Gold regains its traction following a consolidation phase in the early European session and rises toward $4,000, touching yet another record-high in the process. The uncertainty surrounding the US government shutdown, the political crisis in France and Japan’s potential move towards a pro-stimulus agenda help Gold preserve its strength.
EUR/USD extends losses on France’s political woes, cautious markets
EUR/USD is heading south for the second consecutive day on Tuesday. The pair trades near 1.1675 at the time of writing, with France’s political and fiscal crisis spooking investors while an unexpected decline in German Factory Orders add to evidence of the weak momentum of the region’s leading economies.
French Prime Minister Sébastien Lecornu shocked markets on Monday with his decision to resign from the government after only 27 days in charge and a few hours after announcing his new cabinet. President Emmanuelle Macron has asked Lecornu to negotiate a way out of the crisis with the governing coalition leaders, but opposition parties on the left and right are calling for a new snap election, and the president’s credibility is severely damaged.
In this context, ECB President Christine Lagarde declared on Monday that the disinflationary process is over, while the bank’s Vice President Luis de Guindos warned about geopolitical risks and weak domestic growth, suggesting that the possibility of another rate cut is still on the table.
Macroeconomic data released earlier on Tuesday has confirmed those fears, as German Factory Orders contracted against expectations in August. In the US, the Government shutdown enters its seventh day, and Trade Balance figures will be delayed, but a slew of Federal Reserve (Fed) policymakers, including the Vice Chair of Supervision, Michelle Bowman, and US President Donald Trump’s new appointment, Stephen Miran, will take the stage and might set the US Dollar’s direction.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | 0.38% | 0.26% | 0.08% | 0.41% | 0.63% | 0.20% | |
| EUR | -0.34% | 0.04% | -0.07% | -0.25% | 0.10% | 0.29% | -0.01% | |
| GBP | -0.38% | -0.04% | -0.12% | -0.30% | 0.10% | 0.21% | -0.05% | |
| JPY | -0.26% | 0.07% | 0.12% | -0.16% | 0.19% | 0.28% | -0.07% | |
| CAD | -0.08% | 0.25% | 0.30% | 0.16% | 0.32% | 0.50% | 0.25% | |
| AUD | -0.41% | -0.10% | -0.10% | -0.19% | -0.32% | 0.05% | -0.15% | |
| NZD | -0.63% | -0.29% | -0.21% | -0.28% | -0.50% | -0.05% | -0.35% | |
| CHF | -0.20% | 0.00% | 0.05% | 0.07% | -0.25% | 0.15% | 0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: France’s political woes keep weighing on the Euro
- The Euro remains on the back foot, with investors concerned about France’s political void and its ability to tackle the country’s booming fiscal deficit. The focus will be on President Macron’s attempts to resolve the political deadlock, but his chances diminish by the minute. The Euro is likely to struggle in this backdrop.
- Rating agencies have warned that the political standoff could trigger further downgrades of France’s sovereign debt, according to news reports by Reuters. France’s fiscal debt is nearly twice the European Union’s 3% limit, and some agencies have expressed concerns that failure to apply fiscal consolidation measures will boost financing costs.
- Eurozone macroeconomic data has failed to improve the market mood. German Factory Orders figures released on Tuesday have shown a 0.8% decline in August, compared to market expectations of a 1.4% growth, following a 2.7% contraction in July. Year-on-year, orders have increased at a 1.5% rate, after a 3.3% fall in July.
- Later in the day, Bundesbank President and ECB member Joachim Nagel, and the ECB President Christine Lagarde are due to speak and could likely provide further clues on the bank’s next monetary policy steps.
- In the US, in the absence of macroeconomic releases, the conferences of Fed officials Raphael Bostic, Neel Kashkari, Michelle Bowman, and Stephen Miran might give fundamental guidance for the US Dollar.
Technical Analysis: EUR/USD key support is at the 1.1645 area
The EUR/USD is on a bearish trend from mid-September highs above 1.1900. The 4-hour chart Relative Strength Index (RSI) has consolidated below the key 50 level, highlighting the bearish momentum, and the Moving Average Convergence Divergence (MACD) remains below the signal line.
The recovery attempt from Monday´s lows near 1.1650 found sellers, and the pair returned below the 1.1700 level during Tuesday’s Asian session. Bears are eyeing support at the 1.1645 area (September 25 low). Further down, the September 2 and 3 lows, near 1.1610, and the August 22 and 27 lows, near 1.1575, will come into view..
Upside attempts are likely to be challenged at the descending trendline resistance, now around 1.1730, ahead of the last week’s highs at the 1.1765-1.1775 area, and the September 23 and 24 highs, near 1.1820.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
FX option expiries for Oct 7 NY cut
FX option expiries for Oct 7 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
- 1.1500 2.3b
- 1.1650 2.6b
- 1.1750 1.8b
- 1.1820 2.5b
- 1.1900 1.5b
- 1.1950 1b
USD/JPY: USD amounts
- 146.50 930m
- 149.75 946m
- 151.00 827m
USD/CHF: USD amounts
- 0.8000 600m
AUD/USD: AUD amounts
- 0.6500 653m
WTI attracts some buyers to near $61.50 as OPEC+ opts for modest oil output hike
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.45 during the Asian trading hours on Tuesday. The WTI drifts higher after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a smaller-than-expected hike in its crude production levels. Traders await the release of the American Petroleum Institute (API) weekly crude oil stock report later on Tuesday.
WTI price received some support as OPEC+ will raise oil output from November by 137,000 barrels per day (bpd), below market expectations of as much as a 500,000 bpd boost to production. The group has increased its oil output targets by more than 2.7 million bpd this year, accounting for over 2.5% of world demand.
“The price jump has primarily been boosted by OPEC+’s decision for a lower-than-expected production hike next month as the group intended to buffer the recent slump in oil markets,” said independent analyst Tina Teng.
The ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies and supporting the black gold. The US proposed that the G7 allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine.
On the other hand, IEA projected the global oil market is headed for a record surplus next year of 3.33 million bpd, about 360,000 bpd more than they forecast a month ago, as OPEC+ continues to revive production. This, in turn, might cap the upside for the WTI price in the near term.
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.
Dow Jones Industrial Average holds steady despite wobbling start on Monday
The Dow Jones Industrial Average (DJIA) struggled to keep its footing on Monday, kicking off the new trading week opening at record highs above 46,800. The Dow slipped early on Monday after investors briefly showed frayed nerves, but general market sentiment continues to drift into the high side.
The Federal Reserve (Fed) is still firmly on pace to deliver a follow-up interest rate cut on October 29, keeping equity markets well bid as interest rate cuts remain a key point of focus for stock traders. Key economic datapoints have been suspended or delayed as a result of the US government’s ongoing shutdown, which has extended into a second week. Lacking the latest Nonfarm Payrolls (NFP) jobs report, investors are running on the assumption that the Fed will be forced to make interest rate decisions on currently available data, which tilts in favor of more rate cuts.
US President Donald Trump refreshed his tariff threats on Monday, declaring via social media post that the US would be introducing yet another vehicle tariff, this time targeting medium and heavy-duty trucks. According to Trump, the US would impose an additional 25% tariff on all foreign-made medium and heavy-duty vehicles beginning on November 1. The Trump administration’s track record since January has been riddled with dozens of issued, walked back, reissued, and delayed tariff threats, and investors have fallen largely deaf to Trump’s day-to-day tariff announcements which tend to be delivered via social media and rarely make it to the policy stage.
OpenAI has announced another mega-deal investment agreement, this time with AMD as the LLM giant’s ever-growing demand for calculation hardware reaches the stratosphere. AMD bounced into a strong daily performance on the news, but overall bullish AI momentum is increasingly limited as the investment cycle turns circular.
It’s a rate cut market, and we’re all just trading in it
According to the CME’s FedWatch Tool, rate markets are pricing in around 95% odds that the Fed will trim interest rates by 25 basis points on October 29, the closest to a sure thing that rate futures can provide. Rate traders are also pricing in over 80% odds of a third consecutive interest rate cut on December 10, but the long end of the tail has continued to extend, and rate odds currently place a fourth cut way out in April of 2026.
The economic data docket remains relatively mid-tier this week. The Federal Open Market Committee’s (FOMC) latest Meeting Minutes will be released on Wednesday and will give investors a closer look at the Fed’s internal dialogue from its last interest rate decision. Fed Chair Jerome Powell’s avatar will also be making a public appearance on Thursday, when a pre-recorded message by the Fed head will be released during the Community Bank Conference in Washington, DC.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Gold surges to fresh highs above $3,950 amid persistent safe-haven demand
Gold (XAU/USD) extends its historic run beyond $3,900 on Monday, notching one record high after another as the prolonged United States (US) government shutdown, dovish Federal Reserve (Fed) bets, and renewed political jitters in Europe keep safe-haven demand elevated.
At the time of writing, XAU/USD is trading near $3,956 during the American session. The precious metal is up about 1.80% on the day, pushing deeper into uncharted territory and extending its winning streak to an eighth consecutive week.
Adding to the momentum, a broadly weaker Japanese Yen (JPY), traditionally seen as a safe haven, is lending additional support to Bullion as investors react to Japan’s shifting political landscape. Overall, the broader outlook for Gold remains tilted to the upside, as persistent geopolitical tensions, steady central bank buying, and rising ETF inflows continue to lend strong support to Bullion’s remarkable rally, with prices already up about 50% so far this year.
Market movers: US shutdown and France-Japan political shifts steer markets
- The US government shutdown has entered its sixth day after weekend negotiations failed to reach a funding deal, keeping large parts of the federal government closed. The White House has warned of mass layoffs if the stalemate drags on, while the Senate struggles to muster the 60 votes required to advance competing short-term funding measures with no clear breakthrough in sight.
- French Prime Minister Sébastien Lecornu resigned on Monday, less than 24 hours after presenting his new cabinet and under four weeks into office, failing to secure parliamentary backing for his government.
- In Japan, Sanae Takaichi was elected leader of the ruling Liberal Democratic Party (LDP) on October 4, positioning her to become the country’s first female prime minister once parliament confirms her on October 15. The change in leadership was perceived as favoring a softer monetary policy stance with more fiscal spending and less urgency to raise interest rates.
- Renewed demand for the US Dollar (USD) and Treasuries emerges as political tensions in France and Japan weigh on the Euro and Yen. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, climbed to its highest level in nearly two weeks. The index is hovering around 98.35 at the time of writing, limiting Gold’s advance.
- Expectations of further interest rate cuts by the Fed are also fueling demand for non-yielding Gold. Investors are anticipating two more reductions this year. According to the CME FedWatch Tool, markets are pricing in a 95% probability of a 25-basis-point (bps) cut at this month’s FOMC meeting and an 83.7% chance of another cut in December.
- Looking ahead, the prolonged US government shutdown has delayed the release of several key economic indicators, prompting investors to rely more on private-sector data and Fed commentary for guidance. Attention now turns to the Fed’s Meeting Minutes due on Wednesday, which may offer fresh clues on the monetary policy outlook.
Technical analysis:
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XAU/USD is consolidating after reaching a fresh high near $3,949. The breakout above $3,900 keeps the bullish structure intact, with buyers defending dips despite overbought signals.
The $3,900 zone acts as the first support, reinforced by the rising 21-period SMA at $3,879, while the 50-period SMA at $3,826 sits deeper as a secondary floor. A push beyond $3,949 could set the stage for a test of the psychological $4,000 mark, while a drop below $3,900 could spark a corrective slide toward the above-mentioned moving averages
The Relative Strength Index (RSI) hovers around 69, just below overbought territory, suggesting the metal may consolidate before the next move higher.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold Price Forecast: XAU/USD refreshes all-time high near $3,950 on firm Fed rate cut bets
Gold price (XAU/USD) posts a fresh all-time high around $3,950 during the European trading session on Monday. The yellow metal strengthens as traders become increasingly confident that the Federal Reserve (Fed) will cut interest rates by 50 basis points (bps) in the remainder of the year.
According to the CME FedWatch tool, there is an 84% chance that the Fed will reduce interest rates by 25 basis points (bps) in each of its two remaining policy meetings this year.
Lower interest rates by the Fed bode well for non-yielding assets, such as Gold.
Fed dovish expectations have intensified as labor market conditions remain weak in the wake of tariffs imposed by United States (US) President Donald Trump.
Contrary to market expectations, Chicago Fed Bank President Austan Goolsbee warns of uptick in inflation in the services sector and argued against reducing interest rates aggressively.
“You see this uptick in inflation and particularly the uptick in services inflation, which is probably not coming from tariffs,” Goolsbee said, added, “I’m a little wary about front-loading too many rate cuts and just counting on the inflation going away,” Reuters.
Additionally, the ongoing US government shutdown has also increased the safe-haven demand of the Gold price, as it has been leading to mass lay-offs.
On Sunday, US President Donald Trump told reporters, “It’s taking place right now,” after he was asked when the White House would begin lay-offs, Reuters reported.
Gold technical analysis
Gold price extends its winning streak for eighth week. The near-term trend of the Gold price remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around $3,751.20. Upward-sloping trendline from the August 22 low around $3,321.50 will act as key support for the Gold price.
The 14-day Relative Strength Index (RSI) oscillates inside the 60.00-80.00 range, suggesting a strong bullish momentum.
On the upside, the Gold price could extend its upside towards $4,000. Looking down, the 20-day EMA will act as key support.
Gold daily chart
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Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Japanese Yen retains bearish bias as Takaichi’s win fuels fiscal easing bets
The Japanese Yen (JPY) dives to the lowest level since early August against its American counterpart at the start of a new week after a fiscal dove, Sanae Takaichi, was elected as the leader of Japan’s ruling Liberal Democratic Party (LDP). Takaichi would become the first female Prime Minister of Japan and is expected to oppose any further monetary tightening by the Bank of Japan (BoJ). This, along with the prevalent risk-on environment, is seen exerting intense pressure on the safe-haven JPY.
Meanwhile, a steep decline in the JPY provides a strong boost to the US Dollar (USD) and pushes the USD/JPY pair beyond the 150.00 psychological mark during the Asian session. That said, the growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs two more times this year and concerns that a prolonged US government shutdown could impact the US economic performance could act as a headwind for the USD. This, in turn, might cap gains for the currency pair.
Japanese Yen retains bearish bias as Takaichi’s win sparks fiscal easing bets, tempers BoJ rate hike bets
- Sanae Takaichi was elected as the leader of the Liberal Democratic Party (LDP) in a run-off election held on Saturday and is now expected to be confirmed as Japan’s first female Prime Minister during a parliamentary session in mid-October. Takaichi stood out in the race as the only proponent of big spending and loose monetary policy.
- Expectations for more expansionary economic policies could complicate the Bank of Japan’s task and also seem to have raised the chances that the central bank will avoid raising interest rates this month. The optimism lifts Japan’s Nikkei 225 to a fresh record high and weighs heavily on the Japanese Yen during the Asian session on Monday.
- Meanwhile, BoJ Governor Kazuo Ueda reiterated last week that the central bank will raise interest rates if the economy and prices move in line with forecasts. Moreover, markets are fully pricing in another rate increase by the BoJ early next year, which might continue to offer some support to the JPY and help limit deeper losses.
- The BoJ’s hawkish stance marks a significant divergence in comparison to rising bets that the US Federal Reserve (Fed) will lower borrowing costs in October and in December. Adding to this, concerns about the economic impact of a US government shutdown might keep a lid on any further USD appreciation and cap the USD/JPY pair.
- Important US macro releases scheduled at the start of a new month have been delayed due to the government closure, leaving the USD at the mercy of speeches from influential FOMC members. This, along with the broader risk sentiment, could drive the USD/JPY pair ahead of Japan’s Household Spending data due for release on Tuesday.
USD/JPY seems poised to climb further following an intraday breakout above 150.00
From a technical perspective, last week’s bounce from the 100-day Simple Moving Average (SMA) and a subsequent move up beyond the 150.00 round figure will be seen as a fresh trigger for the USD/JPY bulls. Given that oscillators on the daily chart have again started gaining positive traction, spot prices might then aim to test the August monthly swing high, around the 151.00 neighborhood, with some intermediate resistance near the 150.65-150.70 region.
On the flip side, any corrective slide below the 149.40 immediate support could be seen as a buying opportunity and remain limited near the Asian session low, around the 149.00 mark. A convincing break below the latter could drag the USD/JPY pair to the next relevant support near the 148.35 region en route to the 148.00 round figure and the 147.80 zone, which, if broken, might shift the near-term bias in favor of bearish traders.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
NZD/USD holds gains above 0.5800 on worries over US government shutdown
The NZD/USD pair trades on a positive note around 0.5825 during the early Asian session on Monday. The fears of a prolonged US government shutdown continue to drag the US Dollar (USD) lower against the New Zealand Dollar (NZD). Traders await the release of FOMC Minutes later on Wednesday for fresh impetus.
The US government shutdown entered its fifth day as US Senators failed to pass spending proposals to reopen the federal government. Later on Sunday, US President Donald Trump said that his administration would begin laying off federal workers. “It’s taking place right now,” Trump said.
“If the shutdown lasts for a long time, and I mean by several weeks, yes, then, of course, people will begin to question governability in the U.S., said Thierry Wizman, global FX and rates strategist, at Macquarie in New York.
The key US Nonfarm Payrolls (NFP) and Unemployment Rate data, originally scheduled for release on Friday, have been postponed due to the ongoing government shutdown. Concerns over governability in the US might weigh on the Greenback and act as a tailwind for the pair in the near term.
The Reserve Bank of New Zealand (RBNZ) is expected to cut its Official Cash Rate (OCR) on Wednesday from its current level of 3.0%. Markets are fully pricing in a 25 basis points (bps) cut and see about a 30% odds of a 50 bps reduction. Economists widely interpret the RBNZ’s stance as a “dovish pivot,” expecting further rate cuts in the near future. This, in turn, could undermine the Kiwi against the USD.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Bitcoin rallies above $122,000 as US buyers boost price momentum
Bitcoin (BTC) rallied above $122,000 on Friday as US traders pushed prices close to its all-time high, with open interest (OI) hitting a record $89 billion.
Bitcoin nears all-time high as spot demand and leverage bets rise
Bitcoin rose briefly above $122,000 on Friday, buoyed by increased spot demand and leverage among traders. The rise triggered $153 million in short liquidations in the past 24 hours as Bitcoin approaches its all-time high of $124,128, according to CoinGlass data.
US investors are largely responsible for the recent price growth, as evidenced by the Bitcoin Coinbase Premium GAP, which climbed $113 more than in other exchanges. This indicates that US investors are paying a higher price for Bitcoin on Coinbase compared to other exchanges, said crypto analyst Maartun in a Friday X post.
Institutional demand has also contributed to BTC’s current momentum, with US spot Bitcoin exchange-traded funds (ETFs) experiencing inflows throughout the week. The products have seen $2.2 billion in net inflows since Monday, marking a shift in investor sentiment from the outflows of last week.
The rise in investor sentiment comes after the delay of the US September jobs report due to the government shutdown. The delay has sparked increased interest in crypto assets, leading to a rise in prices.
Traders have also shown increased appetite for leveraged risk, with BTC’s open interest hitting an all-time high of $89 billion, according to CoinGlass data.
Bitcoin’s open interest saw a reset following last week’s options expiry, “clearing the board” of hedging activity and setting the stage for Q4, Glassnode stated in an X post on Friday.
The recovery in open interest now reflects more deliberate positioning on market direction and volatility.
Despite Bitcoin’s regained momentum, the top crypto asset still lags gold and silver in year-to-date performance, Maartun added. Bitcoin has seen a 25.6% increase year-to-date, compared to Gold and Silver, which have grown 46.7% and 61.8%, respectively.