Forex News
- Silver price plunges to near $47.80 as US-China trade deal optimism has diminished safe-haven demand.
- US Secretary Bessent expresses that Washington won’t proceed with 100% additional tariffs on China.
- Soft US inflation paves the way for Fed interest rate cuts in policy meetings this month and December.
Silver price (XAG/USD) trades 1.5% lower, slightly below $48.00 during the late Asian trading session on Monday. The white metal faces selling pressure as the appeal of safe-haven assets has diminished on hopes that the United States (US) and China will reach a bilateral trade deal soon.
The optimism over the US-China trade deal increased following comments from US Treasury Secretary Scott Bessent stated that recently announced 100% additional tariffs by the White House on imports from Beijing won’t proceed.
“No, I’m not, and I’m also anticipating that we will get some kind of a deferral on the rare earth export controls that the Chinese had discussed,” Bessent said in an interview with NBC’s "Meet the Press" program after he was asked whether the White House would continue with 100% additional tariffs threatened on China. These comments from Bessent came after his meeting with Chinese Premier He Lifeng at the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Malaysia over the weekend.
Signs of easing global trade tensions diminish the demand for safe-haven assets, such as Silver.
Meanwhile, intensified expectations of more interest rate cuts by the Federal Reserve (Fed) in the near term due to soft US Consumer Price Index (CPI) data for September are expected to offer relief to the Silver price. According to the CME Fedwatch tool, traders see a 94% chance that the Fed could reduce interest rates in each of its two policy meetings remaining this year.
Lower interest rates by the Fed bode well for non-yielding assets, such as Silver.
Silver technical analysis
Silver price retraces from the all-time high of around $54.85 posted last week. The near-term trend of the precious metal has become uncertain as it struggles to return above the 20-day Exponential Moving Average (EMA), which trades around $48.86.
The 14-day Relative Strength Index (RSI) slides below 60.00, suggesting that the bullish momentum has ended for now.
Looking down, the September 23 high of $44.47 would remain a key support. On the upside, the all-time high of $54.50 might act as key barrier.
Silver daily chart
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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.
- EUR/JPY edges higher to around 178.00 in Monday’s early European session.
- Investors are concerned about Japan’s fiscal health and the uncertain outlook for further BoJ policy tightening.
- ECB's Escriva said the current level of rates is appropriate.
The EUR/JPY cross gains ground near 178.00 during the early European session on Monday. The expectation that Japan's new Prime Minister Sanae Takaichi would maintain expansionary spending policies and resist early tightening weighs on the Japanese Yen (JPY) against the Euro (EUR). Traders brace for the German IFO Business Survey data later on Monday.
Reports suggest Takaichi may unveil a major stimulus package as soon as next month, potentially exceeding last year’s 13.9 trillion yen program aimed at easing inflationary pressures on households. The potential aggressive fiscal expansion under the new government and uncertainty over the Bank of Japan’s (BoJ) policy outlook weigh on the JPY and create a tailwind for the pair.
Meanwhile, the BoJ is broadly expected to hold its interest rate steady at 0.5% at its upcoming policy meeting on Thursday. Traders will closely monitor the guidance from BoJ Governor Ueda following the meeting for fresh impetus.
On the Euro front, France’s Socialist party leader has threatened to bring down Prime Minister Sébastien Lecornu’s government by Monday if their budget conditions are not met, Reuters reported on Friday. Olivier Faure, whose party holds a swing vote in the hung parliament, said that he would file a no-confidence bill early next week if billionaires are not forced to pay more tax.
Earlier this month, Lecornu agreed to suspend an unpopular pension reform so the Socialists could help him survive a no-confidence vote in parliament. Fears of a political crisis in France could undermine the EUR against the JPY in the near term.
Analysts expect the European Central Bank (ECB) to keep its interest rates unchanged at its policy meeting on Thursday, for the third consecutive time. ECB officials indicated that the current level is appropriate given the inflation outlook. The ECB Governing Council member José Luis Escrivá said on Sunday that he is satisfied with the current settings for borrowing costs.
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.
- Asian stocks appreciate amid easing trade tensions between the US and China, the two largest economies.
- US and Chinese negotiators reached consensus on key disputes, paving the way for Trump and Xi to finalize a trade deal Thursday.
- Japan’s Nikkei 225 jumped above 50,000, driven by expectations of major fiscal spending under Prime Minister Sanae Takaichi.
Asian stocks start the week on a strong foot amid easing United States (US)-China trade tensions. The top negotiators US and China reached a consensus on major disputes and paved the way for Presidents Donald Trump and Xi Jinping to meet on Thursday in South Korea to finalize a trade deal aimed at easing tensions. Traders are expected to focus on central bank meetings and megacap earnings.
According to CBS News, US Treasury Secretary Scott Bessent said that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”
Japan’s Nikkei 225 rises 2% to trade near 50,300 at the time of writing, while Hong Kong’s Hang Seng gains 1% to move above 26,400, and South Korea’s KOSPI advances 2% to trade around 4,000. Additionally, China’s Shanghai Composite rises 1% to reach near 4,000, while the Shenzhen Component gains 1.26%, rising to nearly 13,450.
Asian markets also draw support from a subdued US Dollar (USD) as softer US inflation data helps in keeping the likelihood of the Federal Reserve (Fed) rate cuts higher. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.
Japan’s Nikkei surged past the 50,000 mark for the first time on Monday, extending its record-breaking rally amid expectations of significant fiscal spending from the nation’s new Prime Minister Sanae Takaichi, per Reuters.
AsianStocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
Gold prices fell in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 11,494.21 Indian Rupees (INR) per gram, down compared with the INR 11,630.50 it cost on Friday.
The price for Gold decreased to INR 134,066.80 per tola from INR 135,655.80 per tola on friday.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 11,494.21 |
| 10 Grams | 114,941.90 |
| Tola | 134,066.80 |
| Troy Ounce | 357,510.00 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- WTI price drifts higher to near $61.45 in Monday’s Asian session.
- Optimism between the US-China trade talks boosts the outlook for energy demand and lifts the WTI price.
- Traders brace for the API weekly crude oil stock report on Tuesday ahead of the Trump-Xi Jinping meeting.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.45 during the Asian trading hours on Monday. The WTI edges higher as progress between the US and China on trade talks boosts the outlook for oil demand. The American Petroleum Institute (API) weekly crude oil stock report will be released on Tuesday.
The US and China reached a preliminary agreement that would prevent a new round of tariffs and keep critical rare earth mineral supplies flowing to the US from China. US President Donald Trump will meet Chinese President Xi Jinping later on Thursday to decide on the framework of a trade deal. Positive developments to defuse trade tensions that have rattled global markets would be a positive for global economic growth and boost the WTI price.
“Hope of an imminent US-China trade deal is a plus for economic and oil-demand sentiment — it is layering in top of the Russia risk premium this morning,” said Vandana Hari, founder of Singapore-based market analysis firm Vanda Insights.
Last week, Trump hit Russia's Rosneft and Lukoil with sanctions to pressure Russian President Vladimir Putin to end the Ukraine war. The two companies account for more than 5% of global oil production, with Russia ranking as the world's second-largest crude oil producer in 2024, behind the United States. Sanctions on Russia could limit its crude exports to global markets, raising concerns about tighter global supply and pushing the WTI price higher.
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.
Nonetheless, concerns over excess supply might cap the upside for the black gold. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have pushed ahead with plans to increase oil supply. This has led analysts to predict a surplus of crude this year and next year.
- USD/CAD loses ground as softer US inflation data reinforce the Fed rate cut odds.
- US Treasury Secretary Scott Bessent said President Trump’s threat to impose 100% tariffs on Chinese goods is “off the table.”
- President Trump set an additional 10% tariff hike on Canada, responding to an Ontario ad aired during the World Series.
USD/CAD depreciates after two days of little gains, trading around 1.3980 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) faces challenges following the release of softer US inflation data on Friday, which helps keep the likelihood of the Federal Reserve (Fed) rate cuts higher. The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.
The US Bureau of Labor Statistics (BLS) reported on Friday that the US Consumer Price Index (CPI) rose 3.0% year-over-year (YoY) in September, following a 2.9% the prior month. This reading came in below the market expectation of 3.1%. Meanwhile, the monthly CPI increased 0.3%, against the 0.4% rise seen in August. The core CPI increased 0.2% month-over-month, compared to the market consensus of 0.3%, while the yearly core CPI was up 3.0% in September.
However, the downside of the USD/CAD pair could be restrained as the US Dollar may receive support amid easing United States (US)-China trade tensions. The top negotiators US and China reached a consensus on major disputes and paved the way for Presidents Donald Trump and Xi Jinping to meet on Thursday to finalize a trade deal aimed at easing tensions.
Additionally, US Treasury Secretary Scott Bessent said that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table,” while adding that China will purchase soybeans and postpone rare-earth export controls.
President Trump announced on Saturday that he was raising tariffs on Canada by an additional 10% “above what they’re paying now.” The move came in response to an ad from Canada’s Ontario province that aired during the World Series broadcast. Trump had already halted trade talks with Ottawa on Thursday, calling the tariff-related ad misleading.
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.
Japanese Chief Cabinet Secretary Minoru Kihara said on Monday, it is “Important for currencies to move in a stable manner reflecting fundamentals.”
Additional quotes
Won’t comment on forex levels.
Closely watching excessive, disorderly moves in FX market.
Forex both positively, negatively affect the economy.
Market reaction
USD/JPY was last seen trading 0.08% higher on the day at 153.00.
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.
- US Dollar Index loses ground to around 98.80 in Monday’s early Asin session.
- Fed is widely expected to cut the fed funds rate by 25 bps on Wednesday.
- Traders await the US-China trade talks later on Thursday for fresh impetus.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a negative note near 98.80 during the early Asian session on Monday. The DXY softens amid the prospect of a US rate cut after moderate inflation figures on Friday.
The US Federal Reserve is widely expected to cut its current benchmark interest rate of 4.0% to 4.25% by a quarter percentage point on Wednesday after a softer-than-expected inflation report. The US Consumer Price Index (CPI) rose 3.0% YoY in September, versus 2.9% prior, according to the US Bureau of Labor Statistics (BLS) on Friday. This figure came in below the market expectation of 3.1%.
Meanwhile, the core CPI climbed 3.0% YoY in September, compared to 3.1% in August, softer than the 3.1% expected. On a monthly basis, the CPI increased 0.3% following the 0.4% rise seen in August, while the core CPI increased 0.2%, compared to the market consensus of 0.3%.
Nonetheless, the optimism surrounding US-China trade talks eases concerns over a trade war between the world’s two largest economies. US Treasury Secretary Scott Bessent said trade talks on the sidelines of a summit of the ASEAN in Kuala Lumpur have eliminated the possibility of the US imposing 100% tariffs on Chinese imports starting November 1.
Bessent added that he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered. US President Donald Trump will meet Chinese President Xi Jinping later on Thursday to decide on the framework of a trade deal.
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.
- NZD/USD gains ground to near 0.5770 in Monday’s early Asian session.
- The Trump-Xi Jinping meeting on Thursday will be in the spotlight.
- The Fed is widely anticipated to cut rates at the upcoming October 28-29 meeting.
The NZD/USD pair attracts some buyers to around 0.5770 during the early Asian session on Monday. The New Zealand Dollar (NZD) strengthens against the US Dollar (USD) on renewed optimism around US-China trade talks. Investors will closely monitor the meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea later on Thursday.
US Treasury Secretary Scott Bessent said on Sunday that the US has reached a framework agreement with China to avoid imposing an additional 100% tariff on Chinese imports. A US Treasury spokesperson noted that the first day of talks had been "very constructive."
A positive outcome for the talks would remove roadblocks for a meeting on Thursday between Trump and Xi Jinping in South Korea. Easing concerns over a trade war between the world’s two largest economies could boost the China-proxy Kiwi, as China is a major trading partner for New Zealand.
The US Federal Reserve (Fed) is widely expected to cut its benchmark interest rate by 25 basis points (bps) at the upcoming October meeting. This would be the second consecutive reduction, following a similar move in September 2025. The anticipated dovish shift is expected to weigh on the Greenback and act as a tailwind for the pair.
On the Kiwi front, the Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 50 basis points (bps) to 2.5% at the October meeting, which was a larger cut than expected. The RBNZ stated that it remains open to further rate cuts if needed to help the economy and inflation return to its target.
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.
- EUR/USD gains ground as ECB’s José Luis Escrivá said that he is satisfied with current interest rate levels.
- France’s Socialist Party leader Olivier Faure warned he would file a no-confidence motion if the government refuses to raise taxes on billionaires.
- The US Dollar may strengthen after reports that US and Chinese negotiators reached a consensus on key trade disputes.
EUR/USD remains stronger for the fourth successive session, trading around 1.1640 during the Asian hours on Monday. The pair edges higher as the Euro (EUR) receives support from after European Central Bank (ECB) Governing Council member José Luis Escrivá said on Sunday that he is satisfied with current settings for borrowing costs, while inflation is at target, per Bloomberg. Traders will observe German IFO Business Survey data later in the day.
However, the Euro could come under pressure as France’s Socialist Party leader, Olivier Faure, has threatened to topple Prime Minister Sébastien Lecornu’s government by Monday if the party’s budget demands are not met. Faure, whose party holds a decisive swing vote in the hung parliament, warned that he would submit a no-confidence motion unless higher taxes are imposed on billionaires, per Reuters.
The upside of the EUR/USD pair could be restrained as the US Dollar (USD) may gain ground following reports that United States (US) and Chinese negotiators have reached a consensus on major disputes. This development paves the way for Presidents Donald Trump and Xi Jinping to meet on Thursday to finalize a trade deal aimed at easing tensions. Officials in Malaysia announced after two days of talks that both sides had agreed on key issues, including export controls, fentanyl, and shipping levies.
US Treasury Secretary Scott Bessent told CBS News that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”
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.
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