Forex News Timeline
06:43 WTI drops to near $74.00 following China inflation data
West Texas Intermediate (WTI) Oil price extends its losses for the second successive session, trading around $74.10 per barrel during the Asian hours on Monday.
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The National Bureau of Statistics of China reported that the country's monthly Consumer Price Index (CPI) remained unchanged at 0% in September, down from August's 0.4% increase. The annual inflation rate rose by 0.4%, falling short of the anticipated 0.6%. Additionally, the Producer Price Index (PPI) decreased by 2.8% year-on-year, a larger drop than the previous decline of 1.8% and exceeding expectations of a 2.5% decrease.
Crude oil prices received downward pressure also from the lack of clarity on Beijing's economic stimulus plans stoked fears about demand. However, the National People’s Congress expressed an optimistic outlook following a briefing from China’s Ministry of Finance (MoF) on Saturday. The ministry indicated that special bonds would be issued to support both bank recapitalization and efforts to stabilize the real estate sector but failed to give a figure.
The downside of the Oil prices could be limited following the escalating tensions in the Middle East. The United States (US) expanded sanctions against Iran's petroleum and petrochemical sectors on Friday in response to an Iranian missile attack on Israel, per Reuters.
On Sunday, Hezbollah claimed responsibility for the drone attack in north-central Israel, killing at least four Israeli soldiers were killed, and over 60 people were injured, according to CNN. The number of injuries makes the attack one of the bloodiest on Israel since the war started last October.
WTI Oil FAQs What is WTI Oil?
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. What factors drive the price of WTI Oil?
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. How does inventory data impact the price of WTI Oil
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. How does OPEC influence the price of WTI Oil?
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.
06:37 US State Department: Seriously concerned by Chinese military drills in Taiwan strait and around Taiwan
A spokesperson at the US Department of State said on Monday that they are “seriously concerned by the People's Liberation Army (PLA) military drills in the Taiwan strait and around Taiwan.” Additional quotes “Call on the People's Republic of China (PRC)to act with restraint and to avoid any further actions that may undermine peace and stability across the Taiwan strait and in the broader region.” “Continue to monitor PRC activities and coordinate with allies and partners regarding our shared concerns.”
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A spokesperson at the US Department of State said on Monday that they are “seriously concerned by the People's Liberation Army (PLA) military drills in the Taiwan strait and around Taiwan.”
Additional quotes
“Call on the People's Republic of China (PRC)to act with restraint and to avoid any further actions that may undermine peace and stability across the Taiwan strait and in the broader region.”
“Continue to monitor PRC activities and coordinate with allies and partners regarding our shared concerns.”
“The US remains committed to its longstanding one-China policy.”
These comments come after China's military launched a new round of war games near Taiwan on Monday. Taiwanese Defence Ministry said in a statement that “we will not escalate conflict in our response.”
Related newsAustralian Dollar loses ground as traders expect Fed to slow pace of rate cutsChina’s CPI inflation eases to 0.4% YoY in September vs. 0.6% expectedGold Price Forecast: XAU/USD sellers return amid China concerns and light tradingAustralian Dollar FAQs What key factors drive the Australian Dollar?
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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
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. How does the health of the Chinese Economy impact the Australian Dollar?
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. How does the price of Iron Ore impact the Australian Dollar?
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. How does the Trade Balance impact the Australian Dollar?
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.
06:03 Australian Dollar loses ground as traders expect Fed to slow pace of rate cuts
The Australian Dollar (AUD) edges lower after two days of gains against the US Dollar (USD) on Monday.
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The AUD may have attracted sellers after a detailed note from the Commonwealth Bank of Australia indicated expectations that the Reserve Bank of Australia (RBA) will implement a 25 basis point rate cut by the end of 2024. The report suggested that a stronger disinflationary trend than the RBA anticipates is essential for the Board to consider easing policy within this calendar year.
The decline of the AUD/USD pair could also be linked to a stronger US Dollar (USD), fueled by expectations that the US Federal Reserve (Fed) will slow the pace of borrowing cost reductions more than previously anticipated. According to the CME FedWatch Tool, the markets are pricing in an 86.9% chance of a 25 basis point rate cut in November, with no expectation for a 50-basis-point reduction.
Daily Digest Market Movers: Australian Dollar depreciates following lower inflation data from China The risk-sensitive AUD/USD pair might have received downward pressure due to escalating tensions in the Middle East that have sparked concerns of a broader regional conflict. According to CNN, at least four Israeli soldiers were killed, and over 60 people were injured in a drone attack in north-central Israel on Sunday. The National Bureau of Statistics of China reported that the country's monthly Consumer Price Index (CPI) remained unchanged at 0% in September, down from August's 0.4% increase. The annual inflation rate rose by 0.4%, falling short of the anticipated 0.6%. Additionally, the Producer Price Index (PPI) decreased by 2.8% year-on-year, a larger drop than the previous decline of 1.8% and exceeding expectations of a 2.5% decrease. On Saturday, the National People’s Congress expressed an optimistic outlook following a briefing from China’s Ministry of Finance (MoF). The MoF emphasized key priorities focused on stabilizing the property market and tackling local government debt issues. The ministry indicated that special bonds would be issued to support both bank recapitalization and efforts to stabilize the real estate sector. The US Producer Price Index (PPI) for September remained unchanged at 0%, below August’s 0.2% month-on-month increase. Meanwhile, the monthly core PPI, which excludes food and energy prices, expanded by 0.2% as expected, down from 0.3% the prior month. Chicago Fed President Austan Goolsbee spoke to Bloomberg, commending the progress made on inflation and the labor market. Goolsbee noted that despite the positive jobs report for September, there are no indications of overheating in the economy. Last week, the Reserve Bank of Australia released the Minutes from its September monetary policy meeting, suggesting that board members examined potential scenarios for both lowering and raising interest rates in the future. The discussion indicated that future financial conditions may need to be either tighter or looser than current levels to meet the Board's objectives.
Technical Analysis: Australian Dollar holds position below 0.6750, lower boundary of the descending channel
The AUD/USD pair trades near 0.6730 on Monday. Technical analysis of the daily chart indicates that the pair is testing the upper boundary of the descending channel. A successful breach would indicate a potential for momentum change from bearish to bullish bias. However, the 14-day Relative Strength Index (RSI) is positioned below the 50 level, suggesting that bearish momentum is still active.
Regarding resistance, the AUD/USD pair could test the nine-day Exponential Moving Average (EMA) at 0.6766 level, followed by the psychological level of 0.6800.
On the downside, the AUD/USD pair could explore the region around the lower boundary of the descending channel at 0.6640 level, followed by its eight-week low of 0.6622, recorded on September 11.
AUD/USD: Daily ChartAustralian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the British Pound. USD EUR GBP JPY CAD AUD NZD CHF USD 0.12% 0.11% 0.12% 0.07% 0.28% 0.29% 0.18% EUR -0.12% -0.08% -0.10% 0.03% 0.18% 0.08% -0.04% GBP -0.11% 0.08% -0.02% -0.02% 0.30% 0.19% 0.02% JPY -0.12% 0.10% 0.02% -0.05% 0.18% 0.23% 0.05% CAD -0.07% -0.03% 0.02% 0.05% 0.16% 0.25% -0.07% AUD -0.28% -0.18% -0.30% -0.18% -0.16% 0.02% -0.14% NZD -0.29% -0.08% -0.19% -0.23% -0.25% -0.02% -0.18% CHF -0.18% 0.04% -0.02% -0.05% 0.07% 0.14% 0.18%
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).
Australian Dollar FAQs What key factors drive the Australian Dollar?
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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
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. How does the health of the Chinese Economy impact the Australian Dollar?
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. How does the price of Iron Ore impact the Australian Dollar?
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. How does the Trade Balance impact the Australian Dollar?
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.
05:56 USD/INR weakens ahead of Indian WPI inflation data
The Indian Rupee (INR) recovers some lost ground on Monday after retreating to an all-time low in the previous session.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Indian Rupee drifts higher in Monday’s Asian session. Elevated oil prices and sustained outflows from local stocks weigh on the INR; RBI intervention might help limit its losses. India’s Wholesale Price Index (WPI) inflation data will take center stage on Monday. The Indian Rupee (INR) recovers some lost ground on Monday after retreating to an all-time low in the previous session. The concerns about the recent spike in oil prices amid geopolitical tensions, significant foreign investor sell-offs from the equity market and higher demand for the greenback from foreign banks undermine the local currency.
Nonetheless, the likely intervention from the Reserve Bank of India (RBI) by US Dollar sales from state-run banks might cap the downside for the INR. Traders will keep an eye on India’s Wholesale Price Index (WPI) Inflation on Monday, which is expected to rise to 1.90% YoY in September from 1.31% in August. On the US docket, the NY Empire State Manufacturing Index for October will be released. Daily Digest Market Movers: Indian Rupee recovers, potential upside seems limited “Indian Rupee fell below the 84 per US Dollar mark for the first time on demand from foreign banks amid FII outflows and elevated crude oil prices. Weak domestic markets also weighed on the Rupee,” said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas. The annual PPI rose 1.8% YoY in September, compared to a 1.9% increase seen in August, and came in above the market expectation of 1.6%. The core PPI climbed 2.8% YoY in the same period, surpassing analysts' forecast of 2.7%. On a monthly basis, the US PPI was unchanged in September, while the core PPI was up 0.2% during the same period. The preliminary reading of the US University of Michigan Consumer Sentiment Index fell to 68.9 in October from 70.1 in September, below the consensus of 70.8. The 5-year consumer inflation expectations came in at 3.0% in September. The swaps markets show the Fed’s odds for a 25 bps rate cut at 95.6%, up from 83.3% before the PPI data, according to the CME FedWatch Tool. Technical Analysis: USD/INR’s broader trend remains constructive The Indian Rupee trades in positive territory on the day. The positive view of the USD/INR pair remains intact as the pair is still above the ascending trend line and the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Additionally, the 14-day Relative Strength Index (RSI) is located above the midline near 64.20, hinting that the uptrend is more likely to gain traction than reverse.
The first upside barrier of USD/INR emerges near the all-time high of 84.15. A continuation of the climb past this level could pave the way for a test of 84.50.
On the flip side, the resistance-turned-support level at 83.90 acts as an initial support level for the pair. A breach of the mentioned level could see a drop to the 100-day EMA at 83.69, followed by 83.00, representing the round mark and the low of May 24. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
Nonetheless, the likely intervention from the Reserve Bank of India (RBI) by US Dollar sales from state-run banks might cap the downside for the INR. Traders will keep an eye on India’s Wholesale Price Index (WPI) Inflation on Monday, which is expected to rise to 1.90% YoY in September from 1.31% in August. On the US docket, the NY Empire State Manufacturing Index for October will be released. Daily Digest Market Movers: Indian Rupee recovers, potential upside seems limited “Indian Rupee fell below the 84 per US Dollar mark for the first time on demand from foreign banks amid FII outflows and elevated crude oil prices. Weak domestic markets also weighed on the Rupee,” said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas. The annual PPI rose 1.8% YoY in September, compared to a 1.9% increase seen in August, and came in above the market expectation of 1.6%. The core PPI climbed 2.8% YoY in the same period, surpassing analysts' forecast of 2.7%. On a monthly basis, the US PPI was unchanged in September, while the core PPI was up 0.2% during the same period. The preliminary reading of the US University of Michigan Consumer Sentiment Index fell to 68.9 in October from 70.1 in September, below the consensus of 70.8. The 5-year consumer inflation expectations came in at 3.0% in September. The swaps markets show the Fed’s odds for a 25 bps rate cut at 95.6%, up from 83.3% before the PPI data, according to the CME FedWatch Tool. Technical Analysis: USD/INR’s broader trend remains constructive The Indian Rupee trades in positive territory on the day. The positive view of the USD/INR pair remains intact as the pair is still above the ascending trend line and the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Additionally, the 14-day Relative Strength Index (RSI) is located above the midline near 64.20, hinting that the uptrend is more likely to gain traction than reverse.
The first upside barrier of USD/INR emerges near the all-time high of 84.15. A continuation of the climb past this level could pave the way for a test of 84.50.
On the flip side, the resistance-turned-support level at 83.90 acts as an initial support level for the pair. A breach of the mentioned level could see a drop to the 100-day EMA at 83.69, followed by 83.00, representing the round mark and the low of May 24. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
05:28 Gold price drifts lower amid modest USD strength, downside potential seems limited
Gold price (XAU/USD) rallied over 1% on Friday and settled near the weekly top following the release of the US Producer Price Index (PPI), which pointed to a favorable inflation outlook and suggested that the Federal Reserve (Fed) will cut interest rates further.
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That said, investors have now fully priced out the possibility of another oversized Fed rate cut in November. This keeps the US Treasury bond yields elevated and the US Dollar (USD) close to its highest level since mid-August touched last week. Adding to this, the optimism led by China's pledge to increase debt to revive its economy exerts some pressure on the Gold price during the Asian session on Monday.
Daily Digest Market Movers: Gold price is pressured by modest USD strength, downside potential seems limited The US Bureau of Labor Statistics reported that the headline Producer Price Index (PPI) for final demand rose 1.8% and the core gauge climbed 2.8% on a yearly basis in September. The readings were slightly higher than consensus estimates, though pointed to a deceleration in price rise, which should allow the Federal Reserve to continue cutting interest rates. According to the CME Group's FedWatch Tool, the markets are currently pricing in over a 90% chance that the Fed will lower borrowing costs by 25 basis points in November. The yield on the benchmark 10-year US Government bond, however, holds steady above the 4% threshold amid diminishing odds for a more aggressive policy easing by the Fed. This, in turn, assists the US Dollar to stand tall near a two-month peak and turns out to be a key factor that prompts fresh selling around the Gold price on the first day of a new week. Government data released over the weekend showed that China's headline Consumer Price Index was flat in September and the yearly rate stood at 0.4%, missing market expectations. This, along with the lack of numerical details for China's fiscal stimulus and escalating geopolitical tensions in the Middle East, should offer support to the safe-haven precious metal. The US market is closed on Monday for the Columbus Day holiday, leaving the XAU/USD at the mercy of the USD price dynamics and fresh geopolitical developments.
Technical Outlook: Gold price setup supports prospects for the emergence of dip-buying, $2,600 holds the key for bulls
Any subsequent slide is likely to find some support near the $2,632-2,630 region, below which the Gold price could accelerate the fall towards the $2,600 round-figure mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pace the way for some meaningful downfall. The XAU/USD might then drop to the next relevant support near the $2,560 zone and extend the decline towards the $2,535-2,530 region en route to the $2,500 psychological mark.
Meanwhile, positive oscillators on the daily chart favor bullish traders. That said, it will still be prudent to wait for some follow-through buying beyond the $2,660-2,662 horizontal resistance before positioning a further near-term appreciating move. The subsequent move up has the potential to lift the Gold price to an all-time high, around the $2,685-2,686 region touched in September. This is closely followed by the $2,700 round-figure mark, which if cleared decisively will set the stage for an extension of a well-established multi-month-old uptrend.
Gold FAQs Why do people invest in Gold?
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. Who buys the most Gold?
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. How is Gold correlated with other assets?
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. What does the price of Gold depend on?
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.
04:42 USD/JPY holds above 149.00 on firmer US Dollar
The USD/JPY pair extends its upside to around 149.20 on Monday during the early Asian trading hours.
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The USD/JPY pair extends its upside to around 149.20 on Monday during the early Asian trading hours. The firmer US Dollar (USD) and uncertainty about the Bank of Japan’s stance on monetary policy provide some support to the pair.
The doubts over how aggressive the BoJ would be in raising rates weigh on the Japanese Yen (JPY) against the USD. The BoJ ended negative interest rates in March and raised the short-term benchmark to 0.25% in July. The BoJ Governor Kazuo Ueda signaled the central bank's readiness to keep raising interest rates if economic and price developments move in line with its forecast. Nonetheless, uncertainty about Japanese Prime Minister Shigeru Ishiba's stance on monetary policy could complicate the decision to raise borrowing costs.
The ongoing geopolitical tensions in the Middle East might lift the safe-haven currency like the JPY and cap the upside for the pair. CNN reported on Sunday that at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel and Hezbollah has claimed responsibility for the attack.
The US Producer Price Index (PPI) data released on Friday points to a still-favorable inflation outlook and supports expectations of the Federal Reserve (Fed) rate cut next month. However, the prospect that the Fed will not cut rates as much as expected might underpin the Greenback. Meanwhile, the USD Index (DXY), which tracks the USD against a basket of currencies, trades near the highest level since mid-August above the 103.00 psychological level. According to the CME FedWatch Tool, traders are pricing in roughly 88.6% odds that the Fed will cut the interest rate by 25 basis points (bps) in November. Japanese Yen FAQs What key factors drive the Japanese Yen? 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. How do the decisions of the Bank of Japan impact the Japanese Yen? 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. How does the differential between Japanese and US bond yields impact the Japanese 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. How does broader risk sentiment impact the Japanese Yen? 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 USD/JPY pair extends its upside to around 149.20 on Monday during the early Asian trading hours. The firmer US Dollar (USD) and uncertainty about the Bank of Japan’s stance on monetary policy provide some support to the pair.
The doubts over how aggressive the BoJ would be in raising rates weigh on the Japanese Yen (JPY) against the USD. The BoJ ended negative interest rates in March and raised the short-term benchmark to 0.25% in July. The BoJ Governor Kazuo Ueda signaled the central bank's readiness to keep raising interest rates if economic and price developments move in line with its forecast. Nonetheless, uncertainty about Japanese Prime Minister Shigeru Ishiba's stance on monetary policy could complicate the decision to raise borrowing costs.
The ongoing geopolitical tensions in the Middle East might lift the safe-haven currency like the JPY and cap the upside for the pair. CNN reported on Sunday that at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel and Hezbollah has claimed responsibility for the attack.
The US Producer Price Index (PPI) data released on Friday points to a still-favorable inflation outlook and supports expectations of the Federal Reserve (Fed) rate cut next month. However, the prospect that the Fed will not cut rates as much as expected might underpin the Greenback. Meanwhile, the USD Index (DXY), which tracks the USD against a basket of currencies, trades near the highest level since mid-August above the 103.00 psychological level. According to the CME FedWatch Tool, traders are pricing in roughly 88.6% odds that the Fed will cut the interest rate by 25 basis points (bps) in November. Japanese Yen FAQs What key factors drive the Japanese Yen? 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. How do the decisions of the Bank of Japan impact the Japanese Yen? 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. How does the differential between Japanese and US bond yields impact the Japanese 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. How does broader risk sentiment impact the Japanese Yen? 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.
04:18 EUR/USD falls toward 1.0900 due to dovish sentiment surrounding the ECB
EUR/USD continues its downward trend for the fourth consecutive session, hovering around 1.0920 during the Asian trading hours on Monday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}EUR/USD receives downward pressure as the ECB is widely expected to deliver a 25 basis point rate cut on Thursday.Rising Middle-East tensions put pressure on the risk-sensitive Euro.The US Dollar gains ground as the Fed is projected to slow the pace of borrowing cost reductions.EUR/USD continues its downward trend for the fourth consecutive session, hovering around 1.0920 during the Asian trading hours on Monday. The Euro faces downward pressure as the European Central Bank (ECB) prepares for its monetary policy decision on Thursday.
The ECB is widely anticipated to reduce its Main Refinancing Operations Rate by 25 basis points. Officials have signaled the potential for further reductions in response to the European Union's economic challenges. The central bank has already lowered rates twice this year and is expected to continue with incremental 25 basis point cuts in future meetings.
On the geopolitical front, escalating tensions in the Middle East have sparked concerns of a broader regional conflict, strengthening the safe-haven US Dollar and putting pressure on the risk-sensitive EUR/USD pair. According to CNN, at least four Israeli soldiers were killed, and over 60 people were injured in a drone attack in north-central Israel on Sunday.
The decline of the EUR/USD pair could also be linked to a stronger US Dollar (USD), fueled by expectations that the US Federal Reserve (Fed) will slow the pace of borrowing cost reductions more than previously anticipated.
Traders are looking for a 25 basis points (bps) rate cut from the Fed in November, following the release of the Producer Price Index (PPI) data from the United States last Friday. According to the CME FedWatch Tool, the markets are pricing in an 86.9% chance of a 25 basis point rate cut in November, with no expectation for a 50-basis-point reduction.
In September, the annual Producer Price Index (PPI) increased by 1.8%, following a 1.9% rise in August, and exceeded market expectations of 1.6%. Meanwhile, the annual core PPI, which excludes food and energy prices, rose by 2.8%, surpassing analysts' forecast of 2.7%.
Euro FAQs What is the Euro?
The Euro is the currency for the 19 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%). What is the ECB and how does it impact the Euro?
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. How does inflation data impact the value of the Euro?
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. How does economic data influence the value of the Euro?
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. How does the Trade Balance impact the Euro?
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.
04:16 PBOC sets USD/CNY reference rate at 7.0723 vs. 7.0731 previous
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.0723, as compared to Friday's fix of 7.0731 and 7.0722 Reuters estimates.
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.0723, as compared to Friday's fix of 7.0731 and 7.0722 Reuters estimates.
03:42 GBP/USD remains close to one-month low, seems vulnerable near mid-1.3000s
The GBP/USD pair struggles to capitalize on Friday's modest gains and attracts fresh sellers at the start of a new week.
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The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near its highest level since mid-August as traders have priced out the possibility of further jumbo interest-rate cuts by the Federal Reserve (Fed) in November. This, along with persistent geopolitical risks stemming from the ongoing conflicts in the Middle East, turns out to be another factor benefiting the safe-haven buck and exerting some downward pressure on the GBP/USD pair.
The British Pound (GBP), on the other hand, is undermined by expectations that the Bank of England (BoE) might be heading towards speeding up its rate-cutting cycle. In fact, markets are pricing in a 90% chance that the BoE will cut rates in November. The bets were lifted by the recent comments from the BoE Governor Andrew Bailey, saying that there was a chance that the central bank could become a bit more aggressive in cutting rates if there's further good news on inflation.
Meanwhile, the initial market reaction to Friday's economic releases from the UK and the US fades rather quickly, suggesting that the path of least resistance for the GBP/USD pair is to the downside. The UK Office for National Statistics (ONS) reported that the economy grew by 0.2% in August, marking a modest recovery after two months of stagnation in June and July. This was accompanied by better-than-expected UK Manufacturing and Industrial Production figures for August.
From the US, the Producer Price Index for final demand was unchanged in September and rose 1.8% from a year ago. The core gauge that excludes volatile food and energy categories climbed 0.2% from the prior month and 2.8% from a year ago. The data pointed to a favourable inflation outlook and supported expectations for additional interest rate cuts by the Fed in November. This might hold back the USD bulls from placing aggressive bets and offer some support to the GBP/USD pair.
Pound Sterling FAQs What is the Pound Sterling?
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). How do the decisions of the Bank of England impact on the Pound Sterling?
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. How does economic data influence the value of the Pound?
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. How does the Trade Balance impact the Pound?
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.
03:41 Four Israeli soldiers killed, more than 60 people injured by Hezbollah drone
On Sunday, at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel, per CNN.
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On Sunday, at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel, per CNN. The number of injuries makes the attack one of the bloodiest on Israel since the war started last October. Hezbollah has claimed responsibility for the attack.
Market reaction
At the time of press, the XAU/USD pair was down 0.34% on the day at $2,648.
Gold FAQs Why do people invest in Gold?
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. Who buys the most Gold?
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. How is Gold correlated with other assets?
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. What does the price of Gold depend on?
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.
03:25 Japan’s Ishiba says he will not intervene in BoJ monetary policy
Japanese Prime Minister Shigeru Ishiba said on Sunday that he would not intervene in monetary policy affairs, as the Japanese central bank is mandated to achieve price stability, per Reuters.
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Japanese Prime Minister Shigeru Ishiba said on Sunday that he would not intervene in monetary policy affairs, as the Japanese central bank is mandated to achieve price stability, per Reuters.
Key quotes
It's important to avoid vocally intervening.
Whatever the government has to say, the Bank of Japan makes an individual decision on policy.
I believe the BOJ's governor and staff have a strong sense of responsibility over achieving price stability.
Consumption needs lifting to help achieve a sustained departure from deflation.
Real wages need to boost. Market reaction At the time of writing, USD/JPY is trading 0.05% higher on the day at 149.21. Japanese Yen FAQs What key factors drive the Japanese Yen? 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. How do the decisions of the Bank of Japan impact the Japanese Yen? 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. How does the differential between Japanese and US bond yields impact the Japanese 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. How does broader risk sentiment impact the Japanese Yen? 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.
Whatever the government has to say, the Bank of Japan makes an individual decision on policy.
I believe the BOJ's governor and staff have a strong sense of responsibility over achieving price stability.
Consumption needs lifting to help achieve a sustained departure from deflation.
Real wages need to boost. Market reaction At the time of writing, USD/JPY is trading 0.05% higher on the day at 149.21. Japanese Yen FAQs What key factors drive the Japanese Yen? 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. How do the decisions of the Bank of Japan impact the Japanese Yen? 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. How does the differential between Japanese and US bond yields impact the Japanese 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. How does broader risk sentiment impact the Japanese Yen? 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.
03:08 Gold Price Forecast: XAU/USD drifts lower to near $2,650, potential downside seems limited
Gold price (XAU/USD) edges lower to $2,650, snapping the two-day winning streak during the early Asian session on Monday.
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China's deflation pressure increased in September. The Consumer Price Index (CPI) inflation unexpectedly eased in September, while the Producer Price Index (PPI) fell more than expected during the same period, highlighting the need for more stimulus measures. The persistent deflationary pressure in China is likely to exert some selling pressure on the yellow metal, as China is the world's largest Gold consumer.
The US Producer Price Index (PPI) was unchanged in September, indicating a still-favorable inflation outlook and supporting the bets of the Federal Reserve (Fed) rate cut in November. "The PPI numbers leaned friendly for the precious metals market bulls and suggest the Fed remains on track for two quarter-point interest rate cuts this year," said Jim Wyckoff, senior market analyst at Kitco Metals.
Additionally, the rising geopolitical tensions in the Middle East have triggered the fear of wider war in the region, boosting the traditional safe-haven assets like the Gold price. On Sunday, at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel, per CNN. The number of injuries makes the attack one of the bloodiest on Israel since the war started last October. Hezbollah has claimed responsibility for the attack. Gold FAQs Why do people invest in Gold? 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. Who buys the most Gold? 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. How is Gold correlated with other assets? 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. What does the price of Gold depend on? 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.
China's deflation pressure increased in September. The Consumer Price Index (CPI) inflation unexpectedly eased in September, while the Producer Price Index (PPI) fell more than expected during the same period, highlighting the need for more stimulus measures. The persistent deflationary pressure in China is likely to exert some selling pressure on the yellow metal, as China is the world's largest Gold consumer.
The US Producer Price Index (PPI) was unchanged in September, indicating a still-favorable inflation outlook and supporting the bets of the Federal Reserve (Fed) rate cut in November. "The PPI numbers leaned friendly for the precious metals market bulls and suggest the Fed remains on track for two quarter-point interest rate cuts this year," said Jim Wyckoff, senior market analyst at Kitco Metals.
Additionally, the rising geopolitical tensions in the Middle East have triggered the fear of wider war in the region, boosting the traditional safe-haven assets like the Gold price. On Sunday, at least four Israeli soldiers were killed and more than 60 people were injured by a drone attack in north-central Israel, per CNN. The number of injuries makes the attack one of the bloodiest on Israel since the war started last October. Hezbollah has claimed responsibility for the attack. Gold FAQs Why do people invest in Gold? 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. Who buys the most Gold? 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. How is Gold correlated with other assets? 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. What does the price of Gold depend on? 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.
03:01 Singapore Gross Domestic Product (QoQ): 2.1% (3Q) vs 0.4%
Singapore Gross Domestic Product (QoQ): 2.1% (3Q) vs 0.4%
03:01 Singapore Gross Domestic Product (YoY) up to 4.1% in 3Q from previous 2.9%
Singapore Gross Domestic Product (YoY) up to 4.1% in 3Q from previous 2.9%
02:19 China’s CPI inflation eases to 0.4% YoY in September vs. 0.6% expected
China’s Consumer Price Index (CPI) rose at an annual pace of 0.4% in September after reporting a 0.6% growth in August.
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China’s Consumer Price Index (CPI) rose at an annual pace of 0.4% in September after reporting a 0.6% growth in August. The market consensus was for a 0.6% increase in the reported period.
Chinese CPI inflation was flat at 0% MoM in September versus August’s 0.4% acceleration, worse than the 0.4% estimate.
China’s Producer Price Index (PPI) fell 2.8% YoY in September, following a 1.8% drop in August. The data came in worse than the market forecast of -2.5%. Market reaction to China’s inflation dataAUD/USD attracts some sellers following the softer-than-expected Chinese inflation data, losing 0.28% on the day to trade at 0.6731, as of writing. Australian Dollar FAQs What key factors drive the Australian Dollar? 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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? 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. How does the health of the Chinese Economy impact the Australian Dollar? 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. How does the price of Iron Ore impact the Australian Dollar? 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. How does the Trade Balance impact the Australian Dollar? 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.
Chinese CPI inflation was flat at 0% MoM in September versus August’s 0.4% acceleration, worse than the 0.4% estimate.
China’s Producer Price Index (PPI) fell 2.8% YoY in September, following a 1.8% drop in August. The data came in worse than the market forecast of -2.5%. Market reaction to China’s inflation dataAUD/USD attracts some sellers following the softer-than-expected Chinese inflation data, losing 0.28% on the day to trade at 0.6731, as of writing. Australian Dollar FAQs What key factors drive the Australian Dollar? 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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? 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. How does the health of the Chinese Economy impact the Australian Dollar? 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. How does the price of Iron Ore impact the Australian Dollar? 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. How does the Trade Balance impact the Australian Dollar? 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.
02:06 AUD/USD faces some selling pressure below 0.6750 on weaker Chinese data, geopolitical risks
The AUD/USD pair attracts some sellers to around 0.6730 and during the early Asian session on Monday.
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The weaker-than-expected China’s consumer and factory prices for September weigh on the Australian Dollar (AUD) as China is a major trading partner to Australia. Data released by the National Bureau of Statistics of China on Sunday showed that the nation’s Consumer Price Index (CPI) increased 0.4% YoY in September, compared to 0.6% in August. This figure was below the market consensus of 0.6%. Meanwhile, the Producer Price Index (PPI) fell 2.8% YoY in September versus -1.8% prior, weaker than the expectations of -2.5%.
On the other hand, US PPI data reinforces expectations for a 25 basis points (bps) Federal Reserve (Fed) rate cut in November, which might cap the upside for the Greenback. The US PPI was unchanged in September, while the core PPI was up 0.2% during the same period.
The annual PPI rose 1.8% in September, followed by the 1.9% increase seen in August, and came in above the market expectation of 1.6%. The annual core PPI rose 2.8% in the same period, surpassing analysts' estimate of 2.7%. The swaps markets show the Fed’s odds for a 25 bps rate cut at 95.6%, up from 83.3% before the PPI data, according to the CME FedWatch Tool.
Israel Defence Forces (IDF) said on Sunday that four soldiers had been killed and more than 60 other people injured in a drone strike targeting an army base in northern Israel, per the BBC. Hezbollah has claimed responsibility for the attack. The escalating geopolitical tensions in the Middle East might boost the safe-haven flows, benefitting the USD. Australian Dollar FAQs What key factors drive the Australian Dollar? 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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? 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. How does the health of the Chinese Economy impact the Australian Dollar? 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. How does the price of Iron Ore impact the Australian Dollar? 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. How does the Trade Balance impact the Australian Dollar? 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.
The weaker-than-expected China’s consumer and factory prices for September weigh on the Australian Dollar (AUD) as China is a major trading partner to Australia. Data released by the National Bureau of Statistics of China on Sunday showed that the nation’s Consumer Price Index (CPI) increased 0.4% YoY in September, compared to 0.6% in August. This figure was below the market consensus of 0.6%. Meanwhile, the Producer Price Index (PPI) fell 2.8% YoY in September versus -1.8% prior, weaker than the expectations of -2.5%.
On the other hand, US PPI data reinforces expectations for a 25 basis points (bps) Federal Reserve (Fed) rate cut in November, which might cap the upside for the Greenback. The US PPI was unchanged in September, while the core PPI was up 0.2% during the same period.
The annual PPI rose 1.8% in September, followed by the 1.9% increase seen in August, and came in above the market expectation of 1.6%. The annual core PPI rose 2.8% in the same period, surpassing analysts' estimate of 2.7%. The swaps markets show the Fed’s odds for a 25 bps rate cut at 95.6%, up from 83.3% before the PPI data, according to the CME FedWatch Tool.
Israel Defence Forces (IDF) said on Sunday that four soldiers had been killed and more than 60 other people injured in a drone strike targeting an army base in northern Israel, per the BBC. Hezbollah has claimed responsibility for the attack. The escalating geopolitical tensions in the Middle East might boost the safe-haven flows, benefitting the USD. Australian Dollar FAQs What key factors drive the Australian Dollar? 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. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? 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. How does the health of the Chinese Economy impact the Australian Dollar? 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. How does the price of Iron Ore impact the Australian Dollar? 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. How does the Trade Balance impact the Australian Dollar? 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.
00:45 New Zealand Electronic Card Retail Sales (MoM) fell from previous 0.2% to 0% in September
New Zealand Electronic Card Retail Sales (MoM) fell from previous 0.2% to 0% in September
00:45 New Zealand Electronic Card Retail Sales (YoY) fell from previous -2.9% to -5.6% in September
New Zealand Electronic Card Retail Sales (YoY) fell from previous -2.9% to -5.6% in September
00:30 New Zealand Business NZ PSI climbed from previous 45.5 to 45.7 in September
New Zealand Business NZ PSI climbed from previous 45.5 to 45.7 in September
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