Forex News
- Gold holds gains at $4,270 after hitting resistance at the $4,300 area.
- Lower US Treasury yields amid fading hopes of Fed rate hikes are buoying precious metals this week.
- XAU/USD bulls are targeting mid-June highs in the $4,380 area.
Gold (XAU/USD) consolidates gains after appreciating nearly $200 this week, buoyed by lower US Treasury yields as traders dial down bets of immediate Federal Reserve (Fed) rate hikes. The precious metal trades at $4,270 at the time of writing, after pulling back from $4,300 earlier on Thursday, with bulls aiming for mid-June highs in the $4,380 area.
Analysts at MUFG note that political interference is increasingly being priced into the Dollar. They highlight Wall Street Journal reporting that President Trump has spoken to Fed Chair Warsh “repeatedly” since he took over at the Fed, with “bursts” of calls “several times in a stretch of days, which, in their opinion, “will only reinforce the impression of greater political influence undermining Fed independence.”
Technical Analysis: Gold confirms a trend shift
XAU/USD trades at $4,230, holding gains after breaking above a descending triangle, which suggests that the precious metal is heading through a bullish reversal. Momentum indicators in 4-hour charts show overstretched conditions, but dips are likely to find buyers. Relative Strength Index (14) is entrenched in overbought territory around 77, while the Moving Average Convergence Divergence (MACD) gauge remains firmly positive, which warns about a corrective pause.
On the topside, immediate resistance emerges at session highs in the $4,300, ahead of the June 17 high, around $4,380. Further up, the early June highs,m above $4,500, would come into focus.
Bearish reversals, on the other hand, are likely to be tested at previous highs around $4,200 (June 22, July 6 highs) ahead of the broken trendline resistance, now around $4,130 and Monday's low, near $4,020.
(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.
Rabobank's Senior Macro Strategist Bas van Geffen discusses renewed Japanese Yen (JPY) weakness following recent joint US-Japan FX intervention that briefly pushed USD/JPY below 156. He highlights Japan’s planned food sales tax cut and household handouts, noting funding uncertainties and criticism from markets and politicians. He stresses that these measures do not structurally improve Japan’s growth, leaving the Yen lacking durable support.
Fiscal plans and FX intervention
"Days after the Japanese Ministry of Finance –and the US Treasury– intervened in FX markets to prop up the yen, the cabinet approved a plan to cut the sales tax on food for two years. On top of that, the government is planning handouts to lower-income households. High costs of living are weighing on PM Takaichi’s popularity."
"The tax cut costs JPY 4 trillion (around 0.6% of GDP) in lost revenues annually, and the government did not specify how it would fund this shortfall. The prime minister tried to reassure investors that the measures are temporary, and Finance Minister Katayama pledged to refrain from financing this tax cut through Japan’s deficit."
"The unfunded tax plan has drawn criticism from both the opposition and people within the ruling LDP, as well as market participants - although today’s 30-year bond auction showed little sign of concern or investor fatigue. Having said that, the real litmus test may be the currency."
"Over the past couple of days, the yen has been gradually depreciating again after the joint US-Japan intervention briefly pushed USD/JPY below 156 on Friday. The FX market is probably watching for signs of new interventions, or signs of more structural support for the currency."
"Yet, these tax cuts do not lead to investments that could structurally improve Japan’s economic growth – which could have lent JPY some of the necessary support. But, paradoxically, the cost of effective growth-enhancing policies would probably eclipse the budgetary implications of Takaichi’s food tax cuts."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
OCBC’s Christopher Wong and Sim Moh Siong note that softer US inflation and debate over the Fed’s reaction function have eroded US Dollar upside momentum, even as the Fed remains data dependent. Upcoming US employment data are seen as critical for policy direction. Continued US economic resilience is expected to eventually revive Fed tightening risks and support a moderately bullish US Dollar over the next one to two quarters.
Fed risks and USD outlook
"The Fed remains firmly data dependent. Encouraging inflation readings in June have given policymakers room to wait for further evidence before adjusting policy. At the same time, growing debate over whether the Fed’s reaction function has shifted has contributed to a loss of USD upside momentum."
"The market is increasingly positioned for lower oil, lower real rates and a softer USD. Gold is leading that trade. But resilient US data could ultimately revive Fed tightening concerns and lend support to the USD."
"Near-term momentum has improved, with Friday’s upcoming US payrolls report now key to whether the decline in yields, USD and gold’s breakout can be sustained."
"Even so, the Fed has missed its inflation target for more than five years and is unlikely to tolerate a renewed lack of progress on inflation, regardless of whether recent price pressures were driven by exogenous shocks. We remain mindful of that risk. Upcoming data, particularly Friday’s employment report, will be critical in shaping the Fed’s next move. Continued US economic resilience should eventually bring Fed tightening risks back into focus, supporting our moderately bullish USD view over the next one to two quarters."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY ticks up to levels near 158.00 after hitting 155.23 lows earlier this week.
- Concerns about the Japanese Government's tax-cutting plans are weighing on the JPY.
- Weak UDS data and dwindling hopes of immediate Fed rate hikes are keeping the USD from rallying further.
The Japanese Yen (JPY) is ticking lower against the US Dollar (USD) on Thursday, trimming gains after an exceptional US-Japan coordinated intervention triggered a 4.5% appreciation late last week. The USD/JPY pair has returned to levels a few pips shy of 158.00 after hitting lows at 155.23 on Monday, despite the broad-based US Dollar weakness.
Analysts at Rabobank note that "days after the Japanese Ministry of Finance –and the US Treasury– intervened in FX markets to prop up the Yen, the cabinet approved a plan to cut the sales tax on food for two years." In parallel, "the government is planning handouts to lower-income households," in response to the high costs of living that are weighing on PM Takaichi’s popularity.
Rabobank highlights that "the unfunded tax plan has drawn criticism from both the opposition and people within the ruling LDP, as well as market participants," even though "today’s 30-year bond auction showed little sign of concern or investor fatigue." In their view, "the real litmus test may be the currency," with investors likely to judge the credibility of the policy mix through the Yen’s performance.
Markets await US Nonfarm Payrolls figures
All this notwithstanding, the Yen remains supported by a weak US Dollar, as US macroeconomic data has failed to convince investors, fuelling concerns about a soft Nonfarm Payrolls reading on Friday. The market consensus forecasts 80K new payrolls in July, up from June's 57K, but recent data has cast doubt about the momentum of the US labour market.
Wednesday's ADP Employment Change report disappointed with a 44K net employment growth in July, less than half of June’s 98K rise and well below the 70K anticipated by the market consensus. Also on Wednesday, the ISM Services Purchasing Managers’ Index (PMI) confirmed a healthy growth rate but missed estimates, with employment contracting.
Against this background, traders have cut back hopes of a Federal Reserve (Fed) rate hike to 54% from 67% earlier this week, according to the CME Group's FedWatch Tool, which is keeping US Dollar bulls subdued.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Commerzbank’s Charlie Lay reports that the Reserve Bank of India kept the repo rate at 5.25% for a fourth meeting, maintaining a neutral stance. RBI sees recent inflation overshoot as supply-driven and trimmed its FY2026-2027 inflation forecast while lifting growth to 6.7%. USD/INR slipped to 95.10 on lower Oil and strong capital inflows, but INR remains one of Asia’s weakest currencies this year.
Policy hold and FX underperformance
"The Reserve Bank of India (RBI) voted unanimously to leave the policy repo rate unchanged at 5.25%. This was in line with market expectations and marked a fourth consecutive meeting on hold. The Monetary Policy Committee (MPC) maintained its neutral policy stance, emphasizing the need for greater clarity on the inflation outlook before taking further action."
"Although June CPI rose above RBI's 4% target to 4.4% yoy, the central bank views the recent increase as largely supply-driven, with limited pass-through into underlying inflation. Reflecting this assessment, RBI marginally lowered its FY2026-2027 inflation forecast to 5.0% from 5.1% previously. It also raised the growth forecast for FY2026-2027 to 6.7% from 6.6%, citing resilient domestic demand and supportive government policies."
"Overall, the policy statement suggests RBI remains comfortable maintaining a wait-and-see approach. It is effectively preserving policy flexibility amid elevated external uncertainty. Unlike several regional central banks which have hiked rates this year, including South Korea, Indonesia, and the Philippines, RBI continues to view the recent rise in inflation as largely supply-driven and temporary."
"Policymakers have indicated they would respond only if higher food and energy prices lead to more broad-based inflationary pressures. The interest rate markets have also pared back expectations of near-term tightening. The probability of an October rate hike fell to around 58% from over 90% before the meeting."
"In FX, USD/INR fell 0.3% to around 95.10, aided by the recent decline in oil prices. RBI also noted that measures introduced in June to attract foreign capital have already generated more than USD40bn of inflows through FCNR(B) deposits and overseas borrowing facilities. This has helped to cushion pressure on INR."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING strategist Frantisek Taborsky says July Czech inflation at 1.7% year-on-year should have limited impact on the Czech National Bank (CNB) meeting. He expects rates to stay at 3.75%, with guidance leaning more dovish than markets. Taborsky looks for mixed forecast revisions, sees scope for only one more hike, and anticipates EUR/CZK trading around 24.20–24.25 as tightening expectations keep Czech Koruna (CZK) relatively weak.
CNB to hold rates and lean dovish
"July inflation brought little surprise, rising from 1.5% to 1.7% YoY. Lower food prices partly offset higher fuel prices, while services inflation picked up again to 4.7% YoY from 4.5% in June."
"We estimate core inflation was broadly unchanged at around 2.8-2.9%. Overall, the latest inflation print should have limited implications for today’s CNB meeting."
"We expect the CNB to keep rates unchanged at 3.75% at its first meeting after the June hike, which made it the only central bank in the CEE region to tighten."
"Overall, the picture should be mixed, but relative to current market pricing, the meeting should lean dovish. Despite the recent rates rally across the region, the Czech curve still prices two hikes, the most in EMEA."
"In our view, market pricing of further tightening should keep the CZK on the weaker side, with EUR/CZK likely to trade around the 24.20–24.25 range."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Silver prices (XAG/USD) broadly unchanged on Thursday, according to FXStreet data. Silver trades at $62.01 per troy ounce, broadly unchanged 0.06% from the $62.05 it cost on Wednesday.
Silver prices have decreased by 12.77% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 62.01 |
1 Gram | 1.99 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 69.06 on Thursday, up from 68.46 on Wednesday.
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.
(An automation tool was used in creating this post.)
Societe Generale’s Dev Ashish notes that the central bank of the Brazil, Banco Central do Brasil (BCB) cut the Selic rate by 25bp to 14.0% as expected, extending a 100bp easing cycle since March. Ashish still anticipates one final 25bp cut to 13.75% later this year, supported by softer near-term inflation and moderating growth, but highlights fiscal risks and de-anchored expectations as constraints on further easing.
BCB keeps the door open to data-dependent easing
"The BCB cut the Selic rate by 25bp to 14.0% as expected and kept the easing cycle open while avoiding explicit forward guidance. Improving near-term inflation dynamics and moderating growth support our call for one final cut to 13.75% later this year. However, a likely reacceleration in inflation during 4Q26, persistently de-anchored medium-term inflation expectations, ongoing fiscal risks and elevated structural interest rates are likely to limit the scope for further easing over coming quarters."
"As expected, the BCB delivered another unanimous 25bp rate cut at its August Copom meeting, lowering the Selic rate to 14.0% and extending the easing cycle to 100bp since March. The decision was fully priced by the market and accompanied by a notably shorter statement. The committee avoided explicit forward guidance, instead emphasizing that the total magnitude of the calibration cycle will depend on incoming data."
"We continue to expect one additional 25bp cut later this year, taking the Selic rate to 13.75%, followed by a pause as inflation likely firms again in 4Q26 and political uncertainty increases ahead of the October election. While the BCB would prefer to normalize rates further, the scope for easing remains constrained by Brazil's fiscal trajectory and a persistently elevated neutral interest rate."
"We maintain our end-2027 Selic forecast at 11.50% (vs consensus 12.0%), while continuing to see risks to that view skewed toward a higher policy-rate path."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Nomura strategists highlight that Swedish CPIF ex-energy inflation surprised to the upside in July even as headline CPIF slowed, largely due to government fuel duty cuts and public transport subsidies. They stress that underlying inflation momentum has picked up, yet still expect the Riksbank to keep its policy rate unchanged in 2026.
Fiscal measures mask inflation momentum
"Flash CPIF inflation slowed to 0.7% y-o-y in July (Nomura & consensus: 0.7%, Riksbank: 0.5%) from 1.3% previously. However, CPIF ex-energy inflation surprised to the upside and rose to 0.6% y-o-y (Nomura & Riksbank: 0.2%, consensus: 0.3%) from 0.4% in June."
"A key reason for the slowdown in headline inflation was that the government introduced a SEK3 fuel duty reduction for both petrol and diesel between July and November, which placed further downward pressure on inflation, after other tax changes earlier this year."
"Also, in July Sweden’s government introduced a temporary 50% discount on monthly public transport passes across the country, valid until the end of the year. The Riksbank estimated it will reduce inflation by just over 0.1pp in H2."
"Looking at underlying inflation momentum, CPIF ex-energy rose 0.4% m-o-m in July, which is consistent with the July 2017-18 average (when m-o-m rises were roughly consistent with the 2% CPIF inflation target)."
"We do not expect the Riksbank to change its policy rate this year, as even after adjusting for recent tax and fiscal policy changes, inflation in Sweden is low, and despite recent optimism on economic activity (with the 1.4% q-o-q GDP growth in Q2), the unemployment rate remains high."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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