Forex News
- Tokyo CPI accelerated to 2.7% YoY in September, boosting expectations for Bank of Japan policy hawkishness.
- The US Dollar weakened as traders priced in under a 28% chance of an October Fed rate hike.
- High US Treasury yields and lingering December hike bets may limit further downside for the Greenback.
USD/JPY declines after two days of gains, trading around 157.90 during Asian hours on Friday. The Japanese Yen (JPY) gained momentum following stronger-than-expected inflation data from Tokyo, putting downward pressure on the pair.
According to the Statistics Bureau of Japan, the headline Tokyo Consumer Price Index rose 2.7% year-over-year in September, accelerating from 1.9% in the previous month. Key underlying inflation metrics also saw sharp increases: the CPI excluding Fresh Food climbed to 2.7% YoY (beating expectations of 2.4% and the prior 1.8%), while the core-core index excluding both Fresh Food and Energy jumped to 3.0% YoY from 2.0%.
Japanese Finance Minister Satsuki Katayama announced plans on Friday to intensify efforts toward a Japanese adaptation of government efficiency reviews, focusing specifically on state subsidies and funds. Katayama highlighted that roughly 200 existing funds, valued at approximately 7 trillion yen, will be targeted as part of this initiative to streamline public spending.
In parallel comments, Economy Minister Minoru Kiuchi emphasized the importance of ongoing, close communication between the government and the Bank of Japan regarding future economic policy. Kiuchi noted that Japan has moved past the need for extraordinary monetary stimulus, pointing to the BoJ’s prior exit from yield curve control as evidence of this transition, while refraining from further direct remarks on monetary policy decisions reserved for the central bank.
Adding to the USD/JPY pair's decline is a broader softening in the US Dollar (USD), driven by scaled-back expectations for immediate Federal Reserve (Fed) rate hikes. Markets are currently pricing in less than a 28% chance of a Fed rate increase at the October meeting, according to the CME FedWatch Tool.
Despite the recent weakness, the Greenback may retain potential support. Persistent inflation concerns linked to elevated energy costs, alongside lingering expectations for a Fed rate hike in December, could help the currency regain traction. Furthermore, US Treasury yields remain near multi-decade highs, bolstered by resilient domestic economic performance, expectations of sustained monetary tightening, and growing worries surrounding the US government's long-term fiscal debt trajectory.
Market participants remain focused on upcoming macroeconomic releases to gauge the future path of monetary policy. Attention now shifts to the pending US Nonfarm Payrolls report, where economists anticipate job gains to moderate to 90,000 from the previous month's 162,000, while the unemployment rate is projected to hold steady at 4.1%.
Dollar strength drives USD/JPY toward key technical resistance
Strategists at Brown Brothers Harriman highlight the impact of broad Dollar strength on the pair, noting that "USD/JPY surged to its 200-day moving average at 158.49 on broad USD strength." In their view, the move brings the cross into a consolidation zone, with the bank expecting "USD/JPY to hold within a 155.00-160.00 range in the near term."
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.
- NZD/USD gains ground to around 0.5610 in Friday’s early European session.
- All eyes will be on the US September jobs report later on Friday.
- The prospect of policy uncertainty in New Zealand could undermine the Kiwi.
The NZD/USD pair recovers some lost ground to near 0.5610, snapping the three-day losing streak during the early European session on Friday. However, the potential upside for the pair might be limited, as rising US Treasury yields and a hawkish stance from the Federal Reserve (Fed) underpin the US Dollar (USD) against the New Zealand Dollar (NZD).
Oil spike from US-Iran tensions raise inflation fears, driving bond yields higher. The 10-year US Treasury yield hit 5.34%, its highest since 2002, in the previous session before retreating to 5.25%. The 30-year Treasury bond yield hovered near levels not seen in 24 years before moderating into the close.
Dallas Fed President Lorie Logan said on Thursday that the central bank will need to raise short-term borrowing costs by at least 50 basis points (bps) to turn monetary policy "modestly restrictive" and get inflation back on track to the Fed’s 2% target.
The US jobs report for September will be the highlight later on Friday. The Nonfarm Payrolls (NFP) is forecast to increase by 90,000 in September after rising by 162,000 in August. Meanwhile, the Unemployment Rate is expected to stay at 4.1% for a third straight month.
On the Kiwi front, closer New Zealand election race raises investor concerns over policy uncertainty, weighing on the domestic currency. New Zealand’s reputation for political stability is facing a test as a closely contested election approaches on November 7, with opinion polls indicating that Prime Minister Christopher Luxon’s coalition could lose power. A change in government raises the prospect of policy uncertainty. If elected, Labour signaled that it would restore that dual mandate, among other policy reversals.
Logan’s hawkish tilt lifts Fed expectations and supports the Dollar
Fed’s Logan delivered a notably more hawkish message, with a 9.2/10 FXS Speechtracker score standing well above the 8.1/10 historical average, underscoring a stronger tightening bias relative to the established baseline. The emphasis that higher long-term yields may reflect rising term premiums, potentially reducing the need for additional tightening, sits in tension with explicit calls for at least 50 bps more in rate hikes and several further moves to revive price stability, reinforcing a narrative that policy is not yet restrictive enough and that inflation will not reach 2% without higher rates. Overall, the combination of stronger economic expansion, a well-balanced labor market, and explicit rate hike guidance points to a clear hawkish signal supportive of the Dollar and U.S. yield curves.
The FXS Fed Sentiment Index rose by 1.68 points to 136.59, confirming a deeper move into hawkish territory well above the neutral 100 threshold and aligning with the elevated FXS Speechtracker score. This upward shift in the FXS Fed Sentiment Index suggests markets should price in a higher-for-longer Fed path, with potential upside pressure on the Dollar and continued sensitivity of risk assets to U.S. rate expectations.
Technical Analysis: NZD/USD keeps bearish tone amid oversold conditions
In the daily chart, NZD/USD extends its slide beneath the Bollinger middle band and the 100-day simple moving average (SMA), which keeps the near-term bias firmly bearish. Price is now holding just above the lower Bollinger band, hinting at stretched downside conditions, while the Relative Strength Index (RSI) at 24.8 sits in oversold territory, suggesting that while selling pressure remains dominant, the pace of the decline could start to moderate.
On the topside, initial resistance emerges at the Bollinger middle band near 0.5725, followed by the 100-day SMA around 0.5810 and the upper Bollinger band at 0.5885, a cluster that would cap any corrective bounce for now. On the downside, the lower Bollinger band at 0.5565 offers immediate support; a decisive break below this floor would open the door to a continuation of the bearish trend, whereas holding above it would favor a short-term consolidation within the current oversold backdrop.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- USD/CAD may rebound toward the nearly 18-month high of 1.4262.
- The 14-day Relative Strength Index near 74 signals overbought conditions.
- The primary support lies at the nine-day EMA of 1.4157.
USD/CAD loses ground for the second successive day, trading around 1.4210 during Asian hours on Friday. The technical analysis of the daily chart indicates that the price is positioned slightly below the top trendline of an ascending channel, suggesting a persistent bullish bias.
The USD/CAD pair is maintaining a bullish near-term bias as spot holds above both the nine- and 50-day Exponential Moving Averages (EMAs). The alignment of price over these trend gauges suggests underlying demand, although the 14-day Relative Strength Index (RSI) hovering in overbought territory near 74 hints that upside momentum may be stretched in the short run.
The USD/CAD pair may rebound and test the nearly 18-month high of 1.4262, recorded on October 1, followed by the top trendline of the ascending channel around 1.4270. A successful break above the channel would reinforce the bullish bias and support the pair to test the psychological level of 1.4300.
On the downside, the primary support lies at the nine-day EMA of 1.4157. A break below the short-term price average would weaken the bullish bias and put downward pressure on the USD/CAD pair to navigate the region around the bottom trendline of the ascending channel around the 50-day EMA of 1.4000.
Canadian dollar faces headwinds as US-Canada yield gap widens
Analysts at Scotiabank stress that “the outlook for relative central bank policy remains a dominant driver,” with the “continued widening in US-Canada yield spreads” presenting “a meaningful headwind for the CAD.” In their view, the growing policy divergence between the Fed and the BoC is increasingly weighing on the Canadian dollar’s performance against the USD.
Logan’s hawkish tilt lifts Fed sentiment, supports Dollar upside
Fed’s Logan delivered a notably more hawkish message, with a FXS Speechtracker score of 9.2/10 compared to the established baseline of 8.1/10, underscoring a stronger conviction that policy must tighten further. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for additional tightening, sits in tension with the assertion that policy is not yet restrictive and that at least 50 bps more in rate hikes are needed to revive price stability and secure the 2% inflation target. Overall, the speech signals a Fed willing to lean into further tightening despite balanced labor conditions and strengthening economic expansion, a backdrop typically supportive for the Dollar and a headwind for risk-sensitive FX.
The FXS Fed Sentiment Index rose by 1.68 points to 136.59, reinforcing that the Fed narrative remains firmly in hawkish territory well above the neutral 100 threshold. This upward move in the FXS Fed Sentiment Index, aligned with the elevated FXS Speechtracker score, points to growing market expectations of additional rate hikes, which should underpin the Dollar while keeping pressure on Euro and Yen crosses.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- Silver price gains to near $61.40 as US Treasury Yields retreat from its multi-decade high.
- Fed’s Logan sees at least half-of-a-percent interest rate hike in the near term.
- Investors keenly await the US NFP data for September.
Silver price (XAG/USD) is up 0.55% to near $61.38 during the late Asian trading session on Friday. The white metal edges up as rally in United States (US) Treasury Yields has hit a pause.
10-Year US Treasury Yields have corrected to near 5.25% from its recent highs of 5.34%, the highest level seen since May 2002.
A slight correction in US Treasury yields has improved very-short term appeal of non-yielding assets, such as Silver. However, the broader trend of US bond yields remains firm as Federal Reserve (Fed) officials have signaled more interest rate hikes even after raising them by 25 basis points (bps) to 3.75%-4.00% in September.
Fed’s Logan delivered a notably more hawkish message, with a 9.2/10 FXS Speechtracker score standing well above the 8.1/10 historical average, underscoring a stronger tightening bias relative to the established baseline. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for additional tightening, sits in tension with explicit calls for at least 50 bps more in rate hikes and several further moves to ensure inflation returns to 2%, reinforcing a narrative of a still-not-restrictive stance and a strengthening economic expansion that is supportive for the Dollar. Overall, the tone signals a clear willingness to push policy rates higher until price stability is credibly restored.
The FXS Fed Sentiment Index rose by 1.68 points to 136.59, confirming a solid move deeper into hawkish territory well above the neutral 100 threshold. This combination of a higher index level and an elevated FXS Speechtracker score points to rising market expectations for further Fed tightening, a backdrop typically constructive for the Dollar and a headwind for risk-sensitive currencies.
On the economic data front, investors keenly await the US Nonfarm Payrolls (NFP) data for September, which will be published at 12:30 GMT.
According to Bloomberg consensus, nonfarm payrolls to rise by 90,000 in September, down from 162,000 in August, while the unemployment rate is forecast to remain unchanged at 4.1%.
Silver Technical Analysis
In the daily chart, XAG/USD holds decisively below the 20-day exponential moving average (EMA) at $63.48, keeping the near-term tone bearish as price remains capped by this short-term trend indicator. The Relative Strength Index (14) at 41.64 stays below the neutral 50 line, hinting at persistent downside pressure rather than oversold exhaustion.
On the topside, immediate resistance is August 19 low at $62.19, followed by the 20-day EMA at $63.48. Looking down, the psychological level of $60.00 is the key suppory level; below that, the asset could decline towards the August 3 low at $56.57.
(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.
- WTI struggles to capitalize on its recovery gains registered over the past two days.
- The US-Iran standoff acts as a tailwind for the commodity and limits deeper losses.
- The mixed technical setup warrants some caution before placing directional bets.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some sellers during the Asian session on Friday, snapping a two-day winning streak and stalling the previous day's recovery from the vicinity of a nearly four-week low. The black liquid currently trades near $91.50, down 0.45% for the day, though the downside seems limited amid the risk of a further escalation of tensions in the Middle East.
In the latest developments, the Wall Street Journal reported that the Pentagon may soon send a third aircraft carrier strike group and 10,000 sailors and Marines to the Persian Gulf. Separately, Iran’s Persian Gulf Strait Authority (PGSA) said several tankers were attacked in the Strait of Hormuz in recent days. Adding to this, US President Donald Trump said on Wednesday that he would decide very soon whether to blow up Iran and added that the war will end very soon one way or the other. This keeps the geopolitical risk premium firmly in play and should act as a tailwind for crude oil prices.
From a technical perspective, the black liquid remains capped by the long-term trend structure, with the 100-period Simple Moving Average (SMA) on the 4-hour chart at $94.08 and the 38.2% Fibonacci retracement at $93.28 sitting overhead. This configuration keeps the near-term bias bearish despite a constructive tone in momentum indicators. In fact, the Relative Strength Index (RSI) holds in neutral-positive territory near 53, and the Moving Average Convergence Divergence (MACD) stays above zero with a positive histogram, hinting at only a modest recovery attempt within a broader corrective phase.
Meanwhile, initial support emerges at the 50.0% retracement at $90.59, followed by the 61.8% Fibo. retracement at $87.89, which together define a nearby demand zone before deeper levels at $84.06 and $79.18. On the topside, immediate resistance is seen at the 38.2% retracement at $93.28, ahead of the 100-period SMA at $94.08. A more significant bullish extension would require a break of the 23.6% retracement at $96.60 and ultimately the structural high near $101.99 to challenge the prevailing short-term bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI 4-hour chart
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.
- USD/IDR loses ground as Fed rate-hike bets ease.
- US Nonfarm Payrolls are projected to slow to 90,000 additions, keeping monetary policy expectations in focus.
- Bank Indonesia cites global conditions for Rupiah pressure as September inflation rose to a three-month high.
USD/IDR has pared its recent gains from the previous day, trading around 17,910 during the Asian hours on Friday. The pair depreciates as the US Dollar (USD) declines on easing Federal Reserve (Fed) rate hike bets, with the CME FedWatch Tool suggesting traders are pricing in nearly a 28% chance of an October rate increase.
However, the Greenback could regain its footing due to persistent inflation concerns from elevated energy costs and expectations of a Fed rate hike in December. Benchmark borrowing costs have seen dynamic moves, with 10- and 30-year US Treasury yields holding around 5.25% and 5.62%, respectively, after pulling back from multi-decade highs as fiscal and political instability in France sparked demand for safe-haven assets.
However, US Treasury yields remain near their highest levels since 2002, supported by expectations of further Federal Reserve tightening, underlying resilience in the US economy, and mounting concerns over the nation’s long-term fiscal and debt trajectories. Traders continue to monitor economic indicators for signals on monetary policy direction, with attention focused on upcoming Nonfarm Payrolls data. Economists project an addition of 90,000 jobs, a noticeable moderation from the previous month's 162,000, while the Unemployment Rate is expected to hold steady at 4.1%.
On the domestic front, Bank Indonesia (BI) Governor Destry Damayanti noted that recent rupiah pressure reflected global conditions, shifts in capital flows, and weaknesses in external-sector fundamentals. September headline inflation accelerated to a three-month high of 3.28%, driven by persistent food-price pressures partly linked to El Niño effects.
Analysts at ING’s Asia research team expect Indonesia’s headline price pressures to pick up in the coming months, projecting that “Indonesia’s CPI inflation [will] accelerate to 3.3% YoY, as El Niño drives further increases in food prices.” They highlight that “rising rice prices should remain a key driver,” while cautioning that “spillovers from higher food costs are also likely to add to core inflation,” pointing to a broader build-up in underlying inflationary pressures.
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.
- AUD/JPY softens to around 109.40 in Friday’s early European session.
- The cross keeps a negative outlook below the 100-day SMA, with bearish RSI momentum.
- The immediate resistance level emerges at 110.00; the initial support level to watch is 109.15.
The AUD/JPY cross trades in negative territory near 109.40 during the early European trading hours on Friday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) as Japan’s Tokyo inflation gauge rose sharply in September, bolstering the case for further interest rate hikes from the Bank of Japan (BoJ).
Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) rose 2.7% in September, versus 1.9% prior. Additionally, Tokyo CPI, excluding fresh food, climbed 2.7% YoY in September, compared to 1.8% in August, above the market consensus of 2.4%. The Tokyo CPI ex Fresh Food, Energy jumped 3.0% YoY in September, compared to the previous reading of 2.0%.
"Core inflation will continue to accelerate as a trend due to rising energy costs from the Middle East conflict and subsequent second-round effects," said Masato Koike, senior economist at Sompo Institute Plus, adding that he anticipated the BoJ to raise its policy interest rate in December.
BoJ caution on rates contrasts with improving Japan business sentiment
Analysts at Rabobank highlight that the BoJ “doesn’t want to keep raising rates rapidly,” with September meeting notes revealing a split Governing Council. While “some hawks” argued for further tightening, others “pointed to weak private consumption and warned against hasty action,” and government representatives “urged weighing the cumulative impact of past rate increases.” However, Rabobank adds that “with the latest Tankan survey the most upbeat for large manufacturers since 2018 the Bank may not have a choice – assuming it is the one choosing, not Bessent,” underscoring the tension between cautious policymakers and increasingly robust corporate sentiment.
Technical Analysis: Negative tone of AUD/JPY remains intact below the 100-day SMA
In the daily chart, AUD/JPY keeps a bearish near-term tone as spot remains below the 20-period Bollinger middle band and the 100-day simple moving average (SMA). Price is holding closer to the lower end of the Bollinger envelope, while the Relative Strength Index (14) at 32 stays just above oversold territory, hinting that downside momentum is still dominant but could be losing some intensity.
On the topside, initial resistance appears at the 110.00 psychological level, en route to Bollinger SMA middle band near 110.70. Further north, the next hurdle is located at the upper Bollinger band at 112.30 and then the 100-day SMA at 112.60, which together define a broader supply zone capping recovery attempts.
On the downside, the lower limit of Bollinger band at 109.15 offers immediate support. A clean break beneath this level would likely reopen the path toward the October 1 low of 108.71, followed by the February 17 low of 107.69.
(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.
- EUR/USD finds cushion near 1.1215 after a four-day losing streak.
- Investors keenly await the preliminary Eurozone HICP and the US NFP data for September.
- Fed’s Logan sees further monetary tightening by at least 50 bps.
The Euro (EUR) finds temporary support against the US Dollar (USD) on Friday after a four-day losing streak, in which it hits a fresh yearly low at 1.1215. In Asian trade, EUR/USD is up 0.1% to near 1.1253 due to a marginal correction in the US Dollar.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.11% | 0.19% | 0.28% | 0.51% | 1.11% | 0.86% | 0.13% | |
| EUR | -1.11% | -0.97% | -0.76% | -0.58% | -0.02% | -0.26% | -0.98% | |
| GBP | -0.19% | 0.97% | 0.02% | 0.33% | 0.90% | 0.69% | -0.04% | |
| JPY | -0.28% | 0.76% | -0.02% | 0.12% | 0.75% | 0.49% | -0.26% | |
| CAD | -0.51% | 0.58% | -0.33% | -0.12% | 0.64% | 0.33% | -0.36% | |
| AUD | -1.11% | 0.02% | -0.90% | -0.75% | -0.64% | -0.25% | -0.97% | |
| NZD | -0.86% | 0.26% | -0.69% | -0.49% | -0.33% | 0.25% | -0.72% | |
| CHF | -0.13% | 0.98% | 0.04% | 0.26% | 0.36% | 0.97% | 0.72% |
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
As of writing, the US Dollar Index (DXY) is slightly down to near 101.93 after hitting a fresh over-a-year high at 102.20 the previous day.
The US Dollar is expected to trade with caution as investors await the United States (US) Nonfarm Payrolls (NFP) data for September, which will be published at 12:30 GMT. The NFP report is expected to show that the economy created 90K fresh jobs, lower than 162K in August. The Unemployment Rate is seen as steady at 4.1%.
The US NFP data is expected to have a significant influence on Federal Reserve (Fed) interest rate expectations. Meanwhile, Fed officials have favored at least two more quarter-to-a-percent interest rate hikes in the near term.
Dallas Fed Bank President Lorie Logan said on Thursday that the central bank will need to raise short-term borrowing costs by at least another half of a percentage point to turn monetary policy "modestly restrictive" and get inflation back on track to the target.
On the Euro front, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for September, which will be published at 09:00 GMT. The headline HICP is expected to have accelerated to 3.6% Year-on-Year (YoY) from August’s final reading of 3.2%. Such a scenario would reinforce the expectations of more interest rate hikes by the European Central Bank (ECB) in the near term.
EU/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1253, keeping a bearish near-term tone as spot remains below the 20-day exponential moving average (EMA) at 1.1423, which acts as immediate overhead resistance. The deeply oversold reading in the Relative Strength Index (RSI) at 19.8 hints at stretched downside momentum, but with price still capped beneath the EMA, any recovery attempts would likely face selling pressure toward that barrier.
On the topside, the June 24 low at 1.1325 is the key resistance level for the major currency pair before the the 20-day EMA dynamic barrier at 1.1423. On the downside, the pair could extend its decline towards 1.1200. A break below 1.1200 would expose the pair to 1.1100.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP), released by the German statistics office Destatis on a monthly basis, is an index of inflation based on a statistical methodology that has been harmonized across all European Union (EU) member states to facilitate comparisons. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is bullish for the Euro (EUR), while a low reading is bearish.
Read more.Next release: Tue Oct 13, 2026 06:00
Frequency: Monthly
Consensus: -
Previous: 3.3%
Source: Federal Statistics Office of Germany
Gold prices rose in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 12,967.39 Indian Rupees (INR) per gram, up compared with the INR 12,931.22 it cost on Thursday.
The price for Gold increased to INR 151,250.20 per tola from INR 150,827.20 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 12,967.39 |
10 Grams | 129,674.90 |
Tola | 151,250.20 |
Troy Ounce | 403,334.20 |
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.)
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