Forex News

• AUD/USD edges up to near 0.7203 as the US Dollar faces selling pressure.
• The odds of the Fed raising interest rates this month have diminished to 50%.
• Investors await the US NFP data for August.

The Australian Dollar (AUD) trades marginally higher at around 0.7203 against the US Dollar (USD) during the European trading session on Friday. The Aussie pair is broadly firm as the US Dollar remains under pressure, with traders reassessing Federal Reserve (Fed) interest rate expectations.

Dollar softens as Fed hike odds retreat

Analysts at MUFG observe that the US rates market has scaled back expectations for near-term tightening, with pricing now implying “close to a 50:50 probability of a Fed rate hike this month” compared with “closer to a 70% probability of a hike at the start of this month.” They attribute this “dovish repricing of Fed rate hike expectations in recent days” to “the cautious comments from the Fed’s leadership over the need for rate hikes.”

In particular, MUFG highlights remarks from New York Fed President John Williams, who said recent inflation data has been “encouraging” and that he sees “the trend in inflation moving slowly down as some of the effects of the tariffs move into the rearview mirror.” Williams also stressed that the Fed is “collecting a lot of data now, and will reassess whether rates remain in a good place for the economy.”

Meanwhile, investors await the United States (US) Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT.

Market experts believe that encouraging comments on inflation from Fed’s Williams has underscored the upcoming inflation data as key driver of monetary policy expectations over the official employment report.

MUFG said that it expects the upcoming labour market release to play a more limited role in shaping policy expectations against the backdrop of Fed Williams’s comments, stating: “we expect today’s nonfarm payrolls report to prove less important for Fed rate hike expectations than next week’s CPI report,” a dynamic they see as “helping to dampen the impact on US rates and the US dollar.”

AUD/USD Technical Analysis

In the daily chart, AUD/USD trades at 0.7203, maintaining a bullish near-term bias as spot holds above the 20-day exponential moving average (EMA) at 0.7136. The pair extends its advance after reclaiming this dynamic support, while the Relative Strength Index (RSI) at about 66 stays in bullish territory, suggesting buyers retain control even as conditions approach overbought.

On the downside, immediate support is seen at the 0.7200 area, with the 20-day EMA at 0.7136 acting as a secondary floor that would need to give way to signal a deeper correction. Looking up, the pair aims to revisit the four-year high near 0.7280.

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

Williams flags strong economy behind higher yields as inflation trend cools

Fed's Williams delivered a mildly hawkish-leaning message, with a 6/10 FXS Speechtracker score just above the 5.9/10 historical average, emphasizing that rising yields reflect a strong economy and robust outlook rather than worsening inflation expectations. The focus on tariffs and Middle East conflict as key drivers of above-target inflation, alongside contained expectations and a trend toward lower inflation with a stable labor market, signals confidence that the Fed can stay data-dependent while keeping 2% as the clear priority.

The FXS Fed Sentiment Index slipped by 1.42 points to 127.44, indicating a modest pullback in perceived hawkishness despite the still-elevated stance. With the index firmly above the 100 neutral line, markets continue to see policy as hawkish overall, but the slight decline suggests some easing in the perceived urgency for additional tightening relative to recent readings captured by the FXS Speechtracker.

• Gold pauses after two straight days of gains as traders await the US Nonfarm Payrolls report.
• Fed Governor Christopher Waller’s comments lower expectations of a Fed rate hike this month.
• The $4,500 mark acts as immediate resistance, followed by the 200-day SMA near $4,534.

Gold (XAU/USD) moves quietly on Friday after two straight days of gains, as traders appear reluctant to take fresh positions ahead of the US Nonfarm Payrolls (NFP) report at 12:30 GMT. The metal briefly climbed above $4,500 on Thursday, rising nearly 2% on the back of a softer US Dollar (USD), a modest pullback in Treasury yields and less hawkish remarks from Federal Reserve (Fed) Governor Christopher Waller. At the time of writing, XAU/USD trades around $4,472.

Meanwhile, the US Dollar also steadies after losing about 0.55% on Thursday and slipping below 99.00 to its lowest level in more than a week. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.11.

The US economy is expected to add 56K jobs in August after shedding 23K in July, while the Unemployment Rate is forecast to hold at 4.1%. Markets will also closely watch wage growth and any revisions to the July payrolls figure, after May and June employment gains were revised down by a combined 103K in the previous report.

Fed Governor Waller said on Thursday he is “finally seeing some signs of disinflation,” adding that the “current rate setting could get us back to 2% inflation.” He also said the “rate decision in September hinges on August inflation” and that “if August inflation data comes in hot, I would consider a rate hike.”

His remarks prompted traders to pare back rate hike bets for the upcoming September 15-16 meeting. According to the CME FedWatch Tool, the odds of a 25-basis-point (bps) rate increase now stand at around 50%, down from roughly 63% before Waller spoke.

A stronger-than-expected NFP report could revive Fed rate hike bets and lift the US Dollar and Treasury yields, weighing on the non-yielding metal. Conversely, another weak payroll reading could strengthen the case for the Fed to keep rates unchanged, helping Gold reclaim the $4,500 mark.

Analysts at OCBC remain “constructive” on Gold, but caution that the near-term path is likely to stay “highly sensitive to Fed repricing.” They highlight that “payrolls tonight may drive the next move in yields and the USD,” while “next week’s CPI and PPI should be more decisive in determining whether the recent disinflation trend is sufficient to keep the Fed on hold.” OCBC experts also note that “geopolitical tensions remain supportive at the margin,” but warn that “higher oil prices are a two-sided risk if they feed back into inflation expectations and yields.”

Technical analysis: Buyers eye 200-day SMA

XAU/USD holds above the 100-day Simple Moving Average (SMA) at roughly $4,354 while remaining capped beneath the 200-day SMA near $4,534, leaving the broader tone neutral and consolidative.

Price has reclaimed the 38.2% Fibonacci retracement at about $4,448, turning it into immediate support, yet it has not challenged the 23.6% retracement at $4,544 overhead.

The Relative Strength Index (RSI) on the daily chart around 55 suggests mildly positive momentum, but the Moving Average Convergence Divergence (MACD) remains below zero, hinting that recovery attempts still face supply near the 200-day average.

On the downside, initial support is seen at the 38.2% Fibonacci level around $4,448, followed by the 50.0% retracement at $4,371 and the 100-day SMA near $4,354. A deeper slide would expose the 61.8% retracement at $4,293 and the lower Fibonacci steps at $4,183 and $4,042.

On the topside, bulls need to clear the 200-day SMA near $4,534, with the 23.6% retracement at $4,544 acting as a subsequent cap. A sustained break above these levels would open the path toward the prior swing high area around $4,700.

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

• US Nonfarm Payrolls are expected to rise by 56K in August, following July’s negative print.
• The Unemployment Rate is forecast to hold steady at 4.1%.
• US employment data could influence the market pricing of a potential Fed interest rate hike in September.

The United States (US) Bureau of Labor Statistics (BLS) is set to release the Nonfarm Payrolls (NFP) data for August on Friday at 12:30 GMT. 

With investors leaning toward a Federal Reserve (Fed) interest rate hike in September amid persistent uncertainty surrounding the inflation outlook, the underlying details of the employment report could influence how markets assess the US central bank’s policy outlook and drive the US Dollar’s (USD) valuation. 

What to expect from the Nonfarm Payrolls report?

Investors expect NFP to rise by 56K in August following July’s unexpected print of -23K. The Unemployment Rate is seen holding steady at 4.1%, while annual wage inflation, as measured by the change in Average Hourly Earnings (AHE), is projected to soften to 3% from 3.2%.

Nevertheless, the underlying details of the July employment report suggested that the labor market conditions were not as dire as they seemed initially because a majority of job losses were concentrated in government positions, especially in education due to seasonal variations in academic contracts and summer staffing shifts, and the leisure and hospitality sector.

According to TD Securities, August payrolls are expected to show a recovery, with the bank forecasting that "August NFP [will] rebound to 95k after July posted a decline of 23k." The team cautions that "risks to our payrolls forecasts appear hawkish, and we would not rule out an outsized positive surprise," suggesting the balance of risks is tilted toward stronger-than-expected hiring. At the same time, TD looks for labour market conditions to remain broadly unchanged, noting that "the Unemployment Rate rate likely went sideways at 4.1% with balanced risks."

How will the US August Nonfarm Payrolls affect EUR/USD?

While delivering his opening remarks at the Jackson Hole Symposium earlier this month, Fed Chair Kevin Warsh delivered a hawkish message, causing markets to reassess the probability of an interest rate hike in September. According to the CME FedWatch Tool, markets are currently pricing in about a 60% chance of a 25 bps rate hike on September 16, compared to 35% before Fed Chair Warsh’s speech.

Warsh’s insistence that the Fed must be “confident underlying inflation is moving to objective, or we have work to do,” alongside comments that it is “hard-pressed” to call financial conditions restrictive and that recent disinflation has not “meaningfully changed” underlying trends, pointed to a bias against rapid easing even as growth, consumer spending, and business investment remain solid. Overall, the tone reinforced a firm 2% PCE target and signals that resilient activity and loose credit conditions could keep the Fed cautious about cutting rates too soon, a configuration typically supportive of the US Dollar on a relative policy basis.

Hence, a significant negative surprise, with an NFP print below 10K, could cause investors to second-guess a Fed hike in September, even more so if there is an increase in the Unemployment Rate. In this scenario, the USD could come under renewed selling pressure heading into the weekend and allow EUR/USD to gather bullish momentum. Conversely, an NFP reading above 40K could be seen as ‘good enough’ for the Fed to keep its focus on taming inflation and support the USD.

Strategists at BNY Mellon stress that Friday’s US NFP report is now “the key release for rates, FX, and risk assets.” They note that “after last month’s soft employment print, another weak number could temper the hawkish repricing that followed Jackson Hole.” By contrast, BNY Mellon argues that “a firmer print would validate Warsh’s message that the Fed’s focus should be on the inflation side of the mandate,” reinforcing the recent shift in market expectations for the Dollar and the policy path.

However, TD Securities takes a more cautious view, arguing that a robust US jobs report alone is unlikely to shift the Fed’s near-term policy stance. The bank notes that “a strong payrolls report is a necessary but not a sufficient condition for the Fed to hike in September,” stressing that “the more important piece of the puzzle is inflation as part of the strength in the NFP can be considered to be a reversal of the July weakness.” 

“In the case of a +40-50k upward payrolls surprise to consensus median as we expect, historical sensitivity and current positioning would suggest +0.2% knee-jerk USD reaction on the day,” they add.

Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD: 

“EUR/USD’s near-term technical outlook points to a slightly bullish stance but doesn’t highlight a buildup in momentum. The pair fluctuates near the middle line of the Bollinger Band and the Relative Strength Index (RSI) stays mostly flat slightly above 50 on the daily chart.”

“On the upside, the 200-day Simple Moving Average (SMA) aligns as a key resistance level at 1.1635 ahead of 1.1710 (upper line of the Bollinger Band) and 1.1800 (static level). Looking south, support levels could be spotted at 1.1560 (100-day SMA), 1.1500 (static level, 50-day SMA) and 1.1350 (static level).”

(This story was corrected at 09:35 GMT to revise the market expectation for August Nonfarm Payrolls to 56K from 58K due to a last-minute consensus change.)

• GBP/USD retreats to 1.3520 from session highs near 1.3550 and turns negative on daily charts.
• BoE Bailey calls for flexibility on monetary policy and cools hopes of a September rate hike.
• On Thursday, BoE's Pill reiterated the need to hike the Bank Rate to 4%.

The British Pound (GBP) has retreated from session highs just below 1.3550 against the US Dollar (USD) during the London trading session, returning to levels near 1.3520 and turning negative on the daily chart. Bank of England (BoE) Governor Andrew Bailey called for flexibility on monetary policy, cooling hopes for an interest rate hike at September's monetary policy meeting.

Bailey defended at a conference hosted by the London School of Economics that the bank has the responsibility to keep inflation anchored, but that policymakers “do exercise choice on how fast to bring inflation back to target”.

Beyond that, the BoE Governor suggested that he understands the Federal Reserve (Fed) Chair, Kevin Warsh’s reluctance to provide forward guidance, as, he stated, central banks need to preserve flexibility in responding to changing economic and inflation conditions, rather than committing to a predetermined rate path.

BoE Pill’s hawkish comment boosted the British Pound on Thursday

Previously, the Pound had rallied against its main peers, as BoE Committee member Huw Pill reiterated his call to hike the BoE’s Bank Rate to 4%, at a roundtable in the Edinburgh Chamber of Commerce. Pill affirmed that “clear, prompt and decisive policy action and communication would help steer markets and reduce uncertainty.”

"Raising the bank rate on this basis doesn’t signal prolonged aggressive hikes," according to Pill, who added that a prompt increase in interest rates might “head off some potential insidious catch-up dynamics.”

The main focus on Friday, however, is in the US, where the Bureau of Labour Statistics will release August’s Nonfarm Payrolls (NFP) report. The US economy is expected to have created 56K new jobs last month following an unexpected 23K drop in July. This time, however, the impact of the release in the US Dollar is likely to be softer than usual, as investors await next week's Consumer Price Index (CPI) figures to assess the chances of a rate hike at the Fed meeting on September 15 and 16.

• AUD/JPY gains 0.39% on Friday, supported by growing expectations of higher interest rates in Australia.
• Stronger-than-expected Australian growth increases the likelihood of further monetary tightening as early as September.
• The Japanese Yen remains supported by expectations of a faster normalization of Japanese monetary policy.

AUD/JPY advances on Friday and trades around 112.65 at the time of writing, up 0.39% on the day. The Australian Dollar (AUD) benefits from growing expectations of higher interest rates in Australia, although the prospect of tighter monetary policy in Japan also supports the Japanese Yen (JPY) and could limit the cross’ upside.

Expectations surrounding the Bank of Japan (BoJ) are shifting toward a more hawkish stance following recent comments from board member Hajime Takata. Takata said the central bank should raise interest rates more flexibly to address intensifying inflationary pressures rather than follow a predetermined semiannual pace.

These remarks fuel speculation that the BoJ could adopt a more hawkish tone than previously expected at its September 17-18 meeting. Masahiko Loo, senior fixed income strategist at State Street Investment Management, said the Japanese Yen’s recent move looks less like a position adjustment and more like a cautious market reassessment of a more hawkish BoJ path. According to Loo, investors are beginning to price in the possibility that Japan’s monetary policy normalization could continue into 2027.

However, the Japanese Yen continues to face headwinds from concerns over Japan’s public finances. Japan’s initial general-account budget requests are estimated at around ¥143 trillion, a record high for a fourth consecutive year. Doubts over Prime Minister Sanae Takaichi’s ability to balance fiscal discipline with her ambitious investment strategy therefore offset some of the support the Japanese currency receives from expectations of higher interest rates.

On the Australian side, the monetary policy outlook also supports the currency. The Australian Bureau of Statistics (ABS) reported on Wednesday that the Australian economy expanded by 0.4% QoQ in the second quarter, slightly above expectations. The resilience of economic activity strengthens expectations that the Reserve Bank of Australia (RBA) could resume its monetary tightening cycle.

Markets have therefore raised their expectations of an RBA rate hike as early as September. The growth figures reinforce the view that the Australian economy remains resilient enough to allow the central bank to continue tackling inflationary pressures.

According to strategists at Brown Brothers Harriman, the latest GDP release prompted a notable repricing in RBA expectations, with “RBA cash rate futures” showing that “odds of a 25bps hike on September 29 jumped from 55% to nearly 80%, while markets moved closer to pricing 50bps of tightening over the next twelve months.” BBH adds that, beyond the shifting policy outlook, “Australia’s attractive carry alongside the country’s strategic exposure to commodities linked to energy, AI, and defense remain key AUD tailwinds.”

AUD/JPY is therefore caught between two similar monetary policy forces on Friday. Growing expectations of further RBA tightening support the Australian Dollar and allow the cross to advance toward 112.65, while the prospect of faster BoJ normalization could limit the extent of the upside.

• Andrew Bailey says central banks have some flexibility over how quickly they bring inflation back to target.
• The UK central bank governor warns about the risks associated with overly restrictive forward guidance.
• High public debt levels pose a major challenge for governments and add to pressures in bond markets.

Bank of England (BoE) Governor Andrew Bailey said on Friday that monetary policymakers have some discretion over how quickly they bring inflation back to target, while stressing that returning inflation to the target remains imperative.

Bailey also addressed central bank communication, saying that Federal Reserve (Fed) Chair Kevin Warsh is right to identify some dangers associated with forward guidance. The BoE Governor argued that central bankers should avoid providing unconditional guidance on the future path of monetary policy.

His comments highlight the importance of central banks preserving flexibility in response to changing economic and inflation conditions, rather than committing in advance to a predetermined monetary policy path.

On the fiscal front, Bailey also stressed that high debt levels reflect the very substantial challenges facing governments. He added that elevated debt is also contributing to pressure in bond markets.

Market reaction

The British Pound (GBP) showed little reaction to Bailey’s comments. GBP/USD trades around 1.3525 at the time of writing on Friday, virtually unchanged on the day.

Commerzbank analysts Norman Liebke and Michael Pfister report that the Bank of Canada kept its policy rate at 2.25% but adopted a more hawkish tone as inflation risks rise from higher energy prices and trade tensions with the US. Weak July trade data and volatile labour market outcomes mean today’s Canadian jobs surprise could significantly influence CAD performance in the short term.

Trade weakness and jobs uncertainty

"On Wednesday, the Bank of Canada met and, as expected, left its policy rate unchanged at 2.25% for the seventh consecutive meeting. However, its tone was markedly more hawkish."

"Governor Tiff Macklem stressed that inflation remained too high and that upside risks had increased due to the conflict in the Middle East and the renewed escalation of the trade dispute with the US. In particular, higher energy prices could increasingly spill over into other goods and services."

"Furthermore, Canada’s August labour market data will be released today at 2:30pm (Central European Time). The Bloomberg consensus expects an increase of 15,000 jobs, but the consensus has often been in this range in recent months, while the actual figures have delivered substantial surprises in either direction."

"Last month, nearly 75,000 new jobs were created, significantly more than expected. Following the two fairly solid preceding months, this marked a continuation of the welcome recovery overall. Moreover, the number of survey respondents is usually only around 10 to 15, meaning that the consensus should be treated with caution."

"Despite these shortcomings, today’s data surprise is likely to play an important role. If the labour market once again surprises to the upside, the CAD should benefit as well. However, given that Canada’s labour market has been on something of a roller coaster in recent years and that the escalation in relations with the US is likely to have weighed on sentiment, weaker figures would hardly come as a surprise either."

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

• XAU/USD rebound from lows near $4,280 has stalled below $4,500.
• Lower US yields support Gold's rally, but investors are wary of selling USD ahead of the release of NFP data.
• The precious metal faces key resistance at the 200-day SMA, at $4,534.

Gold (XAU/USD) trades flat at the $4,470 area on Friday, as the previous two days’ rebound from $4,280 failed to find acceptance above the $4,500 psychological area. US Treasury yields have pulled back from highs as markets reassess the odds for an interest rate in September, but investors remain wary of selling the US Dollar ahead of the release of US Nonfarm Payrolls (NFP) data, due later on the day.

Analysts at OCBC note that gold “rose more than 2% towards $4,510 intra-session high as Waller’s comments prompted markets to pare September Federal Reserve (Fed) hike expectations, pulling UST yields and the USD lower.”

The bank remains constructive on the pair, although they warn that "near-term direction is likely to stay highly sensitive to Fed repricing,” with NFP data seen as a potential driver of yields and the USD, while “next week’s CPI and PPI should be more decisive in determining whether the recent disinflation trend is sufficient to keep the Fed on hold.”

Technical Analysis: Gold nears key resistance at the 200-day SMA

XAU/USD trades at $4,464, still to confirm above a previous support area around $4.470 (August 20 low). Momentum indicators in the daily chart fail to provide a clear view, as the Relative Strength Index (RSI) struggles to take off from the key 50 line, while the Moving Average Convergence Divergence (MACD), still in negative territory, suggests that downside pressure is moderating, rather than fully reversing.

Gold bulls face a string of resistances at the mentioned $4,470 area, the psychological $4,500 level, and especially the 200-day Simple Moving Average (SMA), now at $4,534. This is a very popular indicator for FX traders, and a confirmation above that line would suggest that the correction from $4,690 highs in late August has completed

Bearish attempts, on the other hand, are likely to find support between the August 14 low, at $4,311, and the intra-week low of $4,282. A potential reversal from the 200-day SMA below these levels would confirm a "Head and Shoulders" pattern and add pressure towards the August 6 low of $4,220 and the late July lows near $4,000.

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

OCBC’s Christopher Wong notes that the Dollar Index (DXY) has eased alongside lower UST yields after Fed Governor Waller signalled a preference to keep rates unchanged in September if disinflation persists. September Fed hike odds have fallen towards 50%, with upcoming US payrolls, CPI and PPI seen as decisive. Wong highlights DXY trading around 99, with two-way risks inside a broader bearish trend channel.

Dollar index holds within bearish channel

"USD eased alongside UST yields after Fed Governor Waller leaned towards keeping rates unchanged in September should the recent disinflation trend continue. He argued for giving “disinflation a chance”, said he expects a reasonable CPI print and noted that the current policy setting could still bring inflation back towards 2%."

"Waller also appeared relatively sanguine about some recent inflation drivers, judging that much of the tariff impact has already passed through while higher energy prices have yet to spill meaningfully into broader prices."

"That said, he kept the door to a hike open, noting that policy is only slightly restrictive and that renewed inflation acceleration could still warrant tightening. "

"Taken together, his comments reinforce that there is no clear consensus around a September hike yet and that the burden of proof rests increasingly on the incoming data. September hike pricing subsequently slipped towards 50% (vs. 68% on 1 Sep)."

"Payrolls tonight (830pm SGT) are the immediate focus, although next week’s CPI and PPI may ultimately prove more decisive for the September decision. US markets will be close on Mon for labour day holidays."

"DXY last seen at 99 levels. Mild bullish momentum on daily chart remains intact though RSI turned lower. 2-way trades likely with the bearish trend channel. Immediate support at 98.60/70 levels (50% fibo retracement of 2026 low to high), 98 (61.8% fibo). Resistance at 99.40 (21DMA, 38.2% fibo), 99.75 (100 DMA). "

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

Silver prices (XAG/USD) fell on Friday, according to FXStreet data. Silver trades at $66.67 per troy ounce, down 0.46% from the $66.98 it cost on Thursday.

Silver prices have decreased by 6.21% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 66.97 on Friday, up from 66.79 on Thursday.

(An automation tool was used in creating this post.)