Central Bank Outlook and Trade Shift Sentiment | 8th July, 2025

Central Banks Guide Sentiment

On July 8, 2025, global markets respond to growing optimism around potential trade breakthroughs, leading to broad shifts in sentiment across asset classes. Gold (XAU/USD) slips below $3,350 as safe-haven demand eases, while Silver (XAG/USD) flatlines near $36.90 amid mixed technicals. The Australian Dollar (AUD/USD) gains ground ahead of the Reserve Bank of Australia’s rate decision, buoyed by strong positioning and improved risk tone. The Japanese Yen (USD/JPY) weakens as fading trade fears reduce bets on BoJ tightening. Meanwhile, the People’s Bank of China sets the USD/CNY reference rate at 7.1534, slightly firmer than expected, reflecting stability-focused policy intent.

Gold Price Forecast (XAU/USD)

Current Price and Context

Gold (XAU/USD) trades below $3,350, extending its pullback as investors price in optimism surrounding potential global trade agreements. The easing of geopolitical tensions and stronger sentiment for risk assets have weakened safe-haven demand, dragging gold lower. Meanwhile, stable US data and higher bond yields continue to weigh on non-yielding assets like gold.

Key Drivers

Geopolitical Risks: Reduced tensions and progress toward trade deals lessen the need for safe-haven positioning in gold.

US Economic Data: Resilient labor data and firm ISM readings support the USD and yields, pressuring gold prices.

FOMC Outcome: The Fed remains cautious but data-driven; no urgency to cut rates limits the upside for gold.

Trade Policy: Positive signs in trade talks between the US and key partners reduce demand for gold as a hedge.

Monetary Policy: Sticky inflation and stable economic growth curb aggressive rate cut bets, suppressing gold’s appeal.

Technical Outlook

Trend: Bearish short-term; unable to reclaim key moving averages.

Resistance: $3,355, then $3,375 and $3,400.

Support: $3,330, followed by $3,310 and $3,280.

Forecast: Gold may remain under pressure toward $3,310 unless fresh geopolitical risks emerge or Fed tone shifts dovish.

Sentiment and Catalysts

Market Sentiment: Bearish bias as gold fails to attract flows amid improving macro outlook and yield support for the dollar.

Catalysts: US inflation data, FOMC minutes, global trade headlines, and bond market volatility.

Silver Price Forecast (XAG/USD)

Current Price and Context

Silver (XAG/USD) trades just under $37.00, showing little directional movement as bulls and bears battle for control. Despite a weaker US Dollar and improved risk appetite, silver struggles to extend gains due to mixed technical signals and a lack of decisive market catalysts. Traders appear cautious ahead of upcoming US inflation data and central bank commentary.

Key Drivers

Geopolitical Risks: Decreased safe-haven demand amid trade optimism limits upward momentum in silver, even as risk appetite holds steady.

US Economic Data: Mixed signals from US macro indicators keep silver tethered to a tight range as traders await clarity from upcoming CPI data.

FOMC Outcome: With the Fed in wait-and-see mode, expectations for late-year easing remain intact but lack urgency—providing neutral pressure for silver.

Trade Policy: Hopes of trade progress support global demand outlook, but lack of concrete developments tempers industrial metal optimism.

Monetary Policy: Rising yields and firm real rates curb non-yielding asset appeal, but long-term expectations of rate cuts offer support.

Technical Outlook

Trend: Sideways consolidation; rangebound behavior around $36.75–$37.00.

Resistance: $37.00, followed by $37.30 and $37.65.

Support: $36.55, then $36.20 and $35.75.

Forecast: Silver may continue consolidating between $36.20 and $37.00. A clear break above $37.00 could attract momentum buyers, while a drop below $36.20 might signal deeper retracement.

Sentiment and Catalysts

Market Sentiment: Neutral; indecision prevails as traders await stronger directional cues from macro data and yield movements.

Catalysts: US CPI and PPI releases, Fed speeches, and global trade policy developments.

USD/CNY Forecast

Current Price and Context

On July 8, 2025, the People’s Bank of China (PBOC) set the USD/CNY reference rate at 7.1534, slightly higher than the previous 7.1506 fix. The modest adjustment reflects the central bank’s ongoing effort to maintain currency stability amid global trade optimism and a broadly softer US Dollar. The fix comes as markets monitor both domestic Chinese policy and external sentiment tied to trade progress and US-China relations.

Key Drivers

Geopolitical Risks: Reduced global trade tensions lower pressure on the yuan, supporting PBOC’s preference for stability rather than interventionist shifts.

US Economic Data: A weaker dollar environment gives China space to fix the yuan slightly stronger without disrupting competitiveness.

FOMC Outcome: Stable Fed policy limits USD upside, aligning with China’s gradualist approach in fixing USD/CNY levels.

Trade Policy: Easing trade fears support Chinese export sentiment; PBOC maintains a middle ground to avoid speculative yuan appreciation.

Monetary Policy: PBOC remains accommodative with modest liquidity support, while avoiding aggressive easing that would weaken the yuan significantly. 

Technical Outlook

Trend: Slightly bearish for USD/CNY on multi-session view as trade hopes and yuan stability dominate.

Resistance: 7.1600, then 7.1750 and 7.1880.

Support: 7.1400, followed by 7.1260 and 7.1100.

Forecast: USD/CNY may remain rangebound between 7.1400–7.1600. Downside may emerge if US CPI softens further or China issues positive economic data.

Sentiment and Catalysts

Market Sentiment: Stable to slightly bearish on USD/CNY as traders view today’s fix as neutral-to-supportive for yuan strength.

Catalysts: US CPI/PPI, Chinese loan data, further US-China trade signals, and PBOC liquidity moves.

AUD/USD Forecast

Current Price and Context

AUD/USD is trading around 0.6855, building on recent strength as traders position ahead of the Reserve Bank of Australia’s (RBA) policy decision. Despite a recent dip in inflation, the Australian Dollar remains supported by improved global risk sentiment and trade optimism. A softer US Dollar and relatively stable commodity prices are helping to keep the Aussie elevated near recent highs.

Key Drivers

Geopolitical Risks: Trade optimism and easing tensions globally favor high-beta currencies like AUD, reducing safe-haven flows into the USD.

US Economic Data: Mixed US data keeps the dollar in check, offering AUD breathing room as traders assess upcoming inflation figures.

FOMC Outcome: A data-dependent Fed with no immediate easing triggers supports modest USD weakness, aiding AUD’s advance.

Trade Policy: Positive trade rhetoric benefits Australia’s export outlook, adding a tailwind to the Aussie.

Monetary Policy: RBA’s expected hold at this meeting keeps the focus on forward guidance. A neutral-to-hawkish tone could reinforce AUD upside.

Technical Outlook

Trend: Bullish short-term; maintaining a steady upward channel since breaking above 0.6800.

Resistance: 0.6875, then 0.6900 and 0.6955.

Support: 0.6825, followed by 0.6790 and 0.6755.

Forecast: AUD/USD could test 0.6900 if the RBA remains steady or sounds cautiously optimistic. A dovish surprise or stronger USD data could pull it back below 0.6825.

Sentiment and Catalysts

Market Sentiment: Bullish heading into the RBA decision, supported by risk-on flows and USD softness.

Catalysts: RBA policy statement, US CPI report, China trade data, and shifts in commodity prices.

USD/JPY Forecast

Current Price and Context

USD/JPY trades near 161.20, rising as the Japanese Yen weakens further amid fading expectations of aggressive Bank of Japan (BoJ) tightening. Trade optimism and improving global sentiment have reduced demand for traditional safe-haven assets like the yen. Meanwhile, strong US bond yields and supportive dollar flows continue to drive upside pressure in the pair.

Key Drivers

Geopolitical Risks: Reduced tensions and trade deal optimism shift capital away from safe-haven flows into the yen, favoring USD/JPY upside.

US Economic Data: Steady US data and firm yields support the dollar’s bid, helping push USD/JPY to multi-decade highs.

FOMC Outcome: With the Fed staying patient and inflation not yet soft enough for a cut, yield spreads continue to favor the dollar.

Trade Policy: Easing global trade concerns favor carry trades, with the yen acting as a funding currency amid continued BoJ dovishness.

Monetary Policy: The BoJ remains ultra-cautious. Trade uncertainties are tempering already minimal expectations for rate hikes, weakening JPY outlook.

Technical Outlook

Trend: Strong bullish continuation; new cycle highs in play.

Resistance: 161.50, then 162.00 and 163.00.

Support: 160.75, followed by 160.00 and 159.30.

Forecast: USD/JPY may extend toward 162.00 if yield differentials remain wide. Only a major dovish surprise from the Fed or hawkish BoJ tone could reverse this trend.

Sentiment and Catalysts

Market Sentiment: Strongly bullish. Traders continue favoring USD/JPY on rate divergence and risk-on sentiment.

Catalysts: US CPI and PPI releases, BoJ commentary, US-Japan trade developments, and Treasury yield movements.

Wrap-up

On July 8, optimism around global trade deals and upcoming central bank policy announcements dominate market direction. Gold retreats as risk appetite improves, while silver trades sideways awaiting clearer signals. The Aussie dollar advances ahead of a pivotal RBA decision, and the yen softens on diminished rate hike expectations. The PBOC’s steady hand on the yuan fix underscores China’s focus on exchange rate stability. Traders now look to central bank commentary and economic data releases for further cues in an increasingly optimistic but cautious environment.

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