Forex News
On Thursday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7367 compared to last Wednesday's fix of 6.7351 and 6.7254 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.
- USD/CAD sticks to a positive bias and remains close to the year-to-date high, set earlier this week.
- The CAD underperforms amid weak oil prices, US-Canada tensions, and the BoC-Fed divergence.
- Geopolitical risks and elevated US bond yields underpin the USD, further supporting spot prices.
The USD/CAD pair retains its bullish undertone on Thursday, trading around the 1.4265 region during the Asian session, well within striking distance of the highest level since April 2025, touched earlier this week. Moreover, the supportive fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside and backs the case for an extension of a one-month-old strong uptrend.
The Canadian dollar (CAD) has been underperforming due to heavy US-Canada trade tensions, a sluggish domestic economy, and the Bank of Canada's (BoC) predominantly dovish policy stance. In fact, traders seem convinced that the BoC has less reason to raise interest rates than the US Federal Reserve (Fed), as Canada’s weaker economic outlook could contain broader inflationary pressures. Meanwhile, crude oil prices hang near a one-month low as easing supply concerns counter geopolitical uncertainties, further undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair amid a bullish US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, sits near an 18-month top amid bets that the US central bank will raise borrowing costs by the year-end, bolstered by Wednesday's hawkish FOMC Minutes. Adding to this, elevated US bond yields and the risk of a further escalation of tensions in the Middle East benefit the safe-haven buck. In the latest developments, the Pentagon reportedly told US Central Command (CENTCOM) several days ago to conclude preparations for resuming major combat operations in Iran as US President Donald Trump weighs a specific date for launching strikes.
US and Israeli sources said that US attacks could happen before the US midterm elections and possibly the Israeli elections a week earlier. Furthermore, the Saudi-led coalition said it retaliated against the Houthis on Wednesday and attacked more than 80 Houthi military sites across the governorates of Saada, Hodeidah, Jawf and Marib. This, in turn, favors USD bulls, which, along with the divergent BoC-Fed policy outlooks, validates the near-term constructive outlook for the USD/CAD pair.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair is in a clearly bullish near-term structure above the 1.4245-1.4250 congestion zone. That said, the Relative Strength Index (14) at 72.5 stretches into overbought territory, suggesting strong but potentially overextended upside momentum after the latest leg higher. Any corrective pullback, however, could find decent support near last Friday's swing low, around the 1.4200 round figure. Meanwhile, a convincing break below might prompt some technical selling and drag the USD/CAD pair to the 1.4150-1.4145 region.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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 price trades with mild gains near $88.55 in Thursday’s early Asian session.
- Crude oil inventories fell by 3.186 million barrels in the week ended October 2, EIA said.
- The Saudi-led coalition said it retaliated against Houthis.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $88.55 during the early Asian trading hours on Thursday. WTI posts modest gains as US crude oil inventories fell unexpectedly last week. Traders will focus on fresh Houthi attacks in Saudi Arabia and continuing oil flows out of the Middle East.
US crude oil inventories showed a surprise draw last week. According to the Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending October 2 fell by 3.186 million barrels, compared to an increase of 922,000 barrels in the previous week. The market consensus was for a rise of 1.9 million barrels.
However, the International Energy Agency (IEA) agreed to accelerate a release of strategic oil stocks in an effort to address surging fuel prices. This, in turn, might cap the upside for the WTI price. The IEA has deployed about 325 million barrels of oil under the March emergency action plan to address the supply disruption triggered by the Iran war.
Furthermore, escalating tensions in the Middle East could boost the black gold in the near term. Iran-backed Houthi militants in Yemen launched fresh strikes on Saudi Arabia. Saudi-led coalition said that it retaliated against the Houthis, adding that the attacks "will not go unpunished.” The coalition said on Wednesday that it had attacked more than 80 Houthi military sites across the governorates of Saada, Hodeidah, Jawf, and Marib.
CTA flows in WTI crude track systematic response across tapes
According to TD Securities, trend-following commodity trading advisors remain net long WTI Crude, with current exposure described as “23.0%” of maximum historical size and an upside trigger level flagged at “$97.70.” The bank’s “CTA Positioning Estimate (rhs) WTI Crude Prices” framework maps how systematic positioning could evolve across different market regimes, distinguishing between “CTA positioning est., WTI Crude, downtape,” “CTA positioning est., WTI Crude, flat tape,” “CTA positioning est., WTI Crude, uptape,” and “CTA positioning est., WTI Crude, big uptape” scenarios through the forecast horizon.
Technical Analysis: WTI holds below the 20-day SMA, with bearish momentum
In the daily chart, the near-term bias of WTI US Oil turns bearish, as price has slipped back under the 20-period Bollinger simple moving average, leaving it capped beneath the recent volatility midline while still holding above the 100-day simple moving average (SMA). The lower Bollinger band reinforces a soft demand area just above the longer-term trend floor, while the Relative Strength Index (RSI) at 46.33 drifts below the midline and hints at waning upside momentum rather than outright oversold conditions.
On the topside, immediate resistance is located at the Bollinger middle band at $92.50, with a stronger barrier coming in at the upper band near $99.90, where prior buying pressure could fade again. On the downside, initial support is seen at the lower Bollinger band around $85.05, followed by the 100-day SMA at $84.15, a level that would need to hold to prevent a deeper corrective slide toward the mid-$80s.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
(This story was corrected at 01:15 GMT on Thursday to say, in the second bullet point, that crude oil inventories fell by 3.186 million barrels in the week ended October 2, rather than rose.)
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.
The Pentagon told US Central Command (CENTCOM) several days ago to conclude preparations for resuming major combat operations in Iran, Axios reported on Wednesday.
US President Donald Trump hasn't made any final decisions or included a specific date for launching strikes, but the US and Israeli sources said it could happen before the US midterm elections and possibly the Israeli elections a week earlier. A White House official stated that Trump has all options available at any time.
Earlier Wednesday, Iranian Foreign Ministry spokesman Esmaeil Baghaei said that its response to US proposals will be delivered through intermediaries, while announcing progress with Oman on establishing safe shipping routes through the Strait of Hormuz.
Meanwhile, the Saudi-led coalition says it retaliated against the Houthis, saying the attacks "will not go unpunished.” The coalition said on Wednesday that it had attacked more than 80 Houthi military sites across the governorates of Saada, Hodeidah, Jawf and Marib.
On Wednesday, the UK Maritime Trade Operations (UKMTO) stated that a tanker was struck by multiple projectiles north of Qatar, with casualties reported. UKMTO said it received a report of the incident about 51 nautical miles (94 kilometers) north of Madinat ash Shamal, Qatar, at around 19:00 GMT.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 1.05% on the day at $88.25.
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.
- Gold price slumps to near $4,110 in Thursday’s early Asian session.
- Elevated US Treasury bond yields and firmer USD weigh on the Gold price.
- Fed Minutes showed policymakers backed the September decision to raise interest rates.
Gold price (XAU/USD) tumbles to a near two-month low around $4,110 during the early Asian session on Thursday. A stronger US Dollar (USD) and elevated US Treasury bond yields reduce the appeal of the non-yielding metal. Traders will take more cues from the speeches of Federal Reserve (Fed) officials, including Christopher Waller and Alberto Musalem.
The benchmark US Treasury yields climbed again and are trading near their highest levels since 2002. Meanwhile, the greenback strengthened, making USD-denominated gold more expensive for holders of other currencies. A spike in oil prices also reignited concerns over inflation and the prospect of higher interest rates.
According to the Minutes from the last Fed meeting, policymakers were united in backing their September hike, and most officials assessed that another hike would be appropriate by year-end.
Markets are largely expecting the US central bank to keep interest rates on hold later at its October policy meeting but are still pricing in a 78.3% probability of a December increase, according to CME's FedWatch tool.
"I think the message is rates are going to continue to be higher for longer, and that's keeping yields and the dollar underpinned," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Gold finds support as PBoC buying and ETF inflows offset cta pressure
According to TD Securities, “precious metals come under heavy selling pressure, with CTAs selling gold, silver and platinum,” leaving the complex on the defensive as “the yellow metal is on the back foot again this morning amid surging real rates and a stronger Dollar.” Even so, the bank argues that “we expect a strong dip buying impulse for gold in particular as longer-term drivers and flows remain supportive,” pointing to the fact that “ETF accumulation continues and the PBoC reported a 23rd consecutive month of central bank buying, with another 23 tonnes in September.”
TD Securities highlights that “a continued bid from discretionary traders, ETFs, and central banks all combine to provide a strong floor for gold,” with the underlying “drivers of these flows” ranging from “geopolitical risk, fiscal concern, Dollar debasement, de-dollarization and stagflation concerns.” In their view, “we expect the appetite to be more persistent and ultimately hold firm in the face of surging real rates,” and “continue to see the stage being set for gold to disconnect from real rates further and begin a new bull run into 2027.”
Fed’s Schmid flags AI-driven inflation and signals more short-rate tightening
Fed’s Schmid delivers a notably hawkish tone, with an 8/10 FXS Speechtracker score standing above the 7.5/10 historical average, underscoring a stronger-than-usual focus on inflation risks. The emphasis that inflation is “frustrating” and “must be fixed,” alongside the assertion that AI is now one of the largest drivers of inflation and that the Fed’s credibility is at stake, reinforces a message of persistent price pressures and a readiness to act. The comment that the Fed still has work to do on the short rate despite higher long-term yields signals a bias toward keeping policy tight or tightening further, a backdrop typically supportive of the Dollar and a headwind for risk-sensitive currencies.
The FXS Fed Sentiment Index rose by 0.34 points to 137.91, keeping the gauge firmly in hawkish territory well above the neutral 100 mark. This incremental move higher, aligned with the above-baseline FXS Speechtracker score, confirms that Fed communication is tilting more hawkish at the margin, reinforcing expectations for sustained restrictive policy.
Technical Analysis: Gold remains capped below the 100-day SMA
In the daily chart, XAU/USD remains under clear bearish pressure, as it holds below the 100-day simple moving average (SMA) and also below the Bollinger Bands’ middle line, keeping the broader trend capped. Price is hovering just above the lower Bollinger Band support, while the Relative Strength Index (14) at 37.09 slips toward oversold territory, hinting at persistent downside momentum rather than an imminent recovery.
On the downside, immediate support is located at the Bollinger Bands’ lower band near $4,070, where a sustained break would open the door to further declines toward lower psychological levels. On the topside, initial resistance comes at the Bollinger middle band at $4,250, followed by the 100-day SMA at $4,265; a daily close above these overlapping barriers would be needed to ease the bearish bias, with the upper Bollinger Band around $4,424.82 acting as a higher hurdle for any corrective bounce.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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