Forex News
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the British Pound (GBP) is trading fractionally lower against the Dollar, with limited fresh data beyond a slightly contractionary services PMI. Bank of England (BoE) communication has been mixed, though rate expectations have recently recovered and yield spreads stabilized. Markets see little chance of tightening in June but nearly two 25bp hikes priced by year-end, while GBP/USD remains confined between 1.33 and 1.35.
Pound steady within tight trading band
"The pound is also trading fractionally lower with no meaningful data beyond the final services PMI’s offering a near-50 print (49.3) signaling marginal contraction."
"Recent BoE communication has been mixed, with hawkish leaning comments from MPC member Greene and dovish labor-related concerns expressed by Gov. Bailey."
"BoE rate expectations recovered over the past few sessions, and yield spreads are showing signs of stabilization."
"Markets are pricing little risk of tightening at the June 18 meeting but anticipate nearly two full 25bps hikes by December."
"Neutral—the RSI is close to neutral at 50, and recent price action has been closing congestion centered around the 50 day MA (1.3450). We await a break of the local range roughly bound between 1.3300 and 1.3500."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Brown Brothers Harriman’s (BBH) Elias Haddad reports that USD/JPY’s test of 160.00 has heightened intervention risks, with Japanese authorities already having spent a record amount to cap the pair near that level. Governor Ueda’s more hawkish tone and market pricing for further Bank of Japan (BoJ) tightening suggest a supportive backdrop for the Japanese Yen (JPY) over the coming months.
Yen supported by BoJ tightening bias
"USD/JPY tested 160.00, raising intervention risks. Remember, Japanese authorities purchased a record ¥11.735 trillion in the period from April 28 through May 27 to stem the surge in USD/JPY. That underscores their determination to keep a lid on USD/JPY around 160.00."
"Bank of Japan (BoJ) Governor Kazuo Ueda strengthened the bank’s tightening bias. Ueda noted that the recent increase in long-term interest rates appears to be attributable to a rise in market inflation expectations. He added the BoJ should be more vigilant about the risk of a significant upward deviation in inflation materializing than to downside risks to economic activity."
"BoJ may need to tighten more than expected which is JPY positive. The swaps curve price in 86% odds of a 25bps BoJ rate hike to 1.00% at the next June 16 meeting and a total of nearly 75bps of tightening in the next twelve months."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold accounts for 27% of all global central bank reserves, outpacing US Treasuries as the top reserve asset.
- The rise in Gold reserves follows steady central bank purchases of the precious metal, whose price has rallied over the past year.
- The change reflects efforts from central banks to seek an alternative to the US Dollar, reinforcing the narrative of the “debasement trade.”
Gold has become the top reserve asset in global central banks’ vaults, surpassing US Treasuries, suggesting that the precious metal is becoming the main choice for monetary authorities seeking protection against geopolitical uncertainty.
The share of Gold in total official foreign reserves increased to 27% at the end of 2025, up from 20% a year earlier, according to data from the European Central Bank (ECB). This is higher than the share of US Treasuries, which fell from 25% to 22%, and the Euro, which remained stable at 15%. This major change in the global reserve system was first reported by the Financial Times.
The ECB suggests that the increase in Gold’s share is mainly due to valuation effects: Gold’s price rally during 2025 mechanically increased the share. Actually, in terms of quantity, central bank purchases of the precious metal slowed to around 850 tonnes in 2025 compared with the over 1,000 tonnes seen every year between 2022 and 2024.
Still, the report also highlights that purchases of the precious metal could also be due to efforts by some central banks to strengthen their balance sheets. “Survey data suggest that central banks hold Gold not only for diversification but also as a hedge against geopolitical risk,” the report notes.
By country, Poland was the largest purchaser among central banks in 2025 with 100 tonnes, followed by Kazakhstan, Brazil, China and Türkiye. Beyond central banks, the report highlights that stablecoin issuer Tether bought more than 100 tonnes of Gold in 2025.
While the data only covers 2025, the report highlights that some of these central banks have offloaded some of their Gold reserves this year to mitigate the economic fallout from the Iran war. The Turkish central bank, for example, sold or loaned around 130 tonnes of Gold to defend the Lira, in what the ECB describes as “one of the largest reserve drawdowns in recent years”.
Central bank buying is a key catalyst for Gold prices and one of the reasons behind its stunning rally in 2025. The changing mix of reserve assets shows that many countries are trying to reduce their dependence on the US Dollar, which remains the world’s dominant reserve currency.
BNY’s Bob Savage reports that the Dollar Index is firmer as higher U.S. yields and renewed geopolitical tensions underpin safe-haven demand. President Trump’s proposal for broad new tariffs raises trade and inflation risks, reinforcing USD support. Savage also highlights iFlow data showing FX inflows into USD and risk-off positioning in bonds and equities.
Tariff risks bolster Greenback
"President Trump has proposed new tariffs of at least 10% on imports from 60 trading partners, following a forced labor investigation and as part of a wider effort to rebuild the tariff wall previously struck down by the Supreme Court. The Office of the U.S. Trade Representative said Canada, Mexico, the EU, Taiwan and the U.K. would face a 10% rate, while goods from major economies such as China, India, Japan, South Korea, Brazil and Switzerland would be hit with 12.5%. The levies are not immediate and will undergo public comment and hearings before finalization, leaving room for changes."
"The move has heightened trade tensions and raised inflation risks. Outflows were concentrated in DKK, CAD, NZD and TRY, followed by BRL and CLP. In contrast, inflows favored USD, JPY, MXN and ZAR, along with EUR and GBP."
"iFlow Mood has stabilized as June has got underway but remains firmly in risk-off territory, characterized by continued equity outflows and sustained demand for core government bonds."
"The third day of oil price rises has left global shares lower and U.S. equity futures weaker. The escalation in the U.S.-Iranian conflict has again been the driving force, pushing bond yields and USD higher. The economic data produced mixed results: China’s services PMI rose to a three-month high, while Australian Q1 GDP was softer than expected."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Australian Dollar weakens after Australian GDP growth misses expectations in the first quarter.
- The US ISM Services PMI accelerates more than expected in May, supporting the US Dollar.
- Middle East geopolitical tensions and rising inflation components in the ISM survey further underpin the Greenback.
AUD/USD trades around 0.7145 on Wednesday at the time of writing, down 0.50% on the day. The pair remains under pressure after the release of several disappointing Australian economic indicators, while solid US data continues to support the US Dollar (USD).
The Australian economy expanded by 0.3% QoQ in the first quarter, down from a revised 0.9% in the previous quarter and below market expectations of 0.5%. On an annual basis, Gross Domestic Product (GDP) grew by 2.5%, missing the consensus forecast of 2.7%. The figures confirm a loss of economic momentum and reinforce expectations that the Reserve Bank of Australia (RBA) will maintain a cautious policy stance.
Investors have also digested a rise in Australia’s Unemployment Rate to its highest level in about four and a half years, alongside softer recent inflation data, reducing the need for further monetary tightening. UOB expects the central bank to keep its cash rate at 4.35% for an extended period, while TD Securities believes one final 25-basis-point rate hike remains possible later this year as growth continues to run above potential.
In the United States (US), data released on Wednesday supports the Greenback. The Institute for Supply Management (ISM) reported that its Services Purchasing Managers Index (PMI) rose to 54.5 in May from 53.6 in April, beating market expectations of 53.8. The Prices Paid component also increased to 71.3 from 70.7, signaling that inflationary pressures remain elevated.
These figures largely offset the slight disappointment from the S&P Global Services PMI, which was revised down to 50.7 in May from the initial release of 50.9. Meanwhile, the Automatic Data Processing (ADP) report showed that US private employment increased by 122K jobs in May, above expectations of 117K, highlighting the continued resilience of the labor market.
The geopolitical backdrop also remains supportive of the Greenback. Concerns surrounding tensions between the United States and Iran continue to boost demand for safe-haven assets. US President Donald Trump stated that Iran has agreed not to acquire nuclear weapons, while noting that discussions with Iranian authorities remain ongoing.
The strength of the US Dollar, fueled by robust US economic data and a risk-averse market environment, continues to dominate market sentiment and keeps downward pressure on AUD/USD.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.28% | 0.02% | 0.23% | 0.49% | 0.83% | 0.37% | |
| EUR | -0.27% | 0.00% | -0.26% | -0.04% | 0.23% | 0.55% | 0.11% | |
| GBP | -0.28% | -0.00% | -0.26% | -0.05% | 0.22% | 0.53% | 0.10% | |
| JPY | -0.02% | 0.26% | 0.26% | 0.19% | 0.46% | 0.76% | 0.34% | |
| CAD | -0.23% | 0.04% | 0.05% | -0.19% | 0.27% | 0.59% | 0.15% | |
| AUD | -0.49% | -0.23% | -0.22% | -0.46% | -0.27% | 0.32% | -0.14% | |
| NZD | -0.83% | -0.55% | -0.53% | -0.76% | -0.59% | -0.32% | -0.43% | |
| CHF | -0.37% | -0.11% | -0.10% | -0.34% | -0.15% | 0.14% | 0.43% |
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).
(This story was corrected on June 3 at 15:55 GMT to say that the Australian GDP was down from a revised 0.9% in the previous quarter, not 0.8%.)
Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) remains soft but broadly stable, with USD/CAD trading near 1.3850. They highlight that CAD is undervalued versus their fair value estimate around 1.3690, but recent shifts in Bank of Canada (BoC) expectations and wider short-term spreads favour the US Dollar (USD). They see USD/CAD upside as limited toward the mid-1.38s unless a fresh CAD-negative catalyst emerges.
CAD undervaluation but capped USD/CAD gains
"The CAD is soft but little changed this morning. The CAD is “cheap” relative to our fundamental fair value assessment (1.3690 today) but factors have moved against the CAD through May as markets have repriced the BoC policy outlook somewhat and short-term spreads have widened in the USD’s favour."
"More broadly, the CAD remains hampered but the uncertain trade outlook. The weak CAD valuation and a generally stretched-looking USD suggest limited upside potential for USD/CAD absent a new, CAD-negative catalyst."
"Bearish—While the USD has edged a little higher this week so far, chart signals from last week remain clearly bearish (a daily key reversal signal last Thursday and a weekly “shooting star” candle signal)."
"USD gains to the mid-1.38s are meeting resistance, as expected, but there is admittedly no sign of a turn lower developing just yet."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold falls as strong US economic data and Middle East uncertainty lift the US Dollar.
- Markets price in a higher-for-longer Fed interest rate outlook as elevated Oil prices add to inflation concerns.
- Technical signals continue to point lower as XAU/USD struggles to regain momentum.
Gold (XAU/USD) trades lower on Wednesday as escalating tensions in the Middle East dampen hopes for a near-term US-Iran peace deal, while a fresh batch of upbeat US economic data reinforces expectations that interest rates could stay higher for longer. At the time of writing, XAU/USD is trading around $4,447, down nearly 2.0% so far this week.
ADP data showed private payrolls rose by 122K in May from 105K in April, beating expectations of 117K and marking the strongest increase since March 2025. Meanwhile, the ISM Services Purchasing Managers Index (PMI) climbed to 54.5 from 53.6, above forecasts of 53.8.
The US Dollar extended its intraday advance following the latest data releases. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99.45, up 0.25% on the day. Traders now look ahead to the US Nonfarm Payrolls (NFP) report due on Friday.
On the geopolitical front, US Central Command said American forces intercepted multiple Iranian ballistic missiles and drones targeting Kuwait and Bahrain on Tuesday. In response, US forces carried out strikes on an Iranian military ground control station on Qeshm Island in the Strait of Hormuz.
Meanwhile, US President Donald Trump pushed back against reports from Iran's Fars and Tasnim news agencies that talks had stalled.
Trump said on Wednesday that Iran had agreed not to have a nuclear weapon, Reuters reported. He also said Iran’s Supreme Leader, Ayatollah Mojtaba Khamenei, is involved in talks with the United States.
Traders continue to favor the US Dollar (USD) as negotiations between Washington and Tehran remain unclear and tensions in the Middle East persist, while the blockade around the Strait of Hormuz keeps Oil prices elevated.
The current macro backdrop has put Gold’s traditional defensive appeal under pressure as markets increasingly focus on the inflationary impact of higher energy prices.
As a result, traders now expect the Federal Reserve (Fed) to keep interest rates unchanged through the rest of the year, while pricing in a roughly 40% chance of a 25-basis-point (bps) rate hike at the December meeting.
A higher-interest-rate environment tends to reduce the appeal of non-yielding assets such as Gold. The hawkish repricing is also lending additional support to the US Dollar and pushing Treasury yields higher, adding further pressure on the precious metal.
Technical Analysis: XAU/USD trades in the lower end of its recent range
On the daily chart, XAU/USD holds below the Bollinger Bands Simple Moving Average (SMA) midpoint at roughly $4,568, keeping the near-term tone bearish as price gravitates toward the lower half of the recent volatility envelope.
The Relative Strength Index (RSI) around 39 suggests subdued bullish momentum rather than outright oversold conditions, while the Average Directional Index (ADX) near 25 hints at a trend that is gaining strength but is not yet in a strongly directional phase.
On the topside, initial resistance is aligned with the Bollinger Bands SMA center line near $4,568, with the upper band next around $4,752 acting as a secondary cap if buyers attempt a rebound.
On the downside, the lower Bollinger band near $4,384 offers the first notable support, and a clear break beneath this zone would open the door to deeper corrective losses as the broader volatility structure shifts lower.
(The technical analysis of this story was written with the help of an AI tool.)
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.
MUFG’s Derek Halpenny notes that recent Ministry of Finance (MoF) and Bank of Japan (BoJ) intervention failed to prevent USD/JPY from returning to 160, as higher US yields and renewed Middle East tensions support the Dollar. He highlights rising crude Oil risks, stronger speculation for a June BoJ rate hike, and stresses that BoJ action should cap further USD/JPY gains, with upside seen as limited.
BoJ tightening expected to cap yen losses
"The largest single month of intervention by the MoF/BoJ (JPY 11.7trn) has had a brief impact on the yen highlighted by the fact that USD/JPY traded the 160-level today for the first time since intervention took place, probably on 30th April & 6th May. The success of intervention is always determined by whether the fundamental backdrop can reinforce the intervention – and that hasn’t happened."
"Although the price of crude oil has fallen since intervention took place, it is on the rise again and the continued reports of escalation in military conflict is placing some serious doubts over the prospects of a near-term reopening of the Strait of Hormuz. We could be close to a tipping point that sees some renewed sharp increases in crude oil prices."
"The BoJ at least, now looks to be trying to play its part in providing yen support. The OIS pricing for a rate hike on 16th June has increased by about 5-6bps since intervention took place with the probability of a hike now over 80% and the highest since mid-April."
"We expect the BoJ to hike although US yields will remain important and USD/JPY could still gain although BoJ action will help contain any move. We still see upside USD/JPY scope as limited to a few big figures."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Federal Reserve (Fed) Bank of New York President John Williams said on Wednesday that higher energy prices are driving up costs and inflation, per Reuters.
Key takeaways
"Economy has solid growth around 2%, job market has stabilized."
"The job market is healthy."
"Inflation is up quite a bit."
"I would expect inflation to peak in the next few months."
"Inflation should be elevated through remainder of year."
"Inflation is elevated in goods sector and energy related forces."
"Inflation also elevated in tech due to AI."
"A lot of infaltion is due to tariffs and inflation and computer chips."
"Hopefully energy prices will stabilize."
"I'm not that worried about persistent impacts on inflation so far."
"Not expecting long running increase in energy prices."
"Will have to wait and see what happens with latest tariff moves."
"Monetary policy is exactly in the right place, no need to raise or lower rates."
"Upside risks to inflation have increased."
"I don't see an obvious argument to change interest rates right now."
Market reaction
The US Dollar Index continues to edge higher in the American session on Wednesday and it was last seen rising 0.2% on the day at 99.42.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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