Forex News
Bank of Japan (BoJ) board member Hajime Takata said on Wednesday that the central bank needs a different response from conventional semi-annual rate hike pace.
Key quotes
2026 marks a regime change, needs a different response as rate hikes are becoming a global trend on the back of economic growth, as well as AI-linked investment.
BoJ needs a different response from the conventional semiannual rate hike pace.
BoJ needs to consider a broad range of options, not just a 0.25% rate hike each time.
Need a more nimble approach with rate hikes.
Neutral rates could diverse from levels calculated based on conventional analysis.
As a central bank, won't comment on benchmark JGB yield hitting 3%.
We will monitor bond market situations carefully, though we don't believe Japan is an exceptional case.
It's not a foregone conclusion that the next hike will be 0.25%.
Rate hike pace should be assessed at every meeting. Generally speaking, consecutive rate hikes could be a possibility.
Market reaction
At the time of writing, the USD/JPY pair is up 0.10% on the day at 160.35.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- The Indian Rupee opens flat against the US Dollar on Wednesday after a strong Tuesday.
- Hawkish Fed bets could act as a headwind for the Indian currency.
- India’s growth outlook improves on expectations of strong festive demand.
The Indian Rupee (INR) opens flat at around 94.95 against the US Dollar (USD) on Wednesday, but is close to its two-month low of 94.80 posted the previous day. The Indian currency is expected to face selling pressure against the US Dollar, as the latter has strengthened due to increasing expectations that the Federal Reserve (Fed) will tighten its monetary policy at the policy meeting this month.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.13% higher to near 99.80, the highest level seen in over two weeks.
Strategists at Brown Brothers Harriman (BBH) said that Fed funds futures now “price in 67% odds of a 25bps hike on September 16 and imply 60bps of tightening over the next twelve months.”
De-anchored inflation expectations fuel hawkish Fed bets
Rising global inflation projections due to continuously surging oil prices amid fears of prolonged global energy supply disruption on the back of ongoing tensions between the United States (US) and Iran have boosted Fed interest rate hike expectations.
According to Kpler’s data, only five vessels passed through the vital waterway, well below the 10-day average of about 14 vessels, Al Jazeera reported.
Continuous exchange of attacks between the US and Iran near the Strait of Hormuz, a key passage to almost one-fifth of global energy supply, has forced ship sailors to avoid the route.
On Tuesday, US President Donald Trump said in a post on Truth Social that Washington is striking Iranian targets near the Strait of Hormuz in retaliation for Iran’s "failed attempt" to add sea mines in the Strait, which currently “has no mines.” Trump added that the US base at Jordan successfully knocked down all eight missiles launched by Tehran.
US data awaited
Financial markets keenly await the US Nonfarm Payrolls (NFP) data for August, which will be released on Friday. The official employment is expected to have a significant impact on Fed’s interest rate projections.
In Wednesday’s session, investors will focus on the US ADP Employment Change data for August, which will be published at 12:15 GMT. According to estimates, the US private sector created 48K fresh jobs, slightly higher than 44K in July.
Experts lift India’s growth outlook on stronger data and festive tailwinds
Strategists at Standard Chartered have raised their outlook for India’s economy, saying they now “revise our FY27 (year ending March 2027) GDP growth forecast to 7.2% from 6.6%.” They note that they had “previously highlighted upside risks amid reasonably strong economic activity despite the oil supply and price shock,” and the latest data have reinforced that view.
According to the bank, the upgrade “reflects stronger-than-expected Q1-FY27 (quarter ended June 2026) GDP growth of 7.8%, versus consensus – including us – of 7.3%; continued momentum in July, as indicated by our composite economic indicator; and the likelihood that activity and sentiment remain supportive into the festival season.” In line with the more upbeat tone of recent high-frequency data, Standard Chartered adds that “given the strength of high-frequency indicators so far, we now expect Q2-FY27 GDP growth of 7.4%, versus 6.6% previously.”
The bank still anticipates some moderation later in the fiscal year, cautioning that “we still expect growth to slow in H2-FY27, reflecting the adverse impact of El Niño on agricultural output and rural demand, higher inflation, and fading tailwinds from GST cuts delivered from September 2025.” Even so, they emphasise that “momentum should be stronger than previously expected,” and now “forecast H2-FY27 GDP growth of 6.7%, versus 6.5% previously.”
Technical Analysis: USD/INR stabilizes below 20-day EMA
In the daily chart, USD/INR trades at 94.95, maintaining a bearish near-term tone as spot holds below the 20-period Exponential Moving Average (EMA) at 95.41. The pair is sliding away from this dynamic cap, while the Relative Strength Index (RSI) around 35 suggests persistent downside momentum, hinting that buyers remain on the defensive despite intermittent pauses.
On the downside, the two-month low at 94.80 is the key support level; a decisive move below it could expose the pair to the June low at 94.15. Looking up, the 20-day EMA will act as a dynamic barrier for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- USD/CHF gains as the US Dollar advances on Fed rate hike fears.
- Global bond selloff pushed US 10-year Treasury yields to 4.80%.
- BBH’s Haddad notes the zero-rate environment and low inflation make the Swiss Franc Q3’s worst-performing G10 currency.
USD/CHF gains for the second successive day, trading around 0.8130 during the Asian hours on Wednesday. The pair appreciates as the US Dollar (USD) advances amid rising bond yields and surging oil prices, which have reignited concerns over persistent inflation and the likelihood of potential interest rate hikes.
Driven by a global bond selloff, the US 10-year Treasury yield surged to 4.80%, reaching its highest level since early 2025. Compounding these inflationary pressures, crude oil prices jumped significantly following escalating hostilities between the United States and Iran, intensifying worries over potential energy flow disruptions from the Middle East.
Meanwhile, recent economic data from the US offers a mixed backdrop for broader market sentiment. July JOLTS job openings fell below market expectations at 7.27 million, while the ISM Manufacturing PMI eased slightly from 55.6 to 54.6 in August. Despite missing forecasts, the PMI remains firmly in expansion territory, pointing to a resilient manufacturing sector. Investors are now turning their attention to the upcoming ADP employment report and Friday's Nonfarm Payrolls to gauge the Federal Reserve's next move on interest rates.
Switzerland's SVME Purchasing Managers' Index (PMI) rebounded sharply to 57.1 in August from July's five-month low of 53.2, marking its highest reading since May. This manufacturing momentum is mirrored in consumer activity, with July Real Retail Sales accelerating 2.3% year-over-year, beating the 1.3% forecast and building on June's revised 1.9% growth rate. Investors are keeping a close watch on upcoming SVME PMI updates later today for further clues on economic momentum.
Franc underperforms as SNB’s steady stance weighs on CHF
Brown Brothers Harriman’s Elias Haddad underscores the impact of Switzerland’s subdued inflation backdrop and the SNB’s extended hold at 0.00%, noting that “CHF is the worst performing G10 currency so far this quarter,” as the low-yield environment continues to sap support for the Franc.
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 attracts some follow-through selling as oil-driven inflation risks reaffirm Fed hike bets.
- Escalating US-Iran tensions benefit the safe-haven USD, further weighing on the commodity.
- The market focus remains glued firmly on the release of the crucial US NFP report on Friday.
Gold (XAU/USD) recovers slightly from a nearly four-week low, which it touched during the Asian session on Wednesday, and currently trades just above the $4,300 mark, still down over 0.50% for the day. The escalating Middle East conflict lifted crude oil prices to a fresh high since July 24, stoking inflation fears and reaffirming US Federal Reserve (Fed) rate hike bets. Adding to this, some follow-through US Dollar (USD) buying is seen exerting downward pressure on the bullion and should cap the upside.
Tensions between the US and Iran reignited following a US strike on Iranian rocket launchers near Larak Island in the Strait of Hormuz on Sunday. This was the first US strike since late July, prompting an Iranian counterattack on US-linked targets in the region. Adding to this, the Central Command (CENTCOM) said on Tuesday that US forces struck Islamic Revolutionary Guard Corps (IRGC) targets. In response, Iran escalated the confrontation and launched heavy ballistic missile and drone attacks on American interests in Bahrain, Kuwait and Jordan on Wednesday. This keeps the geopolitical risk premium in play, supporting crude oil prices and the safe-haven Greenback.
Meanwhile, investors remain worried that elevated energy prices will rekindle inflationary pressures and force major central banks, including the US Fed, to adopt a more hawkish stance. Adding to this, Fed Chair Kevin Warsh's comments at the Jackson Hole Symposium on Friday continue to fuel expectations of a rate hike in September. Furthermore, concerns about fiscal debt led to a deepening global bond market sell-off, pushing the yield on the benchmark 10-year US Treasury to its highest level since January 2025. This is seen as another factor that continues to drive flows away from the non-yielding Gold and backs the case for a further near-term depreciating move.
US 10-year yields seen grinding toward 5%
Societe Generale’s rates strategists warn that the latest sell-off leaves the US curve vulnerable to further upside in long-end yields, noting that “at this pace, US 10s are on track for 5%.” They frame the move as part of an ongoing bear steepening, with investors increasingly testing how much additional term premium the market will demand as policy expectations remain skewed toward further Fed tightening.
Traders, however, might opt to wait for the release of the closely watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday. The crucial labor market data will be looked at for more cues about the Fed's future policy outlook, which, in turn, will influence the USD price dynamics and provide a fresh impetus to the precious metal. In the meantime, the aforementioned fundamental backdrop seems tilted in favor of bearish traders and suggests that the path of least resistance for the Gold price remains to the downside. Hence, any attempted recovery might still be seen as a selling opportunity and runs the risk of fizzling out quickly.
XAU/USD daily chart
Technical Analysis
An intraday break below the 50% retracement level of the recent recovery from the year-to-date low, touched in July, could be seen as a key trigger for XAU/USD bears. Moreover, the Moving Average Convergence Divergence (MACD) is deeply negative and below the zero line, while the Relative Strength Index (RSI) hovers near 44, hinting at fading bullish momentum. However, some follow-through selling below the 200-day Exponential Moving Average (EMA) at around $4,276 is needed to back the case for further losses.
The said support is followed by the 61.8% Fibonacci retracement at around $4,236, which, if broken, would expose the 78.6% retracement near $4,111 and the prior swing low region around $3,952. On the topside, initial resistance emerges at the 50.0% retracement near $4,324, ahead of a tighter hurdle at the 38.2% retracement around $4,412, with a stronger barrier further up at the 23.6% level near $4,521.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- AUD/USD turns lower following the better-than-expected Australian GDP-led uptick to mid-0.7100s.
- Rising Fed rate hike bets and escalating US-Iran tensions underpin the USD, weighing on spot prices.
- A break below the 0.7125 confluence should pave the way for additional losses amid a mixed setup.
The AUD/USD pair drops to a one-and-a-half-week low during the Asian session on Wednesday and currently trades around the 0.7135 region, down for the second straight day.
The initial market reaction to Australia's better-than-expected Q2 GDP print fades rather quickly amid some follow-through US Dollar (USD) buying, bolstered by rising US Federal Reserve (Fed) rate hike bets and escalating US-Iran tensions. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside and backs the case for an extension of the recent pullback from levels just above the 0.7200 mark, or the highest since mid-May, touched last Friday.
Any subsequent fall is more likely to find decent support near the 0.7125 confluence – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 23.6% Fibonacci retracement level of the June-August rally. This, in turn, suggests a supportive technical backdrop, even as the Relative Strength Index (14) eases back toward the mid-30s. Moreover, the Moving Average Convergence Divergence (MACD) hints at waning momentum rather than an outright bearish reversal.
A convincing break below the said support, however, would expose subsequent Fibonacci supports near 0.7074, 0.7033 and 0.6992, with broader structure extending toward 0.6934 and 0.6860. On the top side, the 0.7170 horizontal zone could act as an immediate hurdle ahead of the 0.7200 mark, which, if conquered, will be seen as a fresh trigger for bullish traders. Nevertheless, the AUD/USD pair keeps the short-term bullish tone intact as long as it sustains trading above the 0.7125 confluence.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD 4-hour chart
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Australian Bureau of Statistics on a quarterly basis, is a measure of the total value of all goods and services produced in Australia during a given period. The GDP is considered as the main measure of Australian economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Wed Sep 02, 2026 01:30
Frequency: Quarterly
Actual: 0.4%
Consensus: 0.3%
Previous: 0.3%
Source: Australian Bureau of Statistics
The Australian Bureau of Statistics (ABS) releases the Gross Domestic Product (GDP) on a quarterly basis. It is published about 65 days after the quarter ends. The indicator is closely watched, as it paints an important picture for the economy. A strong labor market, rising wages and rising private capital expenditure data are critical for the country’s improved economic performance, which in turn impacts the Reserve Bank of Australia’s (RBA) monetary policy decision and the Australian dollar. Actual figures beating estimates is considered AUD bullish, as it could prompt the RBA to tighten its monetary policy.
- EUR/USD softens to around 1.1575 in Wednesday’s early European session.
- Further consolidation cannot be ruled out with directionless RSI momentum.
- The first upside barrier emerges at 1.1600; the initial support level to watch is 1.1565.
The EUR/USD pair loses traction to near 1.1575 during the early European session on Wednesday. The US Dollar (USD) strengthens against the Euro (EUR) amid hawkish Federal Reserve (Fed) stance and escalating Middle East geopolitical tensions. Traders will keep an eye on the Eurozone Retail Sales and US employment data, which are due on Friday.
Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed it has launched a “heavy” ballistic missile attack on Prince Hassan airbase and a US Marine base in Jordan in response to earlier US strikes that killed civilians.
The US military said that its forces completed a wave of strikes against Iranian targets on Tuesday after what it said were attempted attacks by Iran against commercial shipping and American service members. Signs of rising tensions in the Middle East boost the safe-haven flows, supporting the Greenback and creating a headwind for the major pair.
Furthermore, Fed Chair Kevin Warsh’s hawkish remarks at the Jackson Hole symposium might contribute to the USD’s upside. Warsh warned last week that policymakers may need to tighten again if inflation fails to move convincingly towards 2%. Traders raise their bets on a September rate hike after Warsh’s comments.
Expectations of a September Fed rate hike rose to 68%, up from below 40% before the speech, according to the CME FedWatch tool.
Eurozone inflation risks keep ECB bias tilted toward further tightening
BNY’s Geoff Yu highlights that ECB officials remain wary of the inflation outlook, noting that one policymaker “warned that prolonged disruption could sustain inflation pressure even without a wage-price spiral.” According to Yu, “that framing reinforces the path toward another ECB hike in September”: in his view, “policymakers appear increasingly unwilling to wait for second-round effects before acting,” with the ECB “more assertive than its peers” in leaning against the risk that price pressures become entrenched.
Technical Analysis: EUR/USD retains a neutral outlook in the near term
In the daily chart, EUR/USD sits just above the 100-day simple moving average (SMA), which lends immediate support, but it remains below the 20-day Bollinger middle band, leaving spot marginally capped within its recent range. The Relative Strength Index (RSI) at 49.8 is effectively neutral, suggesting directionless momentum as price consolidates between nearby support and overhead resistance bands.
On the topside, the immediate resistance level is located at 1.1600, representing the Bollinger middle band and the psychological level. A more significant barrier is seen at the upper Bollinger band near 1.1710, where recent rallies would likely face supply.
On the downside, immediate support is defined by the 100-day SMA at 1.1565. A break below this level would expose the lower Bollinger band around 1.1490, opening the door to a deeper pullback within the broader consolidation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 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.
- NZD/USD hovers around the lower boundary of the ascending channel at 0.5850.
- The 14-day Relative Strength Index has retreated toward the low 40s, signaling fading downside momentum.
- The immediate barrier lies at the 50-day EMA of 0.5864.
NZD/USD gains ground for the second consecutive day, trading around 0.5840 during the Asian hours on Wednesday.
During the September Monetary Policy Review, RBNZ Governor Anna Breman stated that the official cash rate (OCR) track remains closely aligned with the May projections. Breman noted that moving the OCR toward a neutral stance remains accommodative, allowing the central bank to curb inflation while supporting the broader economy. Breman added that policymakers may need additional time to evaluate the full impact of their current monetary stance. Earlier on, Breman and her colleagues hiked the Official Cash Rate (OCR) by 25 basis points (bps) to 2.75%, as widely expected.
Technical analysis of the daily chart suggests the NZD/USD pair remains within an ascending channel pattern, indicating a bullish bias is still active. However, NZD/USD maintains a bearish near-term tone as it sits below the 50-period Exponential Moving Average (EMA) and the nine-period EMA. The 14-day Relative Strength Index (RSI) has retreated toward the low-40s, hinting that downside momentum is building while rallies are likely to face selling pressure against this overhead EMA cluster.
The NZD/USD pair is hovering around the lower boundary of the ascending channel at 0.5850. A sustained break below the channel would confirm the confirm the bearish reversal and put downward pressure on the pair to explore the region around a nearly 17-month low of the 14-month low of 0.5580, which was recorded in November 2025. Further support lies at 0.5485, the lowest since March 2020.
On the upside, the NZD/USD pair may rebound and test the immediate barrier at the 50-day EMA of 0.5864, followed by the nine-day EMA at 0.5907. A break above these moving averages would revive the bullish bias and support the pair to approach the six-month high of 0.5996.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.13% | -0.02% | 0.18% | 0.16% | 1.02% | 0.19% | |
| EUR | -0.15% | -0.03% | -0.13% | 0.04% | 0.02% | 0.85% | 0.04% | |
| GBP | -0.13% | 0.03% | -0.11% | 0.05% | 0.03% | 0.85% | 0.06% | |
| JPY | 0.02% | 0.13% | 0.11% | 0.18% | 0.16% | 0.98% | 0.18% | |
| CAD | -0.18% | -0.04% | -0.05% | -0.18% | -0.02% | 0.81% | 0.00% | |
| AUD | -0.16% | -0.02% | -0.03% | -0.16% | 0.02% | 0.83% | 0.04% | |
| NZD | -1.02% | -0.85% | -0.85% | -0.98% | -0.81% | -0.83% | -0.79% | |
| CHF | -0.19% | -0.04% | -0.06% | -0.18% | -0.00% | -0.04% | 0.79% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- USD/JPY consolidates near its highest level since late July, set earlier this Wednesday.
- Japan’s fiscal woes and the rate gap undermine the JPY, lending support amid a firmer USD.
- The bullish technical setup backs the case for an extension of a one-month-old uptrend.
The USD/JPY pair touches a fresh high since July 31 on Wednesday, though it lacks follow-through buying and remains below 160.50 through the Asian session.
The Japanese Yen (JPY) continues its relative underperformance on the back of fiscal concerns stemming from a surge in bond yields, which increases the cost of servicing Japan's massive debt pile. The US Dollar (USD), on the other hand, climbs to a nearly three-week top as oil-driven inflation fears reaffirm bets for a September interest rate hike by the Federal Reserve (Fed) amid escalating US-Iran tensions.
Furthermore, the persistent wide US-Japan interest rate differential keeps the so-called JPY carry trade active and backs the case for a further near-term appreciating move for the USD/JPY pair. However, expectations for faster policy tightening by the Bank of Japan (BoJ) cap the upside as traders await the release of the US Nonfarm Payrolls (NFP) report on Friday.
From a technical perspective, momentum indicators remain constructive, with the Relative Strength Index (RSI) hovering in the mid-60s and the Moving Average Convergence Divergence (MACD) line holding slightly positive. This hints that buyers retain control and suggests that the underlying demand is still present despite the recent consolidation. The USD/JPY pair is looking to build on its strength beyond the 200-period Simple Moving Average (SMA) on the 4-hour chart.
Meanwhile, the 61.8% Fibonacci retracement level of the sharp corrective decline from a four-decade high, at 160.64, could act as the first notable topside barrier, capping immediate upside. A clear break above would open the way toward the 78.6% level at 162.10, with the July swing high around 163.96 standing as a more distant resistance, where bullish pressure could begin to fade.
On the downside, initial support aligns at the 50.0% Fibo. retracement at 159.62, creating a cushioning zone if the USD/JPY pair pulls back. A deeper slide would expose subsequent supports at the 38.2% retracement around 158.59 and then the 23.6% Fibo. level near 157.32.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price Last 30 days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 30 days. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.24% | -0.04% | 1.91% | -0.66% | -1.35% | 1.08% | 0.80% | |
| EUR | 0.24% | 0.22% | 2.21% | -0.37% | -1.01% | 1.35% | 1.05% | |
| GBP | 0.04% | -0.22% | 1.62% | -0.62% | -1.23% | 1.13% | 0.83% | |
| JPY | -1.91% | -2.21% | -1.62% | -2.45% | -3.06% | -0.69% | -1.00% | |
| CAD | 0.66% | 0.37% | 0.62% | 2.45% | -0.61% | 1.81% | 1.46% | |
| AUD | 1.35% | 1.01% | 1.23% | 3.06% | 0.61% | 2.38% | 2.09% | |
| NZD | -1.08% | -1.35% | -1.13% | 0.69% | -1.81% | -2.38% | -0.30% | |
| CHF | -0.80% | -1.05% | -0.83% | 1.00% | -1.46% | -2.09% | 0.30% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- GBP/USD weakens to around 1.3500 in Wednesday’s early European session.
- The US launched strikes against targets in Iran, raising fears of wider war.
- BoE's Bailey sees 'subdued' second-round inflation effects for now.
The GBP/USD pair declines to near 1.3500 during the early European trading hours on Wednesday. Ongoing tensions in the Middle East provide some support to a safe-haven currency such as the US Dollar (USD) against the British Pound (GBP). All eyes will be on the US August jobs report later on Friday.
CNBC reported that the US and Iran traded a new round of attacks Tuesday, with American forces striking Iranian targets around the critical waterway and Tehran saying it had launched a retaliatory operation targeting US interests across the region.
US President Donald Trump said the strikes were in retaliation for Iran trying to put mines in the critical waterway and for an earlier attack on a military base. He warned of more attacks to come if Tehran responded.
Bank of England (BoE) Governor Andrew Bailey downplayed the inflationtion threat, sayhat the United Kingdom (UK) is not yet experiencing significant second-round inflation effects. Markets are fully pricing in a 25 basis points (bps) hike this year and another by the spring, according to Bloomberg.
“We’re seeing quite subdued second-round effects, I think we’ve seen a softening labor market for some time now,” said Bailey. “I’ve taken the view that I think we can watch this situation for the moment,” he added.
GBP downside risks persist as UOB keeps focus on 1.3480
Strategists at UOB Group maintain a cautious stance on GBP, reiterating that while they had previously highlighted last Friday (28 Aug, spot at 1.3595) that GBP “could edge lower,” they initially expected “any decline could be contained within a 1.3550/1.3645 range.” However, after the Pound slipped to a low of 1.3527, they noted yesterday (31 Aug, spot at 1.3540) that “the risk remains on the downside, and the level to watch is 1.3480.” UOB adds that they “will continue to hold the same view as long as GBP holds below 1.3600,” keeping 1.3600 unchanged as the “strong resistance” level.
Technical Analysis: GBP/USD keeps a bullish vibe above the 100-day SMA
In the daily chart, GBP/USD holds a modest bullish bias as spot remains above the 100-day simple moving average (SMA) and the lower Bollinger Band, suggesting underlying demand on dips. However, price is still trading below the Bollinger mid-line, indicating that upside traction is not yet dominant, while the Relative Strength Index (RSI) at about 47 keeps momentum in a neutral-to-slightly consolidative stance.
On the topside, initial resistance emerges at the Bollinger middle band around 1.3550, where a daily close above would open the door toward the upper Bollinger Band near 1.3665. On the downside, immediate support is defined by the recent price area around 1.3500, with the 100-day SMA at 1.3443 and the lower Bollinger Band at 1.3435 forming a nearby demand cluster that, if broken, would undermine the current constructive bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Reserve Bank of New Zealand’s (RBNZ) Governor Anna Breman presents the prepared remarks on the Monetary Policy Review (MPR) and responds to media questions at the press conference after the September monetary policy announcement.
Earlier on, Breman and her colleagues hiked the Official Cash Rate (OCR) by 25 basis points (bps) to 2.75%, as widely expected.
RBNZ press conference key quotes
Key question is whether economic recovery broadens as expected.
OCR track is very similar to one we had in May.
We can bring inflation down while supporting economy.
Moving OCR up toward neutral, still accomodative.
May need to take some time to assess stance of policy.
Stressing not on a preset course, rate rise timing highly uncertain.
Election does not come into our policy decision.
Likely there will be a further OCR increase, will assess impact of hikes already done.
Export sector has been significantly stronger than anticipated.
This section below was published at 02:00 GMT following the Reserve Bank of New Zealand (RBNZ) monetary policy announcements.
The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points (bps) to 2.75% from 2.50% after concluding the September monetary policy meeting on Wednesday.
The decision aligned with market expectations.
Summary of the RBNZ Monetary Policy Review (MPR)
The committee judges that gradually removing monetary stimulus is appropriate to return inflation to the 2 percent target mid-point while supporting growth and employment.
This decision reduces the risk that the OCR needs to increase by more later. Future policy decisions will depend on the committee's judgement of the balance of risks to medium-term inflation.
New Zealand's economic recovery has most likely resumed but remains uneven.
The committee remains vigilant and will respond as necessary to ensure inflation returns sustainably to the 2 percent target mid-point over the medium term.
The recovery is expected to strengthen and broaden.
The committee expects New Zealand's export sector to remain resilient and household spending to gradually increase.
Conditions in the labour market should improve.
Minutes of the RBNZ interest rate meeting
The monetary policy committee today reached consensus to increase the OCR to 25 basis points to 2.75 percent.
The committee decided by consensus to increase the OCR by 25 basis points to 2.75 percent
After lacklustre growth in the June quarter, New Zealand's economic recovery has most likely resumed but remains uneven.
Future policy will depend on the committee’s judgement of the balance of risks to medium-term inflation.
Recovery is expected to strengthen and broaden.
Conditions in the labour market should improve as the recovery gathers pace.
Committee judged that increasing the OCR to 2.75 percent is appropriate to sustainably return inflation to the 2 percent target mid-point.
The future OCR path is not pre-determined.
Indicators of medium-term inflation are consistent with inflation returning to target.
All members agreed that the central projection for the OCR is appropriate.
Conditional on the central economic outlook, members judged that the OCR may need to increase further.
On balance, the committee assesses that spare capacity remains in the economy, particularly in the labour market.
Hayley Gourley, Karen Silk, Prasanna Gai and Anna Breman saw upside risks to inflation relative to the central projection.
Paul Conway and Carl Hansen saw risks to inflation as balanced.
All members agreed that downside risks to activity were significant and that the recovery could remain uneven.
Key takeaways from RBNZ Monetary Policy Statement
RBNZ sees official cash rate at 2.81% in December 2026 (pvs 2.84%).
RBNZ sees official cash rate at 3.12% in September 2027 (pvs 3.11%).
RBNZ sees TWI NZD at around 66.9% in September 2027 (pvs 66.6%).
RBNZ sees annual CPI at 2.4% by September 2027 (pvs 2.0%).
RBNZ sees official cash rate at 3.15% in December 2027 (pvs 3.15%).
RBNZ sees official cash rate at 3.28% in September 2029.
NZD/USD reaction to the RBNZ interest rate decision
The New Zealand Dollar (NZD) has come under intense selling pressure in an immediate reaction to the RBNZ interest rate decision. The NZD/USD pair currently trades at 0.5857, down 0.58% on the day.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.07% | 0.03% | 0.10% | -0.01% | 0.74% | 0.14% | |
| EUR | -0.11% | -0.04% | -0.06% | -0.01% | -0.11% | 0.61% | 0.03% | |
| GBP | -0.07% | 0.04% | -0.02% | 0.03% | -0.08% | 0.62% | 0.07% | |
| JPY | -0.03% | 0.06% | 0.02% | 0.05% | -0.06% | 0.66% | 0.09% | |
| CAD | -0.10% | 0.00% | -0.03% | -0.05% | -0.11% | 0.61% | 0.04% | |
| AUD | 0.00% | 0.11% | 0.08% | 0.06% | 0.11% | 0.72% | 0.16% | |
| NZD | -0.74% | -0.61% | -0.62% | -0.66% | -0.61% | -0.72% | -0.56% | |
| CHF | -0.14% | -0.03% | -0.07% | -0.09% | -0.04% | -0.16% | 0.56% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
This section below was published on September 1 at 22:00 GMT as a preview of the Reserve Bank of New Zealand (RBNZ) interest rate decision.
- The Reserve Bank of New Zealand is set to hike the key interest rate to 2.75% on Wednesday.
- RBNZ Governor Breman’s comments and updated OCR forecasts will be closely scrutinized.
- The RBNZ policy announcements could intensify volatility around the New Zealand Dollar.
The Reserve Bank of New Zealand (RBNZ) is on track to deliver a follow-through interest rate hike, raising the Official Cash Rate (OCR) by another 25 basis points (bps) from 2.50% to 2.75% on Wednesday.
Experts expect a consensus decision this week, unlike a deeply divided outcome predicted during the July monetary policy meeting.
The RBNZ interest rate announcement is due at 02:00 GMT, accompanied by the Monetary Policy Review (MPR), Monetary Policy Statement (MPS) and the Minutes of the meeting. Governor Anna Breman’s press conference will follow at 03:00 GMT.
The New Zealand Dollar (NZD) is set to experience intense volatility as all eyes are on the Kiwi central bank’s signals on the monetary policy outlook, particularly amid an uncertain environment caused by the prolonged Middle East conflict.
What to expect from the RBNZ interest rate decision?
Following July’s hawkish hike, the RBNZ said in its Monetary Policy Review (MPR) that “with inflation still above target and economic activity expected to strengthen, some further reduction in monetary stimulus is likely to be required to return inflation to the 2 percent target mid-point.”
The Minutes of the July meeting showed that “the committee agreed that while further OCR increases appear likely at upcoming meetings, their timing is highly uncertain.”
That leaves the upcoming September meeting as a ‘live’ one, with another rate hike fully baked in. Therefore, the main focus will be on whether Breman and company offer any hints on the likelihood of further tightening in October.
Additionally, the economic backdrop gives the RBNZ a reason to stay hawkish. Headline inflation was 4.1% year-on-year in the June quarter, exceeding the central bank's 3.9% forecast.
At the same time, inflation expectations have eased for the third quarter, and the labor market remains soft, with the Unemployment Rate rising to 5.6%. This creates a difficult balancing act, as inflation remains too high, with the recovery still fragile.
That said, the RBNZ updated projections, particularly the OCR forecast, will also be closely scrutinized for any signals on the scope and the timing of further rate increases.
How will the RBNZ interest rate decision impact the New Zealand Dollar?
If RBNZ policymakers signal that another hike in October is more likely than not or raise their projected terminal OCR from around 3.28%, the NZD could stage a solid recovery against the US Dollar (USD). Westpac says markets could then price hikes in both October and December, taking the OCR toward 3.25% by year-end.
On the other hand, if the Kiwi central bank flips to wait-and-see mode to assess the economy after the recent streak of rate rises, markets could scale back expectations for another lift-off in October. That would exert additional downside pressure on the NZD/USD pair.
With a 25 bps rate hike largely priced in, the surprise may come from the RBNZ’s guidance on the next two meetings.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD:
“The pair has cracked the 21-day simple moving average (SMA) near 0.5900, while holding a bullish near-term bias as it remains above the 50-, 100- and 200-day simple moving averages (SMAs), clustered between roughly 0.5823 and 0.5849. The Relative Strength Index (14) near 50 hints at consolidative momentum after the recent advance. ”
“On the downside, initial support emerges at a broader demand zone defined by the 100- and 200-day SMAs at 0.5845–0.5847, with the 50-day SMA at 0.5819 reinforcing the medium-term floor if a deeper pullback unfolds. Conversely, if NZD/USD resumes its recent uptrend, the first critical resistance is aligned at the 12-week high of 0.5989, above which the 0.6050 psychological level will come into play.”
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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