Forex News
- AUD/USD loses ground to near 0.7155 in Friday’s Asian session.
- Traders raise their bets on a US September rate hike following hotter US PPI data, supporting the US Dollar.
- RBA’s hawkish comments have fueled expectations for RBA September rate increase.
The AUD/USD pair edges lower to around 0.7155 during the early Asian session on Friday. The US Dollar strengthens against the Australian Dollar (AUD) following signs of hotter inflation in the United States (US). The release of the US August Consumer Price Index (CPI) inflation data will be in the spotlight later on Friday.
The US Producer Price Index (PPI), a measure of wholesale prices and a gauge of pipeline cost pressures, rose 5.4% YoY in August, versus 4.8% prior, according to the Bureau of Labor Statistics (BLS) on Thursday. This figure came in above the market consensus of 5.3%.
On a monthly basis, the headline PPI increased 0.4% in August, in line with market expectations. The core PPI was up 0.2%, slightly softer than the forecast.
Following Thursday’s hotter Producer Price Index (PPI) release, traders raised the odds of a quarter-percentage-point increase to more than 73%, according to the CME FedWatch tool.
Traders will take more cues from the US CPI data later in the day. This report will be the last piece of the inflation puzzle the Federal Reserve (Fed) will get before making its decision on interest rates next week. The headline CPI is expected to show a rise of 3.4% in August, while the core CPI is projected to show an increase of 2.4% during the same period.
Nonetheless, a hawkish tone from the Reserve Bank of Australia (RBA) might help limit the Aussie’s losses. RBA Assistant Governor Sarah Hunter said on Tuesday that the central bank may need to raise interest rates again if inflation proves more persistent than expected, keeping alive the prospect of another hike at its September meeting.
Meanwhile, RBA Deputy Governor Andrew Hauser stated that inflation is "one big problem" Australia's economy is still facing, adding that the central bank stands ready to raise interest rates further if it believes it is needed.
Markets are now pricing in nearly a 72% chance that the RBA will raise the Official Cash Rate (OCR) to 4.60% at the next RBA Board meeting, according to RBA Rate Tracker.
RBA hawkish turn aligns with US policy preferences
Rabobank points out that the RBA’s policy stance has turned more hawkish after “Hauser [gave] a hawkish speech, which has markets thinking of hikes this month and in November.” The bank adds that this prospective tightening path is “very much what the US Treasury would like to see – plus a lot more action on non-housing parts of the economy,” underscoring the alignment between Australian policy signals and US official preferences for firmer restraint beyond the housing sector.
Technical Analysis: AUD/USD keeps a positive tone above the 100-day SMA
In the daily chart, AUD/USD holds a mild bullish bias as it trades above the 100-day Simple Moving Average (SMA), with the recent pullback still contained within the Bollinger Bands envelope. Price is hovering just under the Bollinger 20-period SMA, which acts as immediate resistance, while the Relative Strength Index (14) at 53.7 stays in neutral-to-positive territory, hinting at steady but not overextended upside momentum.
On the topside, initial resistance is located at the Bollinger 20-period SMA near 0.7165, followed by a stronger barrier at the upper boundary of Bollinger Band around 0.7238. On the downside, the first line of support is the nearby price floor at 0.7158, ahead of a more meaningful cushion at the lower limit of Bollinger Band near 0.7092, with the 100-day SMA at 0.7080 reinforcing that broader demand zone while above it the constructive tone is likely to persist.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Japanese Finance Minister (FM) Satsuki Katayama said on Friday that the government will continue to closely communicate with the United States (US) to ensure orderly foreign exchange markets.
Key quotes
Won't discuss specific currency levels.
Stance unchanged since US-Japan coordination.
Will aim to ensure stable currency movements, will closely communicate with U.S.
Receives backing from Bessent, JPMorgan's Dimon on Japan's economic strategy at G20.
Market reaction
At the time of writing, the USD/JPY pair is up 0.03% on the day at 154.48.
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.
- USD/CAD appreciates as the commodity-linked Canadian Dollar (CAD) struggles due to lower oil prices.
- Crude oil prices may regain due to recent strikes targeting tankers and warships in the Persian Gulf, intensifying regional risks.
- US PPI rose 5.4% YoY in August, accelerating from July and exceeding analyst expectations of 5.3%.
USD/CAD extended its gains for the third consecutive day, trading around 1.3840 during the Asian hours on Friday. The pair appreciates as the commodity-linked Canadian Dollar (CAD) struggles due to lower oil prices.
However, crude oil prices may rebound as the escalating conflict between the US and Iran has fueled concerns over prolonged disruptions to global energy supplies. Top US officials reportedly warned President Donald Trump that the war could continue through the remainder of his term, which ends in January 2029.
Meanwhile, Iranian leaders are reportedly determined to continue fighting despite mounting economic costs, viewing the conflict as an existential threat. They also claim that Tehran has managed to rebuild its missile capabilities and could intensify attacks on US and Gulf assets if Washington escalates its own strikes.
CAD underpriced as commodities firm and US data risk looms
Strategists at Scotiabank observe that rate and credit “spreads have held relatively steady” so far, but caution they “could turn a little more volatile in the next few days as markets react to US inflation data.” They also highlight that “strengthening crude (and firmer commodities in general) do provide some additional lift to Canadian terms of trade,” a support they suggest is “not perhaps fully reflected in the CAD currently.”
The US Bureau of Labor Statistics (BLS) reported on Thursday that the Producer Price Index (PPI) rose 5.4% year-over-year in August, up from 4.8% in July. This figure came in hotter than analyst expectations of 5.3%.
On a monthly basis, the headline PPI increased by 0.4% in August, matching the market consensus. Meanwhile, the core PPI rose by 0.2%, coming in slightly softer than the initial forecast.
Traders have largely chosen to remain on the sidelines, holding off on major positions ahead of the crucial US Consumer Price Index (CPI) inflation report scheduled for release later on Friday.
Strategists at Scotiabank observe that the Dollar is trading with a modestly positive tone ahead of key US releases, noting that “the USD is again mixed to slightly firmer against the G10 currencies as traders await this morning’s data.” The bank frames the latest moves as part of a cautious pre-data consolidation rather than a decisive shift in trend, with investors reluctant to take strong directional views before the next round of US inflation signals.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- NZD/USD attracts some buyers on Friday as USD stalls the US PPI-inspired rise.
- Rising Fed rate hike bets and geopolitical risks should limit deeper USD losses.
- Traders look forward to the crucial US CPI report for some meaningful impetus.
The NZD/USD pair gains some positive traction during the Asian session on Friday, reversing a part of the previous day's heavy losses to sub-0.5800 levels, or the lowest since late July. The upside potential, however, seems limited as traders might opt to wait for US consumer inflation figures before placing fresh directional bets.
The crucial US Consumer Price Index (CPI) will be watched for more cues about the US Federal Reserve's (Fed) policy path amid rising rate hike bets, bolstered by the upbeat US Nonfarm Payrolls (NFP) report and still sticky inflation. In fact, data released on Thursday showed that the US Producer Price Index (PPI) accelerated to a 5.4% YoY rate in August, beating consensus estimates. This, in turn, prompted traders to add to bets for a Fed rate hike next week, which favors US Dollar (USD) bulls and should cap gains for the NZD/USD pair.
Apart from this, escalating US-Iran tensions remain supportive of elevated crude oil prices, which shot to the highest level since May 21 on Thursday and add to concerns about inflation risks stemming from the Middle East conflict. In the latest development, the US Treasury plans to sanction a large, undisclosed bank on Monday as part of its ongoing economic pressure campaign against Iran. Moreover, Houthi forces have taken control of Mocha, a key Red Sea port, tightening their grip near the Bab el-Mandeb shipping route.
This raises the risk of a broader regional conflict and keeps the geopolitical risk premium in play, which should further benefit the safe-haven Greenback. Adding to this, a dovish tilt in the Reserve Bank of New Zealand’s (RBNZ) policy projections might contribute to capping the NZD/USD pair, warranting some caution for bulls and positioning for any further gains. Nevertheless, spot prices remain on track to register losses for the third straight week, and the fundamental backdrop suggests that the path of least resistance is to the downside.
NZD/USD daily chart
Technical Analysis
The NZD/USD pair trades above the 50.0% retracement at 0.5806 but keeps a capped tone below the 200-day Exponential Moving Average (EMA) at 0.5851. The proximity of the 38.2% retracement at 0.5848 to the 200-day EMA reinforces a nearby resistance band that needs to be cleared to ease immediate downside pressure.
On the downside, the 50.0% retracement at 0.5806 is the first support, ahead of the 61.8% level at 0.5763 and the deeper Fibonacci floors at 0.5702 and 0.5625, where buyers would be expected to show more interest if weakness extends.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- GBP/USD flatlines around 1.3510 in Friday’s early Asian session.
- US PPI rose 5.4% YoY in August, higher than the estimate.
- BoE's Bailey pushed back against the idea of a rate hike being inevitable.
The GBP/USD pair trades on a flat note near 1.3510 during the early Asian session on Friday. Traders prefer to wait on the sidelines ahead of the key US August Consumer Price Index (CPI) inflation report later on Friday.
The US Producer Price Index (PPI), a measure of wholesale prices and a gauge of pipeline cost pressures, rose 5.4% YoY in August, compared to 4.8% in July, according to the Bureau of Labor Statistics (BLS) on Thursday. This figure came in hotter than expectations of 5.3%.
On a monthly basis, the headline PPI increased 0.4% in August, in line with market consensus. The core PPI was up 0.2%, slightly softer than the forecast.
Traders await the upcoming US CPI inflation data on Friday as it might offer some hints about the US interest rate path.
Economists expect the headline CPI to show a rise of 3.4% in August, while the core CPI is projected to show an increase of 2.4% during the same period. If the reports show hotter-than-expected outcomes, this could reinforce the Federal Reserve (Fed) rate hike bets and boost the US Dollar (USD) against the British Pound (GBP) in the near term.
Bank of England (BoE) Governor Andrew Bailey said earlier on Tuesday that he wanted to dispel the idea that it's just a matter of time before the central bank raises interest rates, rather than a possibility that hinges on economic and geopolitical developments.
Markets expect one quarter-percentage-point BoE rate hike priced in by the end of this year, and two more for 2027, according to Reuters.
BoE hawkish hold expectations build as UK data and fiscal outlook loom
Strategists at Scotiabank flag that upcoming UK data will be a key catalyst for Sterling, noting that “next week’s jobs and CPI figures offer additional risk into Thursday’s BoE, where policymakers are widely expected to deliver a hawkish hold.” They emphasize that “next week’s BoE is a nonMPR (forecast) meeting, leaving the November 5th rate decision as the next likely meeting for a 25bpt rate hike—with short-term rates markets already pricing ~19bpts of tightening for the decision.” At the same time, Scotiabank highlights that “fiscal concerns remain front and center in terms of sentiment, as we continue to highlight the importance of the budget scheduled for late October,” but they add that “the trend in sentiment remains constructive for the GBP.”
Technical Analysis: GBP/USD retains a neutral tone in the near term
In the daily chart, GBP/USD consolidates in a neutral, range‑bound stance. The pair holds above the 100-day Simple Moving Average (SMA), while intraday price action hovers just over the lower Bollinger Band support, hinting at underlying demand on dips. However, the Bollinger middle band caps the topside together with the upper band and the Relative Strength Index (RSI) around 48 suggests only modest, directionless momentum.
On the upside, initial resistance is located at the Bollinger middle band near 1.3560, with a break there exposing the upper Bollinger Band around 1.3655 as the next barrier. On the downside, immediate support is seen towards the lower Bollinger Band at 1.3465, ahead of the firmer cushion offered by the 100-day SMA at 1.3445; a daily close below this latter level would weaken the current consolidation bias and open the door to a deeper correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- USD/JPY ticks lower during the Asian session as Japan’s PPI reaffirms hawkish BoJ expectations.
- Rising Fed rate hike bets act as a tailwind for the US Dollar and should support the currency pair.
- Traders now look to the US CPI report for short-term opportunities heading into the weekend.
The USD/JPY pair struggles to capitalize on the previous day's recovery momentum and edges lower during the Asian session on Friday. Spot prices currently trade below mid-154.00s, though the downside seems limited as traders might opt to wait for the release of US consumer inflation figures before placing fresh directional bets.
The US Consumer Price Index (CPI) report will be looked to for more cues about the US Federal Reserve's (Fed) future policy path, which, in turn, will drive the US Dollar (USD) and provide a fresh impetus to the USD/JPY pair. In the meantime, data released on Thursday showed that the US Producer Price Index (PPI) accelerated to a 5.4% YoY rate in August, up from the previous month's upwardly revised 4.8% and beating consensus estimates. The data underscored sticky inflation and prompted traders to add to bets for a Federal Reserve (Fed) rate hike next week. The outlook, in turn, assists the USD in preserving the overnight gains and acts as a tailwind for the currency pair.
Meanwhile, the Japanese Yen (JPY) might continue to draw support from an aggressive repricing for a more hawkish Bank of Japan (BoJ). In fact, traders have fully priced in a 25-basis-point (bps) interest rate hike at the upcoming BoJ policy meeting on September 17–18 and are assigning a high probability of a follow-up move in December. Expectations gained traction after BoJ's prominent hawkish members – Hajime Takata and Naoki Tamura – recently pushed for faster and more nimble rate hikes to counter rising inflation. Adding to this, BoJ's Kazuyuki Masu said on Thursday that underlying inflation is approaching 2% and the policy rate is still below the neutral rate.
Moreover, data from the Bank of Japan showed earlier today that Japan's producer inflation grew 7.6% YoY in August, slightly lower than the previous month's upwardly revised print of 7.7%. The PPI, however, remained close to its highest level in over 3-½ years and underscored persistent stickiness in Japanese inflation, which should give the central bank more impetus to hike interest rates. Hawkish BoJ expectations, in turn, might hold back JPY bears from placing aggressive bets and cap the USD/JPY pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any further gains.
USD/JPY daily chart
Technical Analysis
The USD/JPY pair maintains a mildly bearish near-term bias under the 38.2% Fibonacci retracement level and the 155.20-155.30 horizontal support breakpoint. A move beyond the said barrier cpi;d face supply first at the 23.6% Fibo., around 158.49,, above which spot prices could climb to the Fibonacci anchor around 164.23.
On the downside, initial demand is aligned with the 38.2% Fibo. retracement at 154.95, followed by deeper supports at the 50.0% retracement near 152.08 and the 61.8% level at 149.21.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Producer Price Index (YoY)
The Producer Price Index released by the Bank of Japan is a measure of prices for goods purchased by domestic corporates in Japan. The PPI is correlated with the CPI (Consumer Price Index) and is a way to measure changes in manufacturing cost and inflation in Japan. A high reading is seen as anticipatory of a rate hike and is positive (or bullish) for the JPY, while a low reading is seen as negative (or Bearish).
Read more.Last release: Thu Sep 10, 2026 23:50
Frequency: Monthly
Actual: 7.6%
Consensus: 7.4%
Previous: 7.2%
Source: Statistics Bureau of Japan
- WTI may rebound as prolonged tensions threaten global energy flows, driving potential rebounds in crude prices.
- Warnings indicate hostilities could persist through January 2029, deepening market uncertainty.
- Recent strikes target tankers and warships in the Persian Gulf, intensifying regional risks.
West Texas Intermediate (WTI) halts its four-day winning streak, trading around $99.00 per barrel during Asian hours on Friday. However, crude oil prices may rebound as the escalating conflict between the US and Iran has fueled concerns over prolonged disruptions to global energy supplies. Top US officials reportedly warned President Donald Trump that the war could continue through the remainder of his term, which ends in January 2029.
Meanwhile, Iranian leaders are reportedly determined to continue fighting despite mounting economic costs, viewing the conflict as an existential threat. They also claim that Tehran has managed to rebuild its missile capabilities and could intensify attacks on US and Gulf assets if Washington escalates its own strikes.
Fighting has intensified over the past two weeks, with the US targeting Iranian oil tankers while Iran has launched missiles at US warships and tankers in the Persian Gulf, as well as American assets in neighboring countries.
BBC cited military sources and witnesses, saying that Yemen's Houthis have seized the strategic Red Sea port city of Mokha from Saudi-backed pro-government forces. Mokha's capture leaves the Iran-backed group only 75km (46 miles) away from the Bab al-Mandab Strait, the southern gateway to a vital trade route linking Asia and Europe.
The Houthis stated they posed no threat to international shipping. However, they reiterated their threat to target vessels from Saudi Arabia, which has increasingly relied on the Red Sea for oil exports since the US and Israel's war effectively closed the Strait of Hormuz in the Gulf.
Oil costs framed as necessary sacrifice amid Iran conflict
Strategists at BNY highlight that President Trump continues to justify the economic fallout from the Iran conflict by linking it directly to non-proliferation goals. They note that he “framed the current economic costs, including higher fuel prices, as necessary to prevent Iran from obtaining a nuclear weapon,” while reiterating his view that “oil prices would fall once the war ends.”
Bond markets hold the line as energy prices stay elevated
Strategists at BNY observe that fixed income investors are attempting to look through the latest energy shock, noting that “bond markets are striving for resilience, in the face of Brent touching $101.50/barrel and Dutch TTF forward gas prices remaining firmly above €80/MWh.” They suggest that, despite the renewed pressure from higher oil and gas benchmarks, core bond markets are still trying to maintain composure as the conflict-driven spike in energy costs feeds into inflation concerns.
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.
On Friday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.7743 compared to the previous day's fix of 6.7766 and 6.7174 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- EUR/USD steadies near 1.1610 in Friday’s early Asian session.
- ECB raised its key deposit rate by 25 bps to 2.50% in a move widely expected by traders.
- Markets price in a 70% chance of a September Fed rate hike.
The EUR/USD pair holds steady around 1.1610 during the early Asian session on Friday. Traders continue to assess a hawkish hike from the European Central Bank (ECB). However, markets might turn cautious later in the day ahead of the key US Consumer Price Index (CPI) inflation data for more clues on the US interest rate path.
The ECB raised the interest rate on the deposit facility to 2.50% at its September policy meeting on Thursday, as widely expected. It was the ECB’s second hike this year, after policymakers raised borrowing costs in June for the first time since 2023.
ECB President Christine Lagarde warned that the conflict in the Middle East and recent developments in Russia’s war on Ukraine will keep headline inflation “well above target” the bank’s 2% target for an extended period.
Analysts said Lagarde struck a hawkish tone, signaling that further rate increases were possible. This, in turn, could provide some support to the shared currency in the near term. “The communications from the ECB can be read as at least having a hawkish tilt,” said Roman Ziruk, an FX strategist at Ebury.
Across the pond, hotter US Producer Price Index (PPI) inflation data increased bets for a US Federal Reserve (Fed) rate hike next week. Markets are now pricing in nearly 70% odds of an increase in US interest rates next week, up from 62% before the data, according to the CME FedWatch Tool.
Euro steadies as Scotiabank looks for a more forceful ECB tightening signal
Analysts at Scotiabank expect the ECB to strike a firmer tone at the upcoming meeting, arguing that “we expect a hawkish message, given the latest recovery in oil prices,” and that officials are likely to deliver “a forceful endorsement in favor of further near-term tightening as policymakers remain intent on containing the risk of broadening price pressures.”
Technical Analysis: EUR/USD
In the daily chart, EUR/USD holds a modest bullish bias as spot remains above the 100-day simple moving average (SMA), while price is also supported by the lower Bollinger Band near 1.1561. The Relative Strength Index (RSI) at 53.9 leans slightly positive without signaling overbought conditions, suggesting scope for further upside as long as buyers defend the underlying moving average cluster.
On the topside, immediate resistance emerges at the Bollinger middle band, the 20-day SMA, around 1.1628, followed by the upper Bollinger Band near 1.1695. On the downside, initial support is aligned with the 100-day SMA and the lower Bollinger Band in the 1.1560 area, with a sustained break below that zone needed to undermine the current constructive tone and open the door to a deeper correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
- AUD/USD reverses from 0.7223 as hot annual PPI lifts Dollar.
- Oil above $100 amplifies inflation fears and Fed tightening bets.
- Friday CPI could decide whether September hike pricing holds.
The Australian Dollar ended Thursday’s session with a 0.80% loss against the US Dollar after US producer inflation exceeded estimates, triggering pricing for a more hawkish Federal Reserve. The AUD/USD trades at 0.7159 after reaching a peak of 0.7223.
AUD/USD rally fizzles as investors expect hawkish Fed on hot PPI
US August PPI data was 0.4% MoM as expected, driven by the jump in energy prices. Excluding volatile items, the so-called core undershoot estimates rose 0.2% MoM. The outlier was the annual PPI headline, overshooting forecasts of a 5.3% increase to 5.4%.
So far, money markets have priced in a 71% chance that the Federal Reserve might hike rates by 0.25%, according to the CME FedWatch Tool. US jobless claims, released at the same time, confirmed Fed Chair Warsh's statement that the labour market is “consistent with full employment,” and increased by 205K, modestly above forecasts but below the previous week's print of 206K.
US Treasury yields rose sharply, underpinning the Greenback, which, according to the US Dollar Index (DXY), ended Thursday’s session near 99.09. The DXY, which tracks the performance of the buck against a basket of six currencies, finished the session with gains close to 0.30%.
Yields also soared in response to the escalation of the US – Iran conflict. Brent and WTI crude benchmarks rose above the $ 100-per-barrel barrier, up over 6%. Meanwhile, the Wall Street Journal reported that White House advisers told President Trump that the conflict could drag on for the rest of his term.
In Australia, Friday’s economic schedule is empty. However, hawkish commentary by RBA officials increased traders' bets for 50 basis points towards the end of 2027, to 4.85%, which would be the highest level since 2008.
The PPI reading, alongside surging energy prices, increased the chances that the US Federal Reserve might raise interest rates by 25 basis points at next week’s meeting. Money markets see a nearly 70% chance for an increase, via the CME FedWatch Tool
Traders are focusing on Friday’s CPI report. Analysts expect August’s CPI to rise from 0.1% to 0.4% MoM, while the annual rate remains steady at 3.4%. Core CPI is forecasted to stay at 0.2% MoM and slightly decrease from 2.5% to 2.4% YoY.
AUD/USD Price Forecast: Technical Outlook
In the daily chart, AUD/USD trades at 0.7161, maintaining a constructive bullish bias as it holds well above the clustered 50/100/200-day simple moving averages (SMAs) around 0.7062 and continues to respect a series of rising trend-line supports from the mid-0.68/0.69 region. The Relative Strength Index (14) has eased back toward the mid-50s, hinting at consolidative rather than exhausted momentum while the pair grinds higher toward nearby overhead barriers.
On the topside, immediate resistance is seen at the horizontal cap around 0.7198, where a clear break would open the door for further gains toward higher daily highs. On the downside, initial demand is expected near the 0.7161 area along the latest sequence of rising trend-line supports, with the next more substantial support coming in at the clustered SMAs around 0.7062, where a break lower would weaken the current bullish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar Price This week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.07% | -0.93% | 0.02% | 0.56% | 1.27% | 0.50% | |
| EUR | -0.03% | 0.04% | -0.95% | -0.01% | 0.54% | 1.24% | 0.47% | |
| GBP | -0.07% | -0.04% | -1.09% | -0.05% | 0.51% | 1.20% | 0.43% | |
| JPY | 0.93% | 0.95% | 1.09% | 1.05% | 1.59% | 2.28% | 1.50% | |
| CAD | -0.02% | 0.01% | 0.05% | -1.05% | 0.59% | 1.25% | 0.48% | |
| AUD | -0.56% | -0.54% | -0.51% | -1.59% | -0.59% | 0.70% | -0.07% | |
| NZD | -1.27% | -1.24% | -1.20% | -2.28% | -1.25% | -0.70% | -0.77% | |
| CHF | -0.50% | -0.47% | -0.43% | -1.50% | -0.48% | 0.07% | 0.77% |
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).
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