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CFD Markets News and Forecasts — 31-12-2024
- XAU/USD is holding north of $2,600/ounce, but topside momentum remains limited.
- Another spat of risk-off market sentiment pushed Gold higher on the year-end market session.
- Global markets will largely be shuttered on Wednesday for the New Year’s holiday.
XAU/USD caught a bid on a quiet Tuesday, rising back into $2,625.00 per ounce after taking a quick technical bounce off the $2,600 handle at the start of the week. Markets have been trading within tepid ranges for most of the holiday season as investors clock out for the year and await further fundamental drivers to kick off the next leg of market activity in either direction.
Investors spent much of 2024 enjoying themselves, with global markets rising on the back of a stiff AI-fuelled tech rally, which dragged equity indexes deep into record highs. Gold also saw a stellar yearly performance, climbing 40.61% bottom-to-top and setting record highs above $2,790 in October. Despite a sharp decline in November, XAU/USD has closed higher or even for all but two of the past eleven months.
Gold’s topside momentum fizzled just shy of $2,800 just as the US Dollar (USD) hit a bottom for 2024’s market action, implying the inverse relationship between the two assets remains strong. A turnaround in the US Dollar Index (DXY) could front-run a fresh step higher in XAU/USD bids. On the downside, inconsistent policy from incoming US President Donald Trump could skewer investor hopes for a continued rally into 2025, which would send the Greenback even higher on risk-off flows, and could drag Gold prices even lower.
XAU/USD price forecast
XAU/USD may be staunchly holding above $2,600 during the holiday season, but bidders remain constrained just below the 50-day Exponential Moving Average (EMA) drifting into $2,635. Bids are keeping their head above the waterline set at the last swing low into $2,560, but a recovery of December’s peak just north of $2,720 seems to be off the table in the near-term.
The immediate technical floor on another move lower is baked into the 200-day EMA near $2,485, while bidders will be looking for a full recovery to capture the top end and claim the $2,800 handle.
XAU/USD daily chart
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.
Silver prices (XAG/USD) fell on Tuesday, according to FXStreet data. Silver trades at $28.96 per troy ounce, down 0.14% from the $29.00 it cost on Monday.
Silver prices have increased by 21.71% since the beginning of the year.
| Unit measure | Silver Price Today in USD |
|---|---|
| Troy Ounce | 28.96 |
| 1 Gram | 0.93 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 90.29 on Tuesday, up from 89.91 on Monday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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- EUR/USD may depreciate further as the short-term price momentum is weaker.
- The initial support appears at its two-year low of 1.0332, recorded on November 22.
- The nine-day EMA acts as immediate resistance at the 1.0417 level.
EUR/USD recovers its recent losses from the previous session, trading around 1.0410 during the European hours on Tuesday. A review of the daily chart shows an ongoing bearish bias as the pair is confined within a descending channel pattern.
The 14-day Relative Strength Index (RSI), a key momentum indicator, remains below the 50 level, confirming the persistent bearish sentiment for the EUR/USD pair. Additionally, the nine-day Exponential Moving Average (EMA) is below the 14-day EMA, suggesting the short-term price momentum is weaker.
On the downside, the two-year low at 1.0332, which was recorded on November 22, appears as a primary support for the EUR/USD pair. A successful break below this level could reinforce the bearish bias and put downward pressure on the pair to navigate the area around the lower boundary of the descending channel at the 1.0010 level.
In terms of resistance, the EUR/USD pair tests an immediate barrier at the nine-day Exponential Moving Average (EMA) of the 1.0417 level, followed by the 14-day EMA at the 1.0433 level. A breakthrough above these EMAs could lead the pair to approach the descending channel’s upper boundary at 1.0500, followed by its seven-week high of 1.0630 level.
EUR/USD: Daily Chart
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 | -0.15% | -0.04% | -0.42% | 0.09% | 0.13% | 0.23% | -0.12% | |
| EUR | 0.15% | 0.12% | -0.23% | 0.25% | 0.28% | 0.39% | 0.03% | |
| GBP | 0.04% | -0.12% | -0.39% | 0.12% | 0.17% | 0.28% | -0.09% | |
| JPY | 0.42% | 0.23% | 0.39% | 0.54% | 0.56% | 0.65% | 0.33% | |
| CAD | -0.09% | -0.25% | -0.12% | -0.54% | 0.03% | 0.14% | -0.22% | |
| AUD | -0.13% | -0.28% | -0.17% | -0.56% | -0.03% | 0.10% | -0.25% | |
| NZD | -0.23% | -0.39% | -0.28% | -0.65% | -0.14% | -0.10% | -0.35% | |
| CHF | 0.12% | -0.03% | 0.09% | -0.33% | 0.22% | 0.25% | 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).
- GBP/USD is positioned above the descending channel, suggesting a weakening bearish bias.
- The descending channel’s upper boundary acts as primary support near the 1.2540 level.
- The immediate resistance appears at its nine-day EMA at 1.2565 level.
GBP/USD retraces its recent losses, trading around 1.2550 during the European hours on Tuesday. The daily chart analysis suggests a weakening bearish bias as the pair is positioned above the upper boundary of the descending channel pattern.
However, the 14-day Relative Strength Index (RSI) remains below the 50 level, suggesting a persistent bearish bias. Additionally, the GBP/USD pair is positioned below its nine- and 14-day Exponential Moving Averages (EMAs), suggesting a weaker short-term price momentum. A decisive break above these EMAs could indicate a shift from bearish to bullish bias.
On the downside, the GBP/USD pair tests the upper boundary of the descending channel near the 1.2540 level. A reversal back into the channel would reinforce the bearish bias, potentially driving the pair toward its seven-month low of 1.2487, last recorded on November 22.
A decisive break below the seven-month low could intensify bearish momentum, potentially driving the GBP/USD pair toward its yearly low of 1.2299, last recorded on April 22. Further downside could target the lower boundary of the descending channel near the 1.2160 level.
On the upside, the GBP/USD pair tests the immediate barrier at its nine-day Exponential Moving Average (EMA) at 1.2565, followed by the 14-day EMA at 1.2585. A successful break above these levels could enhance bullish momentum, opening the path for a move toward the six-week high of 1.2811, reached on December 6.
GBP/USD: Daily Chart
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.04% | -0.50% | 0.14% | 0.06% | 0.18% | -0.05% | |
| EUR | 0.12% | 0.09% | -0.36% | 0.26% | 0.18% | 0.30% | 0.06% | |
| GBP | 0.04% | -0.09% | -0.47% | 0.17% | 0.10% | 0.23% | -0.03% | |
| JPY | 0.50% | 0.36% | 0.47% | 0.67% | 0.57% | 0.69% | 0.48% | |
| CAD | -0.14% | -0.26% | -0.17% | -0.67% | -0.09% | 0.03% | -0.20% | |
| AUD | -0.06% | -0.18% | -0.10% | -0.57% | 0.09% | 0.12% | -0.12% | |
| NZD | -0.18% | -0.30% | -0.23% | -0.69% | -0.03% | -0.12% | -0.24% | |
| CHF | 0.05% | -0.06% | 0.03% | -0.48% | 0.20% | 0.12% | 0.24% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- USD/JPY depreciates as traders assess the market sentiment of the BoJ raising interest rates in January.
- The Japanese Yen is set to decline more than 10% against the US Dollar in 2024.
- US Treasury yields fell by approximately 2% with 2-year and 10-year yields at 4.24% and 4.53%, respectively, on Monday.
USD/JPY extends its losses for the third consecutive session on New Year’s Eve, trading around 156.20 during early European hours on Tuesday. However, the Japanese Yen (JPY) is headed for a decline of over 10% in 2024, marking its fourth straight year of weakening against the US Dollar (USD).
The USD/JPY pair’s downside is attributed to the improved Japanese Yen (JPY) as traders continue to assess the market sentiment that the Bank of Japan (BoJ) may raise interest rates in January following the release of the Tokyo Consumer Price Index (CPI) inflation data last week.
In December, the headline Tokyo CPI inflation rose to 3.0% YoY, up from 2.6% in November. Meanwhile, the Tokyo CPI excluding Fresh Food and Energy increased to 2.4% YoY, compared to 2.2% the previous month. The Tokyo CPI excluding Fresh Food also climbed 2.4% YoY, slightly below the expected 2.5% but higher than the 2.2% recorded in November.
Additionally, the USD/JPY pair faces challenges as the US Dollar loses ground amid weaker Treasury yields. The US Dollar Index (DXY), which tracks the USD against six major currencies, remains soft around 108.00 as US Treasury bond yields fell by approximately 2% on Monday. The 2-year and the 10-year yields stood at 4.24% and 4.53%, respectively.
The downside risks for the US Dollar seem restrained as the Federal Reserve (Fed) may adopt a more cautious tone regarding potential rate cuts in 2025, signaling a shift in its monetary policy approach. This adjustment comes amidst uncertainties tied to the economic strategies expected under the incoming Trump administration.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Here is what you need to know on Tuesday, December 31:
The action in financial markets remain subdued as the year comes to an end. The economic calendar will not feature any data releases on Tuesday and trading conditions are likely to start normalizing when investors return from the New Year break on Thursday.
US Dollar PRICE This month
The table below shows the percentage change of US Dollar (USD) against listed major currencies this month. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.45% | 1.12% | 3.24% | 2.43% | 4.67% | 4.76% | 2.38% | |
| EUR | -1.45% | -0.33% | 1.72% | 0.96% | 3.17% | 3.26% | 0.91% | |
| GBP | -1.12% | 0.33% | 2.04% | 1.30% | 3.51% | 3.60% | 1.24% | |
| JPY | -3.24% | -1.72% | -2.04% | -0.79% | 1.39% | 1.46% | -0.85% | |
| CAD | -2.43% | -0.96% | -1.30% | 0.79% | 2.18% | 2.27% | -0.05% | |
| AUD | -4.67% | -3.17% | -3.51% | -1.39% | -2.18% | 0.08% | -2.20% | |
| NZD | -4.76% | -3.26% | -3.60% | -1.46% | -2.27% | -0.08% | -2.28% | |
| CHF | -2.38% | -0.91% | -1.24% | 0.85% | 0.05% | 2.20% | 2.28% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The data from the US showed on Monday that Pending Home Sales increased by 2.2% on a monthly basis in November. This reading followed the 1.8% increase recorded in October and came in better than the market expectation of 0.7%. During the Asian trading hours, NBS Manufacturing Purchasing Managers Index in China came in at 50.1 in December. In the same period, NBS Non-Manufacturing PMI improved to 52.2 from 50 in November.
The US Dollar (USD) Index continues to fluctuate near 108.00 after closing flat on Monday. The index, however, remains on track to end the third consecutive month in positive territory. Bond markets in the US will close early on New Year's Eve. Meanwhile, US stock index futures trade marginally lower following the sharp decline seen in Wall Street's main indexes on Monday.
After rising to its highest level in over 10 days above 1.0450, EUR/USD lost its traction and closed in the red on Monday. The pair holds steady at around 1.0400 in the European morning on Tuesday.
GBP/USD tested 1.2600 in the early American session on Monday but failed to gather bullish momentum. The pair stays in a consolidation phase near 1.2550 early Tuesday.
Gold declined below $2,600 and touched its lowest level since December 20 on Monday. XAU/USD holds its ground to begin the European session and trades near $2,610.
USD/JPY turned south and lost more than 0.5% on Monday, erasing a large portion of the previous week's gains in the process. The pair continues to stretch lower and was last seen trading below 156.50.
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.
- USD/CAD softens to near 1.4350 in Tuesday’s early European session.
- The positive view of the pair prevails above the 100-day EMA with the bullish RSI indicator.
- The first upside barrier to watch is 1.4450; the initial support level is seen in the 1.4210-1.4200 zone.
The USD/CAD pair trades in negative territory around 1.4350 during the early European session on Tuesday. The recovery in crude oil prices lifts the commodity-linked Canadian Dollar (CAD) and creates a headwind for USD/CAD. However, the downside for the pair might be limited amid the rising bets that the Federal Reserve (Fed) will slow the pace of interest rate cuts in 2025. The markets are likely to be quiet ahead of the New Year holiday.
According to the daily chart, the constructive outlook of USD/CAD remains intact as the pair is above the key 100-period Exponential Moving Average (EMA). Additionally, the upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 63.50, suggesting further upside looks favorable.
The immediate resistance level emerges at 1.4450, the high of December 27. Any follow-through buying above this level could see a rally to 1.4517, the upper boundary of the Bollinger Band. Further north, the next hurdle to watch is 1.4668, the high of March 16, 2020.
On the other hand, the initial support level for the pair is located at the 1.4210-1.4200 region, representing the low of December 13 and the psychological level. Extended losses could pave the way to 1.4042, the lower limit of the Bollinger Band. The additional downside filter to watch is 1.3955, the 100-day EMA.
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- WTI price continues to gain ground following China’s NBS PMI release, indicating the manufacturing sector expanded in December.
- China's official Manufacturing PMI slipped to 50.1 in December, down from 50.3 in the previous reading.
- US crude stockpiles are forecasted to have dropped by approximately 3 million barrels last week.
West Texas Intermediate (WTI) Oil price extends its gains for the third successive day, trading around $71.40 per barrel during the Asian session on Tuesday. Crude Oil prices have maintained their gains following the release of the NBS Manufacturing Purchasing Managers' Index (PMI), which indicates that China's manufacturing sector expanded in December.
Factory output in China rose for the third consecutive month, though it slightly dipped to 50.1 in December, down from 50.3 in the previous report and below the market's expectation of 50.3. This data suggests that new stimulus measures are helping to support the economy of the world's largest crude Oil importer. Additionally, Chinese authorities have agreed to issue a record 3 trillion Yuan ($411 billion) in special treasury bonds in 2025 to boost economic growth, as reported by Reuters last week.
Oil prices could receive short-term support from a decline in US crude stockpiles, which are expected to have dropped by approximately 3 million barrels last week, per Reuters. However, a weak long-term demand outlook has put downward pressure on Oil prices. Traders are now awaiting US factory survey data for further insights into the demand outlook.
Meanwhile, Oil prices are poised for a modest annual decline of approximately 0.5%, after being stuck in a tight trading range for several months. As the market looks to the future, it anticipates a potentially turbulent year, driven by worries about an oversupply, geopolitical tensions, and the possible influence of the upcoming Trump administration on Oil policy, leading to a cautious sentiment.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- USD/CHF declines to around 0.9030 in Tuesday’s early European session.
- The likelihood that the Fed will make fewer rate cuts next year might support the USD.
- Escalating geopolitical tension in the Middle East could boost the safe-haven flows, benefiting the CHF.
The USD/CHF pair softens to near 0.9030, snapping the two-day winning streak during the early European session on Tuesday. The cautious mood and geopolitical risks could boost the safe-haven currency like the Swiss Franc (CHF). Trading conditions remain choppy ahead of the New Year holiday.
The expectation of a slower pace of Federal Reserve (Fed) rate cuts and rising US Treasury Yields might keep the Greenback on the front foot. Fed officials see the interest-rate forecast for 2025 to 50 basis points (bps) of cuts, down from 100 bps. Fed Chair Jerome Powell noted that the US will look for further progress on inflation in 2025 as elevated inflation in the year-over-year data is concerning policymakers.
On the Swiss front, traders will closely monitor the development surrounding escalating geopolitical tensions in the Middle East. Ant signs of geopolitical risks could boost the safe-haven currency like the Swiss Franc (CHF) and act as a headwind for USD/CHF. On Monday, Israeli forces killed four Palestinians in an attack on besieged Jabalia in North Gaza after a day of attacks that killed at least 27 people across the Strip.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
Gold prices remained broadly unchanged in India on Tuesday, according to data compiled by FXStreet.
The price for Gold stood at 7,170.51 Indian Rupees (INR) per gram, broadly stable compared with the INR 7,176.83 it cost on Monday.
The price for Gold was broadly steady at INR 83,638.14 per tola from INR 83,711.98 per tola a day earlier.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 7,170.51 |
| 10 Grams | 71,707.43 |
| Tola | 83,638.14 |
| Troy Ounce | 223,027.80 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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- EUR/USD inches higher as the US Dollar remains under pressure due to weaker Treasury yields.
- US Treasury yields declined by approximately 2% on Monday, with 2-year and 10-year yields at 4.24% and 4.53%, respectively.
- The Euro struggles as the ECB continues to provide dovish guidance on its interest rate policy for the upcoming year.
EUR/USD gains ground on Tuesday, trading near 1.0410 during the Asian session after posting losses on the previous day. The EUR/USD pair's rebound can be attributed to a subdued US Dollar (USD) following weaker Treasury yields.
The US Dollar Index (DXY), which tracks the US Dollar (USD) against six major currencies, holds minor losses near 108.00 as US Treasury yields fell by approximately 2% on Monday. The 2-year and the 10-year yields stood at 4.24% and 4.53%, respectively.
However, the risk-sensitive EUR/USD pair faces challenges as the Federal Reserve (Fed) may adopt a more cautious tone regarding potential rate cuts in 2025, signaling a shift in its monetary policy approach. This adjustment comes amidst uncertainties tied to the economic strategies expected under the incoming Trump administration.
Additionally, the safe-haven outflows put pressure on the Euro amid heightened geopolitical risks stemming from the prolonged Russia-Ukraine conflict and ongoing tensions in the Middle East. Israel's ambassador to the United Nations, Danny Danon, issued a stern warning on Monday to Yemen's Iran-backed Houthi militants, urging them to cease their missile attacks on Israel, per Reuters.
The European Central Bank (ECB) maintains dovish guidance on interest rate policy for the next year, which puts downward pressure on the Euro and the EUR/USD pair. The ECB reduced its Deposit Facility rate by 100 basis points (bps) to 3% this year and is expected to lower it to 2%, which policymakers see as a neutral rate, by the end of June 2025. This suggests that the ECB will cut its key borrowing rates by 25 bps at every meeting in the first half of next year.
Euro FAQs
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%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/USD edges higher as the US Dollar remains subdued amid weaker Treasury yields.
- US Treasury yields declined by approximately 2% on Monday, with 2-year and 10-year yields at 4.24% and 4.53%, respectively.
- The Pound Sterling remains subdued due to increased dovish bets on the BoE’s policy outlook for 2025.
GBP/USD retraces its recent losses from the previous session, trading around 1.2550 during the Asian hours on Tuesday. This upside of the pair could be attributed to the subdued US Dollar (USD) amid weaker US Treasury yields.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, remains subdued at around 108.00. The Greenback faced challenges as US Treasury bond yields depreciated by around 2% on Monday. 2-year and 10-year yields stood at 4.24% and 4.53%, respectively.
The Federal Reserve signaled a more cautious outlook for additional rate cuts in 2025, marking a shift in its monetary policy stance. This development highlights uncertainties surrounding future policy adjustments amid the anticipated economic strategies of the incoming Trump administration.
The risk-sensitive Pound Sterling (GBP) could face challenges due to the heightened geopolitical risks stemming from the prolonged Russia-Ukraine conflict and ongoing tensions in the Middle East. Israel's ambassador to the United Nations, Danny Danon, issued a stern warning on Monday to Yemen's Iran-backed Houthi militants, urging them to cease their missile attacks on Israel, per Reuters.
Additionally, the British Pound came under pressure as traders slightly increased their dovish bets on the Bank of England’s (BoE) policy stance in 2025. Market expectations now reflect a 53-basis-point (bps) interest rate reduction for next year, up from the 46 bps projected following the December 19 policy announcement, during which the BoE held rates steady at 4.75% with a 6-3 vote split.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Australian Dollar remains steady after the release of China’s NBS Manufacturing Purchasing Managers' Index data on Tuesday.
- China's official Manufacturing PMI slipped to 50.1, with Non-Manufacturing PMI improving to 52.2 in December.
- The US Dollar struggled as Treasury bond yields depreciated by around 2% on Monday.
The Australian Dollar (AUD) remains tepid against the US Dollar (USD) following the release of mixed NBS Manufacturing Purchasing Managers' Index (PMI) data from China on Tuesday. As close trade partners, any fluctuations in China's economy tend to impact Australian markets.
China's official Manufacturing PMI slipped to 50.1 in December, down from 50.3 in the previous reading and below market expectations of 50.3. Meanwhile, the NBS Non-Manufacturing PMI improved significantly, rising to 52.2 in December from November's 50.0 and beating estimates of 50.2.
The recent RBA’s Meeting Minutes suggested that the board had grown more confident about inflation since its previous meeting, though risks persisted. The board emphasized the need for monetary policy to remain "sufficiently restrictive" until there was greater certainty about inflation.
Australian Dollar remains subdued amid light trading on the final day of the year
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, remains subdued around 108.00 as traders continue to digest the US Federal Reserve’s (Fed) hawkish pivot.
- The US Dollar faced challenges as US Treasury bond yields depreciated by around 2% on Monday. 2-year and 10-year yields stood at 4.24% and 4.53%, respectively.
- The Federal Reserve signaled a more cautious outlook for additional rate cuts in 2025, marking a shift in its monetary policy stance. This development highlights uncertainties surrounding future policy adjustments amid the anticipated economic strategies of the incoming Trump administration.
- The risk-sensitive Australian Dollar could face challenges due to the heightened geopolitical risks stemming from the prolonged Russia-Ukraine conflict and ongoing tensions in the Middle East.
- The RBA board also noted that if future data aligns with or falls below forecasts, it would bolster confidence in inflation and make it appropriate to start easing policy restrictions. However, stronger-than-expected data could require maintaining restrictive policies for a longer period.
- Reserve Bank of Australia Governor Michele Bullock highlighted the continued strength of the labor market as a key reason the RBA has been slower than other nations to commence its monetary easing cycle.
- Traders expressed concerns about President-elect Trump’s economic policies, fearing that tariffs could drive up the cost of living. These concerns were compounded by the Federal Open Market Committee’s (FOMC) recent projections, which indicated fewer rate cuts in 2025, reflecting caution amid persistent inflationary pressures.
Technical Analysis: Australian Dollar hovers below nine-day EMA near 0.6200
AUD/USD trades near 0.6220 on Tuesday, with the daily chart signaling a persistent bearish bias as the pair remains within a descending channel pattern. The 14-day Relative Strength Index (RSI) hovers slightly below the 30-level, suggesting the potential near-term upward correction to dissipate.
On the downside, the AUD/USD pair may navigate the region around the lower boundary of the descending channel near the 0.6060 support level.
The AUD/USD pair faces immediate resistance at the nine-day Exponential Moving Average (EMA) of 0.6243, followed by the 14-day EMA at 0.6271. A more significant hurdle is the descending channel’s upper boundary, around 0.6330.
AUD/USD: Daily Chart
Australian 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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.07% | -0.25% | -0.06% | 0.06% | 0.12% | -0.10% | |
| EUR | 0.11% | 0.06% | -0.11% | 0.05% | 0.18% | 0.23% | 0.01% | |
| GBP | 0.07% | -0.06% | -0.18% | 0.00% | 0.14% | 0.20% | -0.06% | |
| JPY | 0.25% | 0.11% | 0.18% | 0.21% | 0.30% | 0.35% | 0.16% | |
| CAD | 0.06% | -0.05% | -0.00% | -0.21% | 0.12% | 0.17% | -0.06% | |
| AUD | -0.06% | -0.18% | -0.14% | -0.30% | -0.12% | 0.05% | -0.19% | |
| NZD | -0.12% | -0.23% | -0.20% | -0.35% | -0.17% | -0.05% | -0.24% | |
| CHF | 0.10% | -0.01% | 0.06% | -0.16% | 0.06% | 0.19% | 0.24% |
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
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- The Indian Rupee trades in negative territory in Tuesday’s Asian session.
- The weakening of Chinese Yuan, spike in USD bids, and slower pace of Fed rate cuts drag the INR lower.
- India’s November Federal Fiscal Deficit and Q3 Trade Deficit will be the highlights on Tuesday ahead of New Year holiday.
The Indian Rupee (INR) extends its downside on Tuesday after falling to its weakest closing level in the previous session. The local currency remains under selling pressure amid a decline in the offshore Chinese Yuan and broad-based US Dollar demand. Furthermore, the rising expectation of higher-for-longer US Federal Reserve (Fed) policy rates, tepid capital inflows, and tariff threats under incoming US President Donald Trump contribute to the INR’s downside.
However, the Reserve Bank of India's (RBI) intervention in NDF (non-deliverable forward) markets could prevent the INR from sharp depreciation. It’s likely to be a quiet trading session in a holiday-shortened and thin-trading-volume week. Traders brace for India’s Federal Fiscal Deficit for November and the Indian Trade Deficit for the third quarter (Q3), which are due later on Tuesday.
Indian Rupee remains vulnerable amid multiple headwinds
- India's Current Account Deficit (CAD) is expected to remain at 1.1% of the Gross Domestic Product (GDP) in the financial year 2024-25 (FY25), according to a report by ICICI Bank.
- “The dollar-rupee pair is expected to remain in a range of 85.30-85.60 with dips to be bought," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
- Foreign portfolio investors have sold over $10 billion of local stocks and bonds over this quarter on a net basis, according to stock depository data.
- The US Pending Home Sales increased by 2.2% MoM in November versus 1.8% (revised from 2.0%) prior, according to the National Association of Realtors (NAR) on Monday. This reading came in better than the estimation of 0.7%.
- The Chicago Purchasing Managers' Index declined to 36.9 in December from 40.2 in the previous reading, weaker than the 42.5 expected.
USD/INR maintains bullish bias in the longer term
The Indian Rupee weakens on the day. Technically, the strong uptrend of the USD/INR pair remains in play as the pair is well supported above the key 100-day Exponential Moving Average (EMA) on the daily timeframe.
However, the 14-day Relative Strength Index (RSI) is located near 76.10, indicating an overbought condition. This suggests that further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation.
The first upside barrier for the pair emerges at the all-time high of 85.81. If bulls manage to break decisively above the mentioned level, this could draw in potential buyers to the 86.00 psychological level.
On the bearish side, the resistance-turned-support level of 85.45 acts as a first downside target for USD/INR. Sustained trading below this level could expose 85.00, the round mark. The key contention level is seen at 84.32, the 100-day EMA.
Indian Rupee FAQs
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.
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.
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.
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.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 28.92 | -1.73 |
| Gold | 2606.13 | -0.59 |
| Palladium | 897.62 | -2.14 |
- Gold price is set to close the year with an impressive 27% gain, marking the strongest annual performance since 2010.
- The non-yielding metal receives downward pressure from the outlook of fewer Fed rate cuts in 2025.
- The safe-haven Gold remains backed by the prolonged Russia-Ukraine and Middle East conflicts.
Gold price (XAU/USD) holds ground after two days of losses amid thin trading volume on Monday. Gold prices are set to finish the year with an impressive 27% gain, representing their strongest annual performance since 2010. This rally has been driven by central bank purchases, rising geopolitical tensions, and monetary easing policies implemented by major central banks.
The yellow bullion, Gold, remained relatively stable as investors reacted to indications of a hawkish Federal Reserve (Fed). Robust labor market data, reflected in payroll counts, and persistent inflation prompted FOMC members to project fewer rate cuts by the Fed in 2025. This outlook led to a slight decline in non-yielding Gold prices during Q4.
However, the safe-haven Gold gains support as markets anticipate signals regarding the United States (US) economy under the incoming Trump administration and the Federal Reserve’s (Fed) interest rate outlook for 2025. The demand for the yellow metal could increase as potential tariffs and trade policies by the incoming Trump administration could trigger trade conflicts, increasing the risk aversion sentiment.
Gold price holds ground as US Treasury yields depreciate
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, remains subdued around 108.00 as traders continue to digest the US Federal Reserve’s (Fed) hawkish pivot.
- The non-interest-bearing Gold might have received support as US Treasury bond yields depreciated by around 2% on Monday. 2-year and 10-year yields stood at 4.24% and 4.53%, respectively.
- The heightened geopolitical risks stemming from the prolonged Russia-Ukraine conflict and ongoing tensions in the Middle East are continuously providing support for safe-haven assets including Gold.
- Israel's ambassador to the United Nations, Danny Danon, issued a stern warning on Monday to Yemen's Iran-backed Houthi militants, urging them to cease their missile attacks on Israel. Danon cautioned that they risk facing the same "miserable fate" as Hamas, Hezbollah, and Syria's Bashar al-Assad if they continue their aggression, per Reuters.
- On Thursday, Russia's Federal Security Service announced that it had thwarted multiple assassination plots by Ukrainian intelligence targeting high-ranking Russian officers and their families in Moscow. The agency stated that the attacks were planned using bombs disguised as power banks or document folders, according to Reuters.
- The Federal Reserve signaled a more cautious outlook for additional rate cuts in 2025, marking a shift in its monetary policy stance. This development highlights uncertainties surrounding future policy adjustments amid the anticipated economic strategies of the incoming Trump administration.
Technical Analysis: Gold price remains below nine-day EMA near $2,600
Gold price trades near $2,610.00 per troy ounce on Tuesday, with the daily chart indicating a consolidation phase as the metal moves sideways near the nine- and 14-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) hovers just below the 50 mark, reflecting a neutral sentiment.
On the downside, the XAU/USD pair may find its immediate support around its monthly low of $2,583.39, recorded on December 19.
Regarding its resistances, the XAU/USD pair may target the nine- and 14-day EMAs at $2,618.00 and $2,624.00, respectively. A break above these levels could support the pair to approach the psychological level of $2,700.00, with the next barrier at its monthly high of $2,726.34, reached on December 12.
XAU/USD: Daily Chart
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.
China’s official Manufacturing Purchasing Managers' Index (PMI) eased to 50.1 in December, compared to 50.3 in the previous reading. The reading came in below the market consensus of 50.3 in the reported month.
The NBS Non-Manufacturing PMI rose to 52.2 in December versus November’s 50.0 figure and the estimates of 50.2.
Market reaction
At the time of writing, the AUD/USD pair is trading around 0.6229, up 0.14% on the day.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1884, as compared to the previous day's fix of 7.1889 and 7.2832 Reuters estimates.
- USD/CAD trades flat near 1.4355 in Tuesday’s early Asian session.
- Investors awaited fresh catalysts for US interest rate policies and potential tariffs under Donald Trump.
- Higher crude oil prices might lift the commodity-linked Loonie, but a cautious Fed stance might cap its upside.
The USD/CAD pair holds steady around 1.4355 on Tuesday during the early Asian trading hours. It’s likely to be a quiet trading session in a holiday-shortened and thin-trading-volume week. Later on Friday, the US December ISM Manufacturing Purchasing Managers Index (PMI) will be in the spotlight.
The Federal Reserve (Fed) lowered interest rates by 25 basis points (bps) at its December meeting, bringing the target interest rate range to 4.25% and 4.5%. The Summary of Economic Projections (SEP) revealed that the Fed officials penciled in just two 25 bps cuts in 2025, down from the four projected in September. The anticipation of fewer cuts in 2025 is likely to lift the Greenback against the Canadian Dollar (CAD) in the near term.
Markets brace for major US policy shifts, including potential tariffs, deregulation, and tax changes, in 2025 once president-elect Donald Trump returns to the White House in January. Last month, Trump said he planned to impose 25% tariffs against Canada and Mexico unless the countries reduce the flow of migrants and fentanyl into the United States. The concerns about the risks of imposing new trade tariffs might weigh on the Loonie and create a tailwind for USD/CAD.
However, the rebound in crude oil prices might help limit the CAD’s losses. It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | -386.62 | 39894.54 | -0.96 |
| Hang Seng | -49.04 | 20041.42 | -0.24 |
| KOSPI | -5.28 | 2399.49 | -0.22 |
| ASX 200 | -26.8 | 8235 | -0.32 |
| DAX | -75.18 | 19909.14 | -0.38 |
| CAC 40 | -41.81 | 7313.56 | -0.57 |
| Dow Jones | -418.48 | 42573.73 | -0.97 |
| S&P 500 | -63.9 | 5906.94 | -1.07 |
| NASDAQ Composite | -235.24 | 19486.79 | -1.19 |
- NZD/USD trades with a mild negative bias around 0.5635 in Tuesday’s early Asian session.
- A slower pace of Fed interest rate cuts in 2025 might lift the USD in the near term.
- RBNZ's dovish bets and Trump's tariffs threat weigh on the Kiwi, but fresh Chinese stimulus measures might cap its downside.
The NZD/USD pair trades with mild losses near 0.5635 amid thin trading during the early Asian session on Tuesday. Investors brace for China’s National Bureau of Statistics (NBS) Manufacturing and Non-Manufacturing Purchasing Managers’ Index (PMI) data for December, which are due later on Tuesday.
The Federal Reserve (Fed) decided to cut the interest rates by a quarter point in the December meeting and projected that it will cut interest rates only twice in 2025, down from its original forecast for four. This, in turn, supports the US Dollar (USD) broadly and acts as a headwind for the pair.
Data released by the National Association of Realtors (NAR) on Monday showed that the US Pending Home Sales rose by 2.2% on a monthly basis in November versus 1.8% (revised from 2.0%) prior. This reading came in better than the estimation of 0.7%. Meanwhile, the Chicago Purchasing Managers' Index eased to 36.9 in December from 40.2 in the previous reading, weaker than the 42.5 expected.
The New Zealand Dollar (NZD) was one of the worst performers in the Group of 10, falling more than 10% against the greenback as of December 27. The dovish expectation by the Reserve Bank of New Zealand (RBNZ) and Donald Trump’s tariff threat have exerted some selling pressure on the Kiwi against the USD.
However, the fresh stimulus measure from the Chinese government over the weekend might help limit the NZD’s losses, as China is a major trading partner for New Zealand. China’s central government stated that it will offer handouts to people struggling with the cost of living and vowed more benefits for some unemployed people ahead of a key national holiday.
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.
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.62211 | 0.13 |
| EURJPY | 163.23 | -0.75 |
| EURUSD | 1.0404 | -0.24 |
| GBPJPY | 196.841 | -0.72 |
| GBPUSD | 1.25496 | -0.14 |
| NZDUSD | 0.56386 | 0.25 |
| USDCAD | 1.43501 | -0.44 |
| USDCHF | 0.90351 | 0.36 |
| USDJPY | 156.854 | -0.5 |
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