Forex News
- AUD/JPY weakens to around 112.35 in Thursday’s early European session.
- The negative outlook of the cross remains intact in the near term under the 100-day SMA.
- The first upside barrier emerges at 112.70; the initial support level is seen at 111.63.
The AUD/JPY cross trades in negative territory near 112.35 during the early European session on Thursday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) as traders are on high alert for further intervention from authorities. Reserve Bank of Australia (RBA) Governor Michele Bullock is scheduled to speak later on Friday.
Goldman Sachs Research strategist Karen Fishman said that the JPY’s gains are now fading as the intervention is “not a sustainable fix ... ultimately just buys some time.”
Meanwhile, the Bank of Japan (BoJ) highlighted growing risks of accelerating inflation in its summary of opinions from the July meeting, with one board member suggesting that the pace of interest rate hikes could accelerate. The BoJ may consider an additional interest rate increase at its next September policy meeting, following a hike in June, in response to rising risks of higher inflation, according to Jiji.
Rare US-Japan FX action underscores shifting Yen dynamics
DBS Group Research underscores the unusual nature of the latest currency support measures, noting that “co-ordinated FX intervention between the US and Japan is rare, with the last joint intervention occurring 15 years ago to weaken an excessively over-valued JPY in the aftermath of the 2011 Tohoku earthquake.” The team highlights that this historical precedent throws the current episode into sharper relief, with policymakers now deploying similarly uncommon tools in response to pronounced Yen weakness rather than strength.
Technical Analysis:
In the daily chart, AUD/JPY leans into a bearish near-term bias as it slips back under the Bollinger Bands 20-period simple moving average and remains capped by the 100-day simple moving average (SMA). Price is still comfortably above the Bollinger lower band, so the broader uptrend is not yet threatened, but the latest Relative Strength Index (14) reading at 48.96 suggests momentum has turned neutral-to-soft after the recent rally stalled near the upper band zone.
On the topside, initial resistance is aligned at the Bollinger Bands 20-period SMA middle line around 112.70, followed by the 100-day SMA at 112.90. A sustained break above these levels would be needed to re-open the path toward the July 16 high of 113.88, en route to the upper Bollinger band near 115.45.
On the downside, the primary support to watch sits at the August 10 low of 111.63. The next contention level to watch is the August 7 low of 110.77, followed by the Bollinger lower band at 110.00, where a decisive move would hint at a deeper corrective phase within the broader trend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- GBP/USD remains depressed as oil-driven inflation fears fuel Fed hike bets and support USD.
- Traders might refrain from placing aggressive directional bets ahead of the UK Q2 GDP report.
- The mixed technical setup warrants caution before positioning for the near-term trajectory.
The GBP/USD pair trades with a negative bias for the second consecutive day and trades below the 1.3500 psychological mark during the Asian session on Thursday amid modest US Dollar (USD) strength. The downside potential, however, seems limited as traders might opt to wait for the UK macro data dump, including the Q2 GDP report, before placing directional bets.
In the meantime, inflation risks stemming from volatile oil prices underpin prospects for a rate hike by the US Federal Reserve (Fed). This, along with persistent geopolitical uncertainties due to the US-Iran standoff, assists the USD in building on the previous day's bounce from the post-CPI swing low and turns out to be a key factor acting as a headwind for the GBP/USD pair.
From a technical perspective, spot prices, barring the overnight bullish spike, have been oscillating in a one-week-old range. This might be categorized as a bullish consolidation phase against the backdrop of the rally since late July. Moreover, the GBP/USD pair maintains a mildly bullish near-term bias above the 100-period Simple Moving Average (SMA) on the 4-hour chart.
However, momentum indicators are less supportive. In fact, the Relative Strength Index (RSI) is hovering near the neutral 50 line, and the Moving Average Convergence Divergence (MACD) is slipping slightly below zero. This, in turn, hints at an extension of the consolidative price action rather than strong near-term directional conviction, warranting caution for aggressive traders.
Meanwhile, further weakness below the current pivot area around 1.3491 might prompt some technical selling and make spot prices vulnerable to accelerating the fall to the 100-period SMA near 1.3415. A sustained defence of these supports would keep the bullish bias intact, while a clean break below would expose a deeper corrective phase for the GBP/USD pair on the four-hour chart.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
GBP/USD 4-hour chart
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Thu Aug 13, 2026 06:00 (Prel)
Frequency: Quarterly
Consensus: 0.4%
Previous: 0.6%
Source: Office for National Statistics
- Asian shares gain as softer US inflation data reinforced expectations for a more accommodative Fed policy.
- Strong earnings from major tech firms renewed confidence in sustained AI infrastructure spending.
- Major Asian indices posted solid gains, led by sharp rallies in South Korean chipmakers.
Asian stocks mostly remain stronger, bolstered by softer US inflation data that reinforced expectations for a more accommodative Federal Reserve (Fed) policy. US headline CPI rose 3.4% year-over-year in July, down slightly from 3.5% in the previous month. Core CPI, which strips out volatile food and energy prices, rose 2.5% year-over-year compared to 2.6% in June. Both figures landed right in line with market forecasts.
According to the CME FedWatch tool, interest-rate swaps are now pricing in roughly a 40.1% chance of a rate hike in September. Odds for an October increase dropped to around 60% from 75% the prior day, with the next potential rate hike not fully priced in until December.
Investor appetite for technology shares continued its recovery following last month’s sharp selloff. This rebound was driven by strong earnings from major tech companies, which reinforced confidence in sustained spending on AI infrastructure and provided growing evidence that AI adoption is expanding across a wider range of applications. Asian markets reflected this positive momentum, led by strong gains in Japan and South Korea.
Japan’s Nikkei 225 Index rises 1.63% to clear 68,600, supported by domestic producer prices rising 7.2% in July, easing slightly from 7.3% in June and coming in below forecasts of 7.4%. Meanwhile, South Korea’s KOSPI surges nearly 4.22% to above 6,850 as major chipmakers rallied following an overnight rise in US tech stocks. Samsung Electronics gained nearly 5%, while SK Hynix jumped over 9%, driven by renewed optimism over AI-related demand across the semiconductor sector.
Sovereign wealth fund interest underpins Korea tech sentiment
BNY’s Wee Khoon Chong notes that improving risk appetite in regional markets is being reinforced by flows into technology, with “reports that regional sovereign wealth funds may invest in South Korean technology companies” providing an additional boost to sentiment and helping validate the recent optimism around Korea’s tech complex.
Markets in Greater China also joined the broader AI-driven rally, though with varying degrees of momentum. China’s Shanghai Composite advances 0.40% to 3,960, and the Shenzhen Component climbs 0.73% to 14,520. Domestic attention remained firmly on Semiconductor Manufacturing International Corp. ahead of its earnings report later on Thursday, where net profit was expected to more than double year-over-year. In contrast, Hong Kong’s Hang Seng Index edges up just 0.04% to trade around 25,450. Investors continued to weigh geopolitical risks and digest Tencent's second-quarter earnings while closely monitoring developments in China's AI sector.
Asian stocks 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.
- Silver price consolidates at around $65.40 with US PPI data in focus.
- Soft US retail inflation data for July has allowed traders to trim hawkish Fed bets.
- Both the US headline and core CPI growth cooled down as expected.
Silver price (XAG/USD) trades in a tight range at around $65.40 during the Asian trading session on Thursday. The Silver price struggles for a direction; however, an expected slowdown in United States (US) inflationary pressures in July has improved its outlook.
On Wednesday, the US Bureau of Labor Statistics reported that the headline Consumer Price Index (CPI) growth cooled down to 3.4% Year-on-Year (YoY) from 3.5% in June. The core CPI – which excludes volatile food and energy items – also arrived lower at 2.5% YoY, as expected, against the previous reading of 2.6%.
Signs of price pressures cooling down have eased fears of Federal Reserve (Fed) interest rate hikes in the near term. According to the CME FedWatch tool, the odds of the Fed holding policy rates steady in the September meeting have increased to almost 60% from 30.4% seen a month ago.
Such a scenario bodes well for non-yielding assets, like Silver.
Going forward, investors will focus on the US Producer Price Index (PPI) data for July, which will be published at 12:30 GMT.
Silver Technical Analysis
XAG/USD trades flat at around $65.40, extending its advance above the 20-day exponential moving average (EMA) at $61.66 and keeping a constructive near-term bullish bias. The positioning above this short-term EMA suggests underlying demand remains firm, while the Relative Strength Index (14) at 61.17 stays in positive territory without yet signaling overbought conditions, hinting that bullish momentum is still in play.
On the downside, initial support is provided by the 20-day EMA at $61.66, which acts as the key dynamic floor that would need to give way to signal a deeper corrective phase. Looking up, the white metal would attempt to extend the advance towards the June 16 high at $71.19 if it manages to break the ongoing consolidation on the upside above $66.59.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- NZD/USD falls as two-year RBNZ Inflation Expectations fall to 2.34% QoQ in Q3, from 2.53% prior.
- Expectations of another 25-basis-point RBNZ rate hike next month could support the New Zealand Dollar.
- The US Dollar recovered daily losses amid escalating geopolitical tensions between the US and Iran.
NZD/USD extends its losses for the fourth successive day, trading around 0.5840 during the Asian hours on Thursday. The pair remains subdued following the release of RBNZ Inflation Expectations.
New Zealand's inflation expectations eased on a two-year horizon in the third quarter of 2026. Two-year inflation expectations, a key timeframe for monitoring how RBNZ monetary policy filters through to consumer prices, cooled to 2.34% in Q3 2026, down from 2.53% recorded in Q2. Meanwhile, one-year forward inflation projections settled at 2.6%.
However, the NZD/USD pair may halt its losing streak as the New Zealand Dollar (NZD) could draw support from expectations that the Reserve Bank of New Zealand (RBNZ) will deliver another quarter-point rate increase next month.
The NZD/USD pair depreciates as the US Dollar (USD) recovers its daily losses amid escalating geopolitical tensions between the US and Iran. A senior Iranian official noted that Washington and Tehran remain at loggerheads over a permanent end to conflicts in the Gulf, reporting zero progress in reviving the interim deal or establishing an implementation timeline.
President Donald Trump stated that the US has "total control" over the strategic waterway amid heightened rhetoric between Washington and Tehran, while diplomatic talks remain stalled. Meanwhile, the Trump administration is pushing to ramp up economic pressure on Iran as military actions have yet to bring the regime into compliance. Planned measures include broadening economic sanctions and implementing a naval blockade to restrict Iranian oil exports.
US inflation steadies as energy and food costs ease
According to TD Securities, consumer price inflation in the US "matched expectations in July," with the headline index rising "0.1% m/m (0.074% before rounding; TD: 0.15%, consensus: 0.1%)." The firm notes that the modest increase was "partly explained by still retreating energy prices (gasoline -3% m/m) and slowing food inflation," underscoring that softer fuel and food costs helped contain overall price pressures during the month.
New Zealand's (NZ) inflation expectations ease on a two-year frame in the third quarter of 2026, the Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey showed on Wednesday.
Two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, cool down to 2.34% in Q3 2026 from 2.53% % seen in Q2.
One-year forward inflation projections arrive at 2.6%.
Market reaction
The New Zealand Dollar (NZD) has responded negatively to a slowdown in the NZ two-year frame Q3 inflation expectations. As of writing, NZD/USD trades 0.37% lower at around 0.58357.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- USD/JPY steadies around 159.40 in Thursday’s Asian session.
- Traders remain on high alert for further currency intervention.
- Some BoJ members said rate hikes should be accelerated, according to a summary of opinions at the meeting released Monday.
The USD/JPY pair trades on a flat note near 159.40 during the Asian trading hours on Thursday. The potential upside for the pair might be limited due to a coordinated intervention in currency markets by US and Japanese authorities. The US Producer Price Index (PPI) report for July will be published later on Thursday.
Japanese Finance Minister Satsuki Katayama said earlier this month that the US had jointly intervened in the foreign exchange market, aiming to address the recent sharp fluctuations and chaotic trends of the Japanese Yen (JPY) exchange rate. US President Donald Trump confirmed US participation in the intervention during a cabinet meeting, calling the move a “signal of friendship.”
Traders will closely watch the 160.00 psychological level as it is seen as a clear threshold that will likely trigger a fresh round of coordinated or solo JPY-buying operations from Tokyo.
“Intervention has scared markets, but has not stopped the laws of finance which say money flows in the direction of maximum returns … as long as the cost of money in Japan is lower than the return overseas, carry trades will re-assert,” said Jesper Koll, expert director at Monex Group.
The Bank of Japan's (BoJ) July meeting summary of opinions showed policymakers debated accelerating interest rate hikes due to upside inflation risks of overshooting the 2% target. The Japanese central bank may consider an additional interest rate increase at its next September policy meeting, following a hike in June, in response to rising risks of higher inflation, Jijisaid
Yen steadies as US–Japan policy tensions simmer around USDJPY levels
Analysts at Scotiabank point out that, while "there have been no comments from FinMin Katayama or ViceMin Mimuri," domestic media are increasingly "highlighting the potential for tension between US officials and Japan’s government as the US pushes for BoJ tightening." Against this backdrop, the bank notes that for USDJPY "we see resistance around 159.50 and note support around 158.50," levels that are likely to remain in focus as markets gauge the risk of further policy-related friction.
Technical Analysis: USD/JPY remains capped below the 100-day SMA
In the daily chart, USD/JPY holds a bearish near-term bias as spot remains below the 100-day simple moving average (SMA) and the Bollinger 20-day SMA, keeping the broader structure capped after the recent retreat from the 163.00 area. The Relative Strength Index (14) at 43.38 sits just under the neutral 50 line, hinting at waning upside momentum rather than outright oversold conditions.
On the topside, initial resistance is set at the 100-day SMA at 160.00, followed by the Bollinger 20-day middle band near 160.65; a sustained break above this cluster would be needed to reopen the path toward the upper Bollinger band around 165.70. On the downside, the Bollinger 20-day lower band at 155.60 forms the next notable support, where buyers could attempt to slow the current corrective phase if selling pressure extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- AUD/USD extends its sideways consolidation around 0.7050 through the Asian session on Thursday.
- The RBA’s hawkish tilt lends support to the Aussie, while receding Fed hike bets undermine the USD.
- Inflation risks due to the Middle East crisis limit the USD downside and cap the upside for spot prices.
The AUD/USD pair holds steady during the Asian session on Thursday and, for now, seems to have stalled the previous day's retracement slide from its highest level since June 5. Spot prices remain confined in a familiar range around 0.7050, awaiting a fresh catalyst before the next leg of a directional move.
The US Dollar (USD) struggles to capitalize on Wednesday's goodish rebound as signs of moderating inflation in the US temper bets on an immediate interest rate hike by the Federal Reserve (Fed). This, along with the Reserve Bank of Australia's (RBA) hawkish outlook, acts as a tailwind for the Australian Dollar (AUD) and the AUD/USD pair. In fact, RBA Governor Michele Bullock emphasized that upside risks to inflation persist and explicitly noted that the board is prepared to raise interest rates again if price pressures fail to show sufficient downward progress.
Investors remain worried about inflation risks stemming from volatile oil prices due to the US-Iran standoff. President Donald Trump said the US had total control over the Strait of Hormuz, even as Iran reiterated its own control over the vital waterway. This keeps geopolitical risks on the table, which acts as a tailwind for the safe-haven Greenback and caps the AUD/USD pair. Moreover, the recent range-bound price action around 0.7050 makes it prudent to wait for some follow-through buying before positioning for an extension of a one-and-a-half-month-old uptrend.
Moving ahead, the focus now shifts to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data. This, along with speeches from influential FOMC members, will drive USD demand later during the North American session. Apart from this, traders will take cues from further developments surrounding the Middle East crisis, which might continue to infuse volatility in financial markets and produce short-term trading opportunities around the AUD/USD pair.
AUD/USD daily chart
Technical Analysis
The AUD/USD pair keeps a mildly bullish near-term bias near the 100-day Simple Moving Average (SMA) at 0.7056. However, the lack of any meaningful buying interest warrants caution before positioning for any further gains. On the downside, a close below the 100-day SMA would negate the constructive tone and expose the recent lows near 0.7000/0.6950.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- Weak US Dollar offsets the impact of lower oil prices, keeping CAD exchange rates relatively stable.
- July US CPI inflation fell to 3.4%, reducing chances of an aggressive Fed rate hike.
- Canadian Dollar weakens as OPEC and IEA slash 2026 global oil demand forecasts due to Middle East conflict.
USD/CAD remains steady after registering minor gains in the previous day, trading around 1.3940 during the Asian hours on Thursday. The currency pair moves within a narrow range as a weaker US Dollar (USD) balances out the impact of falling oil prices on the commodity-linked Canadian Dollar (CAD).
The Greenback continues to face headwinds following the release of July's Consumer Price Index (CPI) report, which showed moderating inflation across a wide range of goods and services and significantly cooled expectations for an aggressive Federal Reserve interest rate hike in September.
According to data from the Bureau of Labor Statistics, headline CPI rose 3.4% year-over-year in July, down from 3.5% in the previous month. Similarly, core CPI, which strips out volatile food and energy prices, rose 2.5% year-over-year compared to 2.6% in June. Both figures landed right in line with market forecasts.
Following the inflation report, market expectations for future Federal Reserve policy shifts have recalibrated. According to the CME FedWatch tool, interest-rate swaps are now pricing in roughly a 40.1% chance of a rate hike in September. Odds for an October increase dropped to around 60% from 75% the prior day, with the next potential rate hike not fully priced in until December.
US inflation in line with expectations as energy and food costs ease
According to TD Securities, July US consumer price inflation came in broadly as expected, with the headline index rising “0.1% m/m (0.074% before rounding; TD: 0.15%, consensus: 0.1%).” Strategists note that the modest increase was “partly explained by still retreating energy prices (gasoline -3% m/m) and slowing food inflation,” underscoring how softer input costs helped keep overall price pressures contained over the month.
Meanwhile, the Canadian Dollar is coming under pressure as oil prices decline following downward revisions to global demand forecasts for 2026, driven by disruptions stemming from the US-Israeli war on Iran. In its monthly oil market report on Wednesday, OPEC reduced its 2026 world oil demand growth projection to 580,000 barrels per day. Meanwhile, the International Energy Agency further downgraded its outlook, forecasting a 1.6 million bpd contraction in consumption this year—a notable drop from its previous estimate of 1 million bpd.
President Donald Trump stated that the US has "total control" over the strategic waterway amid heightened rhetoric between Washington and Tehran, while diplomatic talks remain stalled. At the same time, the Trump administration is pushing to ramp up economic pressure on Iran as military actions have yet to bring the regime into compliance. Planned measures include broadening economic sanctions and implementing a naval blockade to restrict Iranian oil exports.
Euro FAQs
The Euro is the currency for the 20 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.
Forex Market News
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