Forex News
- GBP/JPY declines to near 208.50 as the British Pound is under pressure ahead of BoE’s policy decision.
- The BoE is expected to hold interest rates again at 3.75%.
- Financial markets have priced in BoJ interest rate hike in the policy meeting on Friday.
The British Pound (GBP) trades 0.3% lower at around 208.50 against the Japanese Yen (JPY) during the European trading session on Thursday. GBP/JPY is under pressure as the British currency underperforms ahead of the Bank of England’s (BoE) monetary policy announcement.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.01% | -0.30% | 0.01% | -0.34% | -0.33% | -0.10% | |
| EUR | 0.05% | 0.04% | -0.25% | 0.07% | -0.30% | -0.25% | -0.03% | |
| GBP | 0.01% | -0.04% | -0.29% | 0.03% | -0.34% | -0.29% | -0.04% | |
| JPY | 0.30% | 0.25% | 0.29% | 0.28% | -0.03% | -0.05% | 0.20% | |
| CAD | -0.01% | -0.07% | -0.03% | -0.28% | -0.34% | -0.32% | -0.06% | |
| AUD | 0.34% | 0.30% | 0.34% | 0.03% | 0.34% | 0.04% | 0.25% | |
| NZD | 0.33% | 0.25% | 0.29% | 0.05% | 0.32% | -0.04% | 0.28% | |
| CHF | 0.10% | 0.03% | 0.04% | -0.20% | 0.06% | -0.25% | -0.28% |
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).
The BoE is expected to leave interest rates unchanged at 3.75% for the sixth meeting in a row, with a 6-3 vote split.
Strategists at Brown Brothers Harriman (BBH) said in a note, “BoE policymakers: Megan Greene, Catherine L Mann and Huw Pill will back a 25 basis points (bps) hike.”
The BoE is expected to warn of upside inflation risks, as the United Kingdom (UK) headline Consumer Price Index (CPI) growth remained faster in August. The CPI report showed on Wednesday that the headline inflation accelerated to 3.1% Year-on-Year (YoY) in August from 2.9% in July, with core figure remaining steady at 2.6% YoY.
On the Tokyo front, investors also await the Bank of Japan’s (BoJ) monetary policy announcement, which is scheduled for Friday.
BoJ path beyond September in focus as markets eye normalisation signals
Strategists at OCBC note that with a September rate increase from the BoJ "largely anticipated," investor attention is shifting to the policy outlook. They argue that "the bigger question is how Governor Ueda frames the path beyond September," highlighting that markets will be watching closely "whether the BoJ signals a faster pace of normalisation amid still-elevated inflation."
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note that USD/CHF has staged an overdone rally toward 0.8265 and now expect the pair to consolidate between 0.8225 and 0.8275 in the near term. Over the next 1–3 weeks, momentum remains strong but may not yet be sufficient to break above 0.8300, with 0.8185 flagged as key downside support.
Pair seen consolidating below 0.8300
"24-HOUR VIEW: Yesterday, we held the view that USD “could rise above the major resistance at 0.8205.” However, we highlighted that “based on the current momentum, it may not be able to maintain a foothold above this level.” We added, “the next resistance at 0.8245 is also unlikely to come into view.” We did not expect the rapid upward acceleration as USD rallied to a high of 0.8265. The sharp rally appears to be overdone, and USD is unlikely to rise much further. Today, USD is more likely to consolidate between 0.8225 and 0.8275."
"1-3 WEEKS VIEW: In our most recent narrative from Tuesday (15 Sep, spot at 0.8175), we highlighted that USD “must break and hold above 0.8205 before a move to 0.8245 can be expected.” Yesterday, USD broke above both levels as it surged to 0.8265. While momentum remains strong, it is too early to tell whether it is sufficient for USD to break above 0.8300. On the downside, a breach of 0.8185 (‘strong support’ level was at 0.8145 yesterday) would mean that the upside momentum from late last week is easing."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
European Central Bank (ECB) Governing Council member and Governor of the Central Bank of Ireland, Gabriel Makhlouf, signaled during the European trading session on Thursday that the central bank could raise policy rates further in upcoming policy meetings. Makhlouf said that he doesn’t see any sign of second-round effects of inflation emerging in the near term.
Additional remarks
Can't rule out anything at future meetings.
Risks to inflation remain on upside.
Not seeing sign of concerning 2nd-round effects.
Market reaction
Some selling pressure is observed in the Euro (EUR) against the US Dollar (USD), following ECB Makhlouf's remrks. However, the move appears to be driven by a recovery move in the US Dollar. As of writing, EUR/USD trades flat at around 1.1465.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- US stock futures advance as falling oil prices ease fears over potential supply disruptions and broader inflation concerns.
- Wall Street tumbled overnight after the Federal Reserve delivered its first interest rate hike in three years.
- The Fed raised rates by 25 basis points to 3.75%–4.00% and signaled potential future increases.
Dow Jones futures rise by 0.82% to trade near 51,930 during European hours on Thursday. Meanwhile, S&P 500 futures gain by 0.82% to trade around 7,620, while Nasdaq 100 futures advance by 0.98% to trade near 29,250.
US stock futures advance as market sentiment improves as oil prices retreat amid easing concerns over supply disruptions and inflation. Oil prices decline following reports that Saudi Arabia plans to restore roughly half the capacity of its East-West pipeline within days and achieve full operation within six weeks. Easing global supply concerns further, Saudi Arabia has stepped up efforts to transport larger volumes of crude through Hormuz with assistance from the US military. US Energy Secretary Chris Wright also confirmed that 18 million barrels of crude and petroleum products successfully passed through the Strait of Hormuz earlier this week.
This positive pre-market momentum comes right after Wall Street posted overnight losses following the Federal Reserve's (Fed) decision to deliver its first interest rate hike in three years. During regular US trading on Wednesday, the Dow Jones dropped 1.21%, largely dragged down by losses among financial services stocks. The S&P 500 and Nasdaq Composite also gave up earlier session gains to finish lower by 0.45% and 0.01%, respectively.
The market downturn reflected the US central bank's policy shift, as the Fed raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%. While the increase matched market expectations, sentiment remained cautious after officials signaled that another rate hike could still occur before the end of the year.
Tech resilience offsets deeper losses in blue chips and banks
Analysts at Deutsche Bank note that the equity sell-off was uneven across sectors, with growth names cushioning the broader move lower. They highlight that “tech stocks helped limit the size of the aggregate decline, with the Nasdaq (-0.01%) and the Mag-7 (-0.11%) outperforming as the Philly Semiconductor Index (+0.63%) advanced.” In contrast, Deutsche Bank points to “sharper losses amid blue chip names, with the Dow Jones (-1.21%) falling to a three-month low, while banks (-2.30%) and energy stocks (-2.97%) led the losses for the S&P 500.”
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.
Commerzbank’s India analysis shows the Reserve Bank of India stepping up liquidity absorption via INR1trn of government bond sales and continued VRRR operations, FX swaps and open-market actions. The measures aim to align money-market rates with the 5.25% policy rate. Despite higher short- and intermediate-term yields, USD/INR stayed near 95.96 as RBI intervened to curb volatility.
Bond sales and FX intervention
"Foreign investors net sold USD201.7mn of government bonds yesterday, following USD503.1mn last Friday, the largest single-day outflow in five months. The sell-off followed the Reserve Bank of India’s (RBI) announcement on Friday that it would sell INR1trn of government securities from its portfolio to absorb surplus banking-system liquidity."
"The liquidity surplus is estimated at around INR10trn, the highest since late 2021, boosted partly by around USD127bn mobilised through the RBI's special foreign-currency schemes. These include the FCNR(B) deposits, external commercial borrowings (ECB), and overseas foreign currency borrowings (OFCB)."
"RBI is set to issue INR500bn of government securities today, followed by INR250bn on both 21 and 28 September. The first auction includes securities concentrated in the shorter and intermediate segments of the curve. It will also provide banks with assets of similar maturity to their FCNR(B) deposit liabilities. The bond sales provide a more durable means of withdrawing liquidity than the short-term variable rate reverse repo (VRRR) operations, where participation has been weak. Yesterday’s INR1tn VRRR auction attracted just INR403bn of bids."
"Nevertheless, RBI is likely to continue using a combination of VRRRs, open-market bond sales, and FX swaps to manage liquidity, depending on market conditions. Governor Sanjay Malhotra has emphasised that the RBI has several instruments available and will use them flexibly to align money-market rates more closely with the policy rate."
"Looking ahead, the INR1tn bond sales will absorb only around one-tenth of the current liquidity surplus, suggesting that RBI is taking a measured approach initially. Further bond sales or other liquidity-absorption measures are possible if the surplus persists. With RBI expected to leave the policy rate unchanged at 5.25% at its next meeting on 7 October, near-term policy attention is likely to remain on liquidity sterilisation. The liquidity withdrawal should put greater upward pressure on the shorter and intermediate portions of the curve than the long end. The 5Y government bond yield has risen 24bp to 6.76%."
"In FX, USD/INR was steady at around 95.96 yesterday, despite pressure from elevated global crude oil prices. Reports suggested that RBI sold USD to curb volatility. The central bank has stepped up its intervention in recent weeks, supported by higher FX reserves following measures to attract foreign capital. RBI’s liquidity-absorption measures should have a limited direct impact on the INR."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Deutsche Bank analysts highlight that the first Federal Reserve hike since 2023 and a more hawkish dot plot weighed on US equities. The S&P 500 fell to its lowest level since July, with blue-chip names and banks underperforming, although tech indices were more resilient. Overnight, S&P 500 futures reversed prior losses, pointing to a tentative improvement in risk sentiment.
US stocks react to Fed shift
"The hawkish Fed repricing weighed on risk assets. The S&P 500 closed -0.45% lower, having traded a few tenths higher earlier in the day thanks to the decline in oil prices."
"Tech stocks helped limit the size of the aggregate decline, with the Nasdaq (-0.01%) and the Mag-7 (-0.11%) outperforming as the Philly Semiconductor Index (+0.63%) advanced. There were sharper losses amid blue chip names, with the Dow Jones (-1.21%) falling to a three-month low, while banks (-2.30%) and energy stocks (-2.97%) led the losses for the S&P 500."
"The market mood has improved somewhat overnight with S&P 500 futures (+0.60%) reversing yesterday’s losses and NASDAQ futures (+0.69%) similarly stronger. This has left a mixed backdrop in Asian markets overnight. Japan’s Nikkei 225 (+0.15%), South Korea’s KOSPI (+0.89%) and Australia’s S&P/ASX 200 (+0.35%) are all advancing. Elsewhere, Chinese equities are under pressure."
"The Hang Seng (-0.75%) is leading the losses as the HKMA mirrored the Fed’s move by raising rates +25bps to 4.25%, while the Shanghai Composite (-0.35%) and the CSI 300 (-0.36%) are modestly lower."
"The Stoxx 600 (+0.46%), DAX (+0.53%), CAC 40 (+0.62%) and FTSE 100 (+0.28%) all recovered from multi-week lows, while yields fell back from Tuesday’s multi-year highs, with 10yr bund (-3.1bps), OAT (-4.0bps), and BTP (-5.4bps) yields all lower. "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold gains some positive traction on Thursday as the USD pauses for a breather.
- The hawkish Fed and elevated US bond yields could help limit deeper USD losses.
- Geopolitical risks further favor USD bulls, which should cap the upside for bullion.
Gold (XAU/USD) builds on its intraday ascent through the first half of the European session on Thursday and recovers further from a near six-week low, touched the previous day. A modest pullback in US Treasury bond yields prompts some US Dollar (USD) profit-taking, which, in turn, is seen offering support to the commodity. However, the Federal Reserve's (Fed) hawkish outlook, along with escalating Middle East tensions, should limit deeper losses for the safe-haven Greenback and cap the non-yielding bullion.
The US central bank voted unanimously to raise interest rates for the first time since 2023 at the conclusion of the September policy meeting on Wednesday. The decision was in line with the broader consensus and was accompanied by a more hawkish outlook. In fact, the so-called dot plot revealed that Fed officials expect one more interest rate increase this year. At the post-meeting press conference, Fed Chair Kevin Warsh said that the decision was led by a strengthening US economy, a lack of improvement in summer inflation trends, and geopolitics.
Warsh added that inflation is too high and has been for too long, while underscoring the importance of stabilizing consumer prices to grow the US economy. Furthermore, inflation risks stemming from persistently high energy prices underpin prospects for further tightening by the Fed and remain supportive of elevated US bond yields. In fact, the yield on the benchmark 10-year US Treasury remains close to the 5.0% psychological mark and its highest level since April 2007. This, along with escalating tensions in the Middle East, could underpin the safe-haven USD.
In the latest developments, Iran-backed Houthi rebels said that Saudi aircraft have carried out more than 450 air strikes across Yemen in the past week and claimed that they shot down a Saudi F-15 fighter jet over Marib province. Meanwhile, US President Donald Trump claimed that Iran wants to strike a deal and that the war may be nearing its end. Nevertheless, intensifying fighting between the Houthi group and Saudi Arabia keeps the geopolitical risk premium in play, supporting oil prices. This favors USD bulls, warranting caution before positioning for further gains for the XAU/USD pair.
XAU/USD daily chart
Technical Analysis
The precious metal maintains a bearish near-term bias below the $4,315-$4,320 confluence – comprising the 50% retracement of the June-August upswing and the 100-day Simple Moving Average (SMA). The said area should act as a key pivotal point, above which the XAU/USD pair could climb to the 38.2% level near $4,404 and the 23.6% retracement at $4,513 en route to the broader cycle high zone at $4,690.
On the downside, immediate support is seen at the 61.8% Fibonacci retracement at $4,226, followed by the deeper 78.6% level at $4,100 and the structural floor around the prior swing low near $3,940.20. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator stays in negative territory with the line below its signal line and a contracting bearish histogram. The Relative Strength Index (RSI) hovers around 44, hinting at waning downside momentum but not yet challenging the prevailing corrective tone.
(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.
- New Zealand’s Q2 GDP rose 0.2% QoQ and 2.6% YoY, boosting the NZD.
- The US Dollar soft-pedals despite a recent 25 bps Fed rate hike to 3.75%-4.00%.
- Markets price a 51% chance of another Fed rate increase in October to combat inflation.
NZD/USD halts its three-day losing streak, trading around 0.5740 during the European hours on Thursday. The pair appreciates as the New Zealand Dollar (NZD) strengthens following the release of domestic Gross Domestic Product (GDP) data for the second quarter. New Zealand’s economic activity rose 0.2% quarter-over-quarter in the June quarter, following a 0.9% rise in the March quarter. On a year-over-year basis, GDP grew 2.6% in Q2, up from a revised 1.7% increase in the previous period.
Analysts at ING highlight that the Reserve Bank of New Zealand’s September meeting delivered a “dovish surprise,” with policymakers signalling “there is only room for another 25bp to 3.0%.” ING cautions that this guidance “should not be taken as a commitment,” stressing that the policy path remains data-dependent. In particular, the bank notes that “the longer energy prices remain elevated, the higher the chances of upward revisions in policy projections by year-end,” suggesting that the current rate outlook could yet be pushed higher if cost pressures persist.
The NZD/USD pair gained further support as the US Dollar (USD) held losses despite the potential for additional policy tightening by the Federal Reserve (Fed). The Fed raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%, matching market expectations and marking its first interest rate increase in three years, while signaling that another hike could occur before year-end.
Fed Chair Kevin Warsh explained that the rate hike was driven by inflation remaining "too high" for "too long," framing the action as a "sober" and "responsible decision" while keeping future rate increases on the table to curb price pressures. Following these comments, money markets priced in roughly a 51% probability of another Fed rate hike at the October meeting, according to the CME FedWatch tool.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- Silver price gains to near $64.40 as oil prices correct amid easing fears of energy supply disruption.
- The Fed hiked interest rates by 25 bps to 3.75%-4.00% on Wednesday.
- The Fed is expected to deliver more interest rate hikes this year.
Silver price (XAG/USD) is up 1.8% to near $64.40 during the European trading session on Thursday. The white metal gains as oil price’s rally hits a pause as Saudi Arabia confirms exploring alternatives for shipping energy.
Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, The Times of India (ToI) reported.
Such a scenario would ease fears of energy supply disruption, which escalated after Saudi Arabia closed its east-west pipeline, following drone attacks.
However, the upside in the Silver is expected to remain limited, as the Federal Reserve’s (Fed) monetary policy outcome on Wednesday signaled that policymakers see more interest rate hikes this year. The Fed hiked interest rates by 25 basis points (bps) to 3.75%-4.00%, as expected, in an attempt to counter prolong hot inflationary pressures.
Strategists at NBC Economics reported that the updated dot plot points to “relatively broad support for more restrictive monetary policy for a significant period of time.” In their view, the Fed “doesn’t see a return to a 3.5% to 3.75% range until the end of 2029,” underscoring a higher-for-longer policy bias.
NBC’s team sees “a 4.25% upper bound target representing the peak of what could be a brief tightening cycle,” with the timing and scale of eventual cuts likely to be “dictated by the sustainability of the economic expansion (i.e., the AI boom).” Importantly, they judge that, “relative to the very gradual easing path laid out in this dot plot, we think risks are skewed to earlier and more significant rate cuts,” suggesting the market may ultimately face a faster normalization than the Fed is currently signaling.
Theoretically, higher interest rates by the Fed bodes poorly for non-yielding assets, such as Silver.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $64.38, keeping a bearish near-term bias as it holds below the 20-day exponential moving average (EMA) at $64.91. The price action suggests upside attempts are being capped by this dynamic resistance, while the Relative Strength Index (RSI) at 48.73 sits just under the neutral 50 line, hinting at waning momentum rather than outright oversold conditions.
On the topside, the immediate focus is on the 20-day EMA at $64.91, which acts as the first barrier that bulls would need to reclaim to ease the current downside pressure. Looking up, the Silver price could extend the advance towards $68 if it manages to hold above the dynamce EMA.
On the downside, the white metal could slide towards $60 if it resumes the decline below Wednesday's low at $62.30. Below $60, the Silver price could extend the slide to near the July low at $54.77.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
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