Forex News
- AUD/JPY trades with a negative bias for the second straight day, though it lacks follow-through.
- Intervention speculations prompt some JPY short-covering and act as a headwind for the cross.
- The divergent BoJ-RBA policy expectations back the case for the emergence of some dip-buying.
The AUD/JPY cross remains on the back foot for the second consecutive day and trades just above mid-112.00s during the Asian session on Friday. Spot prices, however, lack bearish conviction, warranting some caution before positioning for an extension of this week's modest pullback from the vicinity of the 114.00 mark, or the highest level since 1990.
The Japanese Yen (JPY) reached levels that prompted the so-called rate checks in January, fueling speculations that authorities would step in to stem further weakness in the domestic currency. This turns out to be a key factor acting as a headwind for the AUD/JPY cross. However, reduced bets for an immediate rate hike by the Bank of Japan (BoJ) might hold back the JPY bulls from placing aggressive bets.
Given that Japan is one of the world's most energy-dependent nations, the recent surge in Crude Oil prices threatens to drive up consumer prices and weaken economic growth. This would create a classic stagflationary environment and complicate the BoJ's normalization efforts. In contrast, traders now seem convinced that the Reserve Bank of Australia (RBA) will hike interest rates as early as next week.
The aforementioned fundamental backdrop suggests that the path of least resistance for the AUD/JPY cross remains to the upside, and any further corrective slide is likely to be limited. Nevertheless, spot prices remain on track to register weekly gains as the focus now shifts to the crucial RBA meeting next Tuesday, which will be looked upon for cues about the policy outlook and provide a fresh impetus.
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.
- WTI falls after Australia’s Energy Minister Chris Bowen announced plans to release 762 million litres of fuel from reserves.
- Oil prices may further rise due to the Strait of Hormuz closure amid escalating US-Israel-Iran tensions.
- Mojtaba Khamenei said the Strait of Hormuz closure should continue as a “tool to pressure the enemy.”
West Texas Intermediate (WTI) oil price holds slight losses after surging more than 9% in the previous session, trading near $95.20 per barrel during the Asian hours on Friday. Oil prices declined after Chris Bowen, Australia’s Energy Minister, said the country would release up to 762 million litres of fuel from reserves after easing stockholding rules to address supply disruptions linked to the Iran conflict.
The Australian government also plans to reduce minimum fuel stockholding requirements by up to 20% to help stabilize domestic supply. Despite this measure, Oil prices may continue rising following the effective closure of the Strait of Hormuz amid escalating tensions involving the United States, Israel, and Iran.
US crude prices have surged more than 40% since the start of the war. The International Energy Agency (IEA) warned that the US-Israeli war on Iran is “creating the largest supply disruption in the history of the global oil market.”
Officials at the United States Department of Defense and the National Security Council reportedly underestimated Iran’s readiness to close the Strait of Hormuz in response to US military strikes while planning the ongoing operation. The Strait handles roughly one-fifth of global Oil consumption, making it one of the world’s most strategically important maritime routes. Any disruption to tanker traffic can quickly ripple through global energy markets.
Iran’s new supreme leader, Mojtaba Khamenei, said in his first public remarks since taking office that the closure of the Strait of Hormuz should remain a “tool to pressure the enemy.” Khamenei also warned that all US military bases in the region should be closed immediately or face potential attacks.
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.
- US Dollar Index softens to around 99.70 in Friday’s Asian session.
- Escalating geopolitical tensions in the Middle East could boost the safe-haven flows, supporting the DXY.
- The US PCE inflation report for January will be the highlight later on Friday.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.70 during the Asian trading hours on Friday. The DXY trades in negative territory on the day but is poised for its second consecutive weekly gain and marks the highest levels since November 2025, bolstered by escalating geopolitical tensions in the Middle East.
The Pentagon and National Security Council (NSC) stated that they underestimated Iran’s willingness to close the Strait of Hormuz in response to US military strikes while planning the ongoing operation.
Iran’s new supreme leader, Mojtaba Khamenei, stated that the crucial Strait of Hormuz should remain closed and Tehran will continue attacks on its Persian Gulf neighbors. Ongoing hostilities in the Middle East, specifically involving the US, Israel, and Iran, could provide some support to the US Dollar against its rivals.
Expectations for the US Federal Reserve (Fed) rate cuts have been reduced as oil-driven inflation complicates the US policy path. Traders will take more cues from the US Personal Consumption Expenditures (PCE) Price Index report for January, which is due on Friday.
The headline PCE is expected to see an increase of 2.9% YoY in January, while the core PCE is projected to see a rise of 3.1% during the same period. In case of softer-than-expected inflation outcomes, this could weigh on the Greenback in the near term.
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.
- Canadian Dollar steadies as Oil prices ease slightly after surging more than 9% on Thursday.
- WTI price may rise further after the Strait of Hormuz closure amid escalating US-Israel-Iran tensions.
- January’s US Personal Consumption Expenditures Price Index will be eyed later on Friday.
USD/CAD steadies after registering over 0.25% gains in the previous session, trading around 1.3640 during the Asian hours on Friday. However, the commodity-linked Canadian Dollar (CAD) may strengthen amid surging oil prices, as Canada is the largest crude exporter to the United States (US).
West Texas Intermediate (WTI) oil price eased slightly after surging more than 9% in the previous session, trading near $95.00 per barrel at the time of writing. However, oil prices may continue to rise following the effective closure of the Strait of Hormuz amid escalating conflict involving the United States, Israel, and Iran.
US crude prices have climbed more than 40% since the start of the war. The International Energy Agency (IEA) warned that the US-Israeli war on Iran is “creating the largest supply disruption in the history of the global oil market.”
Iran’s new supreme leader, Mojtaba Khamenei, said in his first public remarks since his appointment that the closure of the Strait of Hormuz should continue as a “tool to pressure the enemy.” Khamenei also warned that all US military bases in the region should be closed immediately or face potential attacks.
The downside of the USD/CAD pair could be restrained as the US Dollar (USD) may hold its ground as futures markets and economists expect the Federal Reserve to keep interest rates unchanged at next week’s policy meeting, with the benchmark federal funds rate currently at 3.50%–3.75%.
Meanwhile, traders await another key US inflation release. January’s Personal Consumption Expenditures Price Index (PCE) — the Fed’s preferred inflation gauge — is due later in the day, though it will not reflect the impact of the Iran war. Markets will also monitor the first revision of fourth-quarter US GDP growth and March consumer confidence.
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.
- NZD/USD trades with mild gains around 0.5855 in Friday’s early Asian session.
- Iran's new supreme leader said the Strait of Hormuz should remain closed.
- Analysts forecast a potential shift toward RBNZ tightening late in 2026.
The NZD/USD pair posts modest gains near 0.5855 during the early Asian session on Friday. Nonetheless, ongoing conflicts in the Middle East might cap the upside for the Kiwi against the US Dollar (USD). Traders await the US Personal Consumption Expenditures (PCE) Price Index report for January later on Friday for fresh impetus.
US President Donald Trump said that preventing Iran from having nuclear weapons and threatening the Middle East is “of far greater interest and importance to me” than the cost of oil. Meanwhile, Iran’s new supreme leader, Mojtaba Khamenei, stated that Tehran would seek to ensure the Strait of Hormuz remains effectively closed. Traders could seek safety amid heightening geopolitical tensions, which might lift the US Dollar (USD) against the New Zealand Dollar (NZD).
Friday’s US inflation data, the Fed’s preferred price gauge, will take center stage on Friday. This report could shape the US Federal Reserve (Fed) interest rate expectations. The headline PCE is expected to see an increase of 2.9% YoY in January, while the core PCE is projected to see a rise of 3.1% during the same period.
Any signs of softer inflation in the US could weigh on the Greenback and act as a tailwind for the pair. Markets are currently pricing in a 99% chance that the Fed will hold interest rates steady at its next meeting, according to the CME FedWatch tool.
On the Kiwi front, Reserve Bank of New Zealand (RBNZ) Governor Anna Breman said that monetary policy will likely remain accommodative for some time to support a fragile economy. Financial markets have shifted significantly toward pricing in at least two Official Cash Rate (OCR) hikes by the end of 2026, driven primarily by an energy-price shock following conflicts in the Middle East.
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 attracts some buyers during the Asian session and snaps a two-day losing streak.
- The mixed technical setup warrants caution before positioning for any further move up.
- A break below a short-term ascending trend line will be seen as a key trigger for bears.
Silver (XAG/USD) gains some positive traction during the Asian session on Friday and climbs back above the $85.00 mark in the last hour. The white metal, for now, seems to have snapped a two-day losing streak, though it remains on track to end the week on a flattish note.
From a technical perspective, the XAG/USD holds under the descending 200-period Simple Moving Average (SMA) on the 4-hour chart. This keeps sellers in control despite the Relative Strength Index (RSI) recovering toward the neutral 48 area, which suggests only modest downside momentum. Moreover, the Moving Average Convergence Divergence (MACD) indicator stays below the signal line and under the zero mark, with a negative histogram that reinforces the view of prevailing bearish pressure rather than an established base.
However, it will still be prudent to wait for a convincing break and acceptance below the longstanding rising support trend line before placing aggressive bearish bets around the XAG/USD. A failure would invite a deeper pullback toward $82.00, followed by $80.00 as the next significant level.
On the upside, initial resistance emerges at the 200-period SMA near $85.70, and a sustained break above this area would open the way toward last week’s highs around $87.00 and then $88.50. As long as XAG/USD trades below $85.70, rallies are vulnerable to selling pressure, while a recovery above that barrier would be needed to neutralize the current bearish tone.
(The technical analysis of this story was written with the help of an AI tool.)
XAG/USD 4-hour chart
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.
- GBP/USD advances as the US Dollar Index (DXY) retreats after rising nearly 0.5% on Thursday.
- January’s US Personal Consumption Expenditures Price Index will be eyed later on Friday.
- Markets increasingly expect the Bank of England to cut interest rates at next week’s policy meeting.
GBP/USD pares recent losses from the previous session, trading around 1.3370 during the Asian hours on Friday. The pair strengthens as the US Dollar Index (DXY) retreats after gaining nearly 0.5% on Thursday. However, the US Dollar could regain support amid escalating geopolitical tensions in the Middle East.
Traders are likely awaiting another key US inflation release. January’s Personal Consumption Expenditures Price Index (PCE), the preferred inflation gauge of the Federal Reserve (Fed), is due later in the day, though it will not reflect the impact of the Iran war. Markets will also monitor the first revision of fourth-quarter US GDP growth and March consumer confidence.
Safe-haven demand for the Greenback remains supported by surging oil prices. Iran’s new supreme leader, Mojtaba Khamenei, said in his first public remarks since his appointment that the closure of the Strait of Hormuz should continue as a “tool to pressure the enemy.” Khamenei also warned that all US military bases in the region should be closed immediately or face potential attacks.
Futures markets and economists expect the Federal Reserve to keep interest rates unchanged at next week’s policy meeting, with the benchmark federal funds rate currently at 3.50%–3.75%.
Meanwhile, markets are increasingly confident that the Bank of England (BoE) will cut interest rates at next week’s policy meeting. However, rising inflationary pressure from higher oil prices has clouded the outlook, prompting expectations that policymakers may remain cautious and potentially delay rate cuts.
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.
Australia's Energy Minister said on Friday that the country will release up to 762 million litres of fuel from reserves after easing stockholding rules to counter supply disruptions linked to the Iran conflict.
Furthermore, the government plans to cut minimum fuel stockholding obligations by up to 20%. The measure aims to address fuel supply disruptions linked to the Iran conflict.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 1.05% on the day at $93.85.
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.
- USD/JPY attracts some sellers and snaps a three-day winning streak back closer to the YTD top.
- Intervention fears prompt some JPY short-covering and weigh on spot prices amid a softer USD.
- The downside seems limited as traders now await the release of the crucial US PCE Price Index.
The USD/JPY pair meets with some supply during the Asian session on Friday, and for now, seems to have snapped a three-day winning streak back closer to the 159.40-159.45 area, or the year-to-date high. Spot prices drop to the 159.00 mark in the last hour, though the downside potential seems limited.
The Japanese Yen (JPY) reached levels that prompted the so-called rate checks in January, fueling speculations that authorities would step in to stem further weakness in the domestic currency. This turns out to be a key factor exerting some pressure on the USD/JPY pair amid a modest downtick in the US Dollar (USD). Any meaningful depreciation, however, seems elusive, warranting some caution for bearish traders.
Given that Japan is one of the world's most energy-dependent nations, the recent surge in Crude Oil prices threatens to drive up consumer prices and weaken economic growth. This would create a classic stagflationary environment and further complicate the Bank of Japan's (BoJ) normalization efforts, which might hold back traders from placing aggressive bullish bets around the JPY and act as a tailwind for the USD/JPY pair.
The USD, on the other hand, might continue to draw support from reduced bets for near-term interest rate cuts by the Federal Reserve (Fed). Escalating Middle East tensions and the closure of the Strait of Hormuz remain supportive of elevated Crude Oil prices, fueling concerns about a war-driven surge in inflation. This could force the US Fed to delay cutting rates, which should support the USD and the USD/JPY pair.
Traders might also opt to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index, later today, for more cues about the Fed's rate-cut path. This, in turn, might influence the USD price dynamics and provide some impetus to the USD/JPY pair. Nevertheless, spot prices remain on track to register gains for the fourth straight week and the supportive fundamental backdrop favors bulls.
Japanese Yen Price This Month
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this month. Japanese Yen was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 2.37% | 0.93% | 1.91% | -0.42% | 0.29% | 2.15% | 1.44% | |
| EUR | -2.37% | -1.41% | -0.48% | -2.73% | -2.03% | -0.22% | -0.91% | |
| GBP | -0.93% | 1.41% | 0.98% | -1.33% | -0.63% | 1.21% | 0.50% | |
| JPY | -1.91% | 0.48% | -0.98% | -2.28% | -1.59% | 0.22% | -0.46% | |
| CAD | 0.42% | 2.73% | 1.33% | 2.28% | 0.71% | 2.56% | 1.86% | |
| AUD | -0.29% | 2.03% | 0.63% | 1.59% | -0.71% | 1.85% | 1.14% | |
| NZD | -2.15% | 0.22% | -1.21% | -0.22% | -2.56% | -1.85% | -0.69% | |
| CHF | -1.44% | 0.91% | -0.50% | 0.46% | -1.86% | -1.14% | 0.69% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.9007 compared to the previous day's fix of 6.8959 and 6.8888 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
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