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BNY strategists John Velis and David Tam highlight the July Nonfarm Payrolls (NFP) report and upcoming Consumer Price Index (CPI) releases as key inputs for the Fed. They see consensus around 80,000 jobs, with a breakeven near 50,000 to keep unemployment steady. A weaker print could lower 2-year yields and rate-hike expectations. They stress sticky inflation, supply shocks, AI-related capex and constrained labor supply as factors keeping US rates pricing unsettled.

Jobs, CPI and policy learning

"This week features the July Nonfarm Payrolls (NFP) report on Friday, and market expectations currently see around 80,000 new jobs. We don’t think the payrolls “breakeven rate” is much above 50,000 per month, if that. It currently doesn’t require large monthly employment gains to keep the unemployment rate steady, thanks to a much slower labor force growth than before the pandemic."

"Inflation is sticky, but it’s also being whipped around by supply shocks. The AI build is raising questions about the capex outlook and its impact on jobs and productivity."

"Labor supply is restrained, making inferences about the job market fraught, and the new Fed is still being revealed. All in all, a tricky mix of factors for the market to price, and it’s unlikely we’ve reached a steady state yet."

"An additional NFP print and two more CPI releases follow Friday’s NFP report. Warsh’s speech at Jackson Hole at the end of the month is another key event, although given his short track record so far, we won’t be holding our breath for much specificity on rates."

"The market – and economists – continue to learn about the Warsh Fed."

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

ING’s Francesco Pesole expects New Zealand’s Q2 labour data to broadly match the Reserve Bank of New Zealand’s May projections, which implied one to two hikes in Q3. He favours a hike in September or October, with rising conviction for September. Pesole sees NZD/USD holding near 0.585–0.590, with a year-end target at 0.59 and 0.60 increasingly attainable.

Labour data seen matching RBNZ view

"New Zealand releases its 2Q labour market data tonight. High-frequency indicators point to only 0.1% QoQ employment growth, while unemployment is expected to edge up from 5.3% to 5.4%. That would broadly match the Reserve Bank of New Zealand’s May projections, which implied 1-2 hikes in 3Q. Since July’s hike, markets have continued to price around 20-25bp of tightening for the 2 September meeting."

"We have long favoured a hike in either September or October, but our conviction around a September move has increased recently. The main reason is that markets may be overstating the scale of the tightening cycle, with 75bp priced in by February."

"We suspect two of the six policy committee members were not fully aligned with May’s hawkish shift, meaning the narrative may ultimately settle around a smaller 50bp "insurance" tightening cycle. If so, that would argue for an earlier move in September and then a pause."

"NZD has been one of the stronger performers since the Fed meeting, clearly outpacing AUD after the latter suffered a sharp dovish repricing following a soft CPI release. NZD/USD may remain around the 0.585-0.590 range for now, but a September hike delivered with a slightly dovish tone could prompt some correction and open the door to a period of AUD outperformance relative to NZD."

"Our year-end target for NZD/USD is currently 0.59, though 0.60 is looking increasingly attainable."

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

• NZD/USD struggles to lure buyers as the US-Iran uncertainty and Fed hike bets support the USD.
• The NZD bears seem hesitant amid the RBNZ’s hawkish tilt, limiting the downside for spot prices.
• Acceptance above the 0.5900 mark is needed to reaffirm a short-term bullish technical setup.

The NZD/USD pair seesaws between tepid gains and minor losses through the first half of the European session on Tuesday, stalling the previous day's retracement slide from a two-month high – levels just above the 0.5900 mark. Spot prices currently trade around the 0.5870 region, nearly unchanged for the day, as traders seem hesitant to place aggressive directional bets amid the uncertainty surrounding US-Iran peace talks.

Iran denied that any negotiations were taking place with the US, sparking an angry backlash from President Donald Trump and dampening hopes for a diplomatic resolution to end a five-month-old conflict. Furthermore, recovering crude oil prices revive inflation fears and fuel US Federal Reserve (Fed) rate hike bets, which further lends support to the US Dollar (USD and caps the upside for the NZD/USD pair. However, the Reserve Bank of New Zealand's (RBNZ) hawkish tilt helps limit losses for the New Zealand Dollar (NZD).

The recent bounce from the 200-period Simple Moving Average (SMA) on the 4-hour chart and a breakout through the 0.5865 supply zone were seen as key triggers for NZD/USD bulls. This, in turn, underpins a constructive near-term bullish bias while spot prices consolidate above the said resistance-turned-support. Meanwhile, the Relative Strength Index (RSI) is hovering near 60 and away from overbought territory, even as the Moving Average Convergence Divergence (MACD) has slipped marginally below its zero line.

Mixed momentum indicators, although supportive, hint at a mild loss of upside conviction rather than a full-fledged reversal. Hence, any further slide below 0.5865 is more likely to find decent support and remain limited by the 200-period SMA at 0.5757, where buyers are likely to defend the broader recovery structure. On the top side, a move beyond the recent swing high, near 0.5909, will set the stage for further gains. Nevertheless, the bullish bias would remain intact as long as the pair stays above the 200-period SMA floor.

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

NZD/USD 4-hour chart

• Easing US-Iran military tensions temporarily boosted global risk sentiment, offering baseline support for the Euro.
• Eurozone strong 0.4% Q2 growth and 2.9% inflation reinforced market expectations for an ECB interest rate hike.
• Rising WTI price above $80 per barrel strengthened the Canadian Dollar, capping the EUR/CAD's overall gains.

EUR/CAD remains stronger for the eighth consecutive day, trading around 1.6170 during the European hours on Tuesday. The currency cross is holding its ground as the Euro (EUR) gains support from an uptick in market risk sentiment.

Geopolitical tensions eased slightly after US President Donald Trump called off planned military strikes on Iran, signaling that a diplomatic resolution to the conflict remains a possibility. Although President Trump framed his offer for talks as a "last chance," Iranian leadership quickly dismissed the proposal. General Mohsen Rezaei, an advisor to Iran's Supreme Leader, rejected the conditions outright and asserted that Iran would not permit a second corridor in the Strait of Hormuz.

Adding to the Euro's momentum, stronger-than-expected economic data from the eurozone has reinforced expectations that the European Central Bank (ECB) could raise interest rates at its upcoming meeting. The eurozone economy expanded by 0.4% in the second quarter, doubling forecast estimates to mark its strongest growth since early 2025. This economic momentum was further underscored by July's figures, which saw annual inflation accelerate to 2.9% alongside pick-ups in both core and services inflation.

Fed pause tempers global tightening but rates still price further ECB moves

Strategists at BNY observe that the absence of “additional tightening by the Fed has led to hopes of easier financial conditions globally,” partially cushioning the impact of ECB policy via the external channel. They add that “falling prices for dollar-priced commodities will generate some negative pass-through on the margins,” yet caution that, in the absence of “clear visibility over the conflict, rates markets are unlikely to remove the near 45bps currently priced in additional tightening by year-end.”

However, potential gains for the EUR/CAD cross may be capped by strength in the commodity-linked Canadian Dollar (CAD). With diplomatic friction in the Middle East remaining high, crude oil prices have pushed upward; West Texas Intermediate (WTI) crude gained over 2% to trade around $80.50 per barrel at the time of writing, providing underlying support for the CAD.

Oil steadies as markets embrace US-Iran dialogue hopes

Analysts at Deutsche Bank note that, “after several weeks of military exchanges and fears of a renewed energy shock, markets have started August welcoming the late weekend comments from President Trump that fresh talks with Iran would begin after he cancelled plans for what he described as a major attack.” Set against the sharp pullback in Oil and the tentative rebound that followed, the bank highlights how the prospect of renewed US-Iran dialogue has helped ease immediate concerns around energy disruption and risk premia.

MUFG’s Lee Hardman notes that the Japanese Yen has weakened modestly in Asia, with USD/JPY near its 200‑day moving average around 158.00 after recent joint intervention by Japan and the US. Japan is estimated to have bought close to USD 87 billion of Yen, while US participation is smaller but symbolically important. MUFG expects US intervention to remain limited and stresses that fundamental changes, including faster BoJ normalization, are needed for a sustained Yen recovery.

Joint action limits speculative yen pressure

"The yen has weakened modestly during the Asian trading session resulting in USD/JPY rising back up to within touching distance of the 200-day moving average at around 158.00 after hitting a low yesterday at 157.18."

"On balance, we expect US intervention to support the yen to remain relatively small in scale."

"While joint intervention may prove more effective at helping to provide support for the yen in the near-term, we still believe that it can only buy time."

"There will need to be a change in fundamentals as well to encourage a sustainable reversal of the yen weakening trend that has been in place over the last five years."

"More US pressure on Japan to allow a faster pace of BoJ policy normalization as part of the joint intervention arrangement would an important step to help reverse yen weakness."

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

• The Indian Rupee flattens at around 95.33 against the US Dollar in the countdown to the RBI policy.
• Investors expect the RBI to leave the Repo Rate unchanged.
• Financial markets await the outcome of US-Iran talks.

The Indian Rupee (INR) trades flat at around 95.33 against the US Dollar (USD) on Tuesday. The Indian currency is expected to trade sideways as investors await the Reserve Bank of India’s (RBI) monetary policy announcement on Wednesday.

RBI to leave policy rates unchanged

Analysts at Commerzbank note that the Reserve Bank of India is likely to maintain its current policy stance, with the central bank "expected to leave the benchmark repurchase rate unchanged at 5.25% at its next meeting on 5 August." They acknowledge that "inflation risks remain tilted to the upside due to higher global commodity prices and a weaker monsoon season," but point out that the latest June CPI report "showed it rose 4.4% YoY, which was within RBI's 2-6% target range," reinforcing the case for policy continuity in the near term.

Investors await outcome of US-Iran talks

Oil prices attract bids on Tuesday as financial markets remain concerned about the outcome of talks between the United States (US) and Iran. On Monday, US President Donald Trump said that discussions with Iran are going on, but he doesn’t know why they are denying it in the media. Trump added, “This is the last chance for them to sign a good document.” He further added, “They’re going to go quickly one way or the other. It’s not very complex. We’re talking about the opening of the strait, having it open literally by tomorrow—completely open,” Reuters reported.

Over the weekend, US President Trump shelved planned attacks on Iran, stating that Tehran has agreed to reopen the Strait of Hormuz and the nuclear conditions. This led to a significant plunge in oil prices.

In the opening session, the MCX Crude Oil contract expiring on August 19 trades 1.3% higher to near Rs. 7,745.

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

US JOLTS Job Openings data in focus

During the Asian session, the US Dollar clings to Monday’s recovery move, with investors awaiting the US JOLTS Job Openings data for June, which will be published at 14:00 GMT. US employers are expected to have posted 7.45 million fresh jobs, slightly lower than 7.594 million in May.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, reflects strength near 100.00.

This week, the major event for the US Dollar will be the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday.

Technical Analysis: USD/INR sees more downside below 95.00

USD/INR trades at around 95.33, maintaining a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at 95.7234.

The pair’s inability to reclaim this short-term EMA suggests upside remains capped, while the Relative Strength Index (14) at 44.18 leans slightly soft, hinting at waning bullish momentum rather than outright oversold conditions.

On the topside, immediate resistance is located at the 20-day EMA at 95.72, and a sustained break above this barrier would be needed for a more constructive recovery toward the July 29 high near 96.00. On the downside, major support levels are the July 7 low at 94.80 and the June low at 94.21.

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

• EUR/USD trades cautiously at around 1.1500 as the US Dollar clings to Monday’s gains.
• Investors await the US JOLTS Job Openings data for June.
• The ECB is highly expected to raise interest rates in the September meeting.

The Euro (EUR) trades with caution at around Monday’s low of 1.1500 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair is expected to remain volatile as investors await key United States (US) economic release this week to get meaningful cues regarding the interest rate outlook.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, holds onto Monday’s gains at around 100.00.

Investors will pay close attention to the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday. The impact of the US official employment data will be significant on the Federal Reserve’s (Fed) monetary policy outlook, as the central bank has suspended delivering so called “forward guidance” on interest rates from the June policy meeting.

Later in the day, the US JOLTS Job Openings data for June is scheduled to be published at 14:00 GMT. US employers are expected to have posted 7.45 million fresh jobs, slightly lower than 7.594 million in May.

On the Eurozone front, traders seem increasingly confident that the European Central Bank (ECB) will hike interest rates in the September policy meeting. Analysts at Deutsche Bank have said in a report that the ECB September hike pricing is around 90%.

EUR/USD technical analysis

EUR/USD trades cautiously at around 1.1500 at press time. The pair holds a modest bullish near-term bias as price advances above the 20-period exponential moving average (EMA) at 1.1451, suggesting underlying demand after reclaiming that short-term trend reference.

The Relative Strength Index (14) at 59.1 stays below overbought territory yet leans higher, hinting that buying pressure remains constructive while not stretched.

On the topside, immediate resistance aligns with the downward-sloping trend-line break level at 1.1555, which caps further gains and marks the next hurdle of 1.1600 for bulls; above that, the pair would extend its upside journey towards the May 29 high at 1.1686. On the downside, initial support is provided by the 20-period EMA at 1.1451; a daily close back below this floor would weaken the current positive tone and expose the pair to the July 28 high at 1.1353.

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

United Overseas Bank’s (UOB) Quek Ser Leang reports AUD/USD briefly tested 0.7069 before retreating sharply to 0.6984, with the move seen as overdone. Intraday, the Australian Dollar is expected to range between 0.6980 and 0.7030. On a 1–3 week view, risks remain to the upside but advances are likely to face firm resistance at 0.7075, while a breach of 0.6980 would ease upside pressure.

Range trade under key resistance

"24-HOUR VIEW: After AUD opened and traded on firm footing yesterday, we noted that “upward momentum is building, but not significantly.” We pointed out that AUD “could rise further, but based on the prevailing momentum, any advance is unlikely to reach the major resistance at 0.7075.” AUD appeared to have risen briefly to 0.7069 before staging a sharp retreat to a low of 0.6984. The sharp retreat appears to be overdone, and instead of continuing to decline today, AUD is more likely to trade in a range between 0.6980 and 0.7030."

"1-3 WEEKS VIEW: The following excerpt from our update yesterday (03 Aug, spot at 0.7040) remains valid: “While AUD closed higher for the fifth straight week last Friday (0.7020, +0.49%), upward momentum has not increased much. However, the risk remains on the upside, but any advance is expected to face firm resistance at 0.7075. To put it another way, AUD must break clearly above this level before further sustained advances can be expected. On the downside, a breach of 0.6980 would mean that the upside pressure has eased.”"

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

• USD/CAD rebound from the 1.3990 area has been capped below 1.4060 on Tuesday.
• The US Dollar remains weighed by growing uncertainty about the Fed's monetary policy stance.
• The decline in Oil prices has capped the Canadian Dollar's recovery this week.

The US Dollar (USD) stalls at the 1.4050 area against the Canadian Dollar (CAD) on Tuesday. The pair’s rebound from last week’s lows at the 1.3990 area failed to find follow-through above 1.4060, which leaves price action treading towards the peak of a descending triangle pattern.

The Greenback took a beating last week after the US Federal Reserve (Fed) left interest rates on hold and failed to convince markets about its commitment to fight inflation. Investors cut back bets on near-term Fed interest rate hikes, and the USD lost ground against its main peers in the second half of the week.

Bearish momentum faded this week as hopes of a new round of peace talks between the US and Iran sent OIl prices tumbling, and put the CAD under pressure, as Crude Oil is Canada’s main export.

Technical Analysis: Bears eye the 1.4000 support area

In the four-hour chart, USD/CAD trades at 1.4043 with upside attempts capped below a descending trendline, and bears supported at the 1.4000 area, forming a triangle pattern. Momentum indicators are mixed. The 4-hour Relative Strength Index (14) hovers around the 50 level and the Moving Average Convergence Divergence (MACD) is slightly positive, altogether hinting at a lack of clear bias.

Triangles are often continuation patterns and, in this sense, a bullish outcome is favoured. Bulls, however, will have to breach a cluster of resistances at the July 30 high, near 1.4070, the triangle top, around 1.4105, and Late July highs, at the 1.4125 area.

On the downside, initial support is at the triangle bottom, now around 1.3995, with deeper floors at the 1.3920 area (June 9 low) and the 1.3865 area (May 28 high, June 5 low)

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

Danske Research Team underscores strong United States (US) cyclical signals, with the ISM manufacturing index rising to 55.6 in July, beating expectations and June’s reading. New orders, employment and production all improved, while prices moderated. The team also highlights the June JOLTs report, where higher job openings historically point to rising wage pressures, and notes Fed guidance on inflation and potential rate hikes.

Manufacturing strength and labour signals

"In the US, the ISM manufacturing activity index came in at 55.6 in July, above consensus expectations of 54.0 and up from 53.3 in June. The release followed a similar positive uptick in the PMIs."

"Within the ISM details, new orders and especially employment improved, while the prices index moderated slightly. The production index moved sharply higher to 58.5 from 52.2, marking the strongest reading since November 2021."

"Furthermore, the order-inventory balance continued to improve, indicating a further need for increasing output. The bottom line is that US cyclical data is still looking very solid."

"Today's most interesting data release will be the US June JOLTs report; job openings have shifted moderately higher this year, which has historically predicted rising wage pressures ahead."

"June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight."

"The Fed's Williams said he still expects inflation to cool gradually and reach the 2% target on a sustained basis by 2028, assuming energy prices and tariffs have peaked. He described policy as "well positioned" but stressed that the Fed would hike rates if inflation does not slow as expected."

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