Forex News Timeline
02:18 Iran launches over 200 ballistic missiles at Israel
Iran launched over 200 ballistic missiles at Israel on Tuesday.
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Iran launched over 200 ballistic missiles at Israel on Tuesday. The attack began at 7:30 p.m. Israel time, after the US had warned just hours before that a strike was imminent. The Israel Defence Forces reported several of the missiles were intercepted, and reports said one person was killed in the West Bank, per Bloomberg.
Israeli Prime Minister Benjamin Netanyahu vows to retaliate against Iran for a missile attack on Tuesday, but Tehran warned that any response would result in "vast destruction," fuelling fears of a wider war. Market reaction At the time of press, the Gold price was down 0.06% on the day at $2,661. Risk sentiment FAQs What do the terms'risk-on' and 'risk-off' mean when referring to sentiment in financial markets? In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest. What are the key assets to track to understand risk sentiment dynamics? Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit. Which currencies strengthen when sentiment is 'risk-on'? The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity. Which currencies strengthen when sentiment is 'risk-off'? The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Israeli Prime Minister Benjamin Netanyahu vows to retaliate against Iran for a missile attack on Tuesday, but Tehran warned that any response would result in "vast destruction," fuelling fears of a wider war. Market reaction At the time of press, the Gold price was down 0.06% on the day at $2,661. Risk sentiment FAQs What do the terms'risk-on' and 'risk-off' mean when referring to sentiment in financial markets? In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest. What are the key assets to track to understand risk sentiment dynamics? Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit. Which currencies strengthen when sentiment is 'risk-on'? The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity. Which currencies strengthen when sentiment is 'risk-off'? The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
02:00 South Korea Consumer Price Index Growth (MoM) declined to 0.1% in September from previous 0.4%
South Korea Consumer Price Index Growth (MoM) declined to 0.1% in September from previous 0.4%
02:00 South Korea Consumer Price Index Growth (YoY) declined to 1.6% in September from previous 2%
South Korea Consumer Price Index Growth (YoY) declined to 1.6% in September from previous 2%
02:00 USD/CAD drifts higher to near 1.3500 amid geopolitical risks
The USD/CAD pair trades with mild gains near 1.3495 during the early Asian session on Wednesday.
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Data released by the Institute for Supply Management (ISM) on Tuesday showed that the US Manufacturing Purchasing Managers Index (PMI) came in at 47.2 in September versus 47.2 prior, below the market consensus of 47.5. This figure was below the 50% threshold for the sixth consecutive month.
The US Federal Reserve (Fed) Chair, Jerome Powell, stated that more rate cuts are likely as the economy remains on solid ground, yet he cautioned against rapid changes. Atlanta Fed President Raphael Bostic said on Monday that he would be open to another half-percentage-point interest rate cut at the November meeting if upcoming data show job growth slowing faster than expected.
The US ADP Employment Change data will be in the spotlight later on Wednesday. Also, the US Federal Reserve (Fed) Thomas Barkin, Raphael Bostic, Beth Hammack, Alberto Musalem, and Michelle Bowman are set to speak.
On the other hand, crude oil prices rise after Iran launches rockets at Israel in a direct attack, raising fear of supply disruptions in the region. This, in turn, boosts the commodity-linked Canadian Dollar (CAD) against the Greenback. Iran launched over 200 ballistic missiles at Israel on Tuesday. This action was a reprisal after Israel carried out a dramatic series of attacks on Lebanon in recent days, killing Hezbollah leader Hassan Nasrallah in a Beirut airstrike and sending ground forces across the border, per Bloomberg. Canadian Dollar FAQs What key factors drive the Canadian Dollar? The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar? The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar? While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar? Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Data released by the Institute for Supply Management (ISM) on Tuesday showed that the US Manufacturing Purchasing Managers Index (PMI) came in at 47.2 in September versus 47.2 prior, below the market consensus of 47.5. This figure was below the 50% threshold for the sixth consecutive month.
The US Federal Reserve (Fed) Chair, Jerome Powell, stated that more rate cuts are likely as the economy remains on solid ground, yet he cautioned against rapid changes. Atlanta Fed President Raphael Bostic said on Monday that he would be open to another half-percentage-point interest rate cut at the November meeting if upcoming data show job growth slowing faster than expected.
The US ADP Employment Change data will be in the spotlight later on Wednesday. Also, the US Federal Reserve (Fed) Thomas Barkin, Raphael Bostic, Beth Hammack, Alberto Musalem, and Michelle Bowman are set to speak.
On the other hand, crude oil prices rise after Iran launches rockets at Israel in a direct attack, raising fear of supply disruptions in the region. This, in turn, boosts the commodity-linked Canadian Dollar (CAD) against the Greenback. Iran launched over 200 ballistic missiles at Israel on Tuesday. This action was a reprisal after Israel carried out a dramatic series of attacks on Lebanon in recent days, killing Hezbollah leader Hassan Nasrallah in a Beirut airstrike and sending ground forces across the border, per Bloomberg. Canadian Dollar FAQs What key factors drive the Canadian Dollar? The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar? The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar? While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar? Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
01:48 GBP/USD tumbles on war-wary Tuesday
GBP/USD took a tumble on Tuesday, backsliding to its lowest bids in over a week after US ISM Purchasing Managers Index (PMI) figures misfired and broadly missed forecasts.
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The economic calendar remains relatively free and clear on the Pound Sterling side, with GBP traders forced to wait until the Bank of England’s (BoE) Monetary Policy Report Hearings, due early Thursday. On the US side of things, a trickle of meaningful-in-the-aggregate yet individually meaningless economic data litters the landscape on the road to Friday’s Nonfarm Payrolls (NFP), and investors are grappling with middling releases that are routinely missing the mark.Forex Today: The US labour market will be in the spotlight along with Fed speakersSeptember’s US ISM Manufacturing PMI remained stubbornly entrenched at 47.2 for a second consecutive month, entirely missing the expected uptick to 47.5. ISM Manufacturing Prices Paid also backslid more than expected over the same period, falling into contractionary territory at 48.3, down from the previous 54.0.
Looking further into US data, JOLTS Job Openings in August rose to 8.04 million, over and above the previous period’s revised 7.7 million. Still, the widening expanse of listed job openings may not translate directly into new hires after the ISM Manufacturing Employment Index for September fell to 43.9 from the previous 46.0, entirely missing the forecast upswing to 47.0.
Investor attention has swung around to focus entirely on Middle East geopolitical tensions after early reports that Iran has executed a first missile barrage against Israel in response to Israel’s recent invasion of Lebanon. The US has declared it will retaliate on Israel’s behalf, and investors are balking at the prospect of a rapid escalation of the ongoing conflict.
GBP/USD price forecast
Cable’s backslide on Tuesday has dragged the pair back below the 1.3300 handle. Price action is now poised for a downside extension back into the 50-day Exponential Moving Average (EMA) near 1.3100. However, the way is anything but straightforward for an extended bearish push into the previous swing low just north of 1.3000.
GBP/USD daily chartPound 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.
00:40 USD/JPY Price Forecast: Forms doji consolidates at around 143.50
On Tuesday, the USD/JPY formed a ‘doji’ and finished the day unchanged at around 143.58.
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USD/JPY Price Forecast: Technical outlook
The downtrend remains intact. Even though the pair was headed to sustain losses, the USD/JPY rallied on risk aversion amidst Iran's attack on Israel. That sponsored a leg-up toward the current exchange rate.
The Relative Strength Index (RSI) favors further downside, though its slope is flat. This hints at consolidation ahead. That said, the USD/JPY might trade within the 142.98-144.53 area in the near term.
If buyers clear the top of the range, that will expose the 145.00, followed by the 50-day moving average (DMA) at 145.47. A breach of the latter will expose the bottom of the Kumo at around 147.80-148.00.
Conversely, if USD/JPY tumbles below 142.98, the September 30 cycle low at 141.65 will be exposed. On further weakness, the next stop would be the September 16 pivot low at 139.58.
USD/JPY Price Action – Daily ChartJapanese 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.
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