Forex News
- USD/JPY attracts heavy selling for the second straight day amid a combination of negative factors.
- Intervention fears and a more hawkish BoJ repricing boost the JPY amid a broadly weaker USD.
- The technical setup favors bears and backs the case for a further near-term depreciating move.
The USD/JPY pair remains under intense selling pressure for the second straight day and plummets to a nearly four-week low, around the 157.25-157.20 region during the early European session on Thursday.
Traders remain on high alert amid speculation that authorities had conducted a rate check, which signals the possibility of an intervention to support the Japanese Yen (JPY). Furthermore, more hawkish repricing of Bank of Japan (BoJ) rate hike expectations provides a strong boost to the JPY. This, along with a broadly weaker US Dollar (USD), is seen exerting downward pressure on the USD/JPY pair.
From a technical perspective, Wednesday's failed attempt to conquer the 200-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent decline favor bearish traders. Moreover, the Moving Average Convergence Divergence (MACD) indicator is negative, while the Relative Strength Index (RSI) sits in oversold territory, suggesting persistent downside pressure on the USD/JPY pair.
Hence, some follow-through weakness below the 157.00 mark, towards testing the 156.60-156.50 horizontal support, looks like a distinct possibility. The downward trajectory could extend further toward challenging the August monthly swing low, around the 155.25-155.20 region, with some intermediate support near the 156.00 round figure.
On the topside, any attempted recovery is likely to attract fresh sellers near 158.00, which should cap the USD/JPY pair near the 158.40-158.50 pivotal resistance. The momentum might then lift spot prices beyond 159.00, towards the 200-period SMA, around the 160.00 psychological mark. Acceptance above the latter would be needed to ease the current bearish bias and signal a more sustainable rebound.
(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 This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | 0.33% | -1.73% | -0.60% | -0.09% | 1.17% | 0.16% | |
| EUR | 0.20% | 0.53% | -1.52% | -0.41% | 0.10% | 1.32% | 0.38% | |
| GBP | -0.33% | -0.53% | -2.14% | -0.93% | -0.43% | 0.79% | -0.24% | |
| JPY | 1.73% | 1.52% | 2.14% | 1.07% | 1.66% | 2.83% | 1.82% | |
| CAD | 0.60% | 0.41% | 0.93% | -1.07% | 0.52% | 1.75% | 0.70% | |
| AUD | 0.09% | -0.10% | 0.43% | -1.66% | -0.52% | 1.22% | 0.19% | |
| NZD | -1.17% | -1.32% | -0.79% | -2.83% | -1.75% | -1.22% | -1.02% | |
| CHF | -0.16% | -0.38% | 0.24% | -1.82% | -0.70% | -0.19% | 1.02% |
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).
- Asian equity markets trade mixed, while focus shifts to the US NFP data.
- Soft US ADP Employment Change has set an unfavorable backdrop for the US NFP data.
- US President Trump doesn’t expect renewed conflict with Iran to last too long.
Stock markets in the Asian region demonstrate a mixed performance as investors shift their focus to the United States (US) Nonfarm Payrolls (NFP) data for August, which will be released on Friday.
At press time, Nikkei225 is slightly down to near 64,250, Shanghai trades 0.2% higher to near 3,450, KOSPI jumps 0.3% to near 6,585, while Hang Seng declines 0.3% to near 25,230.
Fed focus stays on inflation as TD sees modest NFP rebound
According to TD Securities, August payrolls are expected to show a modest recovery, with "August NFP likely rebounded to 95k after declining 23k in July." The bank also looks for labour market conditions to remain broadly steady, noting that "we expect the UE rate to hold at 4.1%, with balanced risks." In their view, even a stronger-than-expected print would not materially alter the policy outlook: TD argues that "a hawkish employment report will reaffirm the Fed's attention on inflation, but it will be unlikely to push the Committee towards hikes."
Meanwhile, New York Fed Bank President John Williams said on Wednesday that there is evidence “inflation continues to ease as the impact of tariffs fades”, but warned that higher energy prices have yet to spill over into other services.
Ahead of the US NFP data, ADP Employment Change data for August has come in weaker than anticipated. The US ADP reported that private employers hired 38K fresh jobs in August, fewer than 47K estimates and the prior release of 46K.
On the geopolitical front, fears of further military aggression between the US and Iran have diminished, following remarks from President Donald Trump that he doesn’t expect the renewed fighting to last “too long”, Reuters reported.
This has led to slight selling pressure in oil prices, with WTI struggling to move beyond $90.00.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
Commerzbank’s Charlie Lay and Dr. Henry Hao highlight a sharp rebound in the Japanese Yen, with USD/JPY dropping around 150 pips as markets react to increasingly hawkish Bank of Japan guidance and intervention speculation. OIS pricing now implies a 25bp BoJ hike in September and roughly 44bp of tightening by year-end, leaving the pair highly sensitive to further official signals.
Yen jumps on hawkish BoJ talk
"The main theme overnight was the sharp rebound in the Japanese yen and some stabilisation in global risk sentiment as the pace of the recent oil rally moderated."
"USD/JPY fell more than 1% at one stage to the 158.20 area, before ending around 158.70, as markets reacted to increasingly hawkish signals from the Bank of Japan (BoJ) and speculation that Japanese authorities may again be preparing to intervene."
"The yen’s sharp move briefly raised speculation that Japanese authorities had conducted a rate check, although there was no clear evidence of fresh intervention. BoJ board member Hajime Takata said a standard 25bp rate increase was “not necessarily set in stone” and that back-to-back hikes could also be considered. This comes after US Treasury Secretary Scott Bessent publicly pressed Japan to normalise policy."
"The OIS market is fully pricing in a 25bp BoJ hike in September and a total hike of 44bp by year-end."
"The pair remains highly sensitive to any renewed signs of official intervention or further BoJ guidance."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- AUD/USD recovery from 0.7120 lows meets resistance at 0.7170.
- Data released on Wednesday shows that Australia's trade surplus narrowed in July.
- In the US, ADP Employment data disappointed, and Fed Williams advocated for a "wait and see" approach on rates.
The Australian Dollar (AUD) edges down against the US Dollar (USD) on Thursday, following a narrowing trade surplus in Australia and fairly positive PMI data from China, a key trading partner. The AUD/USD trades at 0.7160 after Wednesday’s rebound from lows near 0.7120 was capped at the 0.7170 area, halfway through the last two weeks' trading range.
Traders are reluctant to bet against the US Dollar following hawkish comments from the Federal Reserve’s Chairman, Kevin Warsh, at the Jackson Hole summit last week, which boosted expectations that the central bank will hike interest rates at its September 16 meeting.
Strategists at Scotiabank observe that markets are now pricing “a 70% chance of the Fed raising rates 25bps later this month,” reinforcing the Dollar’s support amid the risk-off tone.
Australian Trade surplus narrows
In Australia, Trade Balance data released earlier on the day by the Australian Bureau of Statistics revealed that the surplus narrowed by 418 million in July to 1.923 million. Exports declined 3.3% following a 9.1% jump in June, offsetting a 2.5% drop in imports that follows a 0.7% decline in the previous month.
A few minutes later, China's RantingDog Services Purchasing Managers Index (PMI) report showed stronger-than-expected business activity, with the Index rising to 51.4 in August from 50.4 in July, as stronger domestic demand helped businesses to create more jobs for the fourth consecutive month. The data, however, failed to provide any significant impulse to the China-proxy AUD.
In the US, ADP figures released on Wednesday showed a 38K increase in net private employment in August, the weakest reading in the last seven months. Apart from that, New York Federal Reserve President John Williams said that rising bond yields are due to a solid economy, rather than to inflation fears, and suggested that the central bank should “wait and see” before taking decisions on interest rates.
Economic Indicator
Trade Balance (MoM)
The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Read more.Last release: Thu Sep 03, 2026 01:30
Frequency: Monthly
Actual: 1,923M
Consensus: 1,390M
Previous: 1,929M
Source: Australian Bureau of Statistics
Economic Indicator
RatingDog Services PMI
The RatingDog Services Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s services sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for CNY.
Read more.Last release: Thu Sep 03, 2026 01:45
Frequency: Monthly
Actual: 51.4
Consensus: 50.6
Previous: 50.4
Source: IHS Markit
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has shifted into short-term range trading between 1.1570 and 1.1610 after a dip to 1.1565 and rebound to 1.1608. They still see scope for a test of 1.1550 unless 1.1630 strong resistance breaks. On a 1–3 month view, a prior decisive upside break keeps medium-term targets at 1.1800 and 1.1850 in focus.
Euro holds range with bearish bias
"24-HOUR VIEW: On Tuesday, EUR fell from 1.1624 to 1.1583, settling at 1.1592 (-0.21%). When EUR was at 1.1590 yesterday, we indicated that “while there is room for EUR to dip below Monday’s low of 1.1573, major support at 1.1550 is likely out of reach.” We noted that “resistance is at 1.1605, followed by 1.1620.” We were not wrong, as EUR dipped to a low of 1.1565. However, it subsequently rebounded strongly to 1.1608 before easing to close largely unchanged at 1.1587 (-0.04%). EUR has likely entered a range-trading phase and is expected to trade between 1.1570 and 1.1610 today."
"1-3 WEEKS VIEW: After EUR fell sharply last Friday, in our most recent narrative from Monday (31 Aug, spot at 1.1585), we highlighted that “the rapid increase in downward momentum suggests EUR could decline further.” We also highlighted that “the major support at 1.1550 may not come into view so soon.” Yesterday, EUR dipped to 1.1565 before rebounding. While there has been no further increase in downward momentum, there is still a chance for EUR to decline to 1.1550. Overall, only a breach of 1.1630 (‘strong resistance’ level previously at 1.1640) would indicate that EUR is not declining further."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold attracts some follow-through buyers for the second straight day amid a weak USD.
- Wednesday’s soft US ADP report and retreating US bond yields weigh on the Greenback.
- Fed hike bets and geopolitical tensions could limit USD losses and cap the XAU/USD pair.
Gold (XAU/USD) maintains its bid tone heading into the European session on Thursday, though it remains below $4,450 amid mixed fundamental cues. Sliding US bond yields and Wednesday's soft US ADP report weigh on the US Dollar (USD), assisting the commodity build on the previous day's goodish recovery from a nearly four-week low. That said, firming US Federal Reserve (Fed) rate-hike expectations and inflation risks stemming from higher energy prices could act as a tailwind for US bond yields. Moreover, geopolitical uncertainties could support the safe-haven USD, warranting caution before positioning for any further appreciation in the precious metal.
According to CME Group's FedWatch Tool, traders are pricing in around a 62% chance that the US central bank will hike rates at its upcoming September 15-16 policy meeting. The expectations were lifted by Fed Chair Kevin Warsh's hawkish remarks last Friday. Moreover, worries that rising energy prices will rekindle inflationary pressures back the case for Fed tightening, which could limit the USD's corrective slide and cap the non-yielding bullion. In fact, crude oil prices trade near the highest level since July 24, touched on Wednesday, as tensions between the US and Iran have flared up after fresh US strikes on Iranian targets and retaliatory drone and missile attacks by Tehran across the Gulf region.
Furthermore, US President Donald Trump said on Wednesday that he is prepared to launch another attack on Iran. This, along with continued clashes over the Strait of Hormuz, keeps the geopolitical risk premium in play, which should continue to support oil prices and the USD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the Gold price has bottomed out in the near term and placing fresh bullish bets. Traders might also opt to wait for the release of the crucial US Nonfarm Payrolls (NFP) report on Friday, which will be looked at for more cues about the Fed's future policy path and help in determining the next leg of a directional move for the XAU/USD pair.
XAU/USD 4-hour chart
Technical Analysis
The overnight close above the 23.6% Fibonacci retracement level of the recent corrective slide from an over three-month peak, set in August, and the subsequent move up back the case for further gains. That said, the 38.2% retracement at $4,438 is the first cap, reinforcing the idea of a corrective bounce within a broader downside phase. Furthermore, the Moving Average Convergence Divergence (MACD) indicator turns positive and the Relative Strength Index (RSI) hovers near 49, hinting at stabilizing but not yet bullish momentum.
A move beyond the 38.2% Fibonacci level, however, should pave the way for a move toward the 100-period SMA at $4,480, the 50.0% retracement at $4,487, the 61.8% level at $4,535, and, later, $4,604 and $4,692. On the downside, immediate support emerges at the 23.6% retracement at $4,378, while a deeper pullback would expose the Fibonacci-derived structural floor near $4,282.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- GBP/USD gains ground to near 1.3490 in Thursday’s early European session.
- The pair maintains a mildly bullish bias; further consolidation cannot be ruled out with subdued RSI momentum.
- The first upside barrier to watch is 1.3550; the initial support level is seen at 1.3440.
The GBP/USD pair trades in positive territory around 1.3490 during the early European trading hours on Thursday, bolstered by a weaker US Dollar (USD). Traders await the Bank of England (BoE) Governor Andrew Bailey’s speech and US August jobs data later on Friday for fresh impetus.
Federal Reserve (Fed) Chair Kevin Warsh delivered unexpectedly hawkish remarks at the Jackson Hole meeting last week, boosting market expectations for a rate hike next month. Warsh pledged to return inflation to the 2% target and indicated rates could rise further.
“The emphasis on inflation risks, together with Warsh’s explicit commitment to achieving price stability and his reluctance to pre-commit to future policy actions, reinforces the elevated risks of policy tightening this year, although it could also be the case of talking without action, said UOB analysts.
On the UK’s front, BoE policymaker Catherine Mann said that the UK economy had shown signs of stronger growth since the last monetary policy meeting. Mann added that the labour market had stabilised and inflation had been a little stronger than expected.
Financial markets on Tuesday were fully pricing a BoE rate hike by the end of the year but only around 15% odds of a rate increase at the September policy meeting, according to Reuters.
Pound sentiment steady as UK politics offer few fresh cues
Strategists at Scotiabank note that the domestic political backdrop remains quiet, with “political developments… equally limited, offering little to market participants in search of domestic drivers.” They “continue to highlight the importance of sentiment – specifically, politically-related sentiment – in driving the recent strength in the Pound following the arrival of PM Burnham in late June,” even as the current lack of new policy signals leaves investors with fewer fresh catalysts to trade on.
Technical Analysis: GBP/USD retains a mildly bullish tone above the 100-day SMA
In the daily chart, GBP/USD maintains a mildly bullish near-term bias as it holds above the 100-day Simple Moving Average (SMA) and the lower Bollinger band, suggesting underlying demand on dips. However, price remains capped beneath the Bollinger middle band, while the latest 14-day Relative Strength Index at 46.8 points to subdued momentum rather than a strong trending move.
On the topside, initial resistance is located at the Bollinger middle band at 1.3550. A stronger barrier is seen at the May 8 high of 1.3637, en route to the upper Bollinger band near 1.3665.
On the downside, the key support level to watch emerges at the 100-day SMA and the lower Bollinger band of 1.3440, forming a tight demand zone that would need to give way to signal a deeper corrective phase. A decisive break below this level could expose the July 13 low of 1.3342.
(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.
- EUR/USD edges up to near 1.1600 as the US Dollar faces selling pressure.
- Investors keenly await the US NFP report for August, releasing on Friday.
- The ECB is highly anticipated to hike interest rates this month.
The Euro (EUR) trades slightly higher against the US Dollar (USD) at around 1.1600 during the early European trading session on Thursday. The major currency pair edges higher, but is broadly sideways, with investors awaiting the United States (US) Nonfarm Payrolls (NFP) data for August, which will be published on Friday.
Investors will closely track the US NFP report to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy expectations.
According to TD Securities, the upcoming US payrolls release could trigger an uneven response in rates markets. Strategists warn that a "firm NFP may increase hike fears, but inflation keeps markets nervous and the reaction asymmetric," with investors reluctant to fully price in a more aggressive Fed path until they see the next CPI print. At the same time, TD Securities argue that "a modestly softer payroll print would allow the market to lower the pricing for a September rate hike," underscoring their view that downside surprises in employment data are more likely to be reflected in near-term policy expectations than upside ones.
Though the Euro is higher against the US Dollar, it is underperforming against its other peers despite financial markets remaining increasingly confident that the European Central Bank (ECB) will hike policy rates this month.
On Wednesday, ECB Governing Council member Joachim Nagel, an outspoken hawk, said that markets see over a 95% chance of a September rate hike.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1598. The pair holds just above the 20-period exponential moving average (EMA) at 1.1594, which suggests a mildly bullish near-term bias as price defends this dynamic support zone. The Relative Strength Index (14) at 53.23 sits in neutral territory with a slight positive tilt, hinting that upside momentum is constructive but not overstretched after the recent retreat from overbought readings seen above 70.
On the downside, immediate support is located at the 20-period EMA at 1.1594, where a daily close below would weaken the current constructive tone and expose deeper corrective pressure. On the upside, the 1.1687-1.1714 range will act as a key supply zone for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
- The Indian Rupee jumps to a fresh two-month high against the US Dollar, with USD/INR sliding to near 94.28.
- Robust foreign inflows through RBI’s special forex scheme have strengthened the Indian currency.
- The US Dollar declines after soft US ADP Employment Change data.
The Indian Rupee (INR) opens strongly against the US Dollar (USD) on Thursday, extending the rally to near 94.28. The Indian currency gains significantly as a juggernaut mobilisation of foreign exchange in India through the Reserve Bank of India’s (RBI) Foreign Currency Non-Resident (FCNR) (B) deposits window has increased FX reserves.
According to a Reuters report, India attracted a much larger-than-expected $136.38 billion through special foreign-currency mobilisation schemes, the RBI said on Wednesday, empowering the Indian central bank to contain more pressure.
In the last several months, the RBI was seen intervening in spot and Non-Deliverable Forward (NDF) markets to support the Indian currency against excessive one-sided volatile moves amid geopolitical uncertainty.
In addition to a significant inflow of foreign funds through the RBI’s special foreign exchange window, weakness in the US Dollar has also pressured USD/INR.
Soft US private labor data hurts US Dollar
The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, fell sharply on Wednesday, and has extended its decline on Thursday to near 99.38 so far in the Asian session.
The Greenback came under pressure after the US ADP reported that the private sector created 38K fresh jobs in August, fewer than 47K estimate and the prior release of 46K. This has set a weak stage for the Nonfarm Payrolls (NFP) data for August, which will be published on Friday.
Investors will closely track the US NFP data as it is expected to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
On Wednesday, New York Fed Bank President John Williams expressed confidence that the labor market is “stable and solid", and inflation expectations are “contained”.
India growth surprise narrows room for RBI to stay dovish
Analysts at Societe Generale highlight that India’s “reported 2Q26 real GDP growth of 7.8%, 80bp above the RBI’s forecast,” suggests aggregate demand is absorbing “tighter financial and adverse external conditions more comfortably than previously assumed.” They stress that the upside surprise was “reasonably broad-based,” noting that real GVA “expanded 8.2%, services grew 10.0%, manufacturing 9.2% and gross fixed capital formation 11.9%, while private consumption rose 7.1%.”
Societe Generale adds that this “super charged growth comes on the back of a massive upward revision to the 1Q26 real GDP and real GVA growth by 0.80 percentage points each,” which in their view “reduces the downside growth cost of additional monetary tightening and suggests that the economy is operating with less spare capacity than embedded in the RBI’s current FY27 growth projection of 6.7%.”
At the same time, the bank cautions that the principal downside risks to this assessment would be “a sharp reversal in food and energy prices, a material weakening in domestic activity, or evidence that the exceptional GDP print overstates underlying demand momentum (which we believe is likely the case).”
USD/INR Technical Analysis
In the daily chart, USD/INR trades at 94.48, keeping a bearish near-term bias as spot holds below the 20-period exponential moving average (EMA) at 95.32.
The bearish structure is reinforced by price trading under this key trend reference, while the Relative Strength Index (14) at 27.96 slips into oversold territory, hinting that while selling pressure dominates, the downside could start to lose momentum if sub-95 levels persist.
On the topside, initial resistance is provided by the 20-day EMA at 95.32, and a daily close back above this barrier would be needed to ease immediate downside pressure and signal room for a corrective bounce. Looking down, the pair is expected to find support near the June 25 low at 94.16.
(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/IDR depreciates as the US Dollar struggles amid a sharp Yen rally and slowing US private employment growth.
- Investors await weekly jobless claims and the August payrolls report for Federal Reserve rate guidance.
- Bank Indonesia's Destry Damayanti pledged responsive policies to maintain economic stability while supporting growth.
USD/IDR loses ground for the second successive day, trading around 17,730 during the Asian hours on Thursday. The currency pair experiences downward pressure as a sharp rally in the Japanese Yen (JPY) weighed heavily on the US Dollar (USD). This surge was fueled by growing market speculation that authorities conducted a rate check and may be preparing to intervene directly in foreign exchange markets.
Meanwhile, the Greenback faced additional headwinds following Wednesday's economic data, which revealed a slowdown in US private employment growth for August. Despite these weaker labor signals, financial markets continue to price in roughly a two-thirds probability that the Federal Reserve will raise interest rates later this month.
US private-sector job growth slowed in August, adding just 38K positions, missing the expected 47K and dropping below July’s revised 46K gain, according to ADP data. Market participants are now closely monitoring upcoming US economic indicators, focusing on Thursday’s weekly jobless claims and Friday’s comprehensive August payrolls report for clearer direction on the monetary policy path.
In Indonesia, Destry Damayanti, the first female governor of Bank Indonesia (BI), pledged to keep policy responsive to economic challenges while promoting stability and supporting growth. MUFG’s Lloyd Chan remains cautious on the Indonesian Rupiah as domestic inflation accelerates and Gross Domestic Product (GDP) growth stays above 5%. The trade balance has improved slightly but remains weaker than 2025 averages due to higher Oil and gas imports. While Bank Indonesia’s (BI) policy support and intervention framework offer near-term backing, sustained Brent prices above $90 could pressure Indonesia’s fiscal and external positions and weigh on IDR.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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