Forex News
- WTI price posts modest gains near $57.65 in Tuesday’s early Asian session.
- Russia to review position on peace talks, supporting the WTI price.
- The API crude oil stockpiles report will be published later on Tuesday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $57.65 during the early Asian trading hours on Tuesday. The WTI price drifts higher amid geopolitical risks. Traders await the release of the American Petroleum Institute (API) crude oil stockpiles report on Tuesday for fresh impetus.
Reuters reported on Monday that Russia accused Ukraine of launching a drone strike on the Russian presidential residence in northern Russia, prompting Moscow to reconsider its stance in peace negotiations. Ukraine dismissed Russian statements about the drone attack, and its foreign minister said Moscow was seeking "false justifications" for further strikes against its neighbor. Dented peace hopes in Ukraine could underpin the WTI price in the near term.
"Unless Russia surprises the world by backing away from previous demands regarding territory and security guarantees, we are looking for the complex to edge higher through the rest of this week and next week," oil trading advisory firm Ritterbusch and Associates said.
Additionally, US President Donald Trump warned on Monday that the US would launch another major military strike on Iran if Tehran is found rebuilding its ballistic missile or nuclear weapons programs, while also issuing a stark ultimatum to Hamas to disarm or face severe consequences. Renewed Iran tensions raise the prospect of higher oil risk premiums and lift the WTI price.
On the other hand, concerns about a global glut might cap the downside for the black gold. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a modest production hike of 137,000 barrels per day (bpd) for December.
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.
- GBP/USD found technical support at the 1.3500 level on Monday.
- Cable price action remains tepid amid end-of-year volume drain.
- Fed Meeting Minutes due on Tuesday to provide one last glimpse at 2025 policy stance.
GBP/USD remains bolstered on the high end as markets grind through the last trading week of the year. Cable caught a bullish tilt to keep price action on the high side of the 1.3500 handle, though year-end holiday volumes are unlikely to see significant progress in either direction as 2025 draws to a close.
The UK side of the economic data docket remains thin this week, leaving low-impact market flows in the driver’s seat. The Federal Reserve’s (Fed) latest Meeting Minutes will land on anemic markets on Tuesday, and will serve as a last glimpse at the Fed’s widening array of policy discussion before the calendar year wraps up.
Investors will be looking for signs of a dovish tilt in policymakers’ internal decision-making rhetoric. Fed officials hit a cautious tone with the latest dot plot update of interest rate expectations, with Federal Open Market Committee (FOMC) voting members expecting a total of two quarter-point interest rate cuts over the next two years. Rate market speculators are expecting the Fed to get bullied into more interest rate cuts, with rate traders pricing in two rate trims by September of 2026.\
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- EUR/USD trades flat around 1.1770 in Tuesday’s early Asian session.
- US Pending Home Sales rose 3.3% MoM last month, stronger than expected.
- Traders brace for the FOMC Minutes on Tuesday for fresh impetus.
The EUR/USD pair holds steady near 1.1770 during the early Asian session on Tuesday. Traders continue to price in the prospect of further rate cuts by the US Federal Reserve (Fed) in 2026, following the 25-basis-point rate reduction delivered at the December meeting. The release of the Federal Open Market Committee (FOMC) Minutes will be in the spotlight later on Tuesday. The economic calendar is thin in most markets ahead of the New Year holiday.
Data released by the National Association of Realtors on Monday showed that the US Pending Home Sales rose 3.3% MoM in November after an upwardly revised 2.4% gain in October. This figure came in stronger than the expectations of 1.0% and registered its highest level since February 2023.
The Fed cut the federal funds rate by 25 basis points (bps) at its December policy meeting, bringing the target range to 3.50%-3.75%. The US central bank delivered a cumulative 75 bps of rate cuts in 2025 amidst a cooling labor market and slightly elevated inflation.
Financial markets are pricing in nearly an 18.3% odds that the Fed will reduce the interest rates at its next policy meeting in January, according to the CME FedWatch tool. Firm Fed dovish bets could weigh on the Greenback and create a tailwind for the pair in the near term.
Across the pond, the European Central Bank (ECB) held interest rates steady earlier this month and hinted they would likely remain so for some time. ECB President Christine Lagarde noted that the central bank cannot provide forward guidance on future rate moves due to high uncertainty, emphasizing a data-dependent, meeting-by-meeting approach.
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.
- USD/JPY pared last Friday’s gains on Monday, scrubbing a late reversal to wrap up the trading year.
- Market momentum remains tepid but wary as year-end trading volumes evaporate.
- Yen traders have one eye on the Fed’s latest Meeting Minutes, and the other on Yentervention risks.
USD/JPY reversed course to open the final week of the trading year, falling back to the 156.00 region and paring off last week’s late burst of bullish momentum. General volatility is expected to widen during the last trading week of 2025, and follow into early 2026 as holiday-thinned market volumes wreak havoc on general market trends.
Yen markets still aren’t in drastic-enough shape to warrant a direct intervention yet, but the risk of the Bank of Japan stepping directly into markets to bolster the Yen yet again remains nearby. Japanese Finance Minister Satsuki Katayama reiterated last week that the BoJ has “free hands” to deal with any “excessive moves” in Yen markets.
The latest interest rate decision from the Fed has sparked some exciting discussions, as they’ve implemented a third consecutive rate cut. According to their latest dot plot, policymakers anticipate a gradual easing in rates, with projections suggesting two additional cuts over the next two years.
Looking ahead, the CME’s FedWatch Tool is showing a growing expectation among traders for an accelerated rate-cutting schedule. Many are predicting at least two more cuts before September arrives, with the potential for even more easing down the line.
USD/JPY daily chart
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.
- The Dow Jones struggled to maintain positive momentum on Monday.
- Despite renewed downward pressure on key AI stocks, markets remain firmly in bull country for the year.
- The last Fed check-in for 2025 is due this week, but the data docket remains otherwise limited.
US equities kicked off the final trading week of 2025 with a bit of a whimper, despite holding close to record highs. The truncated trading week will face a hiccup with a holiday closure on the cards later in the week, and the only meaningful point of interest on the data docket is the latest Federal Reserve (Fed) Meeting Minutes, slated for release on Tuesday.
Major indexes are struggling to find the gas pedal amid rock-bottom year-end volumes. The Standard and Poor’s 500 (SP500) index touched record intraday highs during the overnight session before cooling back to flat for the day, driven lower by another softening in the AI tech rally space and declines in the home building materials segment. The Dow Jones also reached higher during the overnight session before backsliding to a scant 100-point climb from last Friday’s close, with upward momentum sapped by a 1.7% decline in Nvidia (NVDA) shares.
Equities remain bolstered despite year-end slowdown
With the year-end Santa Claus rally keeping bids buoyed, the Dow Jones is on pace to close either bullish or at least flat for the eighth straight month, rounding the corner into the new year. Despite year-end volumes drying up, equities remain buried deep in bull country for the year. The Dow Jones is up over 14% year-to-date, with the SP500 testing a 17.5% gain from January’s opening bids.
Fed minutes in the barrel for Wednesday
The Fed will release its latest Meeting Minutes on Tuesday, and investors will be looking for signs of a dovish tilt in policymakers’ internal decision-making rhetoric. Fed officials hit a cautious tone with the latest dot plot update of interest rate expectations, with Federal Open Market Committee (FOMC) voting members expecting a total of two quarter-point interest rate cuts over the next two years. Rate market speculators are expecting the Fed to get bullied into more interest rate cuts, with rate traders pricing in two rate trims by September of 2026.
Dow Jones daily chart
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Tue Dec 30, 2025 19:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
- AUD/USD snapped a near-term bull run on Monday, slipping back below 0.6700.
- Year-end volume dry-up has left Aussie market flows stumbling near key levels.
- The latest Fed Meeting Minutes serve as the sole focal point for datawatchers.
AUD/USD fizzled to open the final trading week of 2025, pumping the brakes on a recent bullish swing and backsliding below 0.6700 as traders step back into defensive positioning during the year-end slowdown.
Despite tepid market flows during thin final week trading, underlying drivers are unlikely to shift significantly heading into 2026. The Reserve Bank of Australia (RBA) is on a path toward accelerating interest rate hikes, bolstering the Australian Dollar (AUD) heading into the first quarter. The Federal Reserve (Fed), by comparison, is trapped in a downward spiral, with global markets broadly expecting a further dovish tilt from Fed officials.
RBA and Fed trajectories harden, show widening rate spread
Shifting policy stances on both sides of the Pacific and widening interest rate differentials are expected to bolster the Aussie and sewer the Greenback, barring any significant changes in economic modelling. Bleary-eyed traders will be keeping an eye on the Fed’s latest Meeting Minutes, slated to be released on Tuesday.
Major sea changes in policy discussions are not expected from the Fed’s most recent interest rate call, which saw the US central bank trim interest rates for a third straight meeting. According to the Fed’s own dot plot, policymakers expect a moderate easing pace in rates, with median dot plot clusters calling for two interest rate cuts over the next two years.
According to the CME’s FedWatch Tool, rate markets are pricing in an accelerating interest rate-cutting schedule. Rate traders are pricing in at least two interest rate cuts from the Fed before the end of September, with further easing expected in the future.
AUD/USD daily chart
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.
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