Forex News
DBS Group strategists Taimur Baig and Nathan Chow expect South Korea’s August exports to stay strong near 60% year-on-year, underpinning the outlook for the KOSPI and Korean Won (KRW) even as growth moderates from June’s peak. They also see headline and core CPI around 3%, reinforcing its view that further Bank of Korea (BoK) rate hikes are likely this year.
Exports robust, inflation reaccelerating
"August trade and inflation data will be the key focus in the week ahead. Exports are expected to remain strong at around 60% yoy in August, as inferred from the first 20 days of data (+56% yoy), resulting in a strong trade surplus of around USD30bn."
"This should provide fundamental support for the outlook for the KOSPI and KRW. That said, export growth likely peaked at 70.4% yoy in June and is set to moderate for a second consecutive month in August, corroborating our view that the AI supercycle is approaching a peak."
"On the prices front, headline CPI is expected to rebound to around 3% yoy in August, after temporarily moderating to 2.8% in July. Core CPI is also expected to edge up further to around 3%, converging with headline CPI."
"This should reinforce the case for further BOK rate hikes in the remainder of the year."
"In addition to lingering supply-side inflation pressures amid uncertainty over energy prices, demand-side inflation is expected to gradually build as consumption recovers and downstream pricing power improves."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Bank of England (BoE) Governor Andrew Bailey said on Friday that he doesn’t see significant second-round inflation effects in the UK, in an interview with Bloomberg TV at the Jackson Hole Symposium.
Bailey stated, “We’re seeing quite subdued second-round effects, I think we’ve seen a softening labour market for some time now,” suggesting that he is in a wait-and-see mode, ahead of the BoE’s monetary policy on September 17.
Bailey stressed that the BoE is not pre-committed to an interest rate path, assessing the economic situation meeting by meeting, adding that “We are seeing, at the moment, relatively muted second-round inflation effects.”
Key highlights:
WE ARE SEEING QUITE SUBDUED 2ND ROUND EFFECTS SO FAR
WE CAN WATCH THIS SITUATION FOR NOW
I CANNOT PROMISE THAT MUTED 2ND ROUND EFFECTS WILL CONTINUE
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.64% | 0.47% | 0.46% | 0.40% | 0.51% | 0.72% | 0.68% | |
| EUR | -0.64% | -0.16% | -0.15% | -0.28% | -0.13% | 0.10% | 0.04% | |
| GBP | -0.47% | 0.16% | 0.00% | -0.12% | 0.03% | 0.26% | 0.21% | |
| JPY | -0.46% | 0.15% | 0.00% | -0.08% | 0.03% | 0.24% | 0.19% | |
| CAD | -0.40% | 0.28% | 0.12% | 0.08% | 0.11% | 0.32% | 0.28% | |
| AUD | -0.51% | 0.13% | -0.03% | -0.03% | -0.11% | 0.22% | 0.17% | |
| NZD | -0.72% | -0.10% | -0.26% | -0.24% | -0.32% | -0.22% | -0.04% | |
| CHF | -0.68% | -0.04% | -0.21% | -0.19% | -0.28% | -0.17% | 0.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
Martin Kocher, Governor of the Austrian National Bank and a member of the European Central Bank (ECB), said in an interview with Bloomberg that Europe’s economy shows more momentum.
At the Jackson Hole Symposium on Friday, he said that the economy has been more resilient than expected and that threats lean towards price stability.
Key highlights:
Important how long-lived inflation proves to be.
There are threats to price stability.
There's alertness and no complacency.
The economy was more resilient than expected.
The European economy is showing more momentum now.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.60% | 0.46% | 0.46% | 0.37% | 0.50% | 0.69% | 0.64% | |
| EUR | -0.60% | -0.13% | -0.11% | -0.27% | -0.10% | 0.11% | 0.04% | |
| GBP | -0.46% | 0.13% | 0.00% | -0.14% | 0.04% | 0.24% | 0.18% | |
| JPY | -0.46% | 0.11% | 0.00% | -0.10% | 0.03% | 0.22% | 0.17% | |
| CAD | -0.37% | 0.27% | 0.14% | 0.10% | 0.13% | 0.32% | 0.27% | |
| AUD | -0.50% | 0.10% | -0.04% | -0.03% | -0.13% | 0.20% | 0.16% | |
| NZD | -0.69% | -0.11% | -0.24% | -0.22% | -0.32% | -0.20% | -0.05% | |
| CHF | -0.64% | -0.04% | -0.18% | -0.17% | -0.27% | -0.16% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Chicago Federal Reserve (Fed) President Austan Goolsbee commented in a CNBC interview at the Jackson Hole Symposium on Friday that he agreed with Fed Chair Kevin Warsh about the details of the economy, adding that “inflation is the Fed’s main issue right now.”
Goolsbee added that “inflation persists longer than expected,” and when asked about the number of FOMC meetings, he said he doesn’t have a strong opinion on the topic.
Key highlights:
AGREED WITH WARSH ABOUT DETAILS OF ECONOMY
AGREES INFLATION IS FED'S MAIN ISSUE RIGHT NOW
PRETTY CLEAR THAT INFLATION FROM OVERHEATED DEMAND IS HARD TO ADDRESS
INFLATION HAS CONTINUED FOR LONGER THAN EXPECTED
WAS OK WITH HOLDING RATES STEADY AT JULY FOMC
DOESN'T HAVE STRONG OPINION ABOUT NUMBER OF FOMC MEETINGS
DOESN'T THINK FED AND TREASURY ARE AT CROSS PURPOSES
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.63% | 0.48% | 0.48% | 0.38% | 0.52% | 0.73% | 0.67% | |
| EUR | -0.63% | -0.15% | -0.13% | -0.28% | -0.11% | 0.11% | 0.05% | |
| GBP | -0.48% | 0.15% | 0.02% | -0.14% | 0.04% | 0.27% | 0.20% | |
| JPY | -0.48% | 0.13% | -0.02% | -0.11% | 0.03% | 0.23% | 0.18% | |
| CAD | -0.38% | 0.28% | 0.14% | 0.11% | 0.13% | 0.34% | 0.29% | |
| AUD | -0.52% | 0.11% | -0.04% | -0.03% | -0.13% | 0.22% | 0.16% | |
| NZD | -0.73% | -0.11% | -0.27% | -0.23% | -0.34% | -0.22% | -0.05% | |
| CHF | -0.67% | -0.05% | -0.20% | -0.18% | -0.29% | -0.16% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Gold slides over 2.50% as Warsh reinforces inflation focus.
- US Dollar and yields surge as September Fed hike odds rise.
- Sentiment improves slightly, but inflation expectations remain elevated.
Gold (XAU/USD) prices extend losses to over 2.50% on Friday as market participants digest hawkish comments from Federal Reserve (Fed) Chair Kevin Warsh at Jackson Hole. Rising US Treasury yields and overall US Dollar strength are the two drivers of the sudden weakness in precious metals. The XAU/USD pair trades at $4,473, after hitting a high of $4,629.
XAU/USD extends losses as Jackson Hole remarks revive Fed tightening risks
Warsh commented that he still sees inflation as a priority, leaning hawkish as he recognized that underlying inflation measures haven’t improved. He stated that the Fed must be confident inflation is returning to its 2% goal, or otherwise “we have work to do.”
In his prepared remarks, he acknowledged that consumer spending is healthy and that the labor market is solid. Nevertheless, when speaking about price stability, Warsh acknowledged that the figures were “more concerning,” suggesting that the Fed would focus on tackling inflation.
Immediately after his remarks, money markets priced in a 50% chance of a 25-basis-point rate hike by the Fed at the September 16 meeting. As of writing, investors trimmed the odds to nearly 44%, but for December, they see an 82% chance, according to Prime Terminal.
The Greenback is rising by over 0.60%, as measured by the US Dollar Index (DXY), which tracks the value of the American currency against six other currencies. The DXY sits at 99.72, underpinned by the jump in US Treasury yields. The US 10-year Treasury yield has soared by 5.5 basis points to 4.728%.
The rise in US yields is attributed to market participants increasing their bets on a rate hike by the Fed at the September meeting. The odds stand at 43%, up from 34% a day ago, according to Prime Market terminal.
Other data showed the Nonfarm Payrolls Annual Revision coming in at -79K, below forecasts of 183K, improving from the previous revision of -911K. Also, the University of Michigan (UoM) Consumer Sentiment in August was 51.7, above estimates of 51, but deteriorated compared to July’s print.
US households expect inflation over the next year to ease from 4.2% to 4%, while over five years, expectations remain steady at 3.3%, in line with forecasts.
XAU/USD technical analysis: Gold’s tumbles below $4,500
Gold’s price action showed that the yellow metal almost tested the 200-day Simple Moving Average (SMA) at $4,527. However, it reversed part of the move on Warsh’s remarks, pushing back above the psychological $4,550 area.
From a momentum standpoint, buyers remain in charge as the RSI is above its 50 level. Nevertheless, the index has recently been trending lower, an indication that, in the short term, sellers are stepping in.
XAU/USD falling below the 200-day SMA opened the door to a move below $4,500. The next area of interest would be the 100-day SMA at $4,374.
For buyers, the first resistance is $4,500. Once reclaimed, the next stop is the 200-day SMA at $4,527, followed by $4,600. A decisive breakout could open the door to challenge the August 27 daily high at $4,643 ahead of the elusive $4,700.
(This story was corrected on August 28 at 18:38 to say Warsh instead of Warren in the technical analysis section.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- XAG/USD drops after a false breakout above the $70.00 mark.
- RSI softens, warning bulls may be losing short-term momentum.
- A break below $66.00 would expose $65.00 and the 50-day SMA.
Silver (XAG/USD) price made a U-turn after reaching a two-month high of $71.12 on Friday, then dove below the $69.00 figure as Federal Reserve (Fed) Chair Kevin Warsh leaned hawkish in his Jackson Hole speech, pushing US Treasury yields higher. Consequently, the white metal edged lower, with XAG/USD trading at $66.76, down 3.60%, at the time of writing.
XAG/USD Price Forecast: Technical Outlook
From a price action standpoint, Silver's false breakout above the $70.00 level could open the door to a deeper-than-expected pullback, even though XAG is short-term upward biased.
Momentum, as depicted in the Relative Strength Index (RSI), favors further upside as buyers are in control. However, over the last two days, the RSI dipped, indicating that bulls are not out of the woods.
For a bullish resumption, Silver must clear $70.00. A breach of the latter will expose the high of the day at $71.12, followed by the $72.00 milestone. Above sits the 200-day SMA at $72.48.
On the other hand, the path of least resistance in the near term is a break below $66.00, which could prompt a test of $65.00, followed by the 50-day SMA at $61.44. Once hurdled, the $60.00 psychological level is below.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- AUD/USD falls 0.30% on Friday, correcting after reaching its highest level since mid-May earlier in the day.
- Warsh stresses the need to bring inflation sustainably back toward the 2% target despite the resilience of the US economy.
- In Australia, persistently elevated inflation keeps expectations of further interest-rate hikes alive.
AUD/USD retreats 0.30% on Friday to trade around 0.7170 at the time of writing, correcting after reaching its highest level since mid-May at 0.7206 earlier in the day. The Australian Dollar (AUD) loses ground against the US Dollar (USD), which attracts renewed demand following hawkish comments from Federal Reserve (Fed) Chair Kevin Warsh.
Warsh stressed that price stability must remain the US central bank’s predominant focus. He said policymakers need to be confident that underlying inflation is moving toward the Fed’s objective and warned that they still “have work to do” if this trend does not materialize.
On inflation, the Fed Chair acknowledged that data released during the summer have been better than expected but said they are not sufficient to demonstrate a meaningful shift in underlying price dynamics. He also reiterated that the Fed’s 2% Personal Consumption Expenditures (PCE) inflation target remains “firm and fixed.”
Warsh’s hawkish tone triggered a significant repricing of monetary policy expectations. According to the CME FedWatch Tool, markets now assign around a 60% chance to an interest-rate hike at the Fed’s September meeting, up from roughly 36% before Warsh’s speech. The shift supports the US Dollar and puts downward pressure on AUD/USD.
On the Australian side, the Australian Dollar retains some support from the monetary policy outlook of the Reserve Bank of Australia (RBA). In its Bulletin released on Thursday, the central bank notes that consumer prices have remained elevated above its 2%-3% target for much of the post-pandemic period, fueling expectations of a fourth interest-rate hike before the end of the year.
These expectations are also supported by the latest Australian inflation data. The Consumer Price Index (CPI) eased to 3.5% YoY in July from 3.8% in June but remained above the 3.2% expected by markets. Meanwhile, the Trimmed Mean CPI held steady at 3.6% YoY, compared with expectations for a slowdown to 3.5%.
With both the Fed and the RBA facing persistent inflation pressures, AUD/USD remains caught between competing monetary policy forces. For now, the sharp repricing of US interest-rate expectations is dominating, allowing the US Dollar to regain the upper hand on Friday and prompting AUD/USD to pull back from its highest level since mid-May.
AUD/USD technical analysis
In the four-hour chart, AUD/USD trades at 0.7166, holding a modest bullish bias as it remains above the 100-period and 200-period simple moving averages (SMAs) at 0.7108 and 0.7053, respectively, as well as the rising trend-line support around 0.7117. The Relative Strength Index (RSI) has cooled to about 46, suggesting momentum has normalized from overbought territory but still allows for consolidation above these structural floors while the pair probes overhead barriers.
On the downside, initial support is seen at the horizontal level near 0.7135, followed by the trend-line area around 0.7117 and the 100-period SMA at 0.7108, with the 200-period SMA at 0.7053 reinforcing the broader bullish structure. On the topside, immediate resistance is located at the recent horizontal cap near 0.7206, and a clear break above this ceiling would be needed to reopen a more impulsive advance in the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- DJIA trades near 53,700, up 0.18%, after a 320-point round trip.
- September Fed hike odds jumped above 55% from 35.4% a day earlier.
- Two-year Treasury yields rose more than 6 basis points, the long end flat.
The Federal Reserve (Fed) chair used the largest speaking slot on the calendar to commit to nothing and the futures market repriced September anyway. Odds of a quarter-point increase jumped above 55% on Friday from 35.4% a day earlier, on a keynote that declined to offer forward guidance, declined to set out a reaction function, and bound its author to a discipline rather than a decision. The Dow Jones Industrial Average printed its low of the day into it and its first look above 53,800 since mid-month ninety minutes later.
A speech built to withhold
The address opened by describing whatever followed as a route map rather than forward guidance, a practice the chair judged to have outstayed its welcome. He called the economy resilient and the labour market broadly consistent with full employment, then said the summer Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) readings had come in better than expected without persuading him that underlying trends had improved, and that the Committee has work to do if that does not change.
What the text withheld matters more than what it carried. There was no statement of the conditions that would move the Committee, no signal on direction, and no numerical threshold attached to any of it, only a commitment to method. A market still has to hold a position into September 16, so with the reaction function removed it prices the Committee off tone instead. Twenty points of hike probability moved on a document whose stated purpose was to promise nothing.
The tension inside the speech is that it pledges rules while refusing to state one. The chair committed his term to building more reliable models and more robust policy rules, then described forecasting accuracy as an aspiration and counselled modesty about what a central bank can know while geopolitics, supply chains and technology move this fast. A rule that arrives later is not a rule anyone can position around three weeks from now.
The omission that moved the curve
Nothing in the address touched the Treasury operation that doubles the ceiling on longer-dated buybacks from September 9 and supplies duration support the Committee never voted on. A chair who has argued for a smaller government footprint in markets, and who has credited bond-market tightening with doing part of his own job, passed over the fiscal authority quietly undoing both. The single largest constraint on his policy was the one subject the speech left alone.
The curve answered precisely. Two-year yields, the tenor that prices the Committee, rose more than six basis points to their highest in a month, while the long end held flat. A hawkish keynote that flattens the curve rather than lifting it is a market saying the front end still belongs to the Federal Reserve and the back end now belongs to whoever is buying the bonds. That division is the whole of August compressed into one afternoon.
What the index actually did
Equity behaviour under the same text was far less decided than a positive session suggests. The index printed the low of the day into the address, ran roughly 320 points to sell just above 53,800, then handed back more than half of that inside the following hour to sit near 53,700, up 0.18%. A 320-point range that resolves in the middle is not a market that heard an answer.
The week still lands higher, the first of three to do so, with the S&P 500 and the Nasdaq Composite both firmer on the session. That leaves an index roughly 2% beneath a record set on August 5 and capped for a third straight week by the same band it failed at today, gaining on a session that raised the odds of tighter policy by twenty points.
The week that decides it
The symposium runs through August 29 with the rest of the Committee still speaking, so the tone reading has two more days to move without a single new number attached to it. August payrolls land September 4 and the decision follows on September 16, the first date since June on which the front end and the index have to agree on something. Until then the only guidance on offer is the data itself, which is precisely the design.
Levels to watch
Resistance: The band just above 53,800 sold the session high and has capped every attempt since mid-month. Above it 54,000 is the next line, with the early-August ledge near 54,100 and the record just short of 54,750 beyond.
Support: The 53,500 handle caught the session low and is the first floor. Beneath it, 53,200 is the shelf, with the 53,000 handle and the August base under it.
Bias: Bearish while 53,800 caps, with objectives at 53,500 and then the 53,200 area. The daily Stochastic Relative Strength Index (Stoch RSI) near 46 has rolled over from mid-range without the index making a new high. Invalidation on a daily close above 53,900.
Dow Jones 5-minute and daily charts
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- USD/JPY breaks the 160.00 handle, up 0.40% and a fifth straight gain.
- Tokyo inflation excluding food and energy reached 2% in August, from 1.8%.
- A September Fed increase prices above 55%, its first outright majority.
Japan delivered the inflation and labour data the Bank of Japan needs to move next month and the Japanese Yen is weaker for a fifth consecutive session. Tokyo Consumer Price Index (CPI) inflation excluding food and energy reached 2% in August, the headline rate rose to 1.9%, and unemployment fell to 2.4% against a 2.5% forecast. USD/JPY takes the 160.00 handle regardless, at the high of the day.
The print the Bank of Japan needed
The measure policy actually follows, Tokyo prices excluding fresh food, rose 1.8% against a 1.7% consensus and a 1.7% prior, a third consecutive month of acceleration. Government electricity and gas subsidies, reinstated as the Gulf supply disruption pushed fuel costs higher, will suppress the headline rate through the October data, which makes the 2% reading on the ex-energy measure the honest one. Unemployment at 2.4% is the lowest in a year.
Wire reporting through the month has the policy board weighing an increase on September 18 and considering a faster pace than the roughly twice-yearly cadence it has kept since 2024, when it began unwinding a decade of stimulus. Five-year Japanese government bond yields have printed a record high on that speculation, and the June move took the policy rate to a 31-year high. None of it has bought the currency a single session.
Two increases leave one gap
The Federal Reserve chair used his first Jackson Hole keynote to warn that the committee still has work ahead of it while it lacks confidence that underlying inflation is returning to 2%, and futures moved on it. A quarter-point increase on September 16 now prices above 55%, the first outright majority of the cycle, with at least one increase near 85% by October 28 and a second running close to 38% by December 9. The same 14:00 GMT block carried year-ahead consumer inflation expectations falling to 4% against a 4.3% consensus, which the tape ignored entirely, and USD/JPY has added roughly 65 pips since.
The Bank of Japan decides two days after that, and the arithmetic is the problem. A move to 1.25% against a Federal Reserve range of 3.75% to 4.00% leaves the same gap of roughly 250 basis points that exists today. Two central banks tightening on consecutive days changes the level of rates in both countries and changes nothing about the reason to borrow one currency and hold the other.
The only outcome that pays the Japanese Yen is a Japanese increase against an American hold, and futures put that hold at 44% on its own. Every other branch either widens the gap or leaves it where it is, which is a poor return profile for anyone selling the carry trade on the strength of Japanese data.
The defence has a bond problem
Behind the price sits the July 31 operation, a joint Japanese and American Yen purchase and the first coordinated intervention between the two since 2011. Tokyo has said it will not hesitate to repeat it. The scale was the largest single session on record at 8.45 trillion Yen, with roughly 5.3 trillion more following in coordination, and it dragged the pair from just short of 164.00 into the 155.00 area.
Washington's interest in that operation is not friendship. A solo Japanese defence is funded by selling American government bonds, and June holdings data already showed Japan cutting 26.4 billion Dollars of Treasuries while the currency was being defended, inside a total foreign reduction of 72.1 billion Dollars. With thirty-year yields near their highest since 2007, the cheapest way to stop Tokyo selling duration is to lend it Dollars instead. The Yen defence and the long-end problem are the same trade.
What resolves it
The symposium runs through August 29 and Bank of Japan officials speak into the run-up to their decision, including a briefing after a Group of Twenty meeting in the United States next week. American payrolls land September 4, and the two policy decisions arrive two days apart in the middle of the month. Until then the Japanese Yen is a bet on the Federal Reserve stopping, not on Tokyo delivering.
Levels to watch
Resistance: With the 160.00 handle taken, 161.00 is the first shelf above and the only structure between there and the 162.00 to 163.00 zone that drew the July operation. The cycle high just short of 164.00 sits beyond it.
Support: The 160.00 handle inverts to the first floor and carries the 50-day Exponential Moving Average (EMA) on the same line, which is what makes the level worth defending on a retest. The session low just under 159.50 is next, then 158.50, with the rising 200-day EMA near 158.00 the base the August recovery was built on.
Bias: Bullish, with a daily close above 160.00 confirming the break and opening 161.00. The daily Stochastic Relative Strength Index (Stoch RSI) near 62 has room above it and the 5-minute reading near 53 leaves the move unstretched. Invalidation on a daily close back beneath 159.50, and above 162.00 the cap is policy rather than price.
USD/JPY 5-minute and daily charts
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- The US Dollar strengthens after Kevin Warsh emphasizes the need to restore price stability during his Jackson Hole speech.
- Markets raise the chance of a September interest-rate hike to around 56%, compared with roughly 36% before Warsh’s remarks.
- US economic data offer a mixed picture, with a modest downward payroll revision and easing short-term consumer inflation expectations.
The US Dollar Index (DXY) rallies on Friday, gaining 0.36% to trade around 99.50 at the time of writing, as Federal Reserve (Fed) Chair Kevin Warsh’s hawkish remarks at the Jackson Hole Symposium prompt investors to sharply reassess the outlook for US interest rates.
The US Dollar (USD) gains ground after Warsh stresses that price stability should remain the central bank’s predominant focus. The Fed Chair said policymakers need to be confident that underlying inflation is moving toward the central bank’s objective and warned that they still “have work to do” if this is not the case.
On inflation, Warsh acknowledged that data released during the summer have been better than expected but said they are not sufficient to demonstrate a meaningful shift in underlying price dynamics. He reiterated that the Fed’s 2% Personal Consumption Expenditures (PCE) inflation target remains “firm and fixed.”
At the same time, the Fed Chair offered an upbeat assessment of the United States (US) economy. Warsh said economic activity appears to have strengthened, describing consumer spending as healthy and the labor market as stable, while pointing to rapidly increasing business investment.
The combination of resilient economic activity and persistent inflation concerns triggered a significant repricing of monetary policy expectations. According to the CME FedWatch Tool, markets now assign around a 56% chance to an interest-rate hike at the Fed’s September meeting, up from roughly 36% before Warsh’s speech. The shift provides fresh support to the US Dollar and helps the DXY advance toward 99.50.
Meanwhile, US economic releases on Friday provide a more mixed backdrop. The preliminary Nonfarm Payrolls (NFP) Benchmark Revision from the Bureau of Labor Statistics (BLS) shows a downward adjustment of 79K jobs, or 0.1%, to total nonfarm employment for the twelve months through March. The relatively limited revision may ease concerns about a more substantial deterioration in the labor market after last year’s much larger downward adjustment of 911K jobs.
Consumer data also send mixed signals. The University of Michigan Consumer Sentiment Index for August is revised higher to 51.7 from the preliminary reading of 51, although it remains below July’s 55.2. The Expectations Index rises to 51.5 from the initial estimate of 50.6 but also remains weaker than July’s 55.4.
On the inflation front, the University of Michigan’s one-year Consumer Inflation Expectations decline to 4% from 4.3%, while the five-year measure remains unchanged at 3.3%. The moderation in near-term inflation expectations provides some reassurance, but it fails to overshadow Warsh’s emphasis on price stability and the resulting increase in expectations for a September rate hike, leaving the US Dollar firmly supported on Friday.
US Dollar Index technical analysis
In the one-hour chart, US Dollar Index Spot trades at 99.47. Price holds in a bullish configuration, pressing above both the 100-hour and 200-hour simple moving averages (SMAs), which slope gently higher and underpin the broader uptrend. The latest push has also respected the rising trend-line support, keeping the immediate tone constructive, while the Relative Strength Index (RSI) around 75 signals overbought conditions that could slow the pace of gains rather than reverse the trend outright.
On the topside, initial resistance is located at the horizontal barrier near 99.70, where a pause or pullback would not be surprising given stretched intraday momentum. On the downside, the rising trend line around 99.16 acts as a nearby pivot, followed by firmer support at 99.26, with the 100-hour SMA at 99.08 and the 200-hour SMA at 99.06 reinforcing a broader demand band on dips.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
