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United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann describe AUD/USD price action as range-bound around 0.7115, with intraday expectations for 0.7095–0.7125. They had turned negative early last week, targeting 0.7050, but now concede that the probability of reaching that level has diminished considerably. On a 1–3 month view, they see scope for the Australian Dollar to continue rising toward the year-to-date high at 0.7277.

Australian Dollar consolidates in tight band

"24-HOUR VIEW: We indicated yesterday that “the current price movements are likely part of a range-trading phase between 0.7105 and 0.7135.” While AUD then fluctuated within a lower range of 0.7093/0.7126, it closed largely unchanged at 0.7115 (-0.05%). We are not able to derive much from the price action. Today, AUD could trade between 0.7095 and 0.7125."

"1-3 WEEKS VIEW: We turned negative on AUD early last week. Last Thursday (17 Sep, spot at 0.7090), we highlighted that AUD “is expected to drop to 0.7050.” After AUD rose to 0.7140, we highlighted yesterday (22 Sep, spot at 0.7120) that “as our ‘strong resistance’ at 0.7140 has not been clearly breached, we will maintain our negative stance for now.” However, we added that “the likelihood of AUD reaching 0.7050 has diminished considerably.” We continue to hold the same view."

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

Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data. Silver trades at $65.45 per troy ounce, down 2.42% from the $67.07 it cost on Tuesday.

Silver prices have decreased by 7.93% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 66.01 on Wednesday, up from 64.97 on Tuesday.

(An automation tool was used in creating this post.)

ING strategist Francesco Pesole notes the Dollar’s resilience despite lower Oil prices and improved global risk sentiment, highlighting that hawkish Federal Reserve communication is keeping the Dollar supported. Strong US labour indicators and limited impact from geopolitics reinforce expectations for an October Fed hike, with ING seeing DXY at 101.0 as a realistic near-term objective.

Fed narrative keeps Dollar supported

"The dollar continues to show very good resilience to lower energy prices and a risk-friendly environment. It’s another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand. Richmond Fed President Thomas Barkin, who becomes a voter in 2027, reinforced that message yesterday, arguing that a single rate hike may not be enough to bring inflation under control."

"He also noted that resilient labour market conditions should keep consumer spending supported, implying that a dovish shift among the hawks may require clearer signs of labour market softening."

"But high-frequency jobs indicators have remained strong. Initial jobless claims are back below 200k and ADP reported a bump in weekly hiring to 20k at the start of September. Consensus is starting to build around a strong September payroll print – around 80-100k."

"Geopolitics had a limited impact on FX yesterday. President Trump's UN speech generated few clear market signals, while constructive talks with Iranian delegates and the reopening of the Saudi East-West pipeline pushed Brent below $100/bbl. Whether this evolves into a more sustained decline remains to be seen. From a rates perspective, oil floating around the $90-100/bbl range is unlikely to force a dovish rethink in market expectations."

"We’ll be awaiting more headlines from New York ahead of tomorrow’s Trump-Xi meeting. The Fedspeak agenda is quiet today, and the data calendar only includes S&P Global PMIs, which matter less for markets than the ISM surveys."

"We retain the view that the dollar faces upside risks over the next couple of weeks, when a revamp of data releases can prompt markets to add bets on an October hike. In that context, DXY reaching 101.0 remains a very achievable near-term target."

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

• GBP/JPY trades little changed on Wednesday as UK services activity slows more than expected in September.
• The UK manufacturing sector surprises to the upside, limiting the impact of weaker services activity.
• Pound Sterling remains pressured by concerns over UK public finances, while the Japanese Yen stays weak.

GBP/JPY trades around 209.90 on Wednesday at the time of writing, virtually unchanged on the day with a modest 0.05% decline. British Pound (GBP) struggles to find a clear direction following the release of mixed UK activity data, while persistent weakness in the Japanese Yen (JPY) limits the pair's downside.

The preliminary S&P Global United Kingdom (UK) Services Purchasing Managers Index (PMI) fell to 51.7 in September from 52.5 in August, below market expectations of 52. Despite the slowdown, a reading above 50 indicates that activity in the sector continues to expand.

The loss of momentum in services also leads to a slowdown in overall business activity. The UK Composite PMI fell to 51.7 in September from 52.5 in the previous month. The picture is more encouraging in the manufacturing sector as the Manufacturing PMI rose to 52 from 51.7 previously, comfortably beating market expectations for a decline to 51.4.

Beyond the activity indicators, the British Pound remains pressured by concerns surrounding UK public finances. Public sector borrowing reached £18.27B in August, up from £2.04B in July, bringing the cumulative deficit from April to August to £77.3B. This figure exceeds the Office for Budget Responsibility's (OBR) projection by £8.1B.

These figures increase pressure on UK Chancellor of the Exchequer Rachel Reeves ahead of the upcoming budget, as higher borrowing costs and weak economic growth reduce the government's fiscal room for manoeuvre.

On the Japanese side, the Japanese Yen remains relatively weak following the Bank of Japan's (BoJ) dovish policy decision last week. The Japanese currency's underperformance helps limit the downside potential for GBP/JPY. Nevertheless, the possibility of intervention by Japanese authorities in the foreign exchange market could discourage aggressive bearish bets on the Japanese Yen.

Commerzbank’s Antje Praefcke reviews the Hungarian Central Bank decision to keep the key rate at 5.50% while lowering its medium-term inflation target to 2.5% from 2028. The MNB slightly raised its 2027 inflation forecast and will move to eight policy meetings per year. She sees the cautious, data-driven stance as generally supportive for the Forint, barring renewed rate cuts.

Lower target, data-driven policy

"As expected, the Hungarian Central Bank (MNB) left its key interest rate unchanged at 5.50% yesterday. Nevertheless, there was plenty of news. The MNB decided to lower its inflation target from 3% to 2.5%. It stated the following:"

"Ultimately, the issue is convergence with the euro zone, and the current low inflation rates support this decision, although it should not be overlooked that inflation risks remain due to the drought and energy prices. However, the MNB addresses these risks in its statement:"

"The MNB slightly raised its inflation forecast for 2027. It will base future interest rate decisions on "the inflation outlook, global developments, and Hungary’s risk premium, based on which it will take decisions on the level of the base rate in a cautious and data-driven manner." However, the data-driven approach also means that the Monetary Policy Council could decide to hold rates steady or cut them, Central Bank Governor Mihaly Varga later emphasized to reporters."

"Another change will be that, starting in 2027, the central bank’s meetings will no longer be held monthly; instead, there will be eight meetings per year to decide on the policy rate."

"Interest rates remained unchanged, as expected; the MNB continues to maintain a cautious stance in light of price risks; and several technical changes were introduced that will take effect in 2027 and 2028, respectively. In general, the MNB’s monetary policy is a supportive factor for the forint, provided that it does not consider continuing the interest rate cycle for the foreseeable future. Following the decision, the HUF initially rose accordingly, but then gave up its gains as the euro weakened against the USD."

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

• Eurozone September preliminary figures show modest expansion across services and stable manufacturing performance.
• German Services PMI jumped to 52.9, boosting overall composite growth despite a manufacturing drop to 53.8.
• Canadian Dollar struggles as WTI oil stays under $90 due to easing Middle East tensions.

EUR/CAD halts its four day-winning streak, trading around 1.6090 during the European hours on Wednesday. The currency cross is under pressure as the Euro (EUR) holds losses following the release of the latest HCOB Purchasing Managers’ Index (PMI) data for Germany and the broader Eurozone.

Across the Eurozone, September's preliminary figures point to moderate expansion, with services sector activity expected to edge up slightly to 51.7 from August’s 51.6, while manufacturing remains steady at 52.7.

In Germany, business activity presented a mixed picture across sectors. Manufacturing output slowed unexpectedly, with the Manufacturing PMI dropping to 53.8, falling short of the estimated 54.5 and the previous reading of 54.3. However, this slowdown was offset by a strong rebound in the service sector, where the PMI jumped to 52.9 from 49.7 in August, signaling a return to expansionary territory above the 50.0 threshold. Buoyed by this service sector momentum, Germany’s overall Composite PMI rose to 53.8, up from 51.8 in the prior month.

Despite the Euro's weakness, losses for the EUR/CAD cross may be limited as the Canadian Dollar (CAD) faces headwinds from subdued crude oil prices. With West Texas Intermediate (WTI) holding below $90.00 per barrel, commodity-linked CAD buyers are keeping a close eye on global supply developments.

Oil markets remain muted as efforts to resolve Middle Eastern supply disruptions progress: Saudi Arabia is preparing to restart exports via its East-West pipeline to bypass the Strait of Hormuz, while US President Donald Trump reported productive diplomatic talks with Iranian officials, signaling potential stability ahead.

• EUR/USD holds lows near 1.1400, about 0.5% down in the week so far.
• Bright Eurozone PMI data and lower Oil prices are failing to lift the Euro.
• Political uncertainty in Germany and France's soaring debt are keeping investors away from the common currency.

The Euro (EUR) remains on its back foot against the US Dollar (USD) on Wednesday, extending its decline to two-and-a-half-month lows after dropping about 0.5% so far this week. The EUR/USD pair trades at session lows of 1.1414 at the time of writing, unable to draw support from the bright Eurozone Purchasing Managers' Index (PMI) figures and lower Oil prices amid growing concerns over German political uncertainty and France's ballooning debt.

Eurozone’s preliminary business activity data from September beat expectations on Wednesday, with the HCOB Services PMI jumping to 53, its highest level in 10 months, well above the 51.7 market forecast and last month’s 51.6 reading. The HCOB Manufacturing PMI remained steady at 52.7, in line with the market consensus.

Before that, German PMIs showed a mixed picture, with the Services sector’s activity growing to 52.9 in September after five months of contraction and also beating expectations of a 50 reading. Manufacturing activity, on the other hand, slowed down to 53.8, from 54.3, although still at levels consistent with solid business activity.

German political uncertainty, France’s debt weighing

The Euro, however, is facing political issues, keeping investors on edge. German Chancellor Friedrich Merz suffered a severe reversal at state elections in Berlin and especially in Mecklenburg-Vorpommern, where his Christian Democratic Union (CDU) party was barred from the regional parliament.

These results have raised questions about Merz’s support and cast a shade over the Eurozone’s EUR 2 trillion budget proposal that includes a significant boost to the block's defence program, which might be stopped by the emerging pro-Kremlin Allianz fur Deutschland (AfD).

Beyond that, French debt has reached its highest level since 1978 in a context of declining investors’ confidence in government bonds. With the prospects of any significant tightening off the table and with the country facing spiralling borrowing costs, concerns of a fiscal crisis in the Euro area are growing and might pose a significant weight on Euro crosses.

• EUR/JPY cross struggles to gain any meaningful traction amid mixed fundamental cues.
• German political uncertainty overshadows the upbeat PMI and firming ECB hike bets.
• The BoJ’s dovish outlook continues to undermine the JPY, lending support to the cross.

The EUR/JPY cross seesaws between tepid gains/minor losses through the first half of the European session on Wednesday and moves little following the release of flash Eurozone PMIs. Spot prices, however, remain confined within the previous day's broader range and currently trade just above the 180.00 psychological mark, nearly unchanged for the day.

The preliminary Eurozone HCOB Composite PMI defied expectations and jumped to 53.1 in September, which marks its highest reading since April 2023. Solid growth was registered in both the manufacturing and services sectors, with the latter being a key driver of the improvement in September. Additional details of the survey revealed that firms faced ​the sharpest rise in operating costs in four months, strengthening the case for another interest rate hike by the European Central Bank (ECB) as early as October.

The Euro, however, struggles to attract any meaningful buyers amid political instability in Germany – the Eurozone's largest economy. In fact, German Chancellor Friedrich Merz’s Christian Democratic Union (CDU) suffered humiliating defeats in state elections. Merz’s CDU is currently below the 5% threshold required to sit in parliament, fueling speculation that he could be replaced mid-term in a so-called chancellor swap. This continues to undermine the shared currency and caps the EUR/JPY cross.

The Japanese Yen (JPY), on the other hand, continues with its relative underperformance on the back of the Bank of Japan's (BoJ) dovish rate hike to a 31-year high last week. This, in turn, helps limit the downside for the currency pair. However, intervention fears might hold back JPY bears from placing aggressive bets. The mixed fundamental backdrop, in turn, warrants some caution before positioning for an extension of the recent recovery from the 177.80 area, or the year-to-date low, touched last Monday.

• The Indian Rupee drops against the US Dollar after rising significantly in the last two trading days.
• The Fed is almost certain to deliver at least one more interest rate hike this year.
• US President Trump sees deal with Iran after midterm elections.

The Indian Rupee (INR) trades lower against the US Dollar (USD) on Wednesday after rising in the past few trading days. The USD/INR pair is marginally up to near 95.72 as the US Dollar outperforms amid firm expectations that the Federal Reserve (Fed) will extend its monetary tightening cycle for the remainder of the year.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.25% higher to near 100.80, the highest level seen in over seven weeks.

The CME FedWatch tool shows traders see an almost 90% chance that the Fed will deliver at least one more interest rate hike this year.

What’s driving hawkish Fed expectations

Analysts at MUFG note that these rate expectations “were supported by hawkish comments from regional Fed presidents although neither are voting members this year.” In particular, Chicago Fed President Austan Goolsbee, who “will become a voting member again from next year,” cautioned that “supply shocks have come more frequently, hit harder and lasted longer and once supply shocks to inflation become persistent, some of the logic behind ‘looking through’ no longer holds,” reinforcing the case for an extended period of tighter Fed policy.

On Tuesday, Richmond Fed Bank President Thomas Barkin, who is also currently a non-voting member, said that more interest rate hikes will be required to tame inflation. However, he didn’t provide any specific guidance regarding how much higher interest rates could go. "Will additional hikes be required, and how many? ​We'll see," Barkin said, Reuters reported.

Oil prices extend the decline

Oil prices continue to remain under pressure on hopes of diplomacy between the United States (US) and Iran, a scenario that will ease energy supply disruption through the Middle East. The optimism over US-Iran diplomacy boosted after a report from Kyodo News showed that a senior Iranian official confirmed Tehran sending proposal to the US via mediators, which states that Iran would reopen the Hormuz Strait within seven days in return of Washington’s military de-escalation near their seaports.

In the opening session, the MCX Crude Oil contract expiring on October 19 is down 1.43% to near Rs. 8,520, the lowest level seen in two weeks.

Lower oil prices bode well for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

In a speech at United Nations (US) General Assembly on Tuesday, US President Donald Trump said that either Washington will make a deal or will drive the nation to hell. “I have a big decision to make on whether to make a deal or drive Iran into hell with no chance of survival and no hope of future greatness or generations.” Trump said. He reiterated stress that Iran will never have a nuclear weapon and the deal with the nation will be made right after midterm elections.

India's preliminary HSBC PMI remains stronger in Steptember

India's flash HSBC Composite Purchasing Manager's Index (PMI) data for September has come in stronger. The Composite PMI jumped to 56.5 from 54.3 in September due to robust manufacturing and service sector activity. “Activity in the private sector gained momentum, led by stronger manufacturing. Output and new domestic orders rose at faster rates,” said Pranjul Bhandari, chief India economist at HSBC. She added that renewed tensions in the Middle East had prompted firms to build buffers to manage uncertainties, while price pressures strengthened among manufacturers.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 95.72, holding a mild bullish bias as spot remains above the 20-period exponential moving average (EMA) at 95.53. The positioning over this short-term EMA suggests underlying demand, while the Relative Strength Index (RSI) at 56 stays just above the neutral 50 line, hinting at steady rather than aggressive upside momentum.

On the downside, immediate support is seen at the 20-period EMA near 95.53, which reinforces the current floor under prices. Looking up, the September 17 high near 96.10 is the critical hurdle; above that, the pair might aim to revisit the all-time high near 97.10.

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

DBS Group Research economist Philip Wee expects the Swiss National Bank to keep its policy rate unchanged at 0% at the September 24 meeting, despite higher energy prices and a modest uptick in headline inflation. He sees scope for a near-term inflation forecast upgrade, but notes that Swiss growth has improved and CHF haven pressures have eased against EUR and GBP.

SNB stance, inflation and haven demand

"The Swiss National Bank has little reason to follow the US Federal Reserve and the European Central Bank into tightening at its September 24 meeting."

"The SNB is nevertheless likely to raise its near-term inflation forecast as elevated energy prices feed through into the economy amid persistent uncertainty in the Middle East."

"The SNB may also pay closer attention to the second-round effects highlighted in its June minutes, including processed food, transport, tourism, and restaurants."

"The hawkishness of any forecast upgrade will depend less on higher near-term inflation than on whether the SNB sees the oil shock feeding into underlying inflation."

The SNB could also temper its language on FX intervention. In June, it expressed “an increased willingness to intervene to counter a rapid and excessive CHF appreciation,” framing the concern in terms of price stability and broader activity in its export-led economy."

"Those concerns have since eased. The State Secretariat for Economic Affairs has raised its 2026 growth forecast to 1.7% from its 0.9% projection in June. 2Q26 GDP growth accelerated to 1.9% QoQ (2.8% YoY) from 0.6% QoQ (0.5% YoY) in 1Q26."

"Meanwhile, the CHF has surrendered more than half of its post-Liberation Day gains against the EUR and GBP. SNB should view the Fed and ECB hikes as providing a stronger counterweight to haven demand for the CHF."

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