03% | |
| GBP | 0.02% | -0.12% | -0.02% | -0.18% | -0.13% | 0.10% | -0.15% | |
| JPY | 0.00% | -0.11% | 0.02% | -0.15% | -0.12% | 0.10% | -0.14% | |
| CAD | 0.18% | 0.05% | 0.18% | 0.15% | 0.04% | 0.25% | 0.03% | |
| AUD | 0.14% | -0.00% | 0.13% | 0.12% | -0.04% | 0.22% | -0.02% | |
| NZD | -0.09% | -0.22% | -0.10% | -0.10% | -0.25% | -0.22% | -0.24% | |
| CHF | 0.18% | 0.03% | 0.15% | 0.14% | -0.03% | 0.02% | 0.24% |
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).
During the press time, S&P 500 futures trades 0.2% higher to near 7,060, reflecting a strong demand for riskier assets. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 98.10. The DXY is all set to close negatively for the second straight week.
A broader risk rally suggests that market participants are confident of the announcement of a permanent ceasefire between the United States (US) and Iran, as President Donald Trump has expressed multiple times that Washington is close to reaching a deal with Tehran.
US President Trump said in a press briefing on Thursday, “We're very close to a deal with Iran,” while warning that military actions against Tehran would resume if a deal is not closed. Trump also said that Iran is willing to give up its enriched uranium and surrender its nuclear ambitions.
On the domestic front, market participants expect the Reserve Bank of Australia (RBA) to deliver more interest rate hikes this year. In the March policy meeting, the RBA raised its Official Cash Rate (OCR) by 25 basis points (bps) to 4.1%, and warned that inflation was already high in Australia before the war in the Middle East started.
According to a Reuters report, the RBA is expected to raise its OCR further by 55 bps in the remaining year to 4.65%.
Economic Indicator
RBA Interest Rate Decision
The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.
Read more.Last release: Tue Mar 17, 2026 03:30
Frequency: Irregular
Actual: 4.1%
Consensus: 4.1%
Previous: 3.85%
Source: Reserve Bank of Australia
- Silver advances on Friday, supported by renewed pressure on the US Dollar.
- Optimism surrounding potential diplomatic progress between the US and Iran influences market sentiment.
- Expectations of a more accommodative stance from the Federal Reserve continue to support precious metals.
Silver (XAG/USD) rebounds on Friday, trading around $79.40 at the time of writing and gaining 1.25% on the day. The Silver price remains close to the $79 mark as investors monitor geopolitical developments and monetary policy expectations in the United States (US).
The precious metal moves in a relatively cautious environment as markets await further details about a possible second round of negotiations between the US and Iran. Washington has indicated that talks with Tehran could resume before the expiration of the current two-week ceasefire scheduled for April 21. Investors are closely watching these developments, which could influence global risk sentiment and safe-haven flows.
US President Donald Trump recently expressed optimism that a diplomatic agreement with Iran could be close, stating that Tehran appears more willing to make concessions than in previous discussions. Reports suggest that negotiations could involve commitments related to Iran’s nuclear program and enriched uranium stockpiles.
Expectations of progress in diplomacy are contributing to persistent pressure on the US Dollar (USD). The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of major currencies, is on track for a new weekly decline. A softer US currency tends to support commodities priced in USD, including Silver.
At the same time, easing tensions in the Middle East are weighing on Oil prices and moderating inflation expectations. This dynamic has encouraged traders to reinforce bets that the Federal Reserve (Fed) could adopt a more accommodative monetary policy stance in the coming months.
Lower interest rate expectations are generally supportive for non-yielding assets such as Silver. With yields potentially declining, the opportunity cost of holding precious metals decreases, which helps maintain investor demand for assets like XAG/USD in the current macroeconomic environment.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Deutsche Bank analysts note Brent Oil nearly touched $100/bbl on Thursday before retreating on Friday, as traders reacted to shifting headlines around US–Iran negotiations and regional ceasefires. They highlight that earlier pessimistic reports on a comprehensive deal had driven Brent higher, but more optimistic comments from President Trump later prompted some profit-taking and a modest pullback.
War news drives volatile Brent swings
"Oil had moved higher for much of yesterday’s sessions following multiple more negative headlines, which dampened hopes about a near-term peace deal between the US and Iran. For instance, Reuters reported yesterday from two Iranian sources, who said that the US and Iranian negotiators had scaled back their ambitions for a comprehensive peace deal, and were instead looking at a temporary memorandum that would prevent a return to conflict."
"Moreover, Iran’s Tasnim news agency said in a report that “Iran has emphasized through Pakistani mediation that the US must first fulfill its commitments”, and that “without going through the preliminary arrangements and reaching the necessary framework, these negotiations will be of no benefit”."
"That backdrop meant that oil prices moved higher yesterday, with Brent crude (+4.70%) closing at $99.39/bbl. Yet despite the latest advance for oil prices, the US equity rally continued."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Indian Rupee gains against the US Dollar as the RBI takes measures to curb Dollar buying.
- US President Trump says that Iran is willing to give up its nuclear ambitions.
- FIIs remained net buyers in the last two trading days.
The Indian Rupee (INR) trades higher against the US Dollar (USD) on Friday, as the opening of special credit lines for state-run Oil buyers to meet their foreign exchange needs has strengthened the Asian currency. The USD/INR pair declines to near 92.70 after remaining sideways in the last two trading days.
On Thursday, the Reserve Bank of India (RBI) urged state-run Oil refiners to curb spot US Dollar purchases and to tap a special credit line, in an attempt to reduce the impact of Dollar buying by state-run Oil refiners on the domestic currency, Reuters reported. This facility was also started by the RBI when the Russia-Ukraine war started.
The Indian central bank has been taking several measures to limit the downside in the Indian Rupee against the US Dollar. In late March, the RBI directed banks to cap their net open rupee positions in the foreign exchange market at $100 million by the end of each business day.
Trump seems confident of a deal with Iran
Oil prices remain capped, and the market sentiment is broadly risk-on as United States (US) President Donald Trump has expressed confidence that a deal with Iran is very likely. “We're very close to a deal with Iran,” Trump said in a press briefing on Thursday. However, he warned that military actions against Tehran would resume if a deal is not reached.
The overall commentary from Trump appeared to express optimism toward a permanent truce with Iran. Trump said that Iran is now “more willing to do things today they previously weren't”, such as giving up nuclear ambitions and handing over enriched uranium.
Upbeat market sentiment has diminished the safe-haven appeal of the US Dollar. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 98.25, but is set for a consecutive negative weekly close.
Meanwhile, capped WTI Oil prices around $90 from the past few days after surging above $100 are also offering support to the Indian Rupee. Currencies from economies such as India, which rely heavily on Oil imports to meet their energy needs, take a recovery route when Oil prices start to correct.
FIIs start buying in Indian stock market
The response by Foreign Institutional Investors (FIIs) toward the Indian equity market appears to have started improving since the announcement of the two-week ceasefire between the US and Iran on April 8. Over the last two trading days, FIIs have remained net buyers and have raised their stake worth Rs. 1,048.51 crore. However, the amount of investment is significantly lower than the selling pressure seen before the temporary truce announcement.
Technical Analysis: USD/INR is expected to find support near 92.45
USD/INR trades lower at around 92.70, as of writing, holding a mildly bearish near-term bias as spot remains below the 20-period Exponential Moving Average (EMA) at 93.06. The recent pullback from last week’s highs has pushed the price under this short-term trend gauge, and the Relative Strength Index (RSI) at 48.6 has slipped just below the neutral 50 line, hinting that upside momentum is fading without yet signaling oversold conditions.
On the topside, initial resistance is now defined by the 20-day EMA at 93.07, where a daily close above would be needed to ease immediate downside pressure and reopen the path toward recent peaks above 95.00. As long as the pair holds beneath this moving average, rebounds are likely to struggle, leaving risks skewed toward additional consolidation or further slippage in the coming sessions toward the March 3 high of 92.46.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Bank of England (BoE) Deputy Governor Sarah Breeden said in a program in the United States (US) during the European trading session on Friday that the ongoing war in the Middle East has raised the odds of market stresses combining. Breeden also said, “The vulnerabilities that have preceded past crises have not disappeared. They have re-emerged elsewhere. Across private markets, government bond markets, and in stretched valuations, you can hear the familiar echoes of leverage, complexity, concentration, and opacity. If some of these crystallize simultaneously, we may be in for a rocky ride.”
Market reaction
No response observed by the Pound Sterling (GBP) after BoE Breeden's remarks. GBP/USD trades in a limited range around 1.3530 since the opening.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- EUR/USD bounces up from 1.1770 and reaches session highs above 1.1790
- Markets remain moderately optimistic, ahead of a new round of US-Iran peace talks.
- Concerns about the impact of high Oil prices for a protracted period are likely to weigh on the Euro.
The Euro (EUR) edges higher against the US Dollar (USD) on Friday's European trading session, as the latter loses ground amid a moderate risk appetite. The pair picks up from session lows at 1.1770, reaching levels above 1.1790 at the time of writing, although it remains within previous ranges and below Thursday's highs of 1.1825.
Traders keep cutting back holdings of the safe-haven US Dollar, amid a moderate optimism about the resolution of Iran’s war. US President Donald Trump announced on Thursday a ten-day ceasefire in Lebanon, and confirmed that Washington and Tehran could resume peace talks this weekend.
Nevertheless, the nuclear issue seems to be a key hurdle for a steady peace deal. A news report by Reuters, citing Iranian sources, affirms that US and Iranian negotiators have scaled back their ambitions for this weekend’s talks and are now seeking a temporary memorandum to prevent a return to conflict.
Beyond that, closure of the Strait of Hormuz is another point of friction and maintains Oil prices more than 30% above pre-war levels. The Eurozone is strongly dependent on Crude imports; the energy shock triggered by the war in the Middle East has boosted inflationary levels in the region, which, coupled with weakening economic activity, is raising concerns about stagflation. If these fears increase, the Euro is likely to suffer.
Technical Analysis: Consolidating gains below 1.1825
EUR/USD maintains the near-term bullish bias intact after rallying nearly 2.5% over the last three weeks, although technical indicators on the 4-hour chart are showing signs of weakness. The Relative Strength Index (RSI) has eased back to levels around 60, while the Moving Average Convergence Divergence (MACD) remains marginally negative, suggesting upside momentum is cooling but not yet reversing decisively.
Support at Thursday's lows around the 1.1770 area is holding bears for now, and closing the path towards the previous tops, between 1.1720 and 1.1740, and the 1.1650 support area (near April 8, 12 lows). A confirmation below that level would negate the bullish structure.
On the upside, immediate resistance remains at the late February highs around 1.1825. Further up, the February 10 and 11 highs, near 1.1930, are likely to be targeted.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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- USD/CAD hits fresh three-week lows at 1.3670 following a five-day sell-off.
- Hopes of a resolution of the US-Iran conflict keep the safe-haven USD under pressure.
- Canada's CPI figures, due on Monday, are expected to show higher inflationary pressures in March.
The US Dollar (USD) keeps heading south against the Canadian Dollar (CAD) on Friday, reaching three-week lows at 1.3670. The USD/CAD pair has depreciated continuously over the last five days and is on track for a 1.3% weekly selloff, as hopes that the US and Iran will resume peace talks this weekend are keeping the safe-haven US Dollar under pressure.
News from the Middle East is mixed, but the market keeps focusing on US President Donald Trump’s positive comments. Trump announced on Thursday a 10-day ceasefire between Lebanon and Israel and affirmed that a deal to end hostilities in Iran is “very close.”
A news report by Reuters, on the other hand, has cooled hopes of a steady peace agreement coming out of this weekend’s negotiations. Iranian sources cited in the report suggest that negotiators have scaled back their targets and are now seeking a “temporary memorandum” to avoid a return to the conflict.
Meanwhile, the Strait of Hormuz remains closed, keeping Crude prices about 35% above pre-war levels. The Governor of the Bank of Canada (BoC), Tiff Macklem, warned on Thursday about “higher price levels” in a conference at the Montreal Chamber of Commerce and highlighted the challenges to keeping inflation anchored without triggering a recession.
In that sense, Canadian Consumer Prices Index (CPI) figures from March, due on Monday, are expected to validate those fears. Consumer inflation is expected to have accelerated significantly, amid the energy shock triggered by Iran’s war. If the final figures meet the expectations, concerns about stagflation might take a toll on the Canadian Dollar’s strength.
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.
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Brown Brothers Harriman’s (BBH) Elias Haddad highlights that UK gilts and the Pound are underperforming as political pressure on Prime Minister Keir Starmer intensifies. The bank expects Labour’s weak standing and fiscal credibility challenges to weigh on UK assets. With UK nominal GDP growth below 10-year gilt yields, BBH anticipates EUR/GBP will grind higher in line with interest rate differentials.
UK politics and fiscal worries support Euro
"Long-term gilts are lagging global peers, while GBP is underperforming EUR. UK Prime Minister Keir Starmer is in the hot seat again after being accused of misleading parliament about whether Peter Mandelson had passed security checks before his appointment as ambassador."
"The real test for Starmer’s leadership will be the aftermath of the May 7 local and Scottish elections. Starmer’s Labour Party is poised to get trounced, potentially setting the stage for a leadership challenge. A leadership contest can be triggered if the leader resigns or a challenger secures the backing of at least 20% of Labour MPs."
"Starmer is the most unpopular British prime minister since record began, even worse than Liz Truss’s 49-day in office. As such, his exit will not be a big shock to financial markets. The surprise would be if he managed to stay on as prime minister. Regardless, with or without Starmer, the governing Labour Party faces an uphill battle to restore fiscal credibility. UK nominal GDP growth is tracking below 10-year gilt yields, making stopping debt growth very difficult. As such, we expect EUR/GBP to grind higher in line with rate differentials."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Commerzbank analysts note that recent dovish comments from key European Central Bank (ECB) officials have left forwards pricing only modest near-term moves but still more than two hikes for 2026. They argue there is room for ECB forwards to price out some tightening, especially as energy prices and scenario assumptions do not clearly justify additional hikes versus the ECB’s adverse projections.
Scope for forwards to price out hikes
"The massive verbal ECB intervention still resonates, while bullish steepening has morphed into bearish steepening as oil prices recovered. Following the bluntly dovish statements by heavyweight ECB members and sources, forwards are barely pricing 4bp higher rates at the end of the month, +22bp for June and +52bp for December."
"With more than two hikes discounted this year we see more scope for the market to price out hikes and the curve to bull-steepen. Earlier this week Lagarde said that “we are in between the baseline and adverse” scenarios, and we think that even the adverse scenario projections would make no clear case for hikes."
"Note that in contrast to what the ECB President said at the press conference, the ECB's adverse scenario assumes the rate path from the baseline scenario, not unchanged rates (at the end of the press conference Lagarde said the scenarios don’t factor in any monetary policy measures, but this was corrected in the official transcript). Euribor forwards are still above the forwards from the cut-off date on 11 March and energy futures are lower than the assumptions from the adverse scenario."
"With the June meeting still seven weeks away, a lot can happen. However, without a renewed crisis escalation that pushes oil prices sustainably above $100, we see better chances that the ECB will hike by less than forwards predict."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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