Forex News
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Canadian Dollar (CAD) is steady to slightly firmer versus the Dollar despite weak risk appetite, helped by a modest bid for commodity currencies. They point to a historically strong April for CAD since the 1970s and note USD/CAD has broken above its 200-day moving average, keeping focus on further upside toward the low 1.39s.
Seasonal tailwinds but chart stays bullish
"The CAD is steady to marginally firmer against the USD on the session, reflecting a modest bid for other commodity currencies on the day despite weak risk appetite. With March more or less in the books, the CAD might be able to look forward to the coming month."
"Seasonal trends since the early 1970s reflect a distinct bump in the CAD’s performance in April—a solidly positive month for the currency against the USD. More recent trends have been a little more nuanced but the tendency for the CAD to strengthen against the USD remains."
"Spot gains through the 200-day MA (1.3806) this week and bullish short-term trend momentum signals keep the technical focus on the topside for funds towards the low 1.39s. Support is 1.3790/00 and 1.3750/60. "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Nordea’s Jan von Gerich observes that recent equity weakness has not produced a stronger Dollar, suggesting its traditional safe-haven role is less dominant than before. He links this to market reactions around the Middle East conflict, where Oil and yields have been more responsive, while the USD’s response to risk-off episodes appears more muted than in past crises.
Risk-off flows bypass Dollar strength
"It is worth noting that the most recent dip in equity prices did not spur a stronger USD any more, further suggesting that even if the USD has certainly not lost all its safety appeal, its status is not fully what it used to be."
"Huge swings in financial markets have continued lately as the conflict in the Middle East evolves, and there have been quite contradictory comments regarding the outlook for ending the war."
"Some negotiations seem to have started during the week, and even peace proposals have been presented, but the different sides appear to be very far from each other and the uncertainty remains elevated."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CAD appreciates for the fifth consecutive day and hits two-month highs past 1.3860.
- Risk aversion amid concerns about a long war in Iran keeps the US Dollar buoyed.
- Fed officials Barr and Jefferson showed concerns about higher inflationary pressures.
The US Dollar (USD) keeps marching higher against the Canadian Dollar (CAD) on Friday. The pair extends gains for the fifth consecutive day, trading at its highest levels in more than two months, changing hands at 1.3860 at the time of writing, as investors brace for an extended Middle East conflict.
The Canadian Dollar remains offered, on track for a more than 1% decline on the week. The positive impact of higher Oil prices has been offset by the US Dollar’s traditional safe-haven status, amid a generalized rush for safety amid concerns that the Middle East war might worsen before it improves.
Confusing messages from the Middle East
Meanwhile, contradictory news from the war is failing to improve investors’ mood. US President Donald Trump affirmed that the negotiations with Iran are going “very well” and extended the deadline to attack Iranian energy sites into April 6.
The Wall Street Journal, on the other hand, affirmed that the Pentagon is planning the deployment of an additional 10,000 troops for an alleged ground invasion, which is likely to extend the war and keep the Strait of Hormuz locked for an indefinite period of time.
In this context, the major central banks are reassessing their monetary policy stances. Federal Reserve (Fed) officials Michael Barr and Philip Jefferson expressed concern about the rising inflationary pressures amid the spike in oil prices. The CME FedWatch Tool reflects a 50% chance of at least one interest rate hike this year, in contrast with the 50 bps rate cuts projected only a month ago. This is providing additional support to the US Dollar.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
ING’s Chris Turner argues that EUR/USD remains under pressure as investors position for further Middle East escalation and tighter global financial conditions. He notes that Sovereign Wealth Fund retrenchment and hawkish European Central Bank pricing weigh on the pair. Turner sees scope for EUR/USD to test and potentially break recent lows if risk sentiment deteriorates further.
Pro‑cyclical pair faces downside risks
"EUR/USD remains soft as investors seem more minded to brace for escalation than a ceasefire. News of further US troop movements towards the Middle East is seen as worrying. Those investors in February who backed the view that the US military build-up would result in action – and not merely be used for maximum bargaining pressure – were proved correct."
"Developments in the Middle East are a clear risk negative. One aspect that needs more attention is the role of Middle East investors, largely through Sovereign Wealth Funds, in global capital markets. Their funds have typically been deployed through bond markets rather than bank deposits, but the region's loss of access to energy revenues and now new fiscal commitments at home will be triggering a tightening of global financial conditions."
"That is bad news for pro-cyclical currency pairs like EUR/USD."
"It seems the vast majority of the market does not want to buy into early central bank tightening. But until we see a sharp reversal lower in equity prices, events in the Middle East and hawkish central bank speak can probably see the hawkish pricing retained in money market curves."
"EUR/USD looks vulnerable, and we could easily see a break down to 1.1485 and a retest of the lows in the 1.1410/30 area."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Rabobank’s RaboResearch Global Economics & Markets team reviews Banxico’s March 26 decision to cut the overnight policy rate by 25bp to 6.75%. The move was a close call, with two governors preferring to keep rates at 7.00%. The Bank acknowledges Middle East war risks and now projects inflation at or above 4.0% until Q3 2026, reaching its 3.0% target by Q2 2027.
Banxico cuts as inflation risks linger
"Banxico announced that it cut the overnight policy rate 25bp to 6.75% at the March 26 meeting."
"This was a close call with Governors Borja and Heath dissenting in favor of maintaining the overnight policy rate at 7.00%."
"The Bank was light-handed in its inclusion of the risks the ongoing war in the Middle East poses to the Mexican economy, but it highlighted that it did add “uncertainty” to its forecasts."
"The projections now see both headline and core inflation at or above 4.0% until Q3 2026, while previous projections suggested headline inflation at 3.8% by Q2 2026."
"The Bank still sees convergence to the 3.0% target by Q2 2027"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
UOB’s Quek Ser Leang highlights a weakening technical backdrop for AUD/USD after the pair broke below a rising wedge and tested the Ichimoku cloud base near 0.6870. The strategist notes downside risks toward 0.6765 if the 0.6850/0.6870 support zone gives way, while resistance is seen at 0.6960 and 0.7030, keeping the overall bias negative.
Downside risks focus on 0.6765
"AUD/USD rose to a high of 0.7188 in mid-March and then retreated. On Monday, AUD/USD fell sharply and broke below the lower end of the wedge. Yesterday, AUD/USD fell and tested the base of the daily Ichimoku cloud near 0.6870."
"While the weekly MACD remains in positive territory, it has been heading steadily lower over the past few weeks."
"The overall technical picture suggests that AUD/USD could continue to head lower. A clear break below the 0.6850/0.6870 support zone could potentially trigger a sharp decline toward 0.6765."
"On the upside, resistance is at 0.6960, followed by 0.7030."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Australian Dollar gains on hopes wider policy divergence between the RBA and other central banks.
- The RBA is expected to raise interest rates again in May.
- Peace mediators dismissal to Trump’s claim that strikes on Iran were paused on Tehran’s request has revived risk-off impulse.
The Australian Dollar (AUD) outperforms its major currency peers, trading marginally higher to near 0.6900 against the US Dollar (USD) during the late European trading session on Friday. The antipodean trades higher even as the market sentiment remains risk-averse due to hopes of de-escalation in the Middle East easing.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.19% | 0.37% | 0.05% | 0.02% | 0.02% | 0.10% | 0.30% | |
| EUR | -0.19% | 0.19% | -0.15% | -0.17% | -0.18% | -0.09% | 0.11% | |
| GBP | -0.37% | -0.19% | -0.34% | -0.34% | -0.37% | -0.27% | -0.08% | |
| JPY | -0.05% | 0.15% | 0.34% | -0.00% | -0.03% | 0.06% | 0.27% | |
| CAD | -0.02% | 0.17% | 0.34% | 0.00% | -0.01% | 0.09% | 0.28% | |
| AUD | -0.02% | 0.18% | 0.37% | 0.03% | 0.01% | 0.09% | 0.28% | |
| NZD | -0.10% | 0.09% | 0.27% | -0.06% | -0.09% | -0.09% | 0.20% | |
| CHF | -0.30% | -0.11% | 0.08% | -0.27% | -0.28% | -0.28% | -0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
During the press time, S&P 500 futures are down 0.4% to near 6,450, indicating a risk-off market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.2% higher to near 100.00.
The Australian currency gains on expectations that the pace of monetary policy tightening by the Reserve Bank of Australia (RBA) would be faster than other major central banks, as inflation in the Australian region was high even before the war in the Middle East started. According to a Reuters report, markets imply a 68% chance of a May hike and see rates reaching 4.75% by year-end.
Meanwhile, easing hopes of de-escalation in the Middle East war have underpinned the risk-off impulse. Conflicting statements by peace mediators against United States (US) President Donald Trump’s claim that the 10-day pause to planned military strikes on Iran’s power plants was requested by Iran have revived fears of a prolong Middle East war.
According to a report from the Wall Street Journal (WSJ), peace talks mediators have dismissed claims that Iran had requested a 10-day pause on strikes on its energy plants.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Forex Market News
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