Forex News
Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter said on Tuesday, the central bank is “close to getting inflation to target.”
Additional quotes
Risks around the outlook are balanced.
Monetary policy impact with a delay, have to be forward looking.
Consumption is looking better, position beginning to turn over.
Household spending has picked up a bit.
Very closely monitoring the underlying strength of consumer spending.
Want to keep the Australian economy near full employment.
Monthly July CPI was some due to some timing going on with rebates.
Core inflation looks to be broadly in line with out forecasts.
Market reaction
AUD/USD was last seen trading flat on the day at 0.6670.
The People’s Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1027 compared to the previous day's fix of 7.1056 and 7.1159 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.
- GBP/USD tested its highest bids in ten weeks on Monday.
- The US Dollar fell across the board as investors gear up for a key Fed rate call this week.
- The BoE is also due for its own interest rate decision, but no rate moves are expected.
GBP/USD caught another tentative bullish leg higher on Monday, testing above 1.3600 for the first time since July. The US Dollar (USD) backslid across the board to start the fresh trading week, with investors gearing up for a critical interest rate call from the Federal Reserve (Fed).
Traders will be looking to see if the Fed meets or exceeds market expectations for rate cuts through the remainder of the year when the Summary of Economic Projections (SEP), also known as the 'dot plot' of policymakers’ rate expectations, is also released during Wednesday’s rate call. Markets are betting that the Fed will deliver three rate cuts before the end of the year, with rate markets pricing in nearly 75% odds that the Fed will cut rates by 75 basis points before January, according to the CME’s FedWatch Tool.
BoE expected to stand pat, UK CPI equally unremarkable
The Bank of England (BoE) is also expected to deliver its own interest rate decision on Thursday, but the UK’s central bank is broadly expected to vote 7-to-2 in favor of keeping rates where they are for the time being. UK Consumer Price Index (CPI) inflation data is also due on Wednesday, and is expected to show a slight acceleration in inflation pressures, with annualized headline CPI inflation forecast to clock in around 3.9% YoY versus the previous period’s 3.8%. Core UK CPI inflation over the same period is expected to tick down to 3.6% from 3.8%.
US Retail Sales figures for August are due on Tuesday, but overall impacts are likely to be muted as markets keep both eyes locked on the Fed’s rate call on Wednesday. Monthly Retail Sales figures are expected to ease to 0.3% MoM from 0.5%. While markets are unlikely to react strongly, backsliding Retail Sales volumes will be the cherry on top of slumping jobs data and stubborn inflation metrics as recession fears continue to grow.
GBP/USD daily chart
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.
- Euro rebounds from 1.1716 to 1.1763 as markets fully price 25 bps September Fed cut, slim odds for 50 bps.
- US Retail Sales expected weaker in August, while Industrial Production slowdown adds to pressure on Greenback.
- Eurozone focus turns to ECB’s Escriva speech, Italy Inflation, ZEW Surveys, and bloc-wide Industrial Production data.
EUR/USD advanced over 0.21% on Monday as market participants shrugged off the downgrade to French’s sovereign credit rating, as political turmoil remains. Nevertheless, expectations of the first rate cut in nine months of the Federal Reserve, downward pressured the US Dollar. The pair trades at 1.1763 after bouncing off daily lows of 1.1716.
Euro rises 0.21% after shrugging off France downgrade, traders focused on Fed, US data, and ECB speakers
Financial markets narrative hasn’t changed with the Federal Open Market Committee (FOMC) meeting right around the corner. Money markets had fully priced in a 25-basis points rate cut by the Fed, with a slim chance of a “jumbo size” 50 bps cut, as depicted in Prime Market Terminal interest rate probability tool.
Besides this, the US economic docket will face the release of Retail Sales data on Tuesday, with estimates suggesting that sales dipped in August. Additionally, the Fed is expected to announce that Industrial Production continued to slow down in August.
Across the pond, the docket will feature a speech by European Central Bank (ECB) member Jose Luis Escriva. Data-wise, traders will eye Italy’s inflation print, the ZEW Survey in Germany and the Eurozone for September, and Industrial Production for the Euro area.
Daily market movers: Euro boosted by ECB’s Schnabel comments
- EUR/USD extended its gains, despites Fitch France’s sovereign credit rating from AA- to A+ due to a political deadlock expected after elections. It was also boosted by ECB’s Isabel Schnabel comments that “interest rates are in a good place as inflation stabilizes around our 2% target, and the economy remains resilient at full employment.”
- US Retail Sales are projected to slow in August, rising 0.3% MoM versus 0.5% previously, which may further pressure DXY downward.
- Industrial Production for the same month is expected to drop -0.1% MoM, a tenth lower from the previous month print.
- The US Dollar Index (DXY), which measures the greenback against a basket of six peers, is down 0.28% at 97.34.
- Fitch Ratings Agency expects two 25 basis rate cuts, each in September and December, with three more reductions penciled in 2026. Conversely, the ratings agency does not project any rate cuts by the European Central Bank (ECB) again.
- Across the pond, the European Central Bank (ECB) held rates unchanged, adopting a meeting-by-meeting and data-dependent approach, while not pre-committing to a set path on interest rates.
Technical outlook: EUR/USD stays firm above 1.1750, eyes on 1.1800
EUR/USD uptrend remained intact on Monday, though the pair is shy of cracking the latest cycle high hit on September 9 at 1.1779. This could open the path to challenge 1.1800, setting the stage to test the year-to-date (YTD) high of 1.1829.
On the flip side, if EUR/USD slides below 1.1750, sellers could drive the exchange rate to 1.1700. A breach of the latter will expose the 20-day SMA at 1.1688 and the 50-day SMA at 1.1660.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
US President Donald Trump hit his stride on Monday, taking to social media and also addressing reporters at the White House to declare his intention to forcefully insert military forces under his control into cities that he personally deems require it, regardless of legality or constitutional breaches. Trump also doubled down on his claims that a Venezuelan boat that was attacked by US forces was a "drug boat", while also washing his hands of any knowledge or involvement in Israeli Prime Minister Benjamin Netenyahu's decision to launch military strikes into Qatar.
Trump also declared that trade talks with China are still ongoing, but avoided making any firm declarations around the forced sale of TikTok. Trump also had very little to say about his attempt to terminate Dr. Lisa Cook's position on the Federal Reserve (Fed), despite a statement from Michigan officials that no immediate evidence or proof exists that Dr. Cook actually broke any tax rules.
Key highlights
Trump calls on Hamas to release hostages or "all bets are off".
We're probably going to go into Chicago next.
I will sign a memorandum to establish the Memphis Safe Task Force and the task force will be a replica of efforts in Washington D.C.
The effort in Memphis will include the National Guard.
We need to save St. Louis.
Aiming to reach St. Louis, New Orleans as well.
Have 'recorded evidence’ on Venezuela drug boat.
Netanyahu did not warn me before strike.
Undecided on TikTok stake.
Trump to speak with Xi about a "significant agreement".
Believe discussion with Xi will confirm things.
Maybe TikTok could bring us closer to China.
Netanyahu will not be visiting Qatar.
- NZD/USD held steady near recent highs on Monday.
- Upcoming New Zealand GDP figures are expected to show economic contraction.
- The Fed’s looming interest rate call is widely expected to kick off a rate-cutting cycle.
NZD/USD looked upwards on Monday, testing chart territory just south of 0.5980. The New Zealand Dollar (NZD) has caught a near-term gust of bidding wind as the US Dollar (USD) slumps ahead of the latest interest rate call from the Federal Reserve (Fed). The Fed is broadly expected to kick off a new rate-cutting cycle, and investors will be keeping their heads down in the run-up to Wednesday’s rate call.
The Fed will also be delivering its latest Summary of Economic Projections (SEP), the ‘dot plot’ of what interest rate changes Fed policymakers believe will happen in the near future. Markets are broadly expecting the Fed to deliver three straight 25 basis-point interest rate cuts through the end of the year, and traders will be looking to see signs that the Fed’s SEP lines up with current rate expectations. The Fed will deliver its latest interest rate decision on Wednesday.
New Zealand’s latest GDP figures, due on Thursday, are expected to show a quarterly contraction in NZ growth metrics. New Zealand’s second-quarter growth is expected to backslide by 0.3% QoQ, and contract by a slight 0.1% on the annualized figure.
NZD/USD price forecast
The Kiwi is testing into recent highs near 0.5980, but the 0.6000 handle remains well out of reach of current technical momentum. The pair is running out of bullish gas after breaking through the 200-day Exponential Moving Average (EMA) near 0.5915, and a technical resistance zone is baking into the charts near current price action, warning of another leg lower.
NZD/USD daily chart
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.
Major central banks will host their monetary policy decisions, though the Federal Reserve (Fed) remains at the center stage. Expectations of a resumption of the easing cycle pushed the US Dollar lower, along with US Treasury yields, as traders brace for the release of US Retail Sales data.
Here's what to watch on Tuesday, September 16:
The US Dollar Index (DXY), which tracks the buck’s value against six other currencies, tumbled 0.32% at 97.30, near eight-week lows. US Retail Sales are projected to slow in August, rising 0.3% MoM versus 0.5% previously, which may further pressure DXY downward. Other data expected is Industrial Production.
EUR/USD surged over 0.26%, above 1.1750, as market participants shrugged off Fitch downgrading France’s sovereign credit rating from AA- to A+ due to a political deadlock expected after elections. European Central Bank (ECB) member Isabel Schnabel commented that “interest rates are in a good place as inflation stabilizes around our 2% target, and the economy remains resilient at full employment.” Ahead on Tuesday, the docket will feature ECB’s Escriva speech, inflation in Italy, the ZEW Survey for September in Germany and the Eurozone, and Industrial Production for the whole bloc.
GBP/USD climbed above 1.3600 as traders await UK July jobs data, with the ILO Unemployment Rate expected to hold at 4.7%. Additionally, market players are eyeing the Bank of England (BoE) policy decision on Thursday.
USD/JPY traded lower as the US Dollar declined against most G10 currencies, while the Bank of Japan is expected to increase rates later this year. Japanese data due Tuesday: August Exports are forecast to improve to a -1.9% YoY contraction (from July’s -2.6%), while Imports are expected to decline -4.2% YoY, less than July’s -7.5% drop.
USD/CAD tumbled sharply over 0.49% down below 1.3800, as investors priced in the Fed cut and an uptick in inflation data from 1.7% to 2%, right at the Bank of Canada’s inflation target.
Gold prices continued to print record highs and seem poised to test $3,700 throughout the week as US Treasury yields reflect market players’ bets for a 25-bps rate cut by the US central bank. If XAU/USD retreats below $3,650, expect a drop toward $3,600. Otherwise, further Bullion’s upside is seen.
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.
- The Dow Jones remained largely unchanged on Monday following a rebalancing late last week.
- Equity markets are broadly gearing up for the wait to this week’s Fed rate call.
- An interest rate cut is priced in as a sure thing, with investors already looking ahead to more rate cuts.
The Dow Jones Industrial Average (DJIA) stuck close to its opening bids on Monday, testing the waters near 45,860 as investors shuffle their feet ahead of the latest Federal Reserve (Fed) interest rate call slated for Wednesday. The Fed is fully expected to kick off another rate-cutting cycle on Wednesday.
Traders will be looking to see if the Fed meets or exceeds market expectations for rate cuts through the remainder of the year when the Summary of Economic Projections (SEP), also known as the 'dot plot' of policymakers’ rate expectations, is also released during Wednesday’s rate call. Markets are betting that the Fed will deliver three rate cuts before the end of the year, with rate markets pricing in nearly 75% odds that the Fed will cut rates by 75 basis points before January, according to the CME’s FedWatch Tool.
Despite the market’s overall confidence that the Fed has finally been bullied into a fresh rate-trimming stance, investor apprehension is still on the rise, with markets piling into Gold ahead of the Fed’s key meeting. XAU/USD hit fresh all-time highs on Monday, tipping the scales toward $3,700 per ounce.
Read more Gold news: Gold hits $3,680, eyes $3,700 as Fed decision looms
US President Donald Trump declared that fresh trade talks between his administration and China are “going well” and teased that further progress had been made on a deal surrounding TikTok. Trump initially vowed to get TikTok outright banned in the US in 2020, citing privacy concerns and spying on US constituents by the Chinese government. Trump issued an executive order in August of 2020, demanding that ByteDance sell its stake in the online app to a US company, and has proceeded to routinely delay, suspend, and alter his own goalposts well into his second term.
US Retail Sales figures for August are due on Tuesday, but overall impacts are likely to be muted as markets keep both eyes locked on the Fed’s rate call on Wednesday. Monthly Retail Sales figures are expected to ease to 0.3% MoM from 0.5%. While markets are unlikely to react strongly, backsliding Retail Sales volumes will be the cherry on top of slumping jobs data and stubborn inflation metrics as recession fears continue to grow.
Read more stock news: Nvidia stock weakens at start of week as China applies pressure
Dow Jones daily chart
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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