Forex News

UBS economist Paul Donovan discusses how visible Oil prices at fuel stations interact with changing consumer behavior in major economies. He notes that US gasoline prices above USD 4 per gallon are framed as a crisis, yet demand trends in the United Kingdom (UK), United States (US), Germany and France show flat or lower motor fuel use versus 2015 and pre-pandemic levels. Donovan also highlights political choices around subsidizing fuel instead of using prices to encourage behavioral change.

Motor fuel demand and policy choices

"One of the most visible oil prices is that of motor fuels. In almost every country, the price is predominantly displayed by the side of the road. In the US, the rise above USD 4 per US gallon in the average price of gasoline is presented as a national crisis."

"In the UK, demand for motor fuel is around the same level as in 2015—down 3.5% from its pre-pandemic level. Some of this is fuel efficiency and electric vehicles, but Britons are also driving about 0.8% less than in 2019."

"In the US, motor fuel volumes are the equivalent of pre-pandemic levels and below those of 2015. It is a similar story in Germany and France."

"Changing behavior means that consumers can cut back on motor fuel consumption. Pricing is one factor that can feed into that process."

"The political desire to subsidize fuel, rather than allowing prices to push people to change their behavior (with governments offsetting hardship in other ways), needs to be considered in this context."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Kevin Hassett, Director of the National Economic Council, told FOX Business on Friday that the Federal Reserve (Fed) outlook for having room to cut rates will be very solid. He also claimed the Hormuz Strait can be reopened within two months, saying they have backup plans to reopen it.

Key takeaways:

The outlook for the Fed having room to cut rates is going to be very solid.

Hormuz can be opened within two months, we have backup plans for opening Hormuz.

We expect a rapid reduction in energy prices once the Strait of Hormuz opens.

10% pace of boats going through Hormuz vs normal."

Royal Bank of Canada’s (RBC) Nathan Janzen notes that Canadian labour market conditions steadied in March, with a modest employment gain and an unemployment rate holding at 6.7%. He highlights that softer labour force growth, driven by stalled population growth and aging demographics, is helping unemployment drift lower. RBC remains cautiously optimistic that per-person economic growth and labour conditions will gradually improve through 2026.

Labour force dynamics support lower unemployment

"The first increase in employment of the year in Canada in March (+14k) retraced little of the cumulative 109k drop over January and February."

"But per-worker labour market conditions showed further signs of stabilization with the unemployment rate holding at 6.7% -- still above the 6.5% rate in January but below the 6.8% level in December and the recent peak 7.1% rate in September 2025."

"The (gradual and choppy) drift lower in the unemployment rate since September has been, mechanically, tied as much to softer labour force growth as to stronger hiring -- Canada's labour force has declined by 39k workers over the last 6 months compared to an 42k increase in employment."

"But that labour market decline has more to do with stalled population growth and an aging population rather than a 'distortion' like discouraged workers giving up their job searches."

"Looking ahead, the economic growth backdrop still faces headwinds."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Scotiabank’s strategists Shaun Osborne and Eric Theoret note the Euro is extending consolidation around 1.17 after sentiment-driven gains linked to easing geopolitical concerns. They highlight constructive risk reversals, supportive yield spreads and reduced demand for downside protection. Short-term technicals are bullish, with RSI firmly above 50, limited resistance ahead of 1.18, and an expected near-term range between 1.1680 and 1.1780.

Euro holds gains as technicals turn bullish

"The EUR is extending Thursday’s consolidation and entering Friday’s NA session with a fractional 0.1% gain vs. the USD. The latest congestion appears to be centered around 1.17, and follows a sentiment-driven recovery motivated by the tentative easing in geopolitical concerns."

"The recovery in risk reversals is constructive and suggests a continued softening in demand for protection against EUR weakness, allowing for a return to fundamentals."

"Yield spreads are supportive and offer near-term upside risk for the EUR."

"Bullish – the RSI is firmly in bullish territory above 50, revealing an impressive recovery in momentum following a mid-March plunge to oversold levels nearing 20."

"We see limited resistance ahead of 1.18, a level that offered considerable congestion through the latter half of February."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

United Overseas Bank’s (UOB) economists Quek Ser Leang and Lee Sue Ann see USD/JPY edging higher in the near term after rebounding from oversold levels, but expects gains to be limited below 159.60. On a 1–3 week horizon, they still look for another test of 157.50 as long as 159.60 holds as strong resistance. A break below 158.65 would signal renewed range trading.

Limited upside as downside risk persists

"Today, we expect USD to edge higher, but any advance is unlikely to threaten the strong resistance at 159.60 (there is another resistance level at 159.35)."

"Support is at 158.90; a breach of 158.65 would mean that USD has moved into a range-trading phase."

"After USD dropped to 157.86 and then rebounded, we highlighted yesterday (09 Apr, spot at 158.60) that “oversold short-term conditions could lead to a couple of days of range-trading, but as long as 159.60 (‘strong resistance’ level) is not breached, there is a chance for USD to test 157.50.” There is no change in our view."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Rabobank's Head of Macro Strategy Elwin de Groot argues that Hungary’s parliamentary election could have supportive implications for the Euro if Viktor Orbán loses power. He stresses that a Peter Magyar government might ease Hungary’s obstruction of EU decisions and Ukraine support, but warns that expectations for a dramatic policy shift may be too optimistic given his nationalist background.

Hungary politics and Euro cohesion

"Looking ahead to Sunday, Hungary’s parliamentary election may also attract significant attention, especially following several recent incidents and Vice President Vance’s explicit support for the incumbent."

"Brussels is hopeful that a government led by Peter Magyar would alter Hungary’s course and reduce its obstruction of EU decision‑making."

"Orbán is currently blocking a €90 billion loan package for Ukraine, reportedly linking it – likely for electoral reasons – to damage to the Druzhba pipeline that once carried Russian oil via Ukraine to Hungary and Europe."

"An Orbán defeat is therefore widely seen as a positive development for European cohesion and strategic autonomy, with potential supportive implications for the euro."

"That said, expectations may prove overly optimistic."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

OCBC strategists Sim Moh Siong and Christopher Wong note New Zealand Dollar (NZD) has rallied on hawkish Reserve Bank of New Zealand (RBNZ) rhetoric and easing Oil risks, but warns markets may be overpricing tightening. With a sizeable negative output gap and weak growth, NZD is expected to lag Australian Dollar (AUD). They project the RBNZ to start hiking only in 4Q26, with the policy rate at 2.75% by end-2026.

RBNZ hikes seen delayed to 4Q26

"The NZD firmed after hawkish comments from RBNZ Governor Breman, who warned the Bank would respond forcefully with rate hikes if core inflation accelerated."

"While softer oil prices could allow the NZD to strengthen further against the USD, we still expect it to underperform the AUD."

"Market pricing has shifted sharply hawkish, with nearly three rate hikes now priced by year-end."

"This looks demanding given New Zealand’s sizeable negative output gap and sub-par growth over recent quarters, which raise the bar for aggressive tightening."

"We expect the RBNZ hiking cycle to begin only in 4Q26, with a single 25bp hike lifting the policy rate to 2.75% by end-2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING economists expect National Bank of Poland (NBP) rates to stay unchanged after April’s decision to hold the reference rate at 3.75%. They highlight a neutral Monetary Policy Council stance, with decisions driven by energy prices, geopolitics, fiscal policy and wage dynamics, and see rate hikes as unlikely under current conditions.

NBP seen on prolonged policy hold

"As expected, the Monetary Policy Council (MPC) left the National Bank of Poland's (NBP) interest rates unchanged, with the reference rate remaining at 3.75%. The press release following the April MPC meeting was very brief and neutral in its tone. It highlights that, as a result of supply constraints caused by the conflict in the Middle East, fuel prices have risen globally."

"After the delivery of a 25bp NBP rate cut in March (and despite the outbreak of conflict in the Middle East), the MPC has adopted a more neutral stance and a wait-and-see approach in April. The Council's attention will now focus on incoming data and assessing the impact of the geopolitical and commodity situation on inflation prospects and economic activity. Rate hikes are off the agenda under the current circumstances."

"According to the NBP governor, in the coming months, inflation will depend on prices of energy commodities (oil, natural gas) and domestic regulatory and tax decisions (excise duty and VAT on fuels), which are aimed at soothing the shock. The MPC will also focus on the pass-through of higher fuel prices into prices of other goods."

"As for future decisions by the Council, these will depend on changes in commodity prices and the geopolitical situation, with fiscal policy and regulations concerning fuel prices, as well as changes in GDP and wage dynamics, posing risk factors."

"Our baseline scenario assumes that the Lower Fuel Prices programme (CPN) will be maintained until the end of July this year, and average annual inflation will amount to 3.2%, compared to a roughly 2% estimate before the outbreak of war in the Persian Gulf and 2.3% in the NBP's March projection. This will allow the MPC to keep interest rates unchanged at least until the end of 2026, and we assess the probability of rate hikes as low."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)