Forex News
- NZD/USD trades just under 0.5900, back above both long-run EMAs near 0.5850.
- The RBNZ lifted the OCR to 2.75% Wednesday and meets next on October 28.
- Four of seven committee members see inflation risks to the upside.
The New Zealand Dollar trades just under 0.5900 into the New York afternoon, up roughly half a percent, after a session that retraced most of Wednesday's decision-day slide without a single New Zealand input. NZD/USD climbed from an Asian low that held above Wednesday's 0.5800 trough to a high a handful of pips short of 0.5900, reclaiming both the 200-day and the 50-day Exponential Moving Average (EMA) on the way, the two of which sit within twenty pips of each other near 0.5850. The recovery has the same author as every other major's rally on Thursday, which is a Dollar being sold from London onward.
The Dollar gave back what Wellington took
A Fed governor's lean toward a September hold cut hike odds to around 50% from above 60%, the Yen's surge to a one-month high pulled Treasury yields lower before he spoke, and the Dollar Index slipped beneath 99.00 to its weakest since late August. The Kiwi rode that from midnight GMT to 16:00 GMT in something close to a straight line. Nothing about the Reserve Bank of New Zealand (RBNZ) changed in the interval: the Official Cash Rate (OCR) is 2.75% after Wednesday's quarter point, the next decision is October 28, and the committee's own record shows four of its seven members seeing upside risks to inflation against two who call the risks balanced, with the path explicitly not predetermined.
That split is the interesting part of Wednesday's statement and the market sold through it. The committee framed a gradual quarter point now as insurance against a larger move later, which is the language of a bank that wants to stop near 3% and expects the market to let it. Four members seeing upside risks is not a committee that has decided where the cycle ends, and the one domestic release between now and October 28 capable of moving that view is the third-quarter inflation print in mid-October, with a second-quarter growth figure the bank has already called lacklustre due before it.
Hiking into an economy the bank calls lacklustre
The statement's own growth assessment explains why the currency sells hikes rather than buying them. The committee judged second-quarter activity lacklustre, expects the recovery to have resumed in the third quarter, and described it as uneven: export-exposed regions are doing well on strong export prices and trading-partner demand, while household spending and residential investment remain weak on soft income growth, job insecurity and flat house prices, and the spillover from exports into the wider economy has been limited. That is a bank raising rates because headline inflation is 4.1% on fuel, with the rate excluding vehicle fuels at 2.9% and inside the band.
The cross confirms the reading. AUD/USD and NZD/USD rose by almost identical amounts on Thursday, which leaves AUD/NZD parked beneath the thirteen-year ceiling it tested on Wednesday and means the Kiwi's recovery recovered nothing against the currency it actually competes with. A hike the market treats as growth-negative at home and irrelevant against the Aussie is not a hike that supports the exchange rate, whatever it does to the front end of the curve.
Payrolls first, China after
Friday's nonfarm payrolls at 12:30 GMT carry a 56K consensus after 23K jobs were lost in July, with unemployment seen at 4.1% and average hourly earnings at 0.3% on the month and 3% YoY. With the Fed Chair's stated focus on prices, a soft print buys the Kiwi nothing that a Fed hold has not already delivered, while a firm one restores the September hike and hands Thursday's gain back. Next week is a China week for both Antipodean currencies: August trade at 03:00 GMT Tuesday after exports rose 23.9% YoY and imports 27.5% on a $112.5 billion surplus, and inflation at 01:30 GMT Wednesday after a 0.5% YoY headline and a 3.5% producer price rate.
Domestically the docket is thin, with the manufacturing Purchasing Managers Index (PMI) at 22:30 GMT Thursday after a 54.3 reading the only scheduled New Zealand input before the American inflation prints on September 10 and 11. A currency whose central bank has told the market its path is not predetermined, and whose recovery was written entirely in Dollar ink, has two ways to give Thursday back and one way to keep it.
Levels and bias
Resistance: The 0.5900 handle remains the line, with Thursday's high a handful of pips beneath it, and a daily close above it is what turns the decision-day slide into a completed correction. Beyond it, 0.5950 guards the late-August high just under 0.6000.
Support: The EMA shelf near 0.5850 is beneath the price again and is the first floor, with the 0.5800 area that caught Wednesday's low the line that decides whether the decision was a repricing or a rout. Beneath it, 0.5750 is the next reference and the pair has no meaningful structure between there and 0.5700.
Bias: Bearish below 0.5900. Thursday's recovery was a Dollar event on a day the Dollar was sold everywhere, the daily Stochastic Relative Strength Index (Stoch RSI) near 57 is still easing lower, and the central bank's own words point to a slower path than the currency needs. A daily close above 0.5900 is the only thing that would change the call, and Friday's payrolls report is the most likely thing to prevent one.
NZD/USD 5-minute chart
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Geoff Yu at BNY highlights CNY as the main outlier in the U.S. trade-weighted basket, showing behavior opposite to other key currencies. CNY failed to react positively to July–August Fed and Treasury decisions, with weak domestic growth reinforcing easing expectations. If Chinese yields rise as reflation is priced, further unwinding of underheld CNY positions is possible, with limited impact on USD.
Chinese Yuan flows diverge sharply
"The main outlier is CNY, whose behavior is the complete opposite of the other key currencies in the U.S. trade-weighted basket. CNY didn’t react positively at all to the Fed and Treasury decisions in July and August."
"With the entire Chinese yield curve (including cash rates) falling below Japanese equivalents at various points this year, it’s difficult to make a positive case for currency ownership, even if spot has been performing well relative to peers."
"Although CNY is often the main currency of interest in global trade, its impact on U.S. trade is diminishing. Vietnam now has a larger trade surplus with the U.S. compared to China, even if many of the goods comprise transshipments."
"If yields start to move higher in China as reflation is priced, a further unwinding of underheld CNY positions is possible. The process should be less consequential to the USD by historical standards."
"Meanwhile, monitor China reflation-driven CNY inflows as the clearest offset to a broader dollar holdings recovery."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY trades just under 156.00 after a 3.7-Yen drop through the 200-day EMA.
- A Bank of Japan hike is fully priced for the September 18 decision.
- Tokyo's top currency official calls the move unsatisfying and stays on alert.
The Yen has produced in two sessions what the largest intervention on record could not, and it did so without a single reported purchase. USD/JPY trades just under 156.00 after a session that ran from a high just under 159.00 to a low just under 155.50, a 3.7-Yen decline that passed through the 200-day Exponential Moving Average (EMA) near 158.00 without pausing and now sits within a few dozen pips of the 155.00 area where the joint July operation bottomed. The move has been almost linear since Wednesday's Asian high just above 160.00, which is the signature of a repricing rather than an ambush.
Both ends of the gap moved at once
The trade that carried USD/JPY from the intervention low back above 160.00 rested on a policy gap of more than two and a half percentage points and the assumption that neither end would move. This week both did. A hawkish Bank of Japan board member spent Wednesday arguing for nimble hikes and leaving the door open to outsized or back-to-back moves, the Governor said upside price risks now deserve more weight, and a quarter-point increase at the September 17-18 meeting is fully priced, with wire reporting pointing to a faster pace afterward than the twice-a-year rhythm the market had assumed.
Twelve hours later a Fed governor said he would be inclined to support holding rates at the September 15-16 meeting if the inflation data behave, and September hike odds fell to around 50% from above 60%. The policy rate in Tokyo is 1% and the target range in Washington is 3.50% to 3.75%, so the arithmetic of the gap barely changed. What changed was the direction of travel at both ends, and a leveraged carry position is priced on direction long before it is priced on the level.
Free is cheaper than $98 billion
Japan spent a record ¥15.4 trillion, roughly $98 billion, buying its own currency between July 30 and August 26 according to the finance ministry's own tally, with an American leg on top, and USD/JPY had given all of it back by Wednesday morning. Thursday's decline cost nothing and covered more ground in a day than most of that money did. Tokyo's top currency official responded by describing the move as neither satisfying nor reassuring and the ministry as still on heightened alert, which is a remarkable thing to say about a four-Yen rally in your favour and tells you the level Tokyo actually wants is lower still.
The uncomfortable part for anyone long Yen is the shape. The decline arrived on nothing but two central banks moving in opposite directions, which means it can reverse just as cheaply if either one stops. A Fed hike on September 16 or a Bank of Japan pause on September 18 undoes the week, and the market is currently pricing the opposite of both.
Payrolls, then the two meetings that set the carry
Friday's nonfarm payrolls at 12:30 GMT carry a 56K consensus after 23K jobs were lost in July, with unemployment seen at 4.1% and average hourly earnings at 0.3% on the month and 3% YoY. A strong print restores the Fed hike and the Dollar with it, and it does so with the pair three Yen below where the carry trade was rebuilt, which is where short covering turns into a squeeze. Japan then supplies a Monday night run: labour cash earnings at 23:30 GMT after 3.4% YoY and the second estimate of second-quarter growth at 23:50 GMT, seen unrevised at 0.3% on the quarter and 1.1% annualized with the deflator at 2.6%, alongside the current account after a ¥92.3 billion deficit.
The prints that decide the Dollar leg come next week with the Producer Price Index (PPI) on September 10 and the Consumer Price Index (CPI) on September 11, and then the two meetings land back to back, Washington on September 16 and Tokyo on September 18, with a three-day Japanese holiday immediately after the second one that the market has already flagged as an intervention window. A currency that just rallied for free is about to find out what it is worth when somebody has to pay.
Levels and bias
Resistance: The 156.00 handle is the first hurdle, then 157.00 and the 200-day EMA near 158.00, which now reads as a ceiling rather than a floor. Beyond it, 158.50 is the shelf that held on Wednesday and failed on Thursday, and the 50-day EMA just under 160.00 caps any full retracement.
Support: The session low just under 155.50 is the first reference, and the August intervention low just above 155.00 is the level that decides whether this is a retest or a new leg. A daily close beneath 155.00 puts the pair into territory it has not seen since the spring, with 154.00 the next round figure and nothing technical between the two.
Bias: Bearish. Thursday took the 200-day EMA and the 158.50 shelf in one session, which inverts the summer map, and the daily Stochastic Relative Strength Index (Stoch RSI) near 87 has not yet begun to register the drop, so it has the whole range to fall. Rallies into 157.00 are for selling while both central banks are priced to narrow the gap within a fortnight. Only a daily close back above 158.50 restores the carry trade's claim on the tape.
USD/JPY 5-minute 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.
The Bank of Mexico (Banxico) Deputy Governor Jonathan Heath said that the central bank can wait to reduce interest rates, signaling that further easing is possible but in about a year or more, as he qualified the current monetary policy stance as “appropriate.”
In a podcast with Banorte, Heath said: “I think where we are now, it is appropriate to stop,” adding that the only way to cut is if core inflation converges to Banxico’s 3% goal.
Even though the disinflation process progressed, Heath warned that it is too soon to declare victory, because headline inflation dropped mainly due to non-core components, which are volatile and less influenced by the central bank’s policy.
He recognized that persistent inflation stems from service inflation and sees inflation risks tilted to the upside.
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.
- USD/MXN drops as Waller comments trim Fed hike bets.
- Soft claims and Yen intervention speculation pressure the Dollar.
- Banxico’s Heath signals rate cuts may remain distant.
The Mexican Peso appreciates against the US Dollar on Thursday, with the latter weakening amid a dovish tilt by Fed Governor Waller and speculation about an FX market intervention to boost the Japanese Yen. The USD/MXN trades at 16.92, down 0.32%.
USD/MXN dives amid soft US jobs data, but capped by strong PMIs in the US
Wall Street finished Thursday’s session on a positive note, as Fed Governor Waller opened the door to holding rates unchanged. He supports that decision if the disinflation process evolves, but if a red-hot US CPI report is released next week, he warned that a rate hike is possible.
Data in the US revealed that Initial Jobless Claims for the week ending August 29 ticked higher from 204K to 206K, above estimates of 205K. Other data showed that business activity in the services sector improved, with the ISM Services PMI in August coming at 5.4, up from 54.1, crushing estimates of 54.3
Digging into the details of the ISM Services PMI report, input costs rose to their highest level since May 2022, in part attributed to the energy prices. Meanwhile, the employment subcomponent remained in contractionary territory.
Banxico’s Heath: Next rate cut in about a year
In Mexico, Consumer Confidence s.a. was 46.1 in August, up from 45, but it was mostly ignored by market participants. On Wednesday, the Bank of Mexico (Banxico) Deputy Governor Jonathan Heath warned that Banxico should not cut rates in the near term, adding that a resumption of the easing cycle may be about a year away.
Heath commented, “Where we are now, it is appropriate to stop.” In Banorte’s podcast. He will support a rate cut if core inflation converges to the Mexican central bank’s 3% goal.
Ahead, the US economic docket will feature August’s Nonfarm Payrolls and Unemployment Rate update. Besides this, traders eye speeches by Cleveland Fed Beth Hammack.
USD/MXN Price Forecast: Technical outlook
In the daily chart, USD/MXN trades at 16.9254, extending its decline beneath the clustered simple moving averages (SMA) pack now grouped around 17.2648. Price holding below this triple SMA structure and under the descending trend-line framework drawn from 18.1651 and 21.0808 keeps the near-term bias bearish, even as the Relative Strength Index (14) at 33.25 hovers just above oversold territory and hints that downside momentum could be slowing rather than reversing.
On the topside, initial resistance is seen near the recent interaction with the shorter-term descending trend line around 17.0838, ahead of the triple SMA barrier at 17.2648, while a stronger cap emerges closer to the long-term trend-line proxy near 18.1200. With no clear structural floors defined in the current dataset, the pair remains vulnerable to further slippage, and only a sustained recovery above the 17.2648 SMA cluster would start to ease the bearish pressure on USD/MXN.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall 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.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
UOB economist Jester Koh highlights that Singapore’s electronics PMI rose in August, with broad-based gains in new export orders, output and backlogs. Koh argues recent softness in electronics NODX and IP likely reflects capacity constraints rather than weaker end demand, and suggests inventory drawdowns and AI-related tailwinds should support future electronics production.
Electronics PMI signals resilient demand
"Singapore's electronics PMI rose 0.2pt to 52.6 in Aug, with broad-based improvements in new export orders (Aug: 52.8, Jul: 52.6), output (Aug: 52.5, Jul: 52.2), stock of input purchases (Aug: 52.6, Jul: 52.4) and order backlogs (Aug: 52.8, Jul: 52.5), reflecting strengthening AI-related tailwinds amid the global agentic AI capex buildout."
"The stronger Aug electronics PMI suggests that recent weakness in electronics NODX and IP likely reflects capacity constraints rather than softening end demand, further evidenced by the continued decline in the stocks of finished goods sub-index (Aug: 49.0, Jul: 49.3), indicating that firms are drawing down existing inventories to meet rising demand."
"This should support electronics IP in the months ahead given the eventual need for inventory replenishment."
"The re-escalation of the Middle East conflict since Jul led to a further deterioration in the supplier deliveries subindex (overall: 47.5 from 47.8; electronics: 47.3 from 47.6), with lead times lengthening as some cargo shipments were likely diverted from the Suez Canal/Bab el-Mandeb Strait route to the Cape of Good Hope."
"The input price sub-index for both the overall (Aug: 51.8, Jul: 51.6) and electronics PMI (Aug: 53.0, Jul: 52.7) increased, reflecting the surge in energy prices in Aug, although the increase was more pronounced in the latter, likely reflecting tech-flation pressures associated with the global chip shortage."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD trades near 1.3530 after the 50-day EMA just under 1.3500 held again.
- BoE chief economist calls for a prompt move to 4%, a view outvoted 6-3 in July.
- Friday: BoE Governor at 08:50 GMT, US payrolls at 12:30 GMT, 56K consensus.
Sterling (GBP) has spent Thursday recovering a little of what it lost this week, with GBP/USD trading near 1.3530, roughly a third of a percent higher, after the 50-day Exponential Moving Average (EMA) just under 1.3500 held for a second consecutive session. Thursday's low landed on the average almost to the pip before the pair climbed to a session high a couple of pips short of 1.3550 in the London afternoon. The bounce is a relief rally until a daily close above 1.3550 says otherwise.
Forty pips for the minority view
The sharper of the day's two legs was British, which has been rare this week. The Bank of England's chief economist released the text of an Edinburgh speech at 15:00 GMT arguing that Bank Rate should rise promptly from 3.75% to 4%, that he is uncomfortable with the wait-and-see stance of the majority, and that an early move need not open a prolonged series of increases. GBP/USD jumped from the 1.3500 area to its session high within the hour, roughly forty pips for a position that has already been outvoted.
That vote was 6-3 in July, the third consecutive meeting at which the hike camp lost, and the Governor spent last Friday at Jackson Hole explaining that second-round effects remain subdued and that the committee can afford to watch for now. July's headline inflation rate of 2.9% sits above target and the Bank's own central projection has it peaking near 3.2% in the fourth quarter, which is the material the dissenters are working with. The market has heard the same case at every meeting since April without it moving the majority, and it paid for it again on Thursday anyway.
The Dollar leg was borrowed
The earlier leg belonged to the Dollar and had nothing to do with Britain. A Fed governor said at 12:30 GMT that he would be inclined to support holding rates at the September 15-16 meeting if the inflation data due over the next two weeks keep behaving, and September hike odds on the FedWatch tool dropped to around 50% from above 60% on Wednesday. The Yen's surge to a one-month high on Bank of Japan hike expectations had already pushed Treasury yields lower before he spoke, and the Dollar Index slipped beneath 99.00 to its weakest since late August.
The awkward detail is what happened at 14:00 GMT in between. The Institute for Supply Management (ISM) services Purchasing Managers Index (PMI) beat at 55.4 against a 54.3 consensus, with the prices paid index climbing to 72.6 from 70.3, and the Dollar did not recover a pip on it. A Dollar that ignores a hot services prices reading two weeks before a coin-toss Fed meeting is a Dollar being sold on positioning, and positioning reverses faster than policy does.
The Governor speaks before the payrolls do
Friday belongs to two central bankers who speak four hours apart, and the British one goes first. The Governor delivers a keynote in London at 08:50 GMT, and if he repeats the Jackson Hole line that the committee is not pre-committed and can watch for now, Thursday's forty pips are exposed before New York is at its desk. The September 17 decision arrives one day after the August inflation figures on September 16, so Friday's speech is the last unscripted word from the majority before the data that will decide the vote.
US nonfarm payrolls at 12:30 GMT carry a 56K consensus after 23K jobs were lost in July, with the unemployment rate seen unchanged at 4.1% and average hourly earnings expected at 0.3% on the month and 3% YoY, down from 3.2%. The Fed Chair has said the committee's predominant focus is prices, which makes the report asymmetric for the pair: a soft number does not deliver the cut that would justify a weaker Dollar, while a firm one puts the September hike straight back into pricing. Next week is where the hold actually gets decided, with the Producer Price Index (PPI) on September 10 and the Consumer Price Index (CPI) on September 11, the two prints the governor's conditional was written around.
The British calendar offers almost nothing to counter it. Retail sales from the British Retail Consortium (BRC) land at 23:01 GMT on Monday, and Friday, September 11 brings July Gross Domestic Product (GDP) at 06:00 GMT after a 0.3% rise in June, alongside industrial and manufacturing production after falls of 0.2% and 0.5%, with the Bank's consumer inflation expectations survey at 08:30 GMT after a 4% reading. None of it changes the September vote. What changes the vote is the August inflation print at 06:00 GMT on September 16, and the Fed announces its own decision that same evening.
Levels and bias
Resistance: The 1.3550 line is the one that matters, with Thursday's high failing just beneath it and a daily close above it the first thing that would turn the bounce into a trend change. Above that, 1.3600 is the level that went in the final days of August, and the peak short of 1.3700 caps the whole August range.
Support: The 50-day EMA just under 1.3500 has now absorbed two tests in two days, and it decides whether Thursday was a floor or a pause. Beneath it, the 200-day EMA near 1.3400 is the last technical object before open ground, with 1.3350 and 1.3300 below it and 1.3200 the objective on an extension.
Bias: Bearish while 1.3550 caps. Thursday was a Dollar-selling day with a British garnish, the daily Stochastic Relative Strength Index (Stoch RSI) is still falling from above 90 and sits near 58, and the two events that could extend the bounce, a Governor turning hawkish and American inflation cooling, are both the minority outcome. Rallies into 1.3550 are for selling. A daily close above it invalidates the call and reopens 1.3600.
GBP/USD 5-minute 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.
- DJIA closed just under 53,700, up roughly 620 points, its best day since August 4.
- Vice President Vance asked for cuts as the 30-year mortgage rate rose to 6.71%.
- Payrolls at 12:30 GMT Friday: 56K consensus after 23K jobs lost in July.
The Dow Jones Industrial Average (DJIA) closed just under 53,700 on Thursday, up roughly 620 points and close to 1.2%, its strongest session since August 4, after a Federal Reserve (Fed) governor said he would be inclined to support holding rates at the September 15-16 meeting if the next two weeks of inflation data behave. The index printed its low just above 53,000 at 10:30 GMT, added the bulk of the gain between 12:30 GMT and 15:30 GMT, and spent the final four hours in a 100-point band beneath a high a shade above 53,750. September hike odds on the FedWatch tool ended the day at 50.4%, down from 63.2% on Wednesday, and the 10-year Treasury yield finished at 4.77% after touching its highest level since late 2023 a day earlier.
It rallied through an Institute for Supply Management (ISM) services Purchasing Managers Index (PMI) that beat at 55.4 against a 54.3 consensus and carried a prices paid reading of 72.6, up from 70.3. That is not the kind of number a hold is built on, and the index added roughly 300 points after it printed.
A hold that pleases neither camp
Thursday also produced the clearest statement yet of what the White House wants from the committee, and it is not a hold. Vice President JD Vance told a press briefing that the Fed should be lowering rates because President Trump wants Americans to be able to afford a home, and asked for some help from the central bank, hours after the average 30-year fixed mortgage rate rose to 6.71%, its highest since July 2025. The request landed less than a week after the Fed Chair told Jackson Hole that prices are the committee's predominant focus.
The committee's own hawks are pulling the other way. The July vote was 9-3, with three regional presidents dissenting in favour of a hike, one of them on record that a single quarter-point move would not do much, and a second governor said this week he would support tightening if inflation fails to ease. The equity market's bet is the outcome in the middle, which neither the administration nor the dissenters are arguing for, and 620 points is a lot to have paid for a compromise whose loudest backer attached a condition to it.
Why Friday can only take points away
The problem with a rally built on a hold is that the report due at 12:30 GMT on Friday cannot deliver one. Nonfarm payrolls carry a 56K consensus after 23K jobs were lost in July, with the unemployment rate seen at 4.1% and average hourly earnings at 0.3% on the month and 3% YoY, down from 3.2%. A Fed Chair who has said prices come first is not going to base a hold on weak hiring, so a soft print buys equities nothing on the rate side, and a second poor month in a row turns the labour market from a rates story into an earnings story.
A strong print is worse. It confirms the case the three dissenters made in July, puts the September hike back above 60% where it sat on Wednesday morning, and sends the 10-year back above 4.80%, with WTI Crude Oil just above $91.00 and Brent near $95.50 after the heaviest exchange of fire between American and Iranian forces in more than a month. The data the hold actually depends on do not arrive until next week, with the Producer Price Index (PPI) on September 10 and the Consumer Price Index (CPI) on September 11, so Thursday's gain has to survive a report that can hurt it and cannot help it before the numbers that could vindicate it are printed.
Payrolls first, then the prints that decide the meeting
Friday's report is the only red-band release before the weekend, and its subcomponents carry as much weight as the headline, with the U6 underemployment rate after 7.9% and participation after 61.4% arriving at 12:30 GMT alongside the main number. Next week opens quietly with the four-week average of Automatic Data Processing (ADP) employment change on Tuesday at 12:15 GMT after an 11.75K prior reading.
Thursday, September 10 brings PPI at 12:30 GMT, with the headline seen at 0.3% on the month after a flat July and the core measure at 0.3% after 0.2%, against annual rates of 4.7% and 4.2%, alongside claims after a 206K print and existing home sales. Friday, September 11 delivers CPI at 12:30 GMT after 0.1% on the month and 3.4% YoY in July with core at 2.5% YoY, followed by the preliminary Michigan sentiment index at 14:00 GMT after 51.7 and the one-year inflation expectations gauge after 4%. Every one of those prints lands before the September 15-16 meeting, and the governor who leaned toward a hold made his lean conditional on them.
Levels and bias
Upside: 53,800 is the first hurdle, with Thursday's high stopping just above 53,750 and the index unable to hold above 53,700 into the close. A daily close above 53,800 opens 54,000, and beyond it only the record high just under 54,750 from early August is left.
Downside: 53,500 is the shelf Thursday cleared and the level that decides whether the day was a breakout or a squeeze, and a daily close back beneath it hands the gain back to the range. Beneath it sit 53,250 and then 53,000, with Thursday's low just above the latter, and the rising 50-day Exponential Moving Average (EMA) near 52,800 remains the line under the whole August advance. The 200-day EMA just above 50,000 is not in play.
Bias: Bullish while 53,500 holds, with 53,800 and 54,000 the objectives. The daily Stochastic Relative Strength Index (Stoch RSI) near 36 is turning up from the lower third of its range, and the five-minute reading worked off an overbought print without the index giving back more than 100 points, which is what a session that intends to continue looks like. Friday is the risk rather than the trend: a strong payrolls print tests 53,500 before the European close, and a daily close beneath it reopens 53,250 and the 50-day EMA.
Dow Jones 5-minute chart
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As a futures contract approaches its maturity date, the futures price converges upon the spot price, becoming almost identical at expiration. However, prices can diverge significantly before the contract ends. A market is in contango when future prices are higher than spot prices, while the mirror image is called backwardation (when current prices are higher than future prices). For commodities, the normal state of the market is contango because holding the asset over time incurs costs such as storage or insurance fees. When markets turn from contango to backwardation – or vice versa – it signals a shift in the trend: a change from contango to backwardation is taken as a bullish sign, while going from backwardation to contango is generally considered bearish.
MUFG’s Lloyd Chan argues that while the pace of Rupiah depreciation may slow, the broader weakening trend is set to continue. USD/IDR has pulled back as crowded long positions unwind and some foreign inflows return, but elevated US yields and high Oil prices remain headwinds. MUFG maintains its USD/IDR forecast at 18,350 by end-2026.
Rupiah under pressure from oil shock
"The pace of rupiah depreciation might moderate, but the broader depreciation trend is unlikely to be over. USDIDR has retraced nearly 500 points from its peak as crowded long USD/IDR positioning unwinds and some foreign inflows return. However, headwinds from elevated US yields and higher oil prices remain in place. We maintain our forecast for USDIDR at 18,350 by end-2026."
"Indonesia's trade balance remains under pressure. While the goods trade balance returned to a modest surplus in July after deficits in the prior two months, it remains well below the monthly average surplus recorded in 2025. Surpluses in coal, palm oil, and base metals are only partially offsetting the oil shock impact. Our estimates suggest Indonesia's commodity trade balance is negatively impacted once Brent rises above US$82/bbl. With Brent currently above US$90/bbl, trade-balance pressures are likely to persist, limiting the scope for sustained rupiah appreciation."
"The stronger support for IDR in the near term is portfolio inflows, but this buffer may be approaching maturity. Foreign ownership of SRBI has risen back to around 27%, close to late-2024 highs, while SRBI yields have started to moderate from their June peak. BI's strategy of raising the return on portfolio capital has been effective in stabilising USD/IDR, but its ability to drive further sustained rupiah gains may be diminishing amidst rising US yields and oil prices."
"Several macro and market risks continue to argue against a structurally bullish rupiah view. MSCI's removal of GoTo from the Indonesia index highlights ongoing concerns around market accessibility and liquidity, while uncertainty remains over the future direction of state-led commodity export reforms under Danantara Sumber Daya Indonesia (DSI). At the same time, headline inflation has accelerated to 3.19%yoy and core inflation continues to trend higher, raising the possibility of further BI rate hikes if energy and food price pressures persist."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Geoff Yu notes that Bank Negara Malaysia kept its policy rate at 2.75%, judging the stance consistent with price stability and sustainable growth. The bank sees Malaysia’s economy on track for around 5% growth this year, with low inflation and limited external cost pass-through. However, it highlights Middle East tensions, elevated commodity prices and tighter global financial conditions as risks to the broader growth and inflation outlook.
BNM holds rates, monitors risks
"Bank Negara Malaysia has kept its overnight policy rate unchanged at 2.75%, judging the current stance to be consistent with continued price stability and sustainable growth."
"It said Malaysia’s economy expanded by 5.7% in H1 and is on track to grow around 5% this year, supported by stronger exports, resilient domestic demand, technology-related trade, tourism and investment."
"Headline and core inflation averaged 1.8% and 2.0%, respectively, in the first seven months, with limited pass-through from higher external costs."
"However, the MPC warned that Middle East tensions, elevated commodity prices and tighter global financial conditions remain key risks."
"Policy therefore remains on hold, with officials closely monitoring inflation pressures and domestic demand."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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