Forex News
- US Dollar Index falls as easing risk aversion followed news that Israel and Lebanon agreed to renew their ceasefire on Wednesday.
- Geopolitical optimism was held in check after President Trump threatened to cancel the ceasefire if Tehran kills US troops.
- The Greenback may rally as strong May jobs data fuels expectations that the Federal Reserve will raise interest rates.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is remaining subdued after three successive days of gains and trading around 99.50 during the Asian hours on Thursday.
The Greenback lost ground on easing risk aversion following the news that Israel and Lebanon on Wednesday agreed to renew a ceasefire. However, it would require a "complete cessation" of fire by Iran-backed Hezbollah. The agreement was announced in a joint statement after US-led talks in Washington.
Israel and Lebanon do not have formal diplomatic relations, though also agreed to establish a number of “pilot security zones" in which the Lebanese armed forces "will take exclusive control of the territory to the exclusion of all non-state actors."
However, the Wall Street Journal reported on Thursday that the US President Trump has told aides that he would consider ending the ceasefire with Iran if Tehran kills US troops. Trump insisted that the week-long pause in airstrikes remains intact despite a steady stream of violent skirmishes. Moreover, Trump said in a New York Post interview that the blockade lasting until Labor Day is unlikely but possible, effectively extending the market's timeline for a Hormuz reopening.
The US Dollar may regain its ground amid rising expectations that the US Federal Reserve (Fed) will raise interest rates this year. Stronger-than-expected US jobs data, including the May ADP private payrolls and JOLTS job openings, suggested a resilient US labor market. These reports might prompt traders to raise their bets that the Fed will keep interest rates higher for longer.
Expectations have shifted significantly as the ongoing war in Iran continues to impact energy markets, pushing prices higher and driving inflation upward. Markets are now pricing in nearly a 42% chance of a Fed rate hike in December, according to the CME FedWatch 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.
On early Thursday, a report from The Economic Times (ET) has shown that the Indian government plans to scrap capital gains tax on investments in government securities by foreign portfolio investors (FPIs), in an attempt to improve the inflow of foreign funds into the economy.
Additional announcements
Cabinet meet on Wednesday approved the scrapping of capital gains tax on foreign portfolio investment in government bonds.
Decision likely to be implemented via an ordinance amending Income Tax rules.
Foreign investors currently pay 12.5% long term capital gains tax on listed shares and bonds held for more than 12 months.
They also pay 20% withholding tax on interest earned in government bonds. This may be removed as well.
Foreign investors have maintained net positive flows into Indian government debt this year, investing a net amount of $1.4 billion, while nearly $28 billion has been pulled from equity markets.
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
- USD/CAD retains a bullish bias and continues to draw support from a combination of factors.
- Domestic growth concerns and the divergent BoC-Fed expectations undermine the Loonie.
- Geopolitical risks benefit the safe-haven USD and further offer some support to spot prices.
The USD/CAD pair climbs to a nearly two-week high during the Asian session on Thursday, with bulls now looking to build on the positive momentum further beyond the 1.3900 mark.
The Canadian Dollar (CAD) continues with its relative underperformance against the US Dollar amid slowing domestic growth, a softening labor market, and interest rate divergence between the Bank of Canada (BoC) and the US Federal Reserve (Fed). In fact, Canada faced consecutive quarters of economic contraction during the January-March 2026 period, confirming a technical recession. Adding to this, rising unemployment and weakening consumer demand could force the BoC to adopt a more dovish stance.
In contrast, traders are currently assigning over a 50% chance that the Fed will raise interest rates in 2026 amid sticky inflation. This, along with persistent geopolitical uncertainties, acts as a tailwind for the safe-haven USD and continues to offer some support to the USD/CAD pair. In the latest development surrounding the Middle East conflict, the US military said on Tuesday that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors – Kuwait and Bahrain.
Furthermore, the lack of a breakthrough in US-Iran diplomatic negotiations, amid a standoff over Tehran's nuclear program and the Strait of Hormuz, keeps geopolitical risks in play. This, in turn, assists Crude Oil prices in preserving weekly gains registered over the past three days, which helps limit further losses for the commodity-linked Loonie. Adding to this, the Israel-Lebanon agreement on the implementation of a ceasefire keeps a lid on the safe-haven USD and contributes to capping the upside for the USD/CAD pair.
Investors also seem hesitant and opt to wait for the release of monthly employment details from the US and Canada on Friday. The crucial US Nonfarm Payrolls (NFP) report will be looked for more cues about the Fed's policy path, which, along with the incoming geopolitical headlines, will drive the USD demand. Moreover, Crude Oil price dynamics should provide a fresh impetus to the USD/CAD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the upside.
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.
- WTI falls as an Israel-Lebanon ceasefire renews hopes for a broader diplomatic resolution, easing global oil supply concerns.
- Geopolitical optimism was held in check after President Trump threatened to cancel the ceasefire if Tehran kills US troops.
- The EIA reported US crude stockpiles fell by 8 million barrels to 433.7 million, doubling expectations in a Reuters poll.
West Texas Intermediate (WTI) price declines after three successive days of gains, trading around $92.70 per barrel during the Asian hours on Thursday. Crude oil prices fall as a ceasefire agreement between Israel and Lebanon renews hopes for a broader diplomatic resolution to the US-Israeli war with Iran, easing global supply anxieties.
Following US-led talks in Washington, a joint statement announced that the deal mandates a "complete cessation" of hostilities by Iran-backed Hezbollah. To ensure compliance, the two nations agreed to set up "pilot security zones" under the exclusive control of Lebanese armed forces, effectively shutting out non-state actors.
However, market optimism remains checked by lingering political friction and geopolitical uncertainty. The Wall Street Journal reported Thursday that US President Donald Trump told aides he would consider calling off the ceasefire if Tehran kills US troops, though he maintained that the weeks-long pause in airstrikes is still holding. In a separate interview with the New York Post, Trump noted that while a shipping blockade lasting until Labor Day is unlikely, it remains possible, effectively shifting the market's timeline for a complete reopening of the critical Strait of Hormuz.
On Wednesday, the Republican-led US House of Representatives passed a resolution to curb President Trump's war powers regarding Iran for the first time. However, the measure faces a steep legislative battle to override an expected presidential veto.
The Energy Information Administration (EIA) reported that US crude stockpiles plummeted by 8 million barrels last week to 433.7 million barrels, doubling analysts' expectations in a Reuters poll. Consequently, Reuters cited Haitong Futures, suggesting that rapidly declining global inventories are bound to keep oil prices testing the upper bounds of their current trading range.
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.
Japan’s Chief Cabinet Secretary Minoru Kihara said on Thursday, “specific monetary policy means are up to the Bank of Japan (BoJ) to decide.”
Additional quotes
No comment on BoJ Governor Ueda's specific remarks.
Expect the BoJ to conduct appropriate monetary policies to sustainably and stably hit its price target, while working closely with the government.
Govt, the BoJ have had close communication on economic, financial trends and will continue to do so.
Market reaction
USD/JPY has moved a little following these comments, trading flat on the day near 159.90, as of writing.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- AUD/USD drifts higher to near 0.7135 in Thursday’s early Asian session.
- Australia’s Trade Balance turns positive in April.
- Iranian officials said there was no 'tangible progress' in war talks.
The AUD/USD pair gathers strength to around 0.7135 during the early Asian session on Thursday. The Australian Dollar edges higher against the US Dollar (USD) following the domestic Trade Balance data. The US May Nonfarm Payrolls (NFP) report will take center stage later on Friday.
Australia's Trade Balance shifted back into a monthly surplus of $1,791M MoM for April, according to the Australian Bureau of Statistics (ABS) on Thursday. This figure followed a deficit of 1,024M in the previous reading (revised from $1,841M).
Meanwhile, Australia's Exports climbed by 7.2% MoM in April from a fall of 2.5% seen a month earlier (revised from -2.7%). Imports increased by 0.8% MoM in April, compared to a rise of 12.2% seen in March (revised from 14.1%).
A better trade balance figure can signal strong export demand or a resilient economy. This report could lead markets to expect that the Reserve Bank of Australia (RBA) will hike interest rates or keep them elevated, supporting the Aussie.
On the other hand, ongoing tensions in the Middle East and a lack of progress in the US-Iran peace deal could boost a safe-haven currency such as the Greenback. Iran’s Foreign Minister Abbas Araghchi said on Wednesday that while contact with Washington has not been cut off, negotiations to end the Middle East war had made "no tangible progress.”
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- GBP/USD reverses a part of the overnight losses as an Israel-Lebanon truce undermines the USD.
- Stalled US-Iran peace talks and hawkish Fed expectations should limit deeper losses for the buck.
- Traders also seem hesitant and opt to wait for the release of the crucial US NFP report on Friday.
The GBP/USD pair attracts some dip-buyers following the previous day's slide back closer to the weekly low and trades above the 1.3400 mark during the Asian session on Thursday. The uptick is sponsored by a softer US Dollar (USD), though the upside potential seems limited amid persistent geopolitical uncertainties.
In a joint statement with the US on Wednesday, Israel and Lebanon announced they agreed to the implementation of a ceasefire after peace talks in Washington. The latest development eases concerns about a broader regional conflict and keeps a lid on the safe-haven USD's move higher witnessed since the beginning of this week. This, in turn, is seen as a key factor offering some support to the GBP/USD pair. However, renewed hostilities in the Gulf keep geopolitical risks in play and should limit deeper USD losses, warranting caution before placing aggressive bullish bets on the currency pair.
The US military said on Tuesday that it had successfully repelled multiple Iranian missiles and drones launched at Kuwait and Bahrain, and had conducted self-defense strikes on Qeshm Island in response to the attacks. Meanwhile, Iranian armed forces targeted the US military bases in Bahrain in retaliation for the strike on Qeshm. This comes on the back of the lack of a progress in US-Iran diplomatic negotiations, amid a standoff over Tehran's nuclear program and the Strait of Hormuz. Furthermore, bets that the US Federal Reserve (Fed) will hike rates in 2026 should support the buck and cap the GBP/USD pair.
Traders might also opt to move to the sidelines ahead of the release of the closely watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, on Friday. The crucial jobs data will be looked for more cues about the Fed's future policy path. This, along with further developments surrounding the Middle East crisis, should infuse volatility across global financial markets and influence USD price dynamics. Nevertheless, the fundamental backdrop seems tilted in favor of USD bulls, suggesting that the GBP/USD pair is likely to attract fresh sellers at higher levels.
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.
- AUD/JPY pares its daily losses after Australia's April Trade Balance shifted to a 1,791M surplus from a prior deficit.
- The JPY gains ground as traders price in a potential Bank of Japan interest-rate hike later this month.
- Japan’s Finance Minister Katayama emphasized that persistent energy market volatility requires Japan to remain prepared for "appropriate action."
AUD/JPY pares its daily losses, remaining in the negative territory and trading around 114.10 during the Asian hours on Thursday. The receives minor support as the Australian Dollar (AUD) gains following the release of Australia’s Trade Balance data.
The Australian Bureau of Statistics (ABS) reported on Thursday that the Trade Balance shifted to a surplus of 1,791M month-over-month (MoM) in April, following a deficit of 1,024M in the previous reading (revised from $1,841M). The market consensus was for a surplus of 1,800M. Australia's Exports rose by 7.2% MoM in April from a fall of 2.5% seen in March (revised from -2.7%). Meanwhile, Imports increased by 0.8% MoM, compared to a previous rise of 12.2% (revised from 14.1%).
Meanwhile, the Japanese Yen (JPY) gains ground as traders continue to price in another interest-rate hike from the Bank of Japan (BoJ) later this month as policymakers grapple with rising costs and a stubbornly weak Yen, both of which have been aggravated by ongoing tensions in the Middle East.
BoJ Governor Kazuo Ueda adopted a hawkish stance during a speech in Tokyo on Wednesday. He emphasized that the central bank must carefully weigh the balance of a rate hike if inflationary pressures begin to pose a greater threat than risks to overall economic growth.
Meanwhile, Tokyo remains highly vigilant regarding currency volatility. Finance Minister Satsuki Katayama declined on Tuesday to comment on specific market movements or recent intervention data, but she warned that persistent instability in energy markets requires Japan to remain prepared for "appropriate action." Framing potential interventions as comprehensive economic management rather than a simple defense of the exchange rate, Katayama noted that Tokyo is actively monitoring the markets in close coordination with the United States.
Economic Indicator
Trade Balance (MoM)
The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Read more.Last release: Thu Jun 04, 2026 01:30
Frequency: Monthly
Actual: 1,791M
Consensus: -
Previous: -1,841M
Source: Australian Bureau of Statistics
Australia's Trade Balance shifted to surplus of $1,791M MoM in April, followed a deficit of $1,024M in the previous reading (revised from $1,841M), according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday. The market consensus was for a surplus of $1,800M.
Further details reveal that Australia's Exports climbed by 7.2% MoM in April from a fall of 2.5% seen a month earlier (revised from -2.7%). Meanwhile, Imports increased by 0.8% MoM in April, compared to a rise of 12.2% seen in March (revised from 14.1%).
The Australian Dollar (AUD) gains modestly following the Australia’s Trade Balance report. The AUD/USD pair is trading at 0.7135, gaining 0.08% on the day. The pair advances in positive territory, but remains close to its weekly low at 0.7130.
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 | -0.09% | -0.05% | -0.13% | -0.01% | -0.06% | -0.16% | -0.16% | |
| EUR | 0.09% | 0.03% | -0.02% | 0.08% | 0.00% | -0.16% | -0.06% | |
| GBP | 0.05% | -0.03% | -0.04% | 0.05% | -0.01% | -0.19% | -0.10% | |
| JPY | 0.13% | 0.02% | 0.04% | 0.10% | 0.05% | -0.14% | -0.04% | |
| CAD | 0.01% | -0.08% | -0.05% | -0.10% | -0.05% | -0.24% | -0.15% | |
| AUD | 0.06% | -0.01% | 0.00% | -0.05% | 0.05% | -0.16% | -0.07% | |
| NZD | 0.16% | 0.16% | 0.19% | 0.14% | 0.24% | 0.16% | 0.08% | |
| CHF | 0.16% | 0.06% | 0.10% | 0.04% | 0.15% | 0.07% | -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 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).
What do Australia’s Trade Balance data mean for the Australian Dollar?
Trade Balance gives an early indication of the net export performance. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand.
Even though the impact on the Reserve Bank of Australia (RBA) policy is usually indirect, Australia’s Trade Balance can influence the RBA because it provides insight into the strength of the external sector, economic growth, and national income.
A narrowing trade surplus or unexpected trade deficit may signal weakening export demand or slower growth among key trading partners. This might lead markets to expect a more dovish stance from the Australian central bank. However, if risk sentiment improves, this might help limit the Aussie losses as capital flows toward the riskier assets.
A larger-than-expected trade surplus can signal strong export demand or resilient economy. This report could lead markets to expect that the RBA will hike interest rates or keep them elevated.
Technical Analysis: AUD/USD keeps bullish vibe in near term
In the daily chart, AUD/USD holds above the rising 100-day simple moving average (SMA), keeping the near-term tone constructive despite the recent pullback from last week’s highs. The Relative Strength Index (RSI) around 47 sits just below the midline, hinting at fading upside momentum but not yet signaling an outright bearish shift while price action remains supported over the medium-term average.
On the downside, initial support is seen at the May 20 low of 0.7087, with a more important floor at the 100-day SMA near 0.7067, where buyers are likely to defend the broader uptrend. On the topside, a daily close well above the 0.7135 area would be needed to reassert bullish pressure and open the way for a retest of recent swing highs, with momentum confirmation from a recovery in the RSI back above the 50 line.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Trade Balance (MoM)
The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Read more.Last release: Thu May 07, 2026 01:30
Frequency: Monthly
Actual: -1,841M
Consensus: 4,250M
Previous: 5,686M
Source: Australian Bureau of Statistics
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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