Forex News

Scotiabank strategists Shaun Osborne and Eric Theoret note the British Pound (GBP) is slightly softer against the US Dollar (USD) after encountering resistance near 1.3400, with limited fresh data and Bank of England (BoE) news. The RSI recovery suggests improving momentum, but multiple resistance levels between 1.3420 and 1.3520 constrain upside. They look for GBP/USD to trade in a 1.3350–1.3450 range in the near term.

Momentum improves but upside capped

"The pound is soft and also entering Tuesday’s NA session with a fractional 0.1% decline vs. the USD after finding some near-term resistance around 1.3400."

"Fundamental releases have been limited and developments out of the BoE have been limited to media reports of a proposed easing in bank capital rules. Political developments have been limited with markets waiting for fresh news on the looming leadership transition from PM Starmer to the ‘leader-in-waiting’ Burnham."

"In terms of fiscal risks, the UK’s OBR (Office for Budget Responsibility) has underscored the challenges facing the UK and specifically the cost (£100bn) of stabilizing the national debt around current levels (95% of GDP)."

"Neutral/bullish—the RSI’s recovery has extended through the neutral threshold at 50 and momentum appears to be pushing further into bullish territory. The 50 and 200 day MA’s (both around 1.3400) had been flagged as offering the potential for near-term resistance and appear to be doing so."

"The daily chart offers dense resistance at several levels (1.3420, 1.3450. 1.3500, 1.3520) ahead of 1.3600. We look to a near-term range bound between 1.3350 and 1.3450."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Federal Reserve (Fed) Bank of New York President John Williams said on Tuesday that the United States (US) economy continues to show steady, trend-like growth, while the labor market remains stable. Speaking in an interview with Fox Business, Williams noted that monetary policy is well positioned to achieve the Fed’s goals, although future decisions will depend on incoming data and risks.

Key takeaways:

Williams said he sees steady trend-like growth for the US economy.

The job market is showing stability, with risks looking pretty balanced.

The retreat in energy prices is good news and should continue to cool inflation.

Inflation is still quite high, but Williams feels more positive about the near-term outlook due to lower energy prices.

The Fed is likely near the peak impact of tariffs.

Monetary policy is well positioned to achieve the Fed’s goals.

What happens next with monetary policy will depend on data and risks.

Monetary policy is in a good place.

Expects continued strong investment in artificial intelligence.”

Williams keeps Fed in a "good place" as inflation tone softens but stays hawkish

Fed’s Williams delivered a moderately constructive message, with the 5.6/10 FXS Speechtracker score running slightly below his 5.8/10 historical average, signaling a marginally less impactful tone relative to the established baseline. The emphasis on steady trend-like growth, a stable job market, and retreating energy prices helping to cool inflation is tempered by the acknowledgment that inflation remains “quite high” and that policy decisions will stay data- and risk-dependent, reinforcing a cautious but not dovish stance.

The FXS Fed Sentiment Index slipped by 0.34 points to 125.38, indicating a modest pullback in perceived hawkishness following the speech. Despite the decline, the index remains firmly above the neutral 100 mark.

Commerzbank’s Barbara Lambrecht says Aluminium’s recent correction has likely run its course, with prices rebounding as Chinese and LME inventories fall sharply and Gulf smelter outages persist. The Australian Ministry expects primary Aluminium to be significantly undersupplied this year and next, though longer term it sees strong non-Chinese capacity growth, especially in Indonesia, tempering the structural outlook.

Tight market now, capacity boom later

"Stocks could fall below 900 Tsd. tons this month. Aluminium stocks registered on the LME have also been falling significantly since the end of October and have dropped below 300 Tsd. tons for the first time since October 2022."

"Also, in its latest market outlook, the Australian Department of Resources and Energy considers price levels in the market to be well supported. Whilst China has partially offset production losses in the Gulf region, longer-term outages are expected due to damage to the region’s aluminium smelters."

"For example, the Al Taweelah smelter in the United Arab Emirates, with a capacity of 1.6 million tons per year, is likely to be out of operation for 12 months, although the operator announced yesterday that it is working on a faster timeline. The Australian Ministry therefore expects the market for primary aluminium to be significantly undersupplied this year and next."

"In the longer term, however, the Ministry is more pessimistic: whilst demand would remain well supported by the transition to renewable energy and electrification, and there is also a trend towards replacing the more expensive copper with aluminium in the automotive sector, supply – outside China – would also rise sharply: Capacity is growing rapidly, particularly in Indonesia, thanks to increased investment by Chinese investors."

"Capacity is set to expand from 1.3 million tonnes today to 5.3 million tonnes by 2031. At first glance, this is similar to recent developments in the nickel industry, but the scale is different: China retains its dominant market position."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Geoff Yu notes Japan’s Growth Strategy Minister Minoru Kiuchi rejected reports that the government is trying to push interest rates lower or pressure the Bank of Japan (BoJ). He emphasizes continued coordination with the BoJ, while recent data show firm nominal wage gains but weaker real earnings, soft household spending, and improving coincident indicators, with the Japanese Yen briefly firmer versus the Dollar.

Policy stance steady, data send mixed signals

"Japan’s Growth Strategy Minister Minoru Kiuchi has rejected media reports that Prime Minister Sanae Takaichi’s government is trying to push interest rates lower, saying there is “absolutely no truth” to claims that fiscal expansion is aimed at pressuring the BoJ.He said the omission of “fiscal consolidation” from the draft basic policy guidelines was not intended to weaken fiscal discipline, but to present fiscal sustainability more concretely and verifiably."

"The remarks come as markets scrutinize whether the administration’s pro-growth agenda and large-scale investment plans could constrain further BoJ rate hikes."

"Kiuchi reiterated that the government expects close coordination with the BoJ and appropriate monetary policy conduct."

"Japan’s real earnings rose 1.4% y/y in May, below the 1.7% estimate and April’s revised 1.9% y/y figure."

"Japanese household spending fell 0.4% y/y in real terms in May, the sixth straight negative month, from -0.5% in April."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

TD Securities’ Ryan McKay argues that Crude Oil is far from oversupplied, with high-frequency global and Chinese balances still pointing to tightness. McKay expects ongoing market deficits, inventory drawdowns and the rebuilding of buffers to keep prices elevated, projecting a recovery toward $90/bbl and possible extension toward $100/bbl as structural tightness persists.

Structural tightness and deficit outlook

"Our high-frequency estimates of global and Chinese supply-demand balances, along with Middle Eastern production, continue to point to market tightness despite increased flows through the Strait of Hormuz. Ongoing market deficits, inventory drawdowns, and longer-term rebuilding of market buffers should see prices recover toward $90/bbl, with potential for a move toward $100/bbl."

"Flows through the Strait of Hormuz have increased notably since the signing of the MoU [Memorandum of Understanding], as stranded tankers have quickly rushed for the exit. This has seen a flush of supply in the market that is being mistaken for a supply glut. However, looking forward, as the market becomes reliant on production increases rather than floating storage, flows are likely to tighten again."

"All pre-war slack has been removed from the system, and every conceivable and unexpected lever of flexibility has been pulled to avoid catastrophe. The market has priced this avoidance as a combination of relief and optimism, while also placing an overexaggerated focus on the near-term temporary supply and the start of a supply recovery. While the right tail outcomes for crude pricing have thinned, prices should still settle higher than pre-war levels, given the fundamental damage that has taken place."

"Based on this production recovery profile, we continue to expect market deficits of roughly 2.5-3m b/d in crude and at least 1-2m b/d in products through July and August, before the market moves into a more balanced state in September. We expect these deficits to persist despite higher flows, as a slowdown in SPR releases and lower U.S. exports driven by domestic inventory tightness offset part of the increase in supply."

"In this sense, a system that remains structurally stretched relative to recent history will warrant structurally higher prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is effectively flat versus the US Dollar (USD) and trading close to their fair value estimate around 1.4158. They expect the recent deterioration in spreads to stabilize, easing downside pressure on the CAD. Short-term, USD/CAD is consolidating with an overbought USD, facing resistance near 1.4250/00 and support at 1.4150 and 1.4075/80.

Fair value and range parameters

"The CAD is effectively flat against the USD and outperforming, if only marginally, most of its core peers as a result. Factors driving the CAD are relatively steady; our fair value model for the CAD indicates equilibrium of 1.4158, slightly weaker for the CAD than yesterday, suggesting that the CAD is about where it should be from a fundamental point of view."

"More broadly, we think the deterioration in spreads seen since early May should stabilize which will at least ease downward pressure on the CAD from here, all else equal."

"The BoC Q2 Business Outlook Survey reflected slower domestic sales growth expectations and worries about more persistent inflation—reflecting the anticipated fall out from the Iraq conflict."

"Employment intentions remain soft but business investment intentions remain firm, at least in part due to robust oil prices driving plans in energy-related sectors. The survey suggests no resolution to the slow growth/high inflation look to the economy that is keeping the BoC on the sidelines."

"Neutral—USD/CAD continues to consolidate. The USD remains extremely overbought but there is a risk that the sideways movement in funds is merely a consolidation ahead of another push higher. The 1.4250/00 range should continue to offer resistance to a USD advance. Support is 1.4150 and 1.4075/80."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Royal Bank of Canada (RBC) economist Claire Fan notes that the Q2 2026 Bank of Canada Business Outlook Survey showed resilient sales and investment expectations despite earlier Oil price shocks. With Canadian growth picking up and core inflation still subdued, Fan argues the Bank of Canada (BoC) has little reason to change course and is likely to keep interest rates unchanged through 2026.

Rates expected to stay unchanged

"With economic growth picking up in Q2 after Q4-Q1 stagnation, and core inflation pressures remaining subdued in latest May, the case for BoC to move in either direction is weak."

"We continue to expect the central bank will opt to leave interest rates unchanged through 2026."

"The Q2 Bank of Canada Business Outlook Survey was conducted in May amid high oil prices due to conflict in the Middle East."

"Against that backdrop, results reflected the expected rising price expectations but stable longer-run (5-year) inflation expectations among businesses, as well as overall resilient sales and investment expectations at the time."

"The separate Canadian Survey on Consumer Expectations (CSCE) showed energy prices cutting more significantly into household spending plans in Q2."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)