Forex News
- US Dollar Index gains support as renewed US-Iran peace deal concerns keep inflation and prolonged high interest rates in focus.
- President Trump threatened strikes on Iran if Hezbollah continues attacking Israel, clouding hopes for a US-Iran peace deal.
- Fed policymakers project a rate hike this year, with markets pricing in an increase by September.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, recovers its recent losses from the previous trading day and is hovering around 100.80 during the Asian hours on Monday.
The Greenback receives support amid renewed concerns over a US-Iran peace deal, a development that keeps both inflation risks and the prospect of prolonged high interest rates at the forefront of investor worries.
According to a CNBC report on Sunday, US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel. This warning has severely clouded the outlook for diplomatic progress between Washington and Tehran, completely dismantling the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.
Meanwhile, Tehran simultaneously announced it had once again closed the strategic Strait of Hormuz. While Iranian state media reported that Tehran had completely suspended negotiations in response to Trump's remarks, sources close to the matter indicated that discussions are quietly ongoing.
The Federal Reserve (Fed) kept interest rates steady last week but adopted a decidedly hawkish tone. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.
"The resurgent US dollar, powered by the Fed's newly hawkish tone under Kevin Warsh, has stolen the spotlight," noted Tim Waterer, chief market analyst at KCM Trade, highlighting the growing headwinds facing precious metals.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- GBP/USD attracts some buyers following a bearish gap opening at the start of a new week.
- The fragile US-Iran peace deal and the hawkish Fed lend support to the USD, capping the pair.
- The UK political chaos and reduced BoE rate hike bets should further keep a lid on spot prices.
The GBP/USD pair climbs back to the 1.3235 region during the Asian session and fails the weekly bearish gap opening amid a modest US Dollar (USD) downtick, though the upside potential seems limited.
Mediators Qatar and Pakistan announced a formal 60-day roadmap aimed at securing a final US-Iran peace deal, which, in turn, keeps a lid on the safe-haven buck and prompts some intraday short-covering around the GBP/USD pair. However, geopolitical developments over the weekend, along with the US Federal Reserve's (Fed) hawkish tilt, could act as a tailwind for the Greenback.
Iran closed the Strait of Hormuz again on Saturday in response to the renewed hostilities by Israel in Lebanon. Moreover, Iranian negotiators walked out of the peace talks in Switzerland in response to US President Donald Trump's threat to strike Iran again. This keeps geopolitical risk premiums in play, which favors the USD bulls and backs the case for the emergence of fresh selling around the GBP/USD pair.
Meanwhile, reports suggest that UK Prime Minister Keir Starmer could announce his resignation as early as Monday, paving the way for the former Manchester Mayor Andy Burnham to replace him. The UK political turbulence, in turn, might continue to undermine the British Pound (GBP) and contribute to keeping a lid on the GBP/USD pair, warranting caution before placing aggressive bullish bets.
Moreover, reduced bets for interest rate hikes by the Bank of England (BoE) suggest that any subsequent move up could be seen as a selling opportunity. Hence, strong follow-through buying is needed to confirm that the GBP/USD pair has bottomed out in the near-term and before positioning for any meaningful recovery from the lowest level since late March, touched on Friday.
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.
- NZD/USD weakens to near 0.5735 in Monday’s early Asian session.
- China's central bank holds the Loan Prime Rates steady in June.
- The US-Iran peace talks took place in Bürgenstock, Switzerland, on Sunday.
The NZD/USD pair trades in negative territory around 0.5735 during the early Asian session on Monday. The China-proxy New Zealand Dollar (NZD) remains weak following the People’s Bank of China (PBOC) interest rate decision. Traders continue to digest the developments surrounding the US-Iran peace deal.
The PBOC announced to leave its Loan Prime Rates (LPRs) unchanged on Monday. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively.
Traders will closely monitor the Middle East developments surrounding the US-Iran agreement. Progress on the US-Iran peace deal could support the riskier assets such as the shared currency. On the other hand, signs of a prolonged US-Iran conflict could boost the Greenback as a safe-haven currency.
Last week, the US Federal Reserve (Fed) decided to leave its benchmark interest rate unchanged between 3.50% and 3.75% after Kevin Warsh's first meeting in charge of the central bank. Warsh said during the press conference that “price stability” would be the Fed’s guiding principle.
Futures traders have priced in that the Fed is likely to hike rates by 25 basis points (bps) at its September meeting, with some chance seen of a move as soon as next month’s meeting.
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.
- AUD/JPY holds steady as the Australian Dollar gains support from China’s central bank keeping its benchmark interest rates unchanged.
- The People’s Bank of China kept its one-year and five-year Loan Prime Rates unchanged at 3.00% and 3.50%, respectively.
- The Japanese Yen may find support on Japanese forex intervention risks and recent hawkish BoJ commentary.
AUD/JPY gains ground after posting minor losses in the previous day, trading around 113.30 during the Asian hours on Monday. The currency cross holds ground as the Australian Dollar (AUD) remains stronger following China’s latest monetary policy update.
On Monday, the People’s Bank of China (PBOC) opted to keep its benchmark one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.00% and 3.50%, respectively. Because China and Australia share a close trading relationship, the stability in the Chinese economy provided a supportive baseline for the proxy-vulnerable Australian Dollar.
Meanwhile, domestic policy continues to offer underlying support for the AUD. After holding the cash rate steady this month, Reserve Bank of Australia (RBA) Governor Michele Bullock emphasized that inflation remains too high, warning that further rate hikes cannot be entirely ruled out. Despite this hawkish rhetoric, market participants increasingly suspect that the RBA's tightening cycle has peaked, viewing another rate hike as unlikely unless second-quarter inflation figures significantly overshoot expectations.
However, the upside for the AUD/JPY pair may be capped if the Japanese Yen (JPY) finds support amid ongoing risks of forex intervention by Japanese authorities. This sentiment is reinforced by recent hawkish commentary from the Bank of Japan (BoJ).
Looking ahead, traders are shifting their focus to Tuesday's Japanese Purchasing Managers’ Index (PMI) data and Wednesday’s release of the BoJ’s Summary of Opinions from its June meeting, where policymakers notably lifted interest rates by 25 basis points to 1.00%, for further clues on Japan's economic trajectory.
Economic Indicator
PBoC Interest Rate Decision
The People’s Bank of China’s (PBoC) Monetary Policy Committee (MPC) holds scheduled meetings on a quarterly basis. However, China’s benchmark interest rate – the loan prime rate (LPR), a pricing reference for bank lending – is fixed every month. If the PBoC forecasts high inflation (hawkish) it raises interest rates, which is bullish for the Renminbi (CNY). Likewise, if the PBoC sees inflation in the Chinese economy falling (dovish) and cuts or keeps interest rates unchanged, it is bearish for CNY. Still, China’s currency doesn’t have a floating exchange rate determined by markets and its value against the US Dollar is fixed mainly by the PBoC on a daily basis.
Read more.Last release: Mon Jun 22, 2026 01:15
Frequency: Irregular
Actual: 3%
Consensus: 3%
Previous: 3%
Source: The People's Bank of China
The US-Iran peace talks took place on Sunday in Bürgenstock, Switzerland, with delegations from Iran, the United States, Qatar, and Pakistan participating. On Monday, Qatar and Pakistan issued joint statement on conclusion of negotiations, saying that talks conducted in positive, constructive atmosphere.
"High Level Committee has agreed upon a roadmap towards reaching a final deal within 60 days, laying the foundation for the immediate commencement of further technical talks," reads the Pak-Qatar joint statement on US-Iran talks in Burgenstock.
Meanwhile, Pakistani and Qatari mediation yields significant progress to end Lebanon conflict, adding that oil and petrochemical exports exempt, blockade removed, some frozen assets freed, major reconstruction and development plan initiated for Iran.
Key quotes from joint statement
Encouraging progress includes creation of mechanism for further technical talks.
Establish high-level committee for mediation oversight following MoU.
Chief negotiators to provide regular updates to high-level committee.
High-level committee agrees on roadmap to final deal within 60 days.
Parties agreed to establish de-confliction cell involving Lebanon, with mediator support to ensure termination compliance.
In the last hour, Tasnim news agency cited an Iranian Foreign Ministry spokesman as saying that “a formal transit mechanism was successfully arranged to guarantee the safe passage of commercial vessels through the vital Strait of Hormuz waterway.”
Additional quotes
The framework was hammered out during an intense 18-hour session of high-level diplomatic talks held in Switzerland.
While the primary negotiating delegations have concluded their session, technical expert teams will remain on-site to advance the groundwork for final pact talks.
Market reaction
Crude oil prices attract some sellers following this headlines. At the time of writing, the West Texas Intermediate (WTI) is down 1.08% on the day at $75.60.
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.
China Finance Ministry said on Monday that officials to impose measures on 46 US firms in government procurement. The authorities further stated that they will add 10 US entities to export control list.
Key quotes
To impose measures on 46 U.S. firms in government procurement.
Buyers barred from acquiring items made by 46 U.S. firms in government procurement activities.
Adds 10 U.S. entities to export control list.
Steps taken to protect national security and interests, fulfill international duties including non-proliferation.
Bans exporters from shipping dual-use items to 10 entities immediately.
Ongoing associated export operations must halt immediately.
Market reaction
At the time of writing, AUD/USD is up 0.08% on the day at 0.7015.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- AUD/USD struggles to attract any meaningful buyers and remains confined in a range.
- The Iran uncertainty and the hawkish Fed underpin the USD, capping the currency pair.
- The bearish technical setup suggests that the path of least resistance is to the downside.
The AUD/USD pair extends its sideways consolidative price move for the third consecutive day and trades just above the 0.7000 psychological mark during the Asian session on Monday.
The global risk sentiment takes a hit in reaction to fresh geopolitical developments over the weekend and renewed closure of the Strait of Hormuz by Iran. This, along with the US Federal Reserve's (Fed) hawkish tilt, helps the safe-haven US Dollar (USD) stall its modest pullback from the highest level since May 2025, touched on Friday, which is seen acting as a headwind for the AUD/USD pair.
That said, the Reserve Bank of Australia's (RBA) signal that additional rate hikes were possible if inflation persists limits the downside for the Australian Dollar (AUD). From a technical perspective, the AUD/USD pair has been showing resilience below the 61.8% Fibonacci retracement of the March-May upswing, warranting some caution for bearish traders and positioning for any further losses.
However, the recent breakdown below the 100-day Simple Moving Average (SMA) and the 50.0% Fibonacci retracement of the March-May upswing backs the case for a further near-term depreciation. Moreover, momentum oscillators suggest persistent downside pressure, despite the AUD/USD pair stabilising above a key Fibonacci support. In fact, the Relative Strength Index (RSI) sits near 37.
Furthermore, the Moving Average Convergence Divergence (MACD) indicator hovers slightly below zero with a negative line. That said, it will still be prudent to wait for acceptance below the 61.8% Fibo. before positioning for further losses to the 78.6% level around 0.6928 and the prior swing base near 0.6832.
On the topside, initial resistance emerges at the 50.0% retracement at 0.7055, followed by the 100-day SMA clustered near 0.7085. A sustained strength above there would expose the 38.2% retracement at 0.7108 and the 23.6% level at 0.7173 as subsequent barriers.
(The technical analysis of this story was written with the help of an AI tool.)
AUD/USD daily chart
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
On Monday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8150 compared to last Thursday's fix of 6.8130 and 6.7733 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.
Bank of Japan (BoJ) Deputy Governor Himino said on Monday that delaying adjustment in monetary easing could trigger a significant inflation overshoot. Himino emphasized that oil price pass-through to downstream goods is advancing fairly quickly.
Key quotes
Oil price pass-through to downstream goods advancing fairly quickly.
Recent easing of Middle East tensions aligns with April outlook.
Easy monetary conditions likely to continue.
Delaying adjustment in monetary easing risks price overshoot.
Central Bank to closely watch effects of higher policy rates on firms, families.
Market reaction
At the time of writing, USD/JPY is up 0.11% on the day at 161.45.
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.
- Silver may face challenges as inflation and interest rate fears are revived by mounting oil supply concerns.
- President Trump threatened strikes on Iran if Hezbollah continues attacking Israel, clouding hopes for a US-Iran peace deal.
- Hawkish Fed policy expectations could continue to weigh heavily on non-yielding Silver.
Silver price (XAG/USD) halts its three-day losing streak, trading around $65.90 per troy ounce during the Asian hours on Monday. However, Silver price could further decline amid renewed concerns over a US-Iran peace deal, a development that keeps both inflation risks and the prospect of prolonged high interest rates at the forefront of investor worries.
According to a CNBC report on Sunday, US President Donald Trump threatened direct strikes on Iran if Hezbollah continues its attacks on Israel. This warning has severely clouded the outlook for diplomatic progress between Washington and Tehran.
Furthermore, President Trump threatened to completely dismantle the current peace framework, even as Vice President JD Vance met with Iranian officials for the first round of talks under an interim deal.
Adding to the friction, Tehran simultaneously announced it had once again closed the strategic Strait of Hormuz. While Iranian state media reported that Tehran had completely suspended negotiations in response to Trump's remarks, sources close to the matter indicated that discussions are quietly ongoing.
The non-yielding Silver could face heavy pressure from expectations of tighter monetary policy. The Federal Reserve (Fed) kept interest rates steady last week but adopted a decidedly hawkish tone. Notably, 9 out of 19 Fed policymakers now project at least one interest rate hike this year, with market investors pricing in a potential increase as early as September.
"The resurgent US dollar, powered by the Fed's newly hawkish tone under Kevin Warsh, has stolen the spotlight," noted Tim Waterer, chief market analyst at KCM Trade, highlighting the growing headwinds facing precious metals.
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.
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