Forex News
- Gold price tumbles to around $4,410 in Tuesday’s early Asian session.
- Traders price in a 60% probability of a Fed rate hike next week.
- US PPI and CPI inflation data will be in the spotlight this week.
Gold price (XAU/USD) drifts lower to near $4,410 during the early Asian session on Tuesday. The precious metal extends the decline as a stronger-than-expected US Nonfarm Payrolls (NFP) report for August bolsters expectations for a Federal Reserve (Fed) interest rate hike this month.
Data last week showed that US NFP climbed by 162K in August, versus an upwardly revised rise of 21K prior, above the market consensus of 56K. Meanwhile, the Unemployment Rate in the US held steady at 4.1% during the same period.
Traders see a 60% odds of an interest rate hike at the Fed's policy meeting next week, compared with a probability of 50% before the jobs data was released on Friday, according to the CME FedWatch tool.
"Gold and silver have moved in the opposite direction to energy prices, extending their declines after Friday’s strong U.S. jobs report lifted bond yields and reinforced expectations of a Fed rate hike on 16 September," said Ole Hansen, head of commodity strategy at Saxo Bank.
Traders will take more cues from the US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation data later this week. Any signs of hotter inflation in the US would reinforce a September hike. This, in turn, could underpin the US Dollar (USD) and weigh on the USD-denominated commodity price. A cooler reading would strengthen the case for a rate hold and drag the Greenback lower.
Gold slips on US data even as structural bull run deepens
Analysts at Societe Generale argue that Gold has now “entered a new phase of its 2026 bull run,” one they characterise as being “defined less by speculative momentum and more by broad-based, structural conviction across every category of market participant.” What initially “began as a geopolitical shock” has, in their view, “evolved over the following months into something far more durable: a synchronised build-up of physical, futures, and options exposure that now spans retail investors, professional money managers, and derivatives traders alike.”
At the same time, strategists at UOB Group highlight that near-term price action remains sensitive to macro data, noting that Gold “fell more than 0.9% last Fri to $4429.98/oz for a weekly loss after stronger-than-expected US jobs data boosted expectations that the Fed could raise interest rates as soon as this month, denting the non-yielding bullion’s appeal.”
Technical Analysis: Gold price retains a neutral tone in the near term
In the daily chart, XAU/USD sits between the 100-day Simple Moving Average (SMA) and the 20-day SMA, leaving the metal supported by the longer-term average but capped by the shorter-term trend line overhead. The latest Bollinger Bands (20, 2) show spot holding comfortably above the lower band while failing to challenge the upper band, reinforcing a mid-range consolidation tone. The Relative Strength Index (14) around 51 is neutral, hinting at balanced momentum rather than a clear directional push.
On the topside, immediate resistance aligns with the 20-day SMA and Bollinger middle band near $4,465, with a subsequent barrier at the upper Bollinger band around $4,675 if buyers regain control. On the downside, initial support is seen at the 100-day SMA near $4,350, ahead of stronger demand into the lower Bollinger band around $4,260, where a break would open the door to a deeper corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Citi Mexico released its September “Expectations Survey,” in which most private economists expect the Bank of Mexico (Banxico) to hold rates unchanged, while the exchange rate is forecast to end below the 18.00 threshold by the end of 2026.
The poll showed that most economists expect the main reference rate to be at 6.50% at least until the end of 2027, with the range fluctuating between 6.25% and 6.75%. The USD/MXN is expected to end at 17.50 by the end of the current year, and for the end of 2027, the consensus see the exotic pair at 18.07, down from 18.24.
Regarding inflation, it is expected to finish at 4% for 2026, while the core component is expected to end at 4% as well, according to the survey.
Mexico’s Gross Domestic Product (GDP) is forecast to end 2026 at 1.3%, up from 1.2% YoY, according to the survey. For 2027, respondents expect the economy to grow by 1.8%, as in the previous survey, with estimates ranging from 1.0% to 2.3%.
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
OCBC’s Christopher Wong notes that recent Thai Baht (THB) strength may slow as external conditions turn less supportive. Governor Vitai’s comments suggest further rate cuts are unlikely without another shock, tempering easing expectations. However, higher US yields, weaker Gold and elevated Oil prices, alongside renewed US–Iran tensions, are seen as drags on THB, even as structural tech and Foreign Direct Investment (FDI) trends offer longer-term support.
External backdrop less supportive for Baht
"THB’s recent outperformance may face some consolidation as the external backdrop turns less supportive."
"However, Friday’s stronger US payrolls lifted UST yields and the USD while weighing on gold, removing some of the external and gold-related support for THB."
"Elevated oil prices are also an increasingly important drag, with renewed US-Iran tensions over the weekend adding to upside risks for energy prices."
"As a net energy importer, THB remains relatively exposed should oil stay elevated."
"USD/THB last closed at 32.94 levels. Mild bullish momentum on daily chart shows signs of fading while RSI fell."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- AUD/USD rises for fourth day as US holiday thins volumes.
- Hormuz deal hopes complicate Oil and Dollar reaction.
- Westpac confidence, RBA speakers and US inflation guide next move.
The Aussie Dollar climbed for the fourth straight day, up 0.22% against the US Dollar, amid thin volumes as US financial markets were closed in observance of the Labour Day Holiday. The AUD/USD trades at 0.7218, after bouncing off daily lows of 0.7194.
AUD/USD gains as softer Dollar offsets Fed hike risks
Sentiment is mixed following Monday’s session, as reflected in European equity markets. The US Dollar Index (DXY), which tracks the performance of the US currency versus a basket of six other currencies, fell 0.26% at 98.90.
The US-Iran conflict escalated, while Tehran announced that a deal with Oman over the Strait of Hormuz is close to being finalized. According to Bloomberg, the deal “will include a temporary safe route through Hormuz, raising questions about how the US would respond after the American military struck Iranian tankers over the weekend.”
Last week, a stellar jobs data report from the US, with Nonfarm Payrolls, exceeding estimates and July’s upwardly revised print, has set the stage for a rate hike by the Fed, after Fed Chair Warsh's remarks on Jackson Hole, that the labour market is “consistent with full employment.”
In Australia, Tuesday’s economic docket will feature the release of the Westpac Consumer Confidence for September, along with Reserve Bank of Australia (RBA) officials crossing the wires. According to ANZ Bank, Sarah Hunter, the RBA’s Assistant Governor and Deputy Governor Andrew Hauser will cross the wires.
In the US, the docket is packed with inflation data, jobless claims and the University of Michigan Consumer Sentiment.
AUD/USD price Forecast: Technica outlook
In the daily chart, AUD/USD trades at 0.7219, keeping a clear bullish tone as it holds above the simple moving average near 0.7045 and tracks an established series of rising trend-line supports. The Relative Strength Index (14) around 68 suggests firm but not yet extreme upside momentum, while price action clings to an ascending trend base, hinting that dips are likely to attract buying interest as long as the pair remains anchored above these structural floors.
On the downside, initial support emerges at the horizontal level around 0.7198, reinforced by a nearby rising trend-line pivot just under 0.72, before the simple moving average comes in lower near 0.7045 as a more significant medium-term floor. With no clearly defined overhead levels in the current dataset, the path of least resistance remains to the upside while AUD/USD holds above these supports, though a break below the 0.72 area would signal a deeper corrective phase back toward the mid-0.70s.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.18% | -1.33% | -0.17% | -0.22% | 0.03% | -0.08% | |
| EUR | 0.10% | -0.07% | -1.25% | -0.10% | -0.13% | 0.11% | 0.03% | |
| GBP | 0.18% | 0.07% | -1.15% | -0.02% | -0.02% | 0.19% | 0.09% | |
| JPY | 1.33% | 1.25% | 1.15% | 1.18% | 1.14% | 1.38% | 1.30% | |
| CAD | 0.17% | 0.10% | 0.02% | -1.18% | -0.05% | 0.18% | 0.08% | |
| AUD | 0.22% | 0.13% | 0.02% | -1.14% | 0.05% | 0.23% | 0.12% | |
| NZD | -0.03% | -0.11% | -0.19% | -1.38% | -0.18% | -0.23% | -0.10% | |
| CHF | 0.08% | -0.03% | -0.09% | -1.30% | -0.08% | -0.12% | 0.10% |
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).
Commerzbank’s Charlie Lay highlights Hong Kong’s first five-year plan to strengthen its position as the leading offshore CNY and cross-border financial centre. Expanded CNY products, enhanced Stock/Bond/Wealth Connect schemes and broader commodity and tech financing aim to deepen two-way capital flows. While near-term USD/CNY impact is limited, the longer-term implications are modestly CNY-positive via greater international usage.
Five-year plan supports CNY use
"Hong Kong plans to deepen its role as the leading offshore CNY and cross-border financial center under its first-ever five-year plan."
"Chief Executive John Lee said the government intends to expand offshore CNY investment and risk-management products and widen mutual market access through Stock Connect, Bond Connect and Wealth Management Connect."
"The measures mark another step toward CNY internationalisation without full capital-account liberalisation. A broader range of offshore CNY assets and hedging instruments, together with expanded Connect programmes, should deepen two-way capital flows."
"This could also make it easier for international investors to hold and manage CNY exposure. More broadly, Hong Kong provides Beijing with a controlled gateway to internationalise the CNY while retaining control over cross-border capital flows."
"For USD/CNY, the near-term impact should be limited, but the longer-term implications are modestly CNY-positive. Deeper offshore liquidity and greater cross-border market access should gradually increase international use of the currency."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Labour Day closures keep liquidity thin across North America.
- Canada’s weak jobs report fades as Oil supports Loonie.
- US CPI, PPI and sentiment data guide Fed repricing.
The Loonie gains some traction versus the Greenback, while the latter posts modest losses, as US and Canadian financial markets remain closed in observance of Labour Day. Nevertheless, the USD/CAD edges lower by some 0.15%, trading at 1.3813 at the time of writing.
USD/CAD slips as Oil strength offsets soft Canadian jobs.
Last week, employment data in Canada revealed that the economy lost 41.7K workers, while the Unemployment Rate remained steady at 6.4%. This pushed USD/CAD higher as US Nonfarm Payrolls crushed estimates, with July’s print providing a leg-up that has so far been faded.
Last week’s unexpectedly strong Nonfarm Payrolls report for August confirmed Fed Chair Kevin Warsh’s statement that the jobs market is “consistent with full employment.”
Geopolitics are poised to continue to drive price action. The escalation of the US-Iran war increased upward pressure on energy prices, which typically correlate positively with the Canadian Dollar, suggesting further downside for the USD/CAD pair.
USD/CAD to be influenced by interest rate differentials
Given the backdrop, the Federal Reserve is expected to raise rates by 25 basis points, according to Prime Terminal data. Odds are at 63% to hike to 3.75% - 4$, while for holding rates, stand near 37%.
Regarding the Bank of Canada (BoC), money markets had priced in a near 70% chance of a hold at 2.25% and a slim 30% chance of a rate hike.
Although the data was positive and the US Dollar strengthened after NFP, the move faded as investors await US inflation data on the producer and consumer sides on Thursday and Friday, respectively.
Ahead of the economic calendar, it would remain absent in Canada but not so in the US. The release of inflation data on the producer and consumer side, along with jobs data and Consumer Sentiment, will provide clues about the status of the economy.
USD/CAD Price Forecast: Technical Outlook
In the daily chart, USD/CAD trades at 1.3816, maintaining a soft bearish bias as it holds below the clustered simple moving averages around 1.3999 and beneath the descending trend-line resistance drawn from 1.4248, now coming in near 1.3942. The pair still respects an underlying upward support trend line from 1.3526, but a Relative Strength Index (14) reading near 41 hints that rallies remain vulnerable while price stays capped under these overhead levels.
On the topside, initial resistance is seen at the downward resistance trend line around 1.3942, with the simple moving average cluster near 1.3999 acting as the next barrier that would need to be reclaimed to ease the current bearish pressure. On the downside, immediate support aligns with the ongoing upward trend-line zone just under the market around 1.38, with deeper levels traced back toward the former break region near 1.3598 and the trend-line origin around 1.3526 if selling extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
ING’s Chris Turner reports that USD/KRW rebounded from 1335 after news that Korea’s National Pension Service may halt or reverse its forward-market Dollar selling. Authorities appear comfortable with recent Won gains after a 15% USD/KRW drop since June. ING favours consolidation in both USD/KRW and USD/JPY, seeing reduced Dollar selling in these pairs supporting the broader Dollar tone.
Won rally seen due for consolidation
"USD/KRW bounced off the lows today at 1335 after news emerged that Korea's National Pension Service could be halting, if not reversing, its USD/KRW sales in the forward market."
"Remember, changes to NPS FX hedging were one of the measures introduced in June to help support the beleaguered won."
"Today's news suggests Korean authorities feel that the won has come far enough for the time being."
"And certainly the 15% drop in USD/KRW since June has been impressive and matches a similar move seen in 2022."
"We tend to favour some consolidation both in USD/JPY and USD/KRW for the time being. And the easing of dollar selling pressure in these two big FX pairs can allow the dollar to find support more broadly."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY trades just above 154.00, down 1.22% on Monday.
- Japanese wage growth is seen at 3.9% YoY at 23:30 GMT tonight.
- Swaps price the Bank of Japan at 97% and the Fed at 59%.
USD/JPY trades just above 154.00 after giving up 1.22% on a Monday with American desks shut. Everything the pair has left to argue about arrives inside ten days, and the first of it lands tonight. Japanese wage data at 23:30 GMT is the number the Bank of Japan (BoJ) has made the condition of everything else.
Tonight is Tokyo's own test
Japanese labour cash earnings for July land at 23:30 GMT, seen at 3.9% YoY after 3.4%. The second estimate of Japanese Gross Domestic Product (GDP) follows at 23:50 GMT with growth seen at 0.4% on the quarter after 0.3% and the deflator at 2.6%, alongside a current account seen at ¥2.87 trillion after a ¥92.3 billion deficit.
The wage figure is the one that counts, and the useful comparison sits on the same release. Nominal pay seen at 3.9% against a deflator seen at 2.6% is a real gain, which is precisely what the hawkish case has been short of. The country that could not manufacture wage growth for a generation is scheduled to report some at half past eleven tonight.
What it cannot do is add to September. That hike is priced at close to 97% and there is no room above it. What tonight can move is October, where the pricing is thinner and where a board member has already raised the possibility of consecutive moves rather than the one-every-six-months cadence the BoJ has kept to. The ten-year Japanese Government Bond (JGB) yield cleared 3% on September 1 for the first time since 1996, so the bond market has already taken that side of it.
Two meetings, and the doubt has changed sides
The Federal Reserve decides on September 16 and the BoJ on September 18, forty-eight hours apart. Swaps have the Japanese quarter point at close to 97%. The Federal Reserve's own market pricing puts its quarter point at 59%, with the target band at 3.50% to 3.75% and the effective rate at 3.63%.
That is a reversal of how this pair has worked for years. The Yen leg was the one nobody could predict and the Dollar leg the one that moved on schedule. Going into a fortnight with both banks live, Tokyo is the near certainty and Washington is the open question.
The size of the gap is not the story. Tokyo's policy rate is 1% against a Federal Reserve midpoint of 3.625%, and delivering both hikes moves that by nothing worth trading. What is being traded is which of the two paths bends first, and by how much after the meeting rather than at it.
There is nothing left to price on the Yen side
Friday showed what a decided market looks like from the other direction. US Nonfarm Payrolls (NFP) printed 162K against a 53K consensus, USD/JPY spiked to just under 157.00 within seconds of the 12:30 GMT release, and the entire move was gone inside the hour. Monday then took 1.22% out of the pair on a session when the country that produced those payrolls was shut.
So the arithmetic of the week is one-sided. There are three points of room left in the Japanese pricing and forty-one in the American, which leaves Friday's inflation print as the only scheduled number capable of moving this pair by more than it moves back.
The rest of the week is American
The US ADP employment reading lands Tuesday at 12:15 GMT. The US Producer Price Index (PPI) follows Thursday at 12:30 GMT, seen at 0.4% on the month after a flat July and 5.3% YoY after 4.7%, with the core measure at 4.6% YoY after 4.2%. Initial jobless claims land alongside them, seen at 205K after 206K.
The US Consumer Price Index (CPI) arrives Friday at 12:30 GMT, seen at 0.4% on the month after 0.1%, with the annual rate steady at 3.4% and the core measure easing to 2.4%. Michigan sentiment and the one-year inflation expectations measure, last at 4%, follow at 14:00 GMT. A print at consensus firms a hike already priced at 59% and hands the Dollar leg the only thing that has gone its way in a fortnight.
Levels and bias
Resistance: The 154.50 area caps the bounce, and Monday's rebound stalled short of 155.00 before handing most of it back. Above that, 156.00 is Monday's open and sits just beneath the session high. The 200-day Exponential Moving Average (EMA) near 158.00 broke on September 3 and now caps any retracement, with the 50-day EMA just under 159.50 above it.
Support: The 154.00 handle is the whole map. Monday's low sits a few pips above it and the pair spent the European evening within forty pips without breaking it. Beneath it the chart carries no traded structure at all, which leaves 153.50 and 153.00 as round figures rather than tested levels.
Bias: Bearish while 155.00 caps. The daily Stochastic Relative Strength Index (Stoch RSI) sits at 82 with price at the lows of its range, so no oversold reading is available to support a bounce and the oscillator has its whole range left to give back. The intraday measure near 58 is mid-range after the afternoon rebound faded, which is neither help nor hindrance. A daily close above 155.50 invalidates the call. A soft wage print tonight does it faster, and a hot American inflation number on Friday does it with more staying power.
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.
MUFG’s Lloyd Chan warns that upcoming US inflation data could test the recent Rupiah recovery, as firmer US inflation may reinforce elevated US yields and challenge USD/IDR’s break below 17,700. He notes limits to domestic buffers, rising foreign ownership of SRBI, and that higher Oil prices could revive concerns over Indonesia’s fiscal risks and subsidy costs.
Rupiah recovery faces external tests
"In Indonesia, US inflation data this week could test the recent rupiah recovery."
"Firmer US inflation could reinforce elevated US yields and challenge USD/IDR's recent break below 17,700. While domestic buffers remain supportive, there are limits."
"Foreign ownership of outstanding SRBI has already reached around 27%, close to previous highs seen in late 2024. More importantly, Indonesia's commodity offsets are proving insufficient to fully counter the deterioration in the oil and gas trade balance."
"Our calculations suggest Brent prices above US$82/bbl begin to erode the cushioning effect from coal, palm oil and base-metal exports."
"If oil prices move above US$100/bbl and remain there for an extended period, renewed concerns over fiscal risks and subsidy costs could re-emerge."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD holds just under 1.3550 after a 42-pip Monday, up 0.17%.
- One of Tuesday's four MPC witnesses voted to hike in July.
- Markets price a 59% Fed hike on September 16 and 16% from the BoE.
GBP/USD holds just under 1.3550 after a Monday that covered 42 pips with American desks shut for Labor Day. The week that follows is not that. Pound Sterling (GBP) carries the higher policy rate of the two, the larger tightening path over twelve months, and almost none of the event risk that decides where the pair sits by Friday.
A holiday is not a verdict
The last thing to move this pair was Friday's US Nonfarm Payrolls (NFP), which printed 162K against a 56K consensus. GBP/USD fell 57 pips inside minutes to just beneath 1.3500 on the 12:30 GMT release and had recovered about two thirds of it by the European afternoon.
The mechanism matters more than the move. A strong American labour market raises the odds the Federal Reserve (Fed) tightens again, a tighter Fed means a stronger Dollar, and a stronger Dollar means a lower GBP/USD. Sterling spent Friday being punished for somebody else's good news, and Friday next runs the same experiment on the price data.
Sterling already won the rate argument
Bank Rate is 3.75%. The Federal Reserve's target band is 3.50% to 3.75%, a midpoint of 3.625%, with the effective rate at 3.63%. The Dollar's rate advantage over the Pound, the thing that set the terms of this pair for most of four years, has gone.
The forward path reads the same way. Markets price 71.9 basis points of Bank of England tightening over twelve months against 59.5 from the Federal Reserve, and a terminal rate of 4.47% in London against 4.22% in Washington by the middle of 2027.
The inflation data does not obviously support that ordering. UK CPI inflation was 2.6% in June and the Bank's July report expected it to rise from there as energy costs pass through rather than to have peaked. The American annual rate is seen at 3.4% on Friday. London has the lower inflation, the higher policy rate and the larger path priced against it, and GBP/USD sits roughly 330 pips beneath its January high all the same.
Tuesday is the only British thing that counts
Monetary Policy Report hearings begin at 13:15 GMT on Tuesday. Four Monetary Policy Committee (MPC) members appear before the Treasury Committee: the Governor, the Deputy Governor for Markets and Banking, and two external members. The session covers July's report and the decision to hold Bank Rate.
One of those four voted to raise Bank Rate by a quarter point in July. That vote was 6-3 to hold, after 7-2 in June, so the hawkish minority has been growing a member at a time while the headline decision has not moved. The July report framed the problem as an energy shock the Committee cannot influence but has to set policy around.
None of which touches September. The Bank of England meets on September 17 with a hike priced at 16%, and the first move the market genuinely expects is November, at 56%, with December at 54% behind it and 1.25 hikes priced into Bank Rate by mid-December. Tuesday cannot change next week. It can change November, which is more than anything else on the British calendar can claim.
The rest of the week belongs to the Dollar
British Retail Consortium (BRC) sales land at 23:01 GMT on Monday, seen at 1.2% YoY after 1%. The US Producer Price Index (PPI) follows on Thursday at 12:30 GMT, seen at 0.4% on the month after a flat July and 5.3% YoY after 4.7%, with the core measure at 4.6% YoY after 4.2%.
Friday opens with UK growth at 06:00 GMT, where July output is seen flat after 0.3% and industrial and manufacturing production are both seen at 0.1%. UK consumer inflation expectations follow at 08:30 GMT, last at 4% against a CPI rate well beneath it. The US Consumer Price Index (CPI) arrives at 12:30 GMT, seen at 0.4% on the month after 0.1%, with the annual rate steady at 3.4% and the core measure easing to 2.4%. A stalled British quarter and a hot American print land six and a half hours apart, and only one of them moves a policy rate.
Levels and bias
Resistance: The 1.3550 area caps the pair and Monday's high stopped short of it, in the same place Friday's high stopped. Above it, 1.3600 is the first round figure and the late-August peak in the 1.3650 area is what defines the range. The January high just under 1.3900 is not this week's business.
Support: The 1.3500 handle is doing all the work. Monday's low sat just above it and Friday's NFP low just beneath, with the 50-day Exponential Moving Average (EMA) between the two: the spike undercut that average by less than three pips before the pair took it back. Beneath there, 1.3450 is the next figure and the 200-day EMA sits just above 1.3400.
Bias: Bearish while 1.3550 caps, with 1.3500 and the 50-day EMA beneath it the objective. The daily Stochastic Relative Strength Index (Stoch RSI) has fallen from above 90 in late August to 38 while price held its range, so momentum has left without price following, though the intraday reading near 67 was still rising into the European evening. The scheduled risk points the same way, because Friday's American inflation consensus is hot enough to firm a Fed hike already priced at 59% while nothing British this week can move a September call priced at 16%. A daily close above 1.3550 invalidates the call, and a hearing on Tuesday that lifts November pricing does it faster.
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.
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