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ABN AMRO’s Georgette Boele highlights that EUR/PLN has risen as interest rate expectations diverge between the Eurozone and Poland. The National Bank of Poland kept rates at 3.75% and appears divided on a possible 25bp cut after summer, while ABN AMRO expects the ECB to hike once more to a 2.5% deposit rate. This policy divergence has led the bank to upgrade its EUR/PLN forecasts.

NBP and ECB on different paths

"Since the start of June, the Polish złoty has fallen by 3% against the euro."

"Interest rate expectations in the eurozone and Poland have been an important driver for direction in EUR/PLN."

"Expectations that the NBP and the ECB will move in opposite directions have pushed EUR/PLN higher, meaning a weaker złoty."

"We have upgraded our EUR/PLN forecasts to reflect this policy divergence for this year."

"If the NBP sounds more dovish than expected, EUR/PLN could move towards 4.40."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• Australia's annual headline inflation eased to 3.5% but came in above the 3.2% forecast.
• US headline PCE inflation stayed at 3.7%, above the 3.6% consensus, giving the US Dollar Index a modest lift.
• Reports of an Oman-Iran deal concerning the Strait of Hormuz steadied risk sentiment.

AUD/USD is trading around 0.7170 on Wednesday, down slightly after a hot Australian inflation print ran straight into a firmer US Dollar.

Australia's monthly Consumer Price Index (CPI) climbed 1% in July, above the 0.8% forecast, lifting the annual rate to 3.5%. The trimmed mean measure of the Reserve Bank of Australia's (RBA) preferred core gauge rose 0.5% on the month and held at 3.6% YoY, above the 3.5% forecast.

The US Dollar found support of its own. Annual Personal Consumption Expenditure (PCE) inflation, the Federal Reserve's (Fed) preferred measure, held at 3.7%, above the 3.6% consensus, while the core PCE Price Index stayed at 3.3% as expected. Both rose 0.2% on the month.

Iran and Oman announced this week that they have completed their agreement over management of the Strait of Hormuz, but the US is not party to the agreement and has threatened Oman for making a separate deal that excludes it. A calmer Gulf would normally help risk-sensitive currencies like the Aussie.

Technical Analysis:

On the 4-hour chart, AUD/USD trades at 0.7171, holding a constructive bullish tone as it remains above both the 20-period Simple Moving Average (SMA) at 0.7164 and the longer-term 100-period SMA at 0.7090. The pair is testing a tight band of overhead supply just under recent highs, while the 14-period Relative Strength Index (RSI) around 60 stays in positive territory, hinting that upside momentum is still present but shy of overbought conditions.

On the topside, immediate resistance appears at the nearby horizontal barrier at 0.7175, followed by the recent cap around 0.7188. On the downside, initial support is clustered at 0.7168, reinforced by the 20-period SMA at 0.7164 and the horizontal level at 0.7160, before a deeper structural floor emerges at the 100-period SMA near 0.7090.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Commerzbank’s Dr. Henry Hao and Charlie Lay underscore that Taiwan’s industrial production and exports are surging on AI and high-performance computing demand. July manufacturing output and export orders point to Q3 GDP growth around 12–12.5% year-on-year, after 12.9% in Q2. Despite stellar growth, inflation near 2.1% keeps the CBC comfortable holding its policy rate at 2%.

AI-driven strength with steady policy

"Taiwan’s industrial production remained strong in July, rising 25.6% yoy (Bloomberg consensus: 20.7%) vs 22.6% in June. Manufacturing output increased 26.9% yoy vs 24% previously."

"The strength was once again led by the technology sector, with output of computers, electronics and optical products surging 95.6% yoy, while electronic components rose 22.7%. Importantly, the improvement was not confined to technology, with machinery output rising 19.8% and basic metals 13.2%, although chemicals and autos remained weak."

"The Ministry of Economic Affairs expects manufacturing growth to remain very strong at 25.5-28.9% yoy in August, supported by AI, high-performance computing and the traditional peak season for electronics."

"The latest data point to further upside risk to already exceptionally strong GDP growth. Q2 GDP expanded 12.9% yoy, and the government recently raised its 2026 growth forecast sharply to 11.05%, reflecting booming AI-related exports and investment."

"July exports rose 32.9% yoy and export orders surged 61.9% yoy, pointing to continued strong external demand at the start of Q3. Together with the latest production data, which suggests Q3 growth could remain around 12.0-12.5% yoy. The economy expanded by 14.2% in H1 2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/CAD gains 0.30% on Wednesday, with renewed US-Canada trade tensions weighing on the Canadian Dollar.
• Core Personal Consumption Expenditures inflation holds steady at 3.3% in July, in line with market expectations.
• Oil prices rise 0.60% to $81.20, offering some support to the Canadian currency and potentially limiting the pair’s upside.

USD/CAD rises 0.30% on Wednesday, trading around 1.3880 at the time of writing. The pair remains supported by renewed trade tensions between the United States (US) and Canada, which weigh on the Canadian Dollar (CAD), while the latest US inflation figures provide some support to the US Dollar (USD). However, rising Oil prices offer a tailwind to the commodity-linked Loonie and could limit further gains in the pair.

In the US, inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, stands at 3.7% YoY in July, unchanged from the previous month but above the 3.6% expected by markets. The core PCE Price Index, which excludes volatile food and energy components, remains steady at 3.3% YoY, in line with the market consensus. On a monthly basis, both the headline and core indices rise by 0.2%.

Attention now turns to the Jackson Hole Symposium, where Federal Reserve (Fed) Chair Kevin Warsh could provide further guidance on the monetary policy outlook. Markets will look for clues on how persistent inflation could affect the US central bank’s policy plans.

On the Canadian side, the Loonie remains caught between opposing forces. Trade tensions between Washington and Ottawa are putting pressure on the Canadian currency, but higher Oil prices provide some support. Oil rises 0.60% on Wednesday to around $81.20 at the time of writing. As Canada is a major Oil exporter to the US, higher energy prices generally provide a supportive backdrop for the Canadian Dollar.

Trade tensions remain a key headwind. Canadian Finance Minister Francois-Philippe Champagne announced retaliatory tariffs of up to 50% on a range of US products after negotiations failed to produce a trade agreement. US President Donald Trump responded by threatening another round of tariffs targeting Canadian cars, trucks, auto parts and steel.

Against this backdrop, USD/CAD maintains a positive bias around 1.3880. US-Canada trade tensions and sticky US inflation support the pair, while the rise in Oil prices provides some relief to the Canadian Dollar and could restrain the pair’s advance.

USD/CAD technical analysis

In the one-hour chart, USD/CAD trades at 1.3886, maintaining a bullish near-term tone as it holds above both the 100-period simple moving average (SMA) at 1.3817 and the 200-period SMA at 1.3838. The pair is also trading above the broken former downward resistance trend-line and the rising support trend-line at 1.3865, reinforcing a constructive structure. However, the Relative Strength Index (RSI) at 72 suggests overbought conditions, hinting that upside momentum could be prone to consolidation or a shallow pullback before a fresh leg higher.

On the topside, initial resistance is located at the horizontal barrier around 1.3910, where a clear break would open the way for a continuation of the uptrend. On the downside, immediate support is seen at the uptrend near 1.3865, followed by the 200-period SMA at 1.3838 and the 100-period SMA at 1.3817, while the prior trend-line around 1.3805 offers an additional structural floor if corrective pressures deepen.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• Gold trades lower as the US Dollar firms after the latest inflation data.
• Headline PCE exceeds forecasts, while core inflation comes in as expected.
• XAU/USD maintains a bullish technical bias above the 50-, 100- and 200-day SMAs.

Gold (XAU/USD) remains under pressure on Wednesday as the latest US inflation figures leave buyers reluctant to step back in. At the time of writing, XAU/USD trades around $4,618 after reaching $4,697 on Tuesday, its highest since May 14.

The headline PCE Price Index rose 0.2% MoM in July, above the 0.1% forecast and reversing the 0.1% decline recorded in June. On an annual basis, headline inflation held steady at 3.7%, above the 3.6% forecast.

Meanwhile, the core PCE Price Index, the Federal Reserve’s (Fed) preferred measure of underlying inflation, increased 0.2% MoM, matching market expectations but accelerating from June’s 0.1% rise. Annual core inflation held steady at 3.3%, also in line with forecasts.

The report follows relatively moderate July Consumer Price Index (CPI) and Producer Price Index (PPI) figures. Taken together, the data did little to alter expectations for the Fed’s upcoming meeting, with the CME FedWatch Tool showing a roughly 65% chance that the central bank will leave interest rates unchanged in September.

As a result, the inflation figures had a limited impact on Gold. As a non-yielding asset, the precious metal generally performs better when interest rates are low.

The US Dollar (USD) firms on Wednesday following the release, weighing modestly on Dollar-denominated Gold. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.20, up roughly 0.29% on the day.

However, the US Treasury’s decision last week to increase buybacks of longer-dated government securities has revived concerns about rising US debt and fiscal credibility. The return of the USD-debasement narrative continues to offer underlying support to Gold.

On the geopolitical front, Iranian Deputy Foreign Minister Kazem Gharibabadi stressed that the temporary transit deal with Oman does not mean the Strait of Hormuz has reopened. He said the waterway will stay closed until the United States fulfils its commitments under the Memorandum of Understanding (MOU). Even so, markets have taken the agreement as a positive step, with West Texas Intermediate (WTI) Oil falling for a third consecutive day and trading around $80.00 per barrel.

Technical analysis: XAU/USD bullish bias intact, RSI signals stretched momentum

On the daily chart, XAU/USD maintains a bullish bias above the 50-, 100- and 200-day Simple Moving Averages (SMAs). However, the Relative Strength Index (RSI) near 68 suggests buyers may be hesitant to chase the metal higher at current levels. The Moving Average Convergence Divergence (MACD) remains in positive territory, keeping the broader momentum tilted to the upside.

On the topside, initial resistance is seen at the 50.0% Fibonacci retracement at $4,774, followed by the 61.8% level at $4,968. A sustained break above these levels could expose the 78.6% Fibonacci retracement level at $5,245 and the all-time high of $5,598.25.

On the downside, immediate support is located at the 38.2% Fibonacci retracement at $4,579, followed by the 200-day SMA at $4,522 and the 100-day SMA at $4,378. A deeper pullback could bring the 23.6% retracement at $4,338 and the 50-day SMA near $4,193 into focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

TD Securities’ Robert Both analyzes the impact of new Section 338 US tariffs and Canada’s retaliation on the Canadian economy. The report estimates the combined measures will trim about 0.3 percentage points from GDP by 2027, with growth effects concentrated in late 2026. Fiscal supports of CAD 7.5bn are expected to partially cushion the blow while inflation effects remain contained.

Tariff escalation and growth outlook

"The higher tariff rate under Section 338 and lack of USMCA carve outs will push total policy-implied tariff rates towards 7.5% from ~5.0% over Q2, which would mark the highest rate since the 35% IEEPA tariffs were replaced with Section 122. That also compares to a 3.5% tariff rate if the proposed reductions to steel/aluminum (50% to 25%) and autos (15% from 25%) had gone ahead. As such, this marks a material escalation in the ongoing trade dispute between the US and Canada, though tariff impacts should prove less broad-based given the targeted nature of Section 338."

"We look for new 338 tariffs to shave ~0.3pp from the level of GDP by the end of 2027. Growth impacts will be front-loaded over late Q3/Q4, while the fiscal response is likely to stretch further into 2027. The direct hit from US tariffs will sap some momentum from what has been a sharp rebound in Canadian exports over the first half of 2026, with primary metals and motor vehicles contributing to recent strength, but we do not expect to see outright contractions in quarterly GDP."

"Canadian retaliation would raise ~$8.4bn in annual tariff revenues at 2025 import levels, which could pose a threat to the domestic inflation outlook, but total revenues will be smaller with substitution effects. Industrial goods will also account for a large share of CAD tariff revenues, with ~30% of revenues coming from steel products alone. That will help to mitigate the impact on consumer prices, which did not see material pass-through from the tariffs imposed over 2025."

"The Bank of Canada could prove more sensitive to upside inflation risks amid the ongoing supply shock to global energy supplies, but without further escalation we do not see domestic inflation impacts exceeding 0.2pp on CPI by the end of 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• USD/JPY rebounds as the US Dollar Index climbs after the US PCE release.
• Headline PCE exceeds forecasts, while core inflation matches expectations.
• The Yen receives little support from BoJ hike bets as fiscal worries dominate.

The Japanese Yen (JPY) gives up its earlier gains against the US Dollar (USD) on Wednesday as traders react to the latest United States (US) inflation data. At the time of writing, USD/JPY trades around 159.41, recovering from an intraday low of 158.88.

The headline Personal Consumption Expenditures (PCE) Price Index rose 0.2% MoM in July, above the 0.1% forecast and reversing the 0.1% decline recorded in June. On an annual basis, headline inflation held steady at 3.7%, above market expectations of 3.6%.

Meanwhile, the core PCE Price Index, the Federal Reserve’s (Fed) preferred measure of underlying inflation, increased 0.2% MoM, matching forecasts but accelerating from June’s 0.1% rise. Annual core inflation stayed unchanged at 3.3%, also in line with expectations.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.17, up roughly 0.25% on the day.

According to the CME FedWatch Tool, markets see a 65% chance that the US central bank will leave interest rates unchanged in September. Attention now turns to Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium on Friday for fresh guidance on the policy outlook.

In contrast, the Bank of Japan (BoJ) is widely expected to raise interest rates at its September meeting. A Reuters poll released on Wednesday showed that 57% of economists expect the central bank to lift its policy rate from 1.00% to 1.25%, up sharply from only 5% in the previous month’s survey.

Even so, BoJ rate-hike expectations are offering limited support to the Japanese Yen as concerns over Japan’s fiscal outlook dominate market sentiment. These worries have also limited the lasting impact of the recent joint Yen-buying intervention by Japan and the United States, with USD/JPY drifting back toward the 160 psychological mark.

Rabobank’s FX strategists note that the policy backdrop in Japan has shifted, with “the government has now indicated that it is supportive of tighter monetary policy.” However, they caution that this alone is unlikely to deliver a sustained recovery in the Yen. In their view, “for the JPY to strengthen, the market will likely need clear evidence of a more proactive stance from the BoJ in addition to reassurances about JGB supply,” while “fiscal concerns are set to persist at least until 2027 budget negotiations are underway later in the year, and potentially well beyond.”

ABN AMRO’s Georgette Boele notes that sentiment towards the Dollar is weakening as fiscal concerns and rising risk premia outweigh the support from higher US Treasury yields. The Treasury’s expanded buyback programme has failed to reassure investors, who remain focused on US debt dynamics and fiscal risks.

Dollar pressured by debt concerns

"Even before the announcement, the US dollar was struggling despite higher US Treasury yields, as investors were concerned about fiscal deficits and rising risk premia."

"After the announcement, US Treasury yields fell and the US dollar came under even more pressure across the board."

"The euro has benefited from this dollar weakness and is likely to continue doing so if the dollar falls further."

"In this environment, the risk premium appears to be a more important driver of the US dollar than nominal yields."

"Indeed, since the start of July, the US term premium has been on an upward trend, while the US dollar has moved lower."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The Australian Dollar (AUD) is outperforming across global FX markets following higher-than-expected Consumer Price Index (CPI) data for July, which sharply lifted expectations for additional Reserve Bank of Australia (RBA) interest-rate hikes. 

With annual headline inflation printing at 3.5% and the trimmed mean holding firm at 3.6%, markets now almost fully price in a 25-basis-point hike to 4.60% by year-end. While institutional strategists debate whether the RBA will pull the trigger at its upcoming September or November meetings, technical momentum continues to push AUD/USD toward key multi-week resistance levels.

Hot July inflation accelerates RBA rate hike expectations

According to TD Securities, the July CPI release delivered a clear inflation impulse that validates the RBA's recent hawkish warnings. With underlying price measures remaining at uncomfortable levels, the central bank may be forced to abandon its wait-and-see stance earlier than anticipated.

July CPI data now firmly lines up the September RBA meeting as live with a hike by year-end looking more likely. We retain our on-hold call but concede this is looking less tenable (...) Today's CPI outcome certainly adds weight to the discussion around the potential for the RBA delivering a hike by year-end and possibly as early as next month.

Commodity exposure cushions the Aussie downside

BBH notes that while futures markets are aggressively pricing in an RBA rate increase to 4.60%, restrictive financial conditions and labor market cooling could still tilt the central bank toward a prolonged hold. 

We still think the risk is skewed towards a more extended pause in the RBA tightening cycle because policy is already somewhat restrictive and the labor market is softening (...) Regardless, Australia’s attractive carry alongside the country’s strategic exposure to commodities linked to energy, AI, and defense remain key AUD tailwinds.

Technical momentum supports AUD/USD push toward 0.7200

UOB observes that AUD/USD’s short-term consolidation retains a firm upward bias. Following a close at 0.7165, the pair's technical structure favors continued gains within an elevated daily corridor, provided key support holds.

The tentative increase in upward momentum suggests AUD could edge higher today. However, any advance is likely to stay within a 0.7145-0.7180 range (...) AUD strength remains intact, and the level to watch is 0.7200. We will continue to hold the same view as long as 0.7120 is not breached.

AUD/USD: On the way to 0.7200?

The Australian Dollar is positioned for continued strength supported by sticky domestic inflation and robust fundamental tailwinds, the banks say. While TD Securities and BBH outline a shifting RBA policy debate between a year-end rate hike and an extended pause, UOB's technical outlook suggests that as long as spot prices remain comfortably above 0.7120, AUD/USD maintains the momentum required to test major overhead resistance at 0.7200.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Deutsche Bank expects Germany’s stronger-than-expected H1 2026 GDP performance to lift annual growth closer to 1% from the previous 0.5% forecast. Near-term transport headwinds should remain contained as Rhine water levels recover, although Q3 growth could temporarily stall. Private consumption remains a weak spot as 2.7% inflation erodes wage gains, while expansionary fiscal policy is expected to support investment into late 2026 and 2027.

Growth outlook lifted on stronger H1

"The German economy maintained its surprisingly robust recovery path in the first half of the year. The final Q2 GDP data brought an upward revision of the initially reported growth rate to 0.3% quarter-on-quarter. Together with the already surprisingly strong Q1 momentum of 0.4% and the positive statistical carry-over of almost 0.2 percentage points from 2025, this now puts our 2026 annual growth forecast significantly closer to 1% than the previously assumed 0.5%."

"The transport-related headwinds threatening the current third quarter are likely to remain contained for now, thanks to the weather-driven recovery in water levels at critical Rhine bottlenecks. This should largely put fears of a Q3 GDP contraction to rest, although a temporary slowdown in growth momentum, possibly to stagnation, cannot be ruled out."

"Private consumption is likely to remain a weak spot, as consumer price inflation—driven by elevated oil and gas prices—continues to erode purchasing power. In 2026 as a whole, we expect inflation, measured according to the national definition, to run at 2.7%, absorbing much of the projected 3% increase in collectively agreed wages. This is also reflected in still subdued consumer sentiment."

"However, the expansionary fiscal stance continues to support growth. Its effects are likely to become increasingly visible in the real economy during the second half of the year, providing a particular boost to investment momentum in late 2026 and 2027. The federal deficit is projected to rise to 4.1% of nominal GDP in 2026 and 4.2% in 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)