Forex News

TD Securities economists Oscar Munoz, Eli Nir, Gennadiy Goldberg and Molly Brooks expect August Core CPI to rise 0.19% m/m, with services driving gains and core goods offsetting. They project Core CPI at 2.3% y/y and Headline CPI steady at 3.4% y/y. Risks are seen skewed higher due to assumed tariff-sensitive goods declines, while core inflation is expected to ease through Q3 before re-accelerating in Q4.

Core inflation supported by services

"We expect this week's CPI data to report that underlying inflation stayed under control in August, with the core expected to rise 0.19% m/m. The services segment should be the main driver of inflation, while core goods prices likely acted as a drag, posting a modest m/m drop."

"We project that core CPI rose 2.3% on a y/y basis, down 10 bps vs July, while headline inflation likely stayed unchanged at 3.4% y/y. We see the risks to our forecasts as skewed to the upside given that we're assuming a number of large price declines in tariff-exposed goods categories."

"We look for goods prices to resume declines in August after registering a 0.20% increase in the last report. The core goods ex-vehicles segment (tariff-related) likely walked back its firm July gain with a 0.15% m/m decline, with drops in household goods and apparel acting as key drivers. Strength in new vehicle prices likely contributed to inflation for a second consecutive month."

"The services segment is expected to gather more steam in August, printing a 0.26% m/m increase, owing to firmer shelter inflation along with gains in vehicle maintenance, hospital, and recreation services. We also look for airfares to climb 3.2% m/m, up a full percentage point from July."

"We expect the core segment to continue to evolve positively through October after cresting in May at 2.9% y/y. Likewise for headline inflation, which likely saw its peak for the year at 4.2% in May, but its evolution will remain entirely dependent on the final resolution of the Middle East conflict. We expect both series to resume y/ y momentum in Q4."

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

• Mexico’s 2027 budget puts fiscal discipline under scrutiny.
• Banamex warns spending rigidity could squeeze public investment.
• US PPI and CPI may revive Fed hike bets.

The Mexican Peso remains unchanged against the US Dollar on Tuesday as market participants await the release of Mexico’s Fiscal package, which will be delivered to the Mexican Congress for approval. At the time of writing, the USD/MXN trades at 16.91 flatlined.

USD/MXN steadies as fiscal plan and US inflation loom

On September 2, Mexican President Claudia Sheinbaum stated that she will unveil a “responsible” 2027 fiscal and budget plan that aims to achieve fiscal consolidation while avoiding restrictions on investment or spending in social welfare, health, and education.

Banamex, a Mexican local bank, warned that “the main risk is that, given the rigidity of an increasing share of the budget, the adjustment to public spending will fall on public investment, with negative implications for medium-term economic growth.”

Aside from this, Mexico’s economic docket will feature August inflation data on September 9, followed by Industrial Output figures on September 11.

Across the northern border, the New York Survey of Consumers revealed that households' inflation expectations edged lower in the mid-term, while expectations for the jobs market remained mixed.

A light US economic docket keeps investors focused on Thursday's Producer Price Index (PPI) release, followed by Friday’s Consumer Price Index (CPI) data. A jump in both figures could cement the case for a 25-basis-point rate hike by the Fed.

Money markets had priced in a 63% chance of a 25-basis-point rate hike by the Federal Reserve at the September 15-16 meeting.

Given the backdrop, this would reduce the interest rate differential between Mexico and the US. Hence, USD/MXN could quickly reclaim the 17.00 level, opening the door for further upside.

USD/MXN Price Forecast: Technical Outlook

In the daily chart, USD/MXN trades at 16.9156, keeping a bearish near-term tone as spot holds beneath the clustered 50-, 100- and 200-day simple moving averages (SMAs) now aligned around 17.2285 and under the broader sequence of descending trend-line resistances. The Relative Strength Index (14) hovers near 35, hinting at weak but not yet oversold downside momentum as the pair consolidates just above recent lows.

On the topside, immediate resistance is seen at the confluence of the longer-dated SMAs near 17.2285, which aligns with the broader downward-sloping trend structure and is likely to cap recoveries while price trades below it. On the downside, initial support comes at the horizontal floor around 16.8866; a daily close below this level would expose further weakness within the prevailing downtrend, while holding above it would keep the pair in a shallow consolidation beneath the broader resistance zone.

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

Scotiabank strategists Shaun Osborne and Eric Theoret note that the Japanese Yen (JPY) is modestly firmer, with USD/JPY extending losses through prior intervention lows near 155, a move seen as technically significant and potentially pointing to further Yen gains. They highlight strong wage data, a heavily priced 25 bps Bank of Japan (BoJ) hike on September 18, and key support around 153 and 152, with resistance now expected above 155.

Yen gains test intervention lows

"The JPY is entering Tuesday’s NA session with a fractional 0.1% gain, fading the bulk of its near-1% Asian session rally through early European trade."

"The data calendar has been incredibly heavy, with key labor cash earnings (wage) data delivering a solid beat, while high profile (but less policy relevant) final Q2 GDP figures delivered a minor downward adjustment."

"Focus for the JPY remains centered on government and central bank efforts to support the currency, with officials keenly eyeing price action in the markets as policymakers lean on hawkish messaging into the September 18 meeting, where a 25bpt hike is almost fully priced."

"Support for USD/JPY has been observed around 153 and we note the absence of any additional support ahead of the 2026 lows near 152. Resistance is now expected above 155."

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

UOB’s Quek Ser Leang and Lee Sue Ann describe USD/CHF price action as largely directionless, with the pair closing near 0.8090 after trading in a narrow intraday range. Momentum indicators are flat, and they expect consolidation to persist in the short term between 0.8070 and 0.8105, while over one to three weeks USD/CHF is seen holding a broader 0.8055–0.8155 range.

Dollar Franc remains range bound

"24-HOUR VIEW: Yesterday, we expected USD “to trade in a range between 0.8080 and 0.8125.” While USD subsequently traded within a lower and narrower range of 0.8071/0.8109, it closed largely unchanged at 0.8092 (-0.04%). Momentum indicators are mostly flat, and we continue to expect USD to trade in a range, most likely between 0.8070 and 0.8105."

"1-3 WEEKS VIEW: We continue to hold the same view as yesterday (07 Sep, spot at 0.8100). As highlighted, for the time being, we expect USD to trade in a range between 0.8055 and 0.8155."

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

Deutsche Bank’s UK Chart Of The Week, authored by Sanjay Raja, Shreyas Gopal and Maui Brennan, argues that UK fiscal consolidation since the 2024 election is primarily tax-driven and heavily backloaded. The authors highlight rising spending, concentrated tax measures and reliance on behavioural savings, warning that limited fiscal headroom will constrain the upcoming Budget under Chancellor Healey.

Backloaded tax-heavy UK consolidation

"It’s that time of year again with Budget season now fully upon us. Markets will be bracing for a new government, a new vision and a new economic strategy, but the same public finances. Chancellor Healey struck a more optimistic tone in his first set-speech on 7 September."

"But the headwinds to the public finances are real, with fiscal headroom likely to be nearly halved."

"First, fiscal consolidation is a tax story. Spending decisions across the last four fiscal events have added on average around GBP 82bn per annum on a net basis. Tax rises account for an average of GBP 52bn."

"Second, there is a lot of backloading in the fiscal plans. Gross tax consolidation is 2.3x larger in 2029/30 than in 2025/26."

"Big picture, with the Chancellor sticking to the fiscal rules and manifesto pledges, there’s very little room to manoeuvre in the coming Budget. It’s likely that the past strategy of delaying consolidation, pushing efficiency savings, and relying on a handful of peripheral tax measures will feature again on the 28th of October."

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

Scotiabank strategists Shaun Osborne and Eric Theoret highlight a mixed US Dollar (USD) as markets weigh rising Oil prices, Japanese Yen (JPY) strength, and escalating US trade tensions. They underscore growing political pressure on the Federal Reserve (Fed) to cut rates, even as swaps still price around a 60% chance of a 25 bps hike at the September meeting, with upcoming United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) data seen as decisive for policy.

Fed path and trade tensions key

"The USD is mixed as markets mull rising oil prices—Brent is nearing $100 following attacks on Saudi oil infrastructure—soft stocks and firmer US yields (as well as a slightly steeper Treasury curve). "

"Trade tensions are also rising, with President Trump on social media over the past few days to take aim at Canada as Ottawa imposes counter-tariffs. The president also appeared to threaten a broader trade war unless the Fed cut interest rates in a post last Friday following the strong jobs data as the administration’s pressure campaign for lower rates appears to be stepping up a gear. VP Vance also suggested the Fed should ease policy last week."

"Economic orthodoxy is keeping the Fed hawks concerned, however, with Cleveland Fed President Hammack squeezing in one last call for tighter policy Friday ahead of the FOMC blackout. This week’s inflation data will be decisive in the run into the September 16th policy decision."

"Warsh said he wants progress towards 2% “with speed” while Waller and Williams both suggested there were signs of disinflation, obviating the need for higher rates right now."

"Signs of progress on inflation need to be clear in this week’s PPI (Thursday) and CPI (Friday) for a Fed to hold. Swaps continue to lean towards the idea of a hike, with OIS pricing in around 60% chance of a 25bps tightening move next week."

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

• WTI rises above $92 as Middle East attacks fuel inflation worries.
• Strong NFP keeps September Fed hike odds near 63%.
• US PPI, CPI and jobless claims steer Gold’s next move.

Gold (XAU/USD) registers losses of over 0.44% on Tuesday amid a light economic docket in the US, due to a narrative dominated by the US-Iran conflict, higher Oil prices and traders bracing for the release of US inflation reports, with the PPI expected on Thursday, followed by the next day’s CPI. At the time of writing, XAU/USD trades at $4,393.

XAU/USD falls as energy risks sharpen Fed hike fears

Energy prices continued to climb as attacks in the Middle East sent West Texas Intermediate (WTI) up 1% to $92.10 per barrel. A scarce US economic docket on Tuesday and Wednesday keeps investors focused on US inflation data, which could prompt a repricing of short-term interest rates set by the Federal Reserve (Fed).

Last week’s outstanding Nonfarm Payrolls report gave the green light to Fed Chair Kevin Warsh and company to increase rates. If July’s data – particularly the Consumer Price Index (CPI) expected at 0.4% MoM or 3.4% YoY, along with core figures seen at 0.2% MoM and 2.4% YoY – are exceeded, it opens the door for further tightening. This would push bullion prices lower, which tend to fare well in a lower-interest-rate environment.

Money markets have priced in a 63% chance of a 25-basis-point rate hike by the Fed at next week's meeting, according to Prime Terminal.

Alongside the release of US inflation data, traders would be keen to assess the status of the labor market, as the US Department of Labor will feature Initial Jobless Claims for the week ending September 5.

So far, Gold’s fall has not been triggered by US bond yields or the Dollar. The US 10-year Treasury yield is flat at 4.788%. At the same time, the US Dollar Index (DXY), which measures the performance of the buck’s value against a basket of six currencies, is down 0.04% at 98.86.

XAU/USD technical outlook: Gold falls towards the 100-day SMA, eyes on $4,300

Gold price extended its losses for the third straight day, approaching the 100-day Simple Moving Average (SMA) at $4,346, with the next target seen at $4,300 as the path of least resistance shifted downward in the near term.

The Relative Strength Index (RSI) currently leans downward after piercing the 50-neutral level, indicating further downside.

The first downside support level is at $4,300. A strong breakout below the figure could test the September 2 swing low at $4,282, followed by the 50-day SMA at $4,254. On further weakness, the next area of interest will be $4,200.

On the upside, once prices surpass $4,400, it opens the door to challenge the psychological $4,450, followed by $4,500. A breach of the latter will expose the 200-day SMA at $4,535. Breaking above this level could open the way to $4,600 and, eventually, to the daily high from August 25 at $4,697.

UOB’s Quek Ser Leang and Lee Sue Ann analysts report that EUR/USD was little changed around 1.1620 on Monday, but note a slight pickup in upward momentum. Intraday, they see scope for a test of 1.1640, while over the next one to three weeks the upside bias remains intact, with the pair expected to trade within a narrower 1.1585–1.1670 band and major resistance at 1.1670 unlikely to be threatened decisively.

Euro holds gentle upward bias

"24-HOUR VIEW: When EUR was at 1.1615 in the early Asian session yesterday, we indicated that “the current price movements are likely part of a 1.1595/1.1635 range-trading phase.” EUR subsequently traded between 1.1601 and 1.1635, closing little changed at 1.1621 (+0.07%). Despite the quiet price action, upward momentum has increased slightly. Today, EUR could edge higher and test 1.1640. A break above this level is not ruled out, but any further advance is highly unlikely to threaten the major resistance at 1.1670. Support is at 1.1610, followed by 1.1600."

"1-3 WEEKS VIEW: In our most recent narrative from last Friday (04 Sep, spot at 1.1635), we highlighted that while the strong surge from last Thursday “suggests the bias has shifted to the upside, but upward momentum is not that strong for now, and any advance could stay within a 1.1585/1.1690 range.” Yesterday (07 Sep, spot at 1.1625), we highlighted that “the upside bias remains intact, but EUR should stay within a narrower range of 1.1585/1.1670.” We continue to hold the same view."

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

• EUR/GBP recovers as cautious BoE signals weigh on the British Pound.
• BoE Governor Andrew Bailey acknowledges upside inflation risks but stops short of signalling an imminent rate hike.
• The ECB is widely expected to deliver its second rate hike of the year on Thursday.

EUR/GBP rebounds on Tuesday after slipping to a six-day low earlier in the day. The recovery comes as the British Pound (GBP) weakens against most of its major peers following cautious remarks from Bank of England (BoE) Governor Andrew Bailey. At the time of writing, the cross trades around 0.8587 after touching an intraday low near 0.8570.

Testifying before the UK Treasury Select Committee during the Monetary Policy Report hearing, Bailey said, “Risks to inflation are to the upside,” while adding, “I do not think we are on the verge of a recession.” He noted that “the market’s BoE rate curve reflects investors’ concern about further energy price rises” and said, “I want to dispel the idea that we have a secret plan to raise rates unconditionally.”

The comments reinforce expectations that the BoE will leave the Bank Rate unchanged at 3.75% on September 17. All 65 economists surveyed by Reuters between September 4 and 8 expect the Monetary Policy Committee to keep rates on hold next week, while 57 expect no change for the rest of the year.

In contrast, the European Central Bank (ECB) is widely expected to raise its deposit rate by 25 basis points to 2.50% on Thursday, marking its second increase this year. This policy divergence should keep the Euro (EUR) favoured against the Pound.

UK fiscal concerns also weigh on the Pound. UK Chancellor John Healey delivered his first major speech since taking charge of the Treasury on Monday, insisting the UK economy was “turning a corner” even as he acknowledged the growing burden of high government borrowing costs on businesses and the public finances.

Analysts at Rabobank caution that the underlying backdrop for the Pound remains fragile, highlighting that “the gilts market has the potential to be particularly sensitive to negative budget-related news because of the relatively high amount of foreign ownership.” In their view, “overseas buyers can be more reactionary to a souring of the news flow, and in the case of the gilts market this can have a detrimental impact on the pound.”

Rabobank also flags that current market positioning “may leave the pound vulnerable,” with “a hawkish takeaway from the BoE meeting next week” seen as already priced in. As a result, they warn that “the pound could slip on anything that can be construed as dovish.” “On the back of this factor, coupled with the pound’s potential sensitivity to fiscal matters,” the bank concludes that “we expect EUR/GBP to be biased higher, towards 0.87 on a 3-month view.”

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that USD/JPY briefly hit a seven‑month low near 152.89 before rebounding above 154.00, with support around 152.00 and resistance at 155.00. He argues the recent Japanese Yen (JPY) strength is flow-driven rather than a hawkish Bank of Japan (BoJ) repricing. Haddad outlines Fed–BoJ scenarios skewed toward further Yen gains and notes a potential 50 bps BoJ hike that could turbocharge the Japanese Yen recovery.

Flows and BoJ risks back Yen

"USD/JPY dropped briefly to a seven-month low at 152.89 before rebounding above 154.00. The next support sits near 152.00, the January-February double bottom, while resistance is offered at 155.00."

"JPY’s recent overshoot has come despite no meaningful hawkish BoJ repricing and a modest pullback in longer term JGB yields. This points to a flow driven JPY rally, supported by possible repatriation flows by Japan’s government pension fund (GPIF), and amplified by an unwind of speculative net short JPY positions."

"The sustainability of the USD/JPY plunge hinges on next week’s Fed and BoJ rate decisions. We see four scenarios, with the risks skewed towards a stronger JPY: Fed hold, BoJ +25bps: USD/JPY down. Fed hold, BoJ +50bps: USD/JPY sharply lower. Fed +25bps, BoJ +25bps: USD/JPY rebound. Fed +25bps, BoJ +50bps: USD/JPY down."

"Japan’s July wage data was mixed. Total nominal wage growth quickened more than expected to 4.7% y/y (consensus: 3.8%) vs. 4.0% in June, the fastest pace since 1997. However, the less volatile scheduled pay growth for full-time workers unexpectedly slowed to 2.7% y/y (consensus: 2.9%) vs. 2.9% in June."

"In our view, a jumbo 50bps BoJ hike next week cannot be ruled out. Inflation expectations account for most of the rise in 10-year JGB yields. A larger hike could re-anchor inflation expectations, cap the long end of the curve, and turbocharge the JPY recovery."

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