Forex News
- AUD/USD ends Friday higher, but posts weekly losses.
- Bullish RSI supports upside despite Fed-driven Dollar strength.
- Break above 0.7237 exposes 0.7277 and 0.7300 next.
The AUD/USD ended the day in the green but finished the week 0.45% lower amid growing bets that the Fed will raise rates next week, boosting the US Dollar. Nevertheless, on Friday, the pair traded at 0.7171, up a decent 0.38%.
AUD/USD Price Forecast: Technical Outlook
From a technical perspective, AUD/USD closed the week on the back foot, but the daily chart suggests a possible consolidation lies ahead.
Momentum, as measured by the Relative Strength Index (RSI), is bullish, indicating further upside.
Although the market structure points to higher prices, buyers must clear the high of the ‘doji’ formed on September 9 at 0.7237. In that outcome, the next ceiling level will be the May 6 high at 0.7277. Above, the next area of interest is the 0.7300 milestone.
In a bearish scenario, if AUD/USD dives below the September 11 low of 0.7150, a move towards 0.7100 is on the cards. The next downside levels will be the 100-day Simple Moving Average (SMA) at 0.7080, followed by the 50-day SMA at 0.7066.
AUD/USD Price Chart – Daily
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | -0.10% | -0.58% | 0.28% | -0.18% | -0.26% | 0.38% | |
| EUR | -0.11% | -0.23% | -0.64% | 0.19% | -0.29% | -0.42% | 0.28% | |
| GBP | 0.10% | 0.23% | -0.42% | 0.41% | -0.08% | -0.17% | 0.58% | |
| JPY | 0.58% | 0.64% | 0.42% | 0.87% | 0.37% | 0.29% | 1.01% | |
| CAD | -0.28% | -0.19% | -0.41% | -0.87% | -0.46% | -0.56% | 0.17% | |
| AUD | 0.18% | 0.29% | 0.08% | -0.37% | 0.46% | -0.10% | 0.65% | |
| NZD | 0.26% | 0.42% | 0.17% | -0.29% | 0.56% | 0.10% | 0.76% | |
| CHF | -0.38% | -0.28% | -0.58% | -1.01% | -0.17% | -0.65% | -0.76% |
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).
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note that USD/SGD has rebounded strongly, with short-term momentum pointing higher but key resistance at 1.2705 expected to limit gains. They now see an upside bias over the next one to three weeks, provided the pair holds above 1.2640, while the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) remains comfortably above its mid-point.
Upside bias but resistance still firm
"24-HOUR VIEW: Yesterday, we held the view that USD “is likely to range-trade between 1.2630 and 1.2655.” We did not expect USD to rise sharply to 1.2686. While strong momentum suggests there is room for USD to continue to rise, the major resistance at 1.2705 is likely out of reach for now. Note that there is another resistance level at 1.2695. Support is at 1.2670, followed by 1.2660."
"1-3 WEEKS VIEW: We have been holding a slightly negative USD stance since one week ago. In our most recent narrative from Tuesday (08 Sep, spot at 1.2655), we indicated that “the price action suggests that USD could gradually ease toward 1.2615.” After drifting lower for a few days, USD staged a strong rebound yesterday, breaking above our ‘strong resistance’ level at 1.2675 (high was 1.2686). Downward momentum has faded, and upward momentum is starting to build. While we expect USD to trade with an upside bias from here, it must clearly break above 1.2705 before a sustained rise is likely. To sustain the buildup in momentum, USD must hold above the ‘strong support’ level, now at 1.2640."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CHF clears September high, opening path toward 0.8200.
- Bullish RSI keeps buyers in control of near-term momentum.
- Break below 0.8096 would expose 100-day SMA support.
The USDCHF climbs over 0.40% on Friday after US consumer inflation data, coupled with Thursday's PPI, pushed investors to price in a Fed interest rate hike at next week's meeting. The pair trades at 0.8165 after rebounding from daily lows of 0.8124.
USD/CHF Price Forecast: Technical Outlook
The USD/CHF daily chart shows the pair has bounced above a key resistance level at 0.8156, the September 2 high, opening the door to further upside.
Momentum, as measured by the Relative Strength Index (RSI), is bullish. Therefore, the path of least resistance is tilted upward.
If USD/CHF clears 0.8200, it paves the way to challenge the June 19, 2025, high of 0.8215. Above the next stop is the June 4 cycle high at 0.8250, followed by the psychological 0.8300 mark.
On the other hand, for a bearish-biased shift, USD/CHF needs to clear the 50-day Simple Moving Average (SMA) at 0.8096 before retreating to the 100-day SMA at 0.8009.
USD/CHF Price Chart – Daily
Swiss Franc Price Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | -0.10% | -0.58% | 0.28% | -0.18% | -0.26% | 0.38% | |
| EUR | -0.11% | -0.23% | -0.64% | 0.19% | -0.29% | -0.42% | 0.28% | |
| GBP | 0.10% | 0.23% | -0.42% | 0.41% | -0.08% | -0.17% | 0.58% | |
| JPY | 0.58% | 0.64% | 0.42% | 0.87% | 0.37% | 0.29% | 1.01% | |
| CAD | -0.28% | -0.19% | -0.41% | -0.87% | -0.46% | -0.56% | 0.17% | |
| AUD | 0.18% | 0.29% | 0.08% | -0.37% | 0.46% | -0.10% | 0.65% | |
| NZD | 0.26% | 0.42% | 0.17% | -0.29% | 0.56% | 0.10% | 0.76% | |
| CHF | -0.38% | -0.28% | -0.58% | -1.01% | -0.17% | -0.65% | -0.76% |
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 Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
DBS Group Research expects Taiwan’s central bank to keep its policy rate unchanged on September 17, before raising it to 2.125% in December. Analysts Taimur Baig and Chang Wei Liang highlight subdued August CPI, but anticipate a somewhat hawkish tone as the CBC remains vigilant on supply‑side inflation risks, higher wages and recovering domestic consumption.
CBC to stay vigilant on inflation risks
"We expect the central bank to keep its policy rate unchanged at the September 17 policy meeting, before hiking rates to 2.125% at the next meeting in December."
"That said, we expect the CBC to retain a somewhat hawkish tone."
"The central bank is likely to remain vigilant about the risk of persistent supply-side inflation, particularly given the renewed rise in global oil prices amid prolonged tensions in the Middle East."
"Policymakers are also likely to highlight the risk of second-round inflationary pressures stemming from a potential rise in inflation expectations, higher wages, and a recovery in domestic consumption."
"August CPI data suggest little urgency for the CBC to hike rates: headline CPI came in slightly below expectations at 2.0% YoY, while core CPI eased marginally to 2.3%."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI Crude Oil buckles early and grinds back, down about 3.4% on Hormuz talks.
- Gasoline supplied more than a third of the August CPI monthly increase.
- Global inventories are down 507 million barrels since the war began in February.
West Texas Intermediate (WTI) trades near $97.00, about 3.4% lower and on track for its first down session in five. The Financial Times reported on Friday that Gulf foreign ministers will meet their Iranian counterpart in the Omani city of Salalah, in a push to win backing for a temporary arrangement covering shipping through the Strait of Hormuz. The meeting is on Monday. The price moved on Friday.
Nothing moved through the strait, and the price moved anyway
Preliminary vessel tracking counted seven ships through the Strait of Hormuz on September 10, against eleven the day before. Before the war began on February 28, the waterway handled roughly 125 cargo vessels a day and about one-fifth of the world's seaborne Crude Oil and liquefied natural gas (LNG). The waterway is not congested.
Gulf producers have kept barrels moving by shuttling cargoes out to waiting tankers rather than sailing loaded ships through the strait, so exports have held up better than transit counts suggest. The cost of that workaround sits on top of every cargo, and tanker earnings are at records because of it. Friday's discount was applied to the freight, not to a barrel that has started moving again. Saudi Arabia's August output fell by around 1.9 million barrels a day, and Houthi strikes hit Saudi energy sites this week. American inventories drew a further 300K barrels in the week to September 4.
The barrel now sets the inflation rate it gets punished for
The August Consumer Price Index (CPI) rose 0.4% on the month and held at 3.4% YoY, both in line with consensus. Gasoline rose 3.9% and supplied more than a third of the monthly increase on its own. Fuel costs ran 28% higher YoY and diesel 52%, which reads as a report on the Gulf rather than on the American consumer. Diesel is the number that travels, because it prices trucking and delivery into every shelf in the country, which is how an energy shock stops being an energy shock. It was the last inflation print before the rate decision.
Core CPI rose 0.3% against a 0.2% consensus and eased to 2.4% YoY, so the part of the index that excludes energy also firmed in the month energy did the damage. Rate futures now price a quarter-point increase on September 16 at roughly 70%, which would be the first move of the year out of a target range unchanged since January at 3.50% to 3.75%. A quarter point on the funds rate does not reopen a strait.
The demand downgrade was the smaller number in its own report
The International Energy Agency (IEA) published its monthly report on Friday and cut 2026 demand by a further 940K barrels a day, taking the full-year decline to 2.5 million. The same document has supply falling 5.7 million barrels a day this year to 100.7 million, with more than 10 million barrels a day of Gulf output still shut in through August. Production is put at 100.1 million barrels a day in August, down 1.6 million on the month. Output is forecast to rebound 8 million barrels a day next year, a recovery that runs through the same strait.
Inventories have covered the difference. Observed global stocks have fallen 507 million barrels since the war began, an average draw of 2.8 million barrels a day, and August alone took out 95 million. The agency puts the Gulf recovery in 2027. The balance has been paid for out of tanks, and tanks only empty once.
One meeting has a published time and the other has a draft
The Federal Open Market Committee (FOMC) convenes on September 15 and 16, with the statement, the press conference and an updated Summary of Economic Projections (SEP) landing on the second day. Gulf ministers meet in Salalah the day before that. Rate futures put the quarter point near 70%, an events exchange nearer 57% and a prediction market nearer 49%. One European bank raised its year-end Brent forecast by $10.00 this week. Brent trades above $100.00.
The June memorandum between Washington and Tehran produced a corridor hugging the Omani coast. Iran called that southern route a breach of the memorandum and attacked ships using it, and the interim deal collapsed. It is possible Monday produces a corridor that ships actually use. Two have been announced since June.
Levels to watch
Resistance: The session high just above $100.50 is the first mark, with the $101.00 handle above it. Beyond that sits the May 18 to May 20 shelf just above $103.00, and the late-April peak short of $107.50 behind that.
Support: The session low just beneath $95.50 held the whole pullback. Thursday's low just beneath $93.00 is the next mark, and the $90.00 handle below it carries the September advance.
Bias: Higher while the $95.50 area holds, with $100.50 the first objective and $103.00 behind it. Friday's low gave back not quite half of the four-day advance, and the session has since recovered a third of that drop. The daily Stochastic Relative Strength Index (Stoch RSI) near 80 has dipped and turned back up rather than rolling over. Invalidation is a daily close beneath $93.00, which erases Thursday. A Salalah arrangement that insurers will price does it faster than any chart level, and so does a rate path that reaches demand.
WTI spot daily chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann reports that USD/CNH has bounced sharply to 6.7153, with intraday gains likely capped near 6.7200. The bank’s earlier negative stance has softened as downward momentum fades, and over the next one to three weeks, it now expects the pair to edge higher within a 6.7040–6.7290 range.
From downside bias to gentle rebound
"24-HOUR VIEW: We indicated yesterday that USD “could trade between 6.7030 and 6.7100.” USD then dipped to 6.7043 before rising sharply to 6.7153. While the sharp rise has scope to extend, any advance is expected to face strong resistance at 6.7200. Support is at 6.7085."
"1-3 WEEKS VIEW: We have been holding a negative USD stance since the start of the month. In our most recent narrative from Monday (07 Sep, spot at 6.7070), we noted that “downward momentum has increased further, and if USD breaks and holds below 6.7000, it could decline further to 6.6900.” Yesterday, USD rose sharply to 6.7153. Although our ‘strong resistance’ level at 6.7160 has not been breached yet, downward momentum has largely faded. The increasing upward momentum suggests USD could edge higher, but currently, any advance should stay within a 6.7040/6.7290 range."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- XAG/USD holds below neckline despite bouncing from two-day lows.
- Bearish RSI signals sellers retain short-term technical control.
- Break below $62.55 exposes $61.01 and $60.00 next.
Silver price registers gains of over 1%, yet it is trading below the ‘head and shoulders’ neckline, an indication that the overall trend in the short-term may be tilted to the downside. The XAG/USD trades at $64.24, after bouncing off daily lows of $62.94.
XAG/USD Price Forecast: Technical Outlook
The white metal is poised to trade sideways if it struggles to clear the neckline at around $64.10-$64.15, with bearish momentum continuing to build. Although Silver is positive in the day, momentum is tilted to the downside, as indicated by the Relative Strength Index (RSI) below the 50 neutral level, despite aiming higher.
If XAG/USD rises past $65.00, it could open the door for a recovery to the 100-day Simple Moving Average (SMA) of $66.94. On further strength, the $67.00 could be cleared, and bulls could test the $70.00 figure up next. Above waits the 200-day SMA at $73.05.
On the flip side, Silver’s first support is the $64.00 mark. If bearish momentum builds, sellers can test the 50-day SMA at $62.55 before targeting the July 22 high-turned-support at $61.01. A breach of the latter will expose $60.00.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The US Dollar Index (DXY) closes the week near the 99.00 zone, little changed on the day and holding the ground it clawed back after a brief wobble on Thursday's US inflation release. The Greenback enters a defining week in a familiar spot, firmer in tone, but still unable to turn a hawkish rates story into a decisive breakout.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | -0.10% | -0.48% | 0.26% | -0.21% | -0.22% | 0.46% | |
| EUR | -0.14% | -0.24% | -0.57% | 0.12% | -0.36% | -0.43% | 0.33% | |
| GBP | 0.10% | 0.24% | -0.35% | 0.37% | -0.13% | -0.17% | 0.58% | |
| JPY | 0.48% | 0.57% | 0.35% | 0.73% | 0.25% | 0.18% | 0.94% | |
| CAD | -0.26% | -0.12% | -0.37% | -0.73% | -0.48% | -0.55% | 0.21% | |
| AUD | 0.21% | 0.36% | 0.13% | -0.25% | 0.48% | -0.05% | 0.70% | |
| NZD | 0.22% | 0.43% | 0.17% | -0.18% | 0.55% | 0.05% | 0.76% | |
| CHF | -0.46% | -0.33% | -0.58% | -0.94% | -0.21% | -0.70% | -0.76% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Wednesday's Federal Reserve (Fed) decision anchors everything, and markets now lean toward a quarter-point hike that would lift the target range to 4.00% from 3.75%, following an August Consumer Price Index (CPI) report in which core prices ran hotter than forecast. With the move largely priced in, attention shifts to updated economic projections and Chair Kevin Warsh's press conference for signals on whether this is a one-off insurance hike or the start of something longer.
Canada opens proceedings with August inflation on Monday, alongside a batch of Chinese activity data. Tuesday brings the United Kingdom (UK) labor market report and Germany's ZEW sentiment survey. Wednesday is the pivot: UK CPI and a rebound-tipped US Retail Sales print land before the Fed decision, projections and press conference. The Bank of England (BoE) follows on Thursday, and the Bank of Japan (BoJ) closes the week on Friday.
The European Central Bank (ECB) is well-represented on the speaking circuit, with President Christine Lagarde due several times and colleagues Schnabel, Cipollone, Elderson and Lane also scheduled, though the Eurozone's own data is limited to final inflation confirmations, industrial production and the ZEW survey. Japan adds trade figures and national CPI, New Zealand reports second-quarter Gross Domestic Product (GDP), and the Reserve Bank of Australia's (RBA) Governor, Michele Bullock, speaks on Thursday. Overhanging it all is the unresolved situation around Iran and the Strait of Hormuz, which continues to set the tone for energy prices.
EUR/USD closes around 1.1590, softer on the day. The domestic calendar is thin, with final August inflation readings, industrial production, and the ZEW survey, so the pair stays largely a Dollar story into Wednesday's Fed decision. A hawkish hike would pressure it, but the Greenback's repeated failure to hold gains has kept a floor under the Euro.
GBP/USD trades near 1.3525, roughly flat on the day, and finally has a home calendar worth watching. Tuesday's jobs report, with the unemployment rate seen ticking up to 5.0%, precedes Wednesday's CPI, where core inflation is expected to firm to 2.7%. The Bank of England (BoE) decision on Thursday is expected to hold rates at 3.75%, though the market is looking for a sizeable minority around three members to vote for a hike. Sterling has its own catalysts, but the Fed still sets the bigger tone.
USD/JPY sits around 153.70, pressed lower as a soft Dollar met a firmer Yen. Friday's BoJ meeting is the domestic highlight, with markets leaning toward a hike to 1.25% that would take Japanese rates to their highest in decades. Thursday's national CPI feeds the debate. With the Fed and BoJ potentially tightening in the same week, the risk is skewed toward further Yen strength.
AUD/USD trades near 0.7170 and is the standout among the majors, holding firm into the weekend. The home calendar is light, with Bullock the main event on Thursday, so the Aussie leans on risk appetite, Monday's Chinese activity data and the Fed's guidance. A hawkish surprise is the clearest threat to its recent run.
West Texas Intermediate (WTI) Oil hovers near $100 after shedding more than 3% on the day, with no Oil-specific releases due. The story stays geopolitical: the standoff around Iran and the Strait of Hormuz keeps a floor under prices, and the International Energy Agency's warning of a widening supply deficit adds to the backdrop even as this week's pullback shows how quickly sentiment can turn.
Gold trades near $4,350, close to record highs after another firm session. With no catalyst of its own, the metal is keyed to the Fed: a hawkish hike and firm guidance from Warsh could finally spark a pullback, while any softness in the message would likely extend the run.
ING analysts Chris Turner and Padhraic Garvey argue the Bank of Japan is likely to hike 25bp to 1.25% and then proceed cautiously. They see government resistance to aggressive tightening and project two additional 25bp hikes in January and April, taking the policy rate to 1.75%, which they view as near‑neutral ahead of a temporary consumption tax cut.
BoJ seen hiking but staying cautious
"Formal communication from the BoJ this year has acknowledged that the real policy rate is negative and needs to be raised. Various BoJ speeches have discussed the concept of a neutral rate, which most see in the 1.1-2.5% range in nominal terms."
"We doubt the BoJ would want to shock investors and Scott Bessent by leaving the policy rate unchanged at 1.00%. A 25bp rate hike to 1.25% looks likely. The marginally bigger risk than unchanged rates is a 50bp rate hike, perhaps as part of a broader understanding with Washington designed to sustainably push USD/JPY lower, reduce the need for large-scale dollar selling intervention from the BoJ and help stabilise JGBs."
"However, the Japanese government has an aggressive pro-growth strategy and will no doubt express its views against a more aggressive tightening cycle. Maybe we are underestimating a shift here, but it is hard to see government officials backing a much faster tightening cycle of either a 50bp hike in September or back-to-back hikes in September and October. Instead, our house view is for two further 25bp rate hikes next January and April, which would take the policy rate to 1.75%."
"A near-neutral 1.75% policy rate next April seems an appropriate target before the consumption tax on food and non-alcoholic beverages is cut from 8% to 1% that month for two years. That will sharply depress headline inflation – perhaps for the next two years – and would create a difficult environment in which to deliver further tightening."
"When it comes to prices, the BoJ narrative has firmly shifted towards inflation moving onto a sustainable path. One central theme now is that higher input/producer prices are more likely to feed through into broader CPI. The most recent Tankan business survey showed output price expectations rising sharply and the BoJ is focusing heavily on the 7% year-on-year growth in corporate goods prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- US 10-year yield slips but remains sharply higher for the week.
- 30-year yield eases after touching its highest level since 2007.
- Fed hike odds hit 91% as inflation expectations climb.
US Treasury yields fall during the North American session on Friday following the release of US inflation data, but are poised to finish the week higher. The US 10-year Treasury yield is down one basis point to 4.951% but has gained over 16 basis points, or 3.49%, this week.
US yields cool, but the week’s inflation scare still bites
The US 30-year yield falls two basis points to 5.34% after hitting its highest level since 2007 at 5.38%, due to surging Oil prices fueled by the escalation of the US-Iran conflict, which has spread to Yemen, Houthis versus Saudi Arabia.
Recent US inflation data were mostly aligned with estimates, except for core CPI, which was in line with forecasts but ticked lower. Despite this, the red-hot PPI report a day ago and the surge in US yields this week ignited a Fed-hawkish repricing.
Money markets have priced in a 91% chance of a 0.25% rate increase by the Federal Reserve (Fed) at the next week's meeting.
Other data showed that US consumers are becoming pessimistic about the economy and now expect higher prices due to a resurgence in fuel prices and rising trade tensions, particularly between the US and Canada.
In the meantime, the US Dollar Index (DXY), which tracks the performance of a basket of six currencies against the Greenback, clings to 99.00, up a minimal 0.05%.
US financial markets' five-year inflation expectations are at 2.46%, up from 2.37% at the beginning of the week, according to the 5-year Breakeven Inflation Rate. The 10-year Breakeven rate rose from 2.35% to 2.4%, suggesting markets expect medium-term inflation to rise.
Traders' focus on the Fed’s meeting, Warsh presser
Next week, traders will focus on the FOMC monetary policy decision. Alongside this, they will monitor jobs and housing data, the NY Fed Empire State Manufacturing Index, Retail Sales and Fed officials' speeches.
US 10-year Treasury note yield
(This story was corrected on September 11 at 19:39 GMT to say that the 10-year breakeven rate rose from 2.35% to 2.4%, instead of falling.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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