Forex News
- AUD/USD retreats as US yields recover from buyback-driven lows.
- Solid jobless claims support Dollar ahead of US Flash PMIs.
- Australian PMIs stay expansionary, though services momentum softens.
The Australian Dollar retreated against the Greenback on Thursday as US bond yields resumed their advance, despite the US Treasury's efforts to cap elevated yields following its announcement of a long-end bond buyback program. The AUD/USD trades at 0.7114, down 0.14%.
AUD/USD retreats as Treasury yields recover, offsetting support from resilient Australian PMIs
When the US Treasury’s program was announced, the US 30-year yield fell, and it is now back at 5.25%, after reaching a low of 5.178% earlier in the day. The US Dollar Index (DXY), which tracks the Greenback’s value against six peers, is up 0.07% at 99.83.
Consequently, the AUD/USD soared sharply to a weekly high of 0.7132, before retreating.
Thursday’s economic docket in the US featured Initial Jobless Claims for the week ending August 15, and came at 206K, below forecasts and the previous print reading.
Recently, the US Treasury Secretary Scott Bessent said, “We are announcing probably at the end of this week, beginning of next week, an increased focus on fiscal consolidation.” He said the U-turn in US yields is “noise” and that buyback operations “could be more than the $4 billion.”
Regarding the US – Iran conflict, US President Donald Trump said that the US is essentially and soon controlling the Strait of Hormuz, noting that Iran has some missiles and drones, but a low capacity to build.
In Australia, the S&P Global Manufacturing PMI was 52 in August, unchanged from July’s data. At the same time, the S&P Global Services PMI for the same period decelerated from 53.6 to 52.9.
Eleanor Dennison, Economist at S&P Global Market Intelligence, said: “Positively, manufacturing enjoyed its strongest injection of new work since the start of the year, although disruption to supply chains and challenges on the cost front led to a slight drop in output. Services, meanwhile, maintained its growth path, but with rates of expansion in both activity and new business softening slightly compared to July.”
Ahead, the US economic docket will feature Flash PMIs, which are expected to slow, with the Manufacturing PMI projected at 53.8, down from 53.9, and the Services PMI forecast at 54.0, down from 54.6.
AUD/USD Price Forecast: Technical outlook
In the daily chart, AUD/USD trades at 0.7116. The pair holds above the latest simple moving average triple at 0.6997 and the short-term upward trend line breakpoint near 0.6975, keeping the near-term tone constructive. Price is advancing within a broader rising structure, although several upward trend line break levels between 0.7300 and 0.7311 sit overhead as the next barriers. The Relative Strength Index (14) around 64 leans bullish but not yet overbought, suggesting room for further gains while the spot remains supported above its underlying averages.
On the downside, immediate support is located at the current price area around 0.7116, followed by the clustered technical floor coming from the simple moving average triple at roughly 0.6997 and the shorter-term trend line break at 0.6975. A deeper slide would expose the former downward resistance trend line breakpoint near 0.6398 as a more distant structural base. On the topside, initial resistance is seen at the upward trend line break around 0.7300, with a slightly higher confluence zone near 0.7311; a sustained move above these levels would open the way toward the next trend-line-derived objectives around 0.8440 and 0.9162.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
S&P Global Manufacturing PMI
The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging business activity in Australia’s manufacturing sector. The data is derived from surveys of senior executives at private-sector 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 manufacturing economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for AUD.
Read more.Last release: Thu Aug 20, 2026 23:00 (Prel)
Frequency: Monthly
Actual: -
Consensus: -
Previous: 52
Source: S&P Global
The preliminary reading of Australia's S&P Global Manufacturing Purchasing Managers Index (PMI) came in at 52.0 in August versus 52.0 prior, the latest data published by S&P Global showed on Friday.
Australia’s S&P Global Services PMI declined to 52.9 in August from the previous reading of 53.6, while the Composite PMI fell to 52.5 in August versus 53.2 prior.
Market reaction
The preliminary reading of Australia's PMI data for August has little to no impact to the Australian Dollar (AUD). The AUD/USD pair holds negative ground near 0.7115.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.23% | 0.51% | -0.18% | 0.12% | -0.21% | 0.32% | |
| EUR | 0.06% | -0.17% | 0.58% | -0.08% | 0.17% | -0.16% | 0.40% | |
| GBP | 0.23% | 0.17% | 0.74% | 0.06% | 0.34% | 0.02% | 0.54% | |
| JPY | -0.51% | -0.58% | -0.74% | -0.67% | -0.38% | -0.72% | -0.19% | |
| CAD | 0.18% | 0.08% | -0.06% | 0.67% | 0.30% | -0.03% | 0.49% | |
| AUD | -0.12% | -0.17% | -0.34% | 0.38% | -0.30% | -0.32% | 0.19% | |
| NZD | 0.21% | 0.16% | -0.02% | 0.72% | 0.03% | 0.32% | 0.54% | |
| CHF | -0.32% | -0.40% | -0.54% | 0.19% | -0.49% | -0.19% | -0.54% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- USD/JPY trades near 159.00, close to four Yen above its August low.
- July imports rose 27.8% YoY, outpacing exports at 23.2%.
- July core inflation consensus 1.8% YoY, still beneath the 2% target.
USD/JPY trades near 159.00 late in the session, 0.5% higher on the day and a little over a point clear of a rising 200-day Exponential Moving Average (EMA) near 158.00. The pair has spent three weeks rebuilding what a coordinated intervention took out of it at the turn of the month, with close to half of that move already handed back. Japan's July inflation report lands at 23:30 GMT, Friday morning in Tokyo, and it is not the reason the Bank of Japan is preparing to move.
A level, not a policy
The collapse that produced the current range ran from just under 164.00, a level last seen in the 1980s, into the 155.00 area inside two sessions. The operation behind it was joint, the Ministry of Finance buying Yen alongside the American Treasury in the first coordinated purchase of the currency since 1998, with a single day's spending estimated near 37 billion Dollars.
Three weeks on, the pair has recovered close to four Yen of that and trades roughly five Yen beneath the pre-intervention high. Coordinated purchases move a level without moving a rate differential, which is why the announcement effect decays on a schedule while the flow underneath it does not. The market has now tested that proposition and arrived at the answer the arithmetic implied.
The inflation Japan is holding down
Producer prices rose 7.2% YoY in July while consumer inflation ran near 1.7%, a gap of more than five percentage points between what firms pay and what the index records. That wedge is policy rather than pricing power. Fuel subsidies have been in place since the middle of March, gasoline and utility costs are capped, and free high school tuition introduced in April subtracts directly from the measured basket.
Friday's release carries a further complication, because it is the first print on a rebased index shifted to a 2025 base from 2020, a revision that already trimmed a tenth from the June headline. A central bank whose own outlook calls for core inflation clearly above 2% in the second half of the fiscal year is about to receive a number engineered lower by its own government, on a basket the market has not seen before.
The bill no operation can pay
July trade figures put the flow side beyond argument, and they run against the currency in both directions at once. Imports rose 27.8% YoY against a 26.5% forecast, exports 23.2% against 19.9%, and the merchandise trade balance widened to a deficit near 635 billion Yen from close to 410 billion the month before. An economy importing nearly all of its energy at war prices runs a structural bid for foreign currency every month it stays open.
The part a spot operation cannot reach is the size of that bill. Buying Yen in the market changes the price at which the import bill is paid without changing how large it is, and the Gulf supply disruption that inflated it shows no sign of clearing. For as long as the deficit persists, the intervention defends a level against a flow that rebuilds itself on a monthly cycle.
What Friday actually decides
The national Consumer Price Index (CPI) release at 23:30 GMT carries core excluding fresh food at a 1.8% consensus from 1.6%, with the headline previously at 1.7% and the measure excluding food and energy also at 1.7%. A 1.8% core would be a six-month high and would still sit beneath target, which is the whole problem with reading Friday as a policy trigger.
Pricing has a September increase at close to 80% odds ahead of the September 17-18 meeting, up from roughly 65% in the first week of the month. Reuters sourcing has the Bank of Japan weighing not only an early move but a faster sequence than its recent pace of roughly two a year, citing Middle East price pressure, global demand for artificial intelligence capacity and the currency's own decline. Not one of those three is a domestic demand story, which is the tell in a decision that will be reported as an inflation response.
American flash Purchasing Managers Index (PMI) readings at 13:45 GMT are the only other release of consequence, manufacturing seen at 53.8 from 53.9 and services at 54 from 54.6. The Jackson Hole symposium from August 27 is the next event with the weight to reset the differential outright, which leaves Friday as a Japan-side session in a pair that has spent most of the year trading the other leg.
Technicals
Resistance: The session high just above 159.00 is the first line, 159.50 the next, and the declining 50-day EMA just above 160.00 the level that decides whether the intervention has been fully unwound.
Support: The 158.00 handle sits between a session low just above it and the rising 200-day EMA just beneath, which makes that band the only defence with structure behind it before 157.00.
Bias: Bullish while 158.00 holds, with 159.50 the objective and the 50-day EMA near 160.00 behind it. Daily Stochastic Relative Strength Index (Stoch RSI) near 38 and turning up leaves room above, and a daily close beneath 157.50 puts the pair under the 200-day EMA and hands the next leg back to the Ministry of Finance.
USD/JPY daily chart
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.
- GBP/USD trades just beneath 1.3650, its highest in more than four months.
- UK headline inflation accelerated to 2.9% YoY in July from 2.6%.
- July retail sales consensus -0.5% MoM after a 1% June increase.
GBP/USD trades just beneath 1.3650 late in the session, 0.2% higher on the day and at its highest level in more than four months. The pair sits close to 200 pips above a rising 50-day Exponential Moving Average (EMA) near 1.3450, with the 200-day near 1.3400 further beneath that and a session low a shade under 1.3600 that never looked like holding the tape down. Three days of British data have landed underneath that advance, and Friday brings the half of the ledger nobody has been asked to price.
The acceleration is an administered price
July headline inflation printed at 2.9% YoY against 2.6% in June, matching consensus, with the monthly rate at 0.3% and core holding 2.6% against a 2.5% forecast. Almost all of that acceleration traces to the household energy price cap, lifted 13% at the start of July, with a second increase already scheduled for October. Services inflation, the gauge the Monetary Policy Committee treats as its domestic persistence tell, eased to 3.4% from 3.6%.
Reading that print as evidence of tightening pressure means reading the wrong line of it. The Bank of England has already told the market it expects headline inflation to peak near 3.2% in the fourth quarter, so the path higher is scheduled rather than discovered, and a regulated bill increase does nothing to the wage and services dynamics a rate decision is built to address. The pipeline detail is more interesting than the headline: core output producer prices firmed to 2.8% YoY from 2.6% while the headline measure decelerated to 3.1% from 3.5%.
The hike premium is thinner than the price
The Monetary Policy Committee held at 3.75% on July 30 by 6-3, with three members voting for a quarter point, and meets again on September 17. Pricing for an increase before year end runs near 30%, and a majority of surveyed economists expect no change at all this year. That is a modest premium to be carrying while the currency prints a four-month high.
Goldman Sachs, which forecasts no increase in 2026, has flagged the gap between market pricing and its own call as a source of downside pressure on the currency in the months ahead. The mechanism does not need a shock to work. A currency holding hike premium against a central bank that never delivers surrenders it in increments, and every in-line print that fails to arm September takes a little of it back.
The Dollar is carrying most of this
Thursday's American data did not cooperate with a weak-Dollar story. Initial jobless claims came in at 206K against a 210K consensus and a 212K prior, and the Philadelphia Fed manufacturing survey printed 47.4 against a forecast of 25, nearly double the expected reading and up from 41.4. Two Federal Reserve policymakers spoke, the first reading neutral and the second hawkish.
The Dollar was sold into all of it, sitting near multi-month lows against the majors after this week's Treasury operation at the long end pulled yields down. That sequence dates the advance to Washington rather than to London, which is the uncomfortable part of a four-month high. The pair has been rising on a bid the British calendar did not create and cannot renew.
Friday hands over the demand side
Consumer confidence for August arrives overnight with the consensus at -18 from -17, and retail sales for July land at 06:00 GMT. Consensus there is -0.5% MoM against a 1% June increase, the annual rate decelerating to 2.2% from 4.2%, and the ex-fuel measure marked at -0.5% from 1.1%. Flash August Purchasing Managers Index (PMI) readings follow at 08:30 GMT, composite forecast at 51.5 from 52.2, manufacturing at 51.5 from 51.9 and services at 51.8 from 52.1.
Every consensus on that page points down, which makes Friday the first session this week the British calendar has been positioned to subtract. The July factory strength flattering those prior readings was partly precautionary stock-building tied to Middle East supply disruption, so a step lower in the August flash is an inventory cycle turning rather than demand breaking. Currency markets are unlikely to draw that distinction inside the first hour.
American flash PMI figures at 13:45 GMT round out the week, manufacturing seen at 53.8 from 53.9 and services at 54 from 54.6. Beyond that the calendar thins until the Jackson Hole symposium from August 27, which leaves the Pound trading its own data in relative isolation for one session before the Dollar reclaims the microphone.
Technicals
Resistance: The session high just above 1.3650 is the immediate line and the only structure the pair has built above 1.3600. A break there leaves 1.3700 as the next round objective with nothing meaningful between.
Support: The session low just beneath 1.3600 is the first line, 1.3550 the next shelf, and the rising 50-day EMA near 1.3450 marks where the August advance becomes a failed breakout.
Bias: Bullish while 1.3600 holds, with 1.3700 the objective. Daily Stochastic Relative Strength Index (Stoch RSI) above 90 leaves the move stretched into a docket where every consensus points lower, so a daily close beneath 1.3600 turns Friday into the reversal and exposes 1.3550 and then the 1.3500 handle.
GBP/USD daily chart
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 fails to hold 1.1700 despite fresh three-month high.
- Solid jobless claims revive Dollar demand as yields rebound.
- Flash PMIs could shape Fed and ECB rate expectations.
The Euro remains steady below 1.1700 after failing to hold gains above it, despite hitting a three-month high. Broad US Dollar strength kept EUR/USD from ending Thursday’s session above the 1.1700 mark, with the pair finishing at around familiar levels, unchanged from Thursday’s opening price.
EUR/USD stalls as stronger yields support Dollar before Flash PMIs
The Greenback’s recovery was sparked by the rise in US Treasury yields, erasing some of Wednesday’s losses, following the US Treasury's announcement that it would increase buybacks of long-dated bonds from $2 billion to $4 billion.
The US Dollar Index (DXY), which tracks the advance of the Dollar against a basket of six peers, is up 0.10% at 98.84. The move capped the shared currency’s advance past 1.1700, which could’ve opened the door to challenge the 1.1800 figure, a level last seen on April 17.
US jobs data showed the labour market remains solid, despite the dismal US NFP report in July. Jobless claims for the week ending August 15 were better than expected at 206K, below forecasts for a 210K jump and the previous print of 212K.
Fed officials Alberto Musalem of the St. Louis Fed and Mary Daly of the San Francisco Regional Bank crossed the wires. The former said they supported a rate hike at the July meeting, though they adopted an open-minded approach at the September meeting. On the contrary, Daly said that monetary policy is appropriate and that the US central bank's credibility remains firm.
Minutes from the Fed's July meeting showed concern about inflation deepened, with several policymakers ready to raise rates and many saying a hike would be needed if inflation doesn't decline toward 2%.
The swaps market had priced in a 35% chance of a rate hike in September. Meanwhile, the odds for December stay close to 64% according to Prime Terminal.
In the Eurozone, Germany’s Producer Price Index (PPI) for July rose from -0.3% to 1.1% MoM, while for an annual basis, it expanded fron 1.8% to 3%, exceeding forecasts of 2.7%.
Attention now turns to tomorrow's Flash PMIs data for France, Germany, the Eurozone and the United States.
EUR/USD Price Forecast: Technical outlook
In the daily chart, EUR/USD trades at 1.1681, extending its advance above the cluster of reclaimed supports around the former trend-line break at 1.1456 and the triple simple moving average (50, 100, 200) now tracking near 1.1472. This positioning above key underlying demand suggests a bullish near-term bias, while the Relative Strength Index (14) at 73.13 signals overbought conditions that could temper further upside and favor periods of consolidation or shallow corrective pullbacks.
On the topside, the next notable resistance is the horizontal barrier at 1.1849, which caps the immediate bullish scope unless buyers can secure a daily close above it. On the downside, initial support is located at the current price region around 1.1681, with deeper protection seen at the broken descending trend line near 1.1456 and the grouped triple simple moving average around 1.1472, where any retreat would be expected to attract renewed buying interest while the broader constructive structure remains intact.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.01% | -0.82% | -0.21% | -0.66% | -0.37% | -0.90% | -1.47% | |
| EUR | 1.01% | 0.35% | 0.80% | 0.36% | 0.60% | 0.09% | -0.47% | |
| GBP | 0.82% | -0.35% | 0.54% | 0.02% | 0.26% | -0.24% | -0.85% | |
| JPY | 0.21% | -0.80% | -0.54% | -0.45% | -0.23% | -0.70% | -1.30% | |
| CAD | 0.66% | -0.36% | -0.02% | 0.45% | 0.23% | -0.25% | -0.87% | |
| AUD | 0.37% | -0.60% | -0.26% | 0.23% | -0.23% | -0.48% | -1.10% | |
| NZD | 0.90% | -0.09% | 0.24% | 0.70% | 0.25% | 0.48% | -0.63% | |
| CHF | 1.47% | 0.47% | 0.85% | 1.30% | 0.87% | 1.10% | 0.63% |
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).
- DJIA closed just beneath 52,800, down 687 points and on its lows.
- Walmart down more than 9%, its worst session in over four years.
- 10-year yield near 4.70%, back above its pre-buyback level.
Wednesday bought the bond market one session of calm and the Dow Jones Industrial Average spent Thursday paying for it with interest. The index closed just beneath 52,800, down 687 points and 1.29% on the day, within a dozen points of its session low and beneath the 53,000 handle for the first time this month. Every prop the previous session leaned on was pulled out inside a single afternoon.
The relief that lasted one session
Long-end yields reversed the entire move the buyback plan had produced. The 10-year note finished around 4.70%, back above where it stood before Wednesday morning's decision to at least double liquidity-support repurchases in the 10-year to 30-year sector from September 9, and the 30-year ended near 5.25% after touching its highest in almost two decades earlier in the week. The Treasury Secretary used a television appearance during the session to say the operations could run past 4 billion Dollars per issue.
He argued that yields do not reflect the underlying fundamentals, that liquidity at the long end is badly impaired, and that the Iran conflict is a temporary distortion the market will eventually see past. Yields eased while he spoke and then resumed climbing. A repurchase facility is a liquidity instrument, and the afternoon spent six hours pointing out that liquidity was never the complaint.
What the facility actually does is fund the long end out of the front, retiring 10-year to 30-year paper while the financing shifts toward bills, and it manages that without touching the Fed's balance sheet. Sell-side commentary through the afternoon reduced it to a thin imitation of Operation Twist, on the argument that 4 billion Dollars an operation is not a meaningful share of a market this size. Federal debt passed 40 trillion Dollars on Wednesday, four months after clearing 39 trillion, which is the number the long end has actually been trading.
Where the war reaches the household
Walmart fell more than 9%, its steepest single-session decline in over four years, after comparable United States store sales rose 2.6% against a 3.8% consensus and average ticket growth slowed to 1.1% from 3.1% a year earlier. The company put the trade-down down to what its customers are paying at the pump. Crude Oil traded above $87.00, the highest in close to a month, after an unprecedented economic isolation campaign against Iran was declared on Wednesday evening.
The retailer beat on earnings and nudged its annual sales and profit targets higher for the first time this year, and the market sold it anyway. Operating income carried a benefit of 750 basis points from tariff refunds, so the reported figure was flattered by a policy reversal rather than by demand. Consumer staples led the wider market lower and rival retailers followed. This is the war showing up in an index component's revenue line rather than in a barrel price.
The composition alibi ran the other way
The Dow lost 1.29% against roughly 0.85% for the S&P 500 and 1% for the Nasdaq Composite, which inverts the pattern the summer has run on. Price weighting and membership have been the reason this average outperformed through earnings season and through every war headline since June. On Thursday they were the reason it underperformed.
A price-weighted average built on consumer, industrial and healthcare names is the wrong instrument to hold when the shock is an energy tax on the household rather than a multiple problem in technology. The index ended roughly 3.6% beneath the August 5 record, having lost the 53,250 shelf and the 53,000 handle in one afternoon.
Friday's flash surveys, then Wyoming
Friday August 21 at 13:45 GMT brings the preliminary August S&P Global Purchasing Managers Index (PMI) surveys, two of the three carrying red-band billing. The manufacturing consensus sits at 53.8 against a 53.9 prior and services at 54 against 54.6, with the composite last at 54.5. A firm reading feeds the inflation case that has driven the long end all summer, which makes a beat the unfriendly outcome here.
The week after brings Jackson Hole on August 27-29 and the chair's first symposium keynote. The tension is now explicit, because the bond market has been doing tightening work the Fed never had to vote for and the Treasury spent this week trying to undo it. Whether the chair accepts that help or leans against it is the question the front end has left.
Dow Jones Industrial Average levels
Resistance: The 53,000 handle is the level lost on the way down and the first one to reclaim. Above it sits the 53,500 area that capped Thursday's session, then the 53,800 shelf that has turned back every attempt this month.
Support: The 50-day Exponential Moving Average (EMA) near 52,500 is the first structure beneath, roughly 290 points lower and still rising, with the 52,250 area the next reference under that. Daily Stochastic Relative Strength Index (Stoch RSI) near 68 is nowhere near oversold, so the indicator argues nothing about this fall being over.
Bias: Bearish beneath the 53,000 handle. Objectives are the 50-day EMA near 52,500 and then 52,250, with invalidation on a daily close back above 53,250.
Dow Jones daily chart
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.
- NZD/USD trades in the mid-0.5900s at the time of writing, its strongest level since early June.
- July trade figures showed exports just above imports, but the data barely moved the pair.
- Focus turns to the Reserve Bank of New Zealand (RBNZ) meeting next month, where another hike is priced but no longer certain.
The New Zealand Dollar (NZD) is holding near the top of its recent range against the US Dollar (USD), sitting in the mid-0.5900s at the time of writing after touching its best level since early June. The pair is little changed on the day, but the direction of the past two weeks is clear, and the reason is mostly on the United States (US) side.
A soft US retail sales report trimmed bets on a Federal Reserve (Fed) rate hike next month, pulling the Greenback lower and letting the Kiwi extend its rebound.
New Zealand Exports are expected, at NZ$8.09 billion, leaving only a slim monthly surplus, while the annual balance stayed in deficit near NZ$3.74 billion. The numbers were not the story, and price action confirmed it.
Short-term technical analysis:
On the 4-hour chart, NZD/USD trades at 0.5943, retaining a constructive bullish bias as it holds above both the 20-period Simple Moving Average (SMA) at 0.5909 and the 100-period SMA at 0.5878. The pair is pressing into a nearby cluster of overhead supply, while the Relative Strength Index (RSI) around 66 stays in positive territory but shy of overbought, suggesting upside momentum remains firm though increasingly stretched.
On the topside, immediate resistance emerges at 0.5947, ahead of a stronger cap at 0.5955 On the downside, initial support is seen at 0.5938, followed by 0.5935, while deeper pullbacks would look to the 20-period SMA at 0.5909 and the 100-period SMA at 0.5878 to underpin the broader bullish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- USD/JPY bounces back toward the 159.00 zone, recovering most of the prior day's slide as the US Dollar steadies.
- A rebound in US Treasury yields and a solid jobless claims print are behind the Dollar's recovery.
- The Yen is the day's weakest major currency, pressured by high Oil prices, with Japan's inflation data and flash PMIs due Friday.
USD/JPY trades north of the 159.00 barrier at the time of writing on Thursday, higher on the day and clawing back most of the previous session's losses. The move owes more to a steadier US Dollar (USD) than to anything out of Japan, with the Greenback recovering after slipping to a three-month low.
The US Dollar's footing improved as United States (US) Treasury yields bounced back from Wednesday's sharp drop, following the US Treasury's decision to expand its liquidity-support buybacks of longer-dated debt. Firmer labor data helped as well, with weekly Initial Jobless Claims coming in below expectations and keeping the case for the Federal Reserve (Fed) to hold rates next month intact. The US Dollar Index (DXY) recovered back toward the 98.90 area after touching its weakest level since mid-May.
The bigger drag, though, is a broadly soft Japanese Yen (JPY), the weakest of the majors on the day. Elevated Oil prices are the immediate headwind, since Japan imports almost all of its energy. July trade figures underlined the strain, with imports surging on higher energy costs and the country running a sizeable trade deficit. Longer term, fiscal worries and still-low interest rates remain weights on the currency.
Yet the rebound sits awkwardly against the policy backdrop. The Bank of Japan (BoJ) is expected to raise rates in September, just as recent US data nudge the Fed toward holding a narrowing gap that argues against chasing USD/JPY much higher. Analysts at Societe Generale remain constructive on the Yen over the medium term but caution that a durable turn lower in the pair may need either fresh FX intervention or a meaningful drop in oil to remove the growth headwind.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 159.12, holding a mildly bullish near-term bias as it remains above both the 20-period Simple Moving Average (SMA) at 159.10 and the 100-period SMA at 159.09. The latest 14-period Relative Strength Index (RSI) at 52.67 sits in neutral territory with a slight positive tilt, suggesting steady upside pressure while the pair consolidates just under nearby resistance.
On the topside, initial resistance appears at the horizontal barrier at 159.19, where a clear break would open the way for further gains. On the downside, immediate support is clustered around the short-term averages at 159.10 and 159.09, followed by layered horizontal floors at 158.98, 158.85 and 158.66, which together underpin the constructive tone while price holds above them.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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