Forex News
- NZD/USD appreciates as traders firmly expect the RBNZ to hike interest rates next month.
- Softer July manufacturing data raises questions about the extent of future policy tightening.
- CME FedWatch shows September Fed rate hike probability dropping from 40% to 34.8%.
NZD/USD gains ground after four days of losses, trading around 0.5870 during the early European hours on Friday. The pair appreciates as the New Zealand Dollar (NZD) receives support from traders continuing to price in a Reserve Bank of New Zealand (RBNZ) rate hike next month. The RBNZ has repeatedly stressed the need to withdraw some of its policy support, keeping market expectations for another rate increase firmly in place.
However, soft economic data released this week has raised fresh questions regarding the extent to which the RBNZ can continue tightening its monetary policy. For instance, the Business NZ Performance of Manufacturing Index fell to 54.3 in July from an upwardly revised 60.1 in June. While this still marks the 21st consecutive month of expansion and remains well above the long-term average of 52.5, the slowdown highlights emerging uncertainties for the economy.
NZD inflation expectations seen reinforcing RBNZ credibility
Brown Brothers Harriman’s Elias Haddad highlights that the latest RBNZ survey shows inflation expectations “remain close to the RBNZ 2% target midpoint for inflation, underscoring the bank’s credibility.” He notes that this anchoring of expectations around the midpoint is an important signal for policymakers as they assess the outlook for the Kiwi and the appropriate stance of RBNZ policy.
The US Dollar (USD) declines as market attention is now turning toward the upcoming United States (US) July Retail Sales data scheduled for release later in the day. Meanwhile, the Greenback faces downward pressure following a softer-than-expected US inflation report that has weighed on investor sentiment.
The Bureau of Labor Statistics reported that US wholesale costs for goods and services were flat in July. This came in below the anticipated 0.2% growth and followed a revised 0.1% decline in June. Excluding volatile food and energy components, the core Producer Price Index (PPI) rose 0.2%, slightly under market consensus expectations of 0.3%. On an annual basis, headline PPI climbed 4.7% year-over-year in July, while core PPI increased by 4.2% over the same period.
These cooling inflation metrics have notably shifted expectations regarding Federal Reserve monetary policy. According to the CME FedWatch Tool, markets are now pricing in a 34.8% probability of a US rate hike at the upcoming September meeting, down from 40% immediately following the PPI data release.
Technical Analysis: NZD/USD rises amid bullish momentum
In the daily chart, NZD/USD trades at 0.5870. The pair holds above both the 50-day exponential moving average (EMA) at 0.5823 and the 9-day EMA at 0.5865, hinting at a constructive near-term bias while it consolidates just over the shorter average. The Relative Strength Index (14) at 56.6 stays in positive territory without being overbought, suggesting bullish momentum is present but not stretched, even as the latest Fed Sentiment Index reading around 134.6 reflects softer US policy expectations that tend to favor the kiwi.
On the topside, initial resistance appears at 0.5995, ahead of a higher barrier at 0.6094 that marks a more significant cap for any continuation of the recovery. On the downside, immediate support is provided by the 9-day EMA at 0.5865, followed by the 50-day EMA at 0.5823; a deeper pullback would expose the next structural floors at 0.5580 and 0.5486.
(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.
- The British Pound ticks lower against the Japanese Yen as the BoJ is expected to remain on a monetary tightening path.
- Investors are confident that the BoJ will raise interest rates at the September meeting.
- Financial markets await the UK employment and CPI data.
The British Pound (GBP) faces mild selling pressure against the Japanese Yen (JPY) during the European trading session on Friday. The GBP/JPY pair edges down as the Japanese currency outperforms its peers amid firm expectations that the Bank of Japan (BoJ) will raise interest rates in the September policy meeting.
According to a report from Reuters, three sources familiar with the matter said that the BoJ IS set to raise interest rates as soon as September and is likely to hike more aggressively thereafter than the current pace of roughly twice a year.
The BoJ Summary of Opinions (BoJ) of the July meeting also showed that a majority of board members supported an upward monetary policy path after leaving interest rates unchanged at 1%.
Meanwhile, investors seek fresh remarks from Japan’s Ministry of Finance (MoF) regarding whether there would be more United State (US)-Japan joint intervention to counter excessive volatility in the Japanese currency. In late July, the US-Japan jointly intervened to prop up the Yen.
On the British currency front, financial markets shift their focus to the United Kingdom (UK) employment data for three months ending June and the Consumer Price Index (CPI) data for July, which will be released next week.
Investors will pay close attention to both data sets to get fresh cues about the Bank of England’s (BoE) monetary policy outlook.
Currently, financial markets are not anticipating any BoE interest rate hike in the near term.
BoE seen holding Bank Rate despite firmer UK growth
Analysts at Societe Generale argue that the latest data on UK activity is unlikely to shift the monetary policy outlook. They note that "even though GDP was slightly stronger than the BoE forecast, we don’t think it changes their calculus," as underlying dynamics remain consistent with a gradual cooling in the economy. In their view, "slack continues to build in the labour market, putting downward pressure on wage growth," and both Societe Generale and the BoE "believe the second half of the year is likely to experience softer growth that should limit firms’ pricing power to pass on their higher costs." Against this backdrop, the bank expects policy to stay on hold, stating that "if energy prices remain as they are, we believe the BoE will keep Bank Rate at 3.75% throughout 2026."
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Wed Aug 19, 2026 06:00
Frequency: Monthly
Consensus: -
Previous: 2.6%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
OCBC’s Sim Moh Siong and Christopher Wong note that September Bank of Japan (BoJ) hike expectations have risen sharply, but the Japanese Yen (JPY) has reacted only modestly. They argue a sustained JPY recovery likely needs clearer commitment to faster policy normalisation, with intervention risks capping USD/JPY near 160. They also highlight alignment between BoJ and government on addressing inflation and supporting JPY-buying intervention.
BoJ hikes, intervention and JPY recovery
"Bloomberg reported that the Takaichi administration supports an early BoJ rate hike, helping lift market-implied odds of a September hike to 75%, from 60% a week ago."
"This points to growing alignment between the BoJ, which remains concerned about inflationary pressures from a weak JPY, and the government, which is seeking to enhance the effectiveness of JPY-buying intervention."
"Despite the shift in expectations, the JPY's response has been muted. Should the BoJ deliver another rate hike in September, it would mark its third increase in nine months and the fastest pace of policy tightening since the collapse of Japan's asset bubble in 1989."
"However, it remains unclear how much appetite the government has for additional rate hikes beyond September or October."
"A more meaningful and sustained JPY recovery will likely require a stronger signal from the BoJ that policy normalisation can proceed at a faster pace. For now, intervention risks should help cap USD/JPY near 160, while the CHF remains the preferred funding currency for carry trades."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold attracts some follow-through selling for the second consecutive day on Friday.
- Receding Fed rate hike bets could help limit losses for the non-yielding yellow metal.
- Geopolitical risks could act as a tailwind for the safe-haven USD and cap the bullion.
Gold (XAU/USD) recovers slightly from the $4,300 neighborhood heading into the European session on Friday, though it remains in negative territory for the second straight day. Moreover, a mixed fundamental backdrop warrants some caution before positioning for an extension of the retracement slide from $4,450, or the highest since June 5, set the previous day.
Data released on Thursday showed that the US Producer Price Index (PPI) was unchanged in July, falling short of expectations for a 0.2% rise. Adding to this, the yearly rate decelerated from 5.5% in June to 4.7%, also coming in below the 4.9% estimate. This, along with the US Consumer Price Index (CPI) released on Wednesday, points to a slowdown in overall inflation and gives the US Federal Reserve (Fed) room to keep interest rates unchanged, which keeps US Dollar (USD) bulls on the defensive and offers some support to the non-yielding bullion.
Economists at DBS Group Research highlight that the latest US inflation print did little to shift the broader Dollar narrative, with "US CPI inflation came in very much in line with market expectations, not strong enough or weak enough to break the DXY Index out of its lower 99.4-100.1 range set after USD/JPY’s sell-off from the joint US-Japan interventions." According to DBS, the softer data backdrop has also fed directly into the policy outlook, as "the markets reduced the probability of a September Fed hike to 40% overnight from 72% at the end of July, driven by last Friday's negative nonfarm payrolls and slower CPI inflation readings."
Adding to this, comments from influential FOMC members forced traders to scale back expectations for an immediate policy tightening. Chicago Fed President Austan Goolsbee pointed out that recent price spikes are largely driven by temporary tariff and energy factors, favoring patience rather than aggressive monetary tightening. However, Cleveland Fed President Beth Hammack argued that progress on inflation is still insufficient, asserting that further interest rate increases may be needed to secure price stability.
Nevertheless, Fed funds futures indicate just over a 65% probability of a rate hike by year-end, down from nearly 85% a week earlier, though geopolitical uncertainties could support the safe-haven buck. Treasury Secretary Scott Bessent said that the US is going to apply measures that have never been seen on Iran. Meanwhile, a senior IRGC adviser Mohammad Reza Naqdi said that Tehran's strategy is to make any conflict so costly that future US administrations think twice before taking military action against Iran.
This comes on top of rising tensions over the Strait of Hormuz, which keeps the war-risk premium in play and supports the USD. President Donald Trump again claimed that the US has "total control" over the strategic waterway, while Iran pledged to keep the strait closed until all its demands are met. Moreover, the Iran-backed Houthis in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, and also claimed a drone strike on a Saudi Aramco refinery. This raises the risk of a broader regional conflict and favors USD bulls.
The aforementioned mixed fundamental backdrop, in turn, warrants some caution before placing aggressive directional bets on the Gold price. Nevertheless, the XAU/USD pair, for now, seems to have stalled the monthly upswing from the vicinity of the $4,000 psychological mark, though the downside potential seems limited. Traders now look forward to the US macro data – monthly Retail Sales and the Preliminary University of Michigan Consumer Sentiment Index for some impetus later during the North American session.
XAU/USD 4-hour chart
Technical Analysis
The precious metal holds above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, and a dense cluster of Fibonacci supports, suggesting the broader uptrend is still intact despite the latest pullback. However, momentum has softened, with the Moving Average Convergence Divergence (MACD) below zero and its signal line, and the Relative Strength Index near 42, hinting that upside impulses are waning.
Meanwhile, immediate support appears at the 38.2% Fibonacci retracement of the latest leg up from the August swing low, at $4,285. This is followed by deeper structural floors at the 50.0% retracement near $4,234 and the 61.8% level at $4,184, with the 200-period EMA reinforcing demand slightly below. On the topside, initial resistance is seen at the 23.6% retracement at $4,347, ahead of the cycle high anchor around $4,448.40, where a sustained break would reopen the path toward additional gains.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.10% | -0.14% | -0.15% | -0.08% | -0.27% | -0.05% | |
| EUR | 0.10% | 0.00% | -0.09% | -0.09% | 0.03% | -0.18% | 0.05% | |
| GBP | 0.10% | -0.00% | -0.06% | -0.08% | 0.04% | -0.16% | 0.06% | |
| JPY | 0.14% | 0.09% | 0.06% | 0.01% | 0.08% | -0.14% | 0.12% | |
| CAD | 0.15% | 0.09% | 0.08% | -0.01% | 0.07% | -0.12% | 0.11% | |
| AUD | 0.08% | -0.03% | -0.04% | -0.08% | -0.07% | -0.19% | 0.03% | |
| NZD | 0.27% | 0.18% | 0.16% | 0.14% | 0.12% | 0.19% | 0.25% | |
| CHF | 0.05% | -0.05% | -0.06% | -0.12% | -0.11% | -0.03% | -0.25% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Here is what you need to know on Friday, August 14:
The US Dollar (USD) struggles to stay resilient against its rivals on Thursday but manages to limit its losses as investors reassess the Federal Reserve's (Fed) policy outlook, while evaluating the developments in the Middle East. The European economic calendar will feature second-quarter Gross Domestic Product (GDP) growth data. In the second half of the day, July Retail Sales and the University of Michigan's preliminary Consumer Sentiment Index data from the United States (US) will be watched closely by market participants.
The data from the US showed on Thursday that annual producer inflation, as measured by the change in the Producer Price Index (PPI) softened to 4.7% in July from 5.5% in June. This print came in below the market expectation of 4.9%. According to the CME FedWatch Tool, the odds of a 25 basis points Fed rate hike in September currently stands about 33%, compared to nearly 50% a week ago. In turn, the USD Index stays in negative territory below 100.00 in the European session on Friday.
Fed hawkish rhetoric persists as August inflation data looms large
Analysts at Commerzbank argue that the upcoming US data will be pivotal for policy, noting that "the August inflation figures, which will be released shortly before the next Fed meeting, are now likely to be decisive." Against this backdrop, they highlight that Cleveland Fed President Beth Hammack is "working hard to cement her status as a hawk." Hammack "does not believe that inflation will subside on its own" and insists "the Fed must therefore back up its words with action." Moreover, Commerzbank underscores that, in her view, "a single interest rate hike would not be enough," reinforcing the message that parts of the Fed remain firmly committed to a tougher stance on inflation despite recent softer readings.
Meanwhile, US Treasury Secretary Scott Bessent noted on Thursday that Washington is going to apply measures that have "never been seen" on Iran, and US Secretary of Defense Pete Hegseth said that the US can sustain its blockade against Iran “indefinitely.” Following Thursday's choppyy action, crude Oil prices stretch higher early Friday, rising about 1% near $81.30.
Citing three sources familiar with the matter, Reuters reported on Friday that the Bank of Japan (BoJ) is set to raise interest rates as soon as September and is likely to hike more aggressively thereafter from the current pace of roughly twice a year. USD/JPY edges lower in the European morning and trades below 159.30.
Yen reaction muted even as BoJ tightening pace reaches historic clip
Analysts at OCBC highlight that, “despite the shift in expectations, the JPY's response has been muted,” even as markets increasingly price in another Bank of Japan move next month. They note that if the BoJ “deliver[s] another rate hike in September, it would mark its third increase in nine months and the fastest pace of policy tightening since the collapse of Japan's asset bubble in 1989.” However, OCBC cautions that “it remains unclear how much appetite the government has for additional rate hikes beyond September or October,” leaving investors uncertain about how far and how fast Japan’s policy normalisation can ultimately run.
Despite shifting expectations about a Fed rate increase in September, the uncertainty surrounding the situation in the Middle East made it difficult for Gold (XAU/USD) to build on its weekly gains. After closing in negative territory on Thursday, XAU/USD stays on the back foot and trades below $4,350 in the European session on Friday, down about 0.5% on the day.
After falling toward 1.1500 on Thursday, EUR/USD staged a rebound to close the day virtually unchanged. The pair holds its ground and trades marginally higher on the day, slightly below 1.1550, in the European morning. The Eurozone economy is foreacst to expand at an annual rate of 1% in the second quarter.
GBP/USD corrects higher and fluctuates at around 1.3500 early Friday, following two consecutive days of small losses.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Commerzbank’s Volkmar Baur and Tatha Ghose highlight that despite a “low-hire, low-fire” US labor market, the Dollar remains supported. Initial jobless claims and unemployment stay very low, while wage growth shows only tentative signs of slowing. The authors stress that any sustained moderation in wages and inflation will take time, delaying relief for the Federal Reserve and keeping the Dollar underpinned.
Labor market dynamics and USD
"At the same time, a look at the market movement in EUR/USD shows that last Friday’s jobs report had a stronger impact on the exchange rate than Wednesday’s inflation data. Admittedly, the surprise in the jobs report was also significantly greater than that in the inflation data, which, all in all, came in line with expectations. Nevertheless, it shows that, amid all the focus on inflation figures, we shouldn’t completely lose sight of the labor market."
"Yesterday’s figures on US initial jobless claims were once again at a very low level. With 209,000 initial claims, the 4-week moving average held below 200,000 - only for the fourth time in the last five years."
"While there have been minimal improvements in quits, layoffs, and hiring rates in recent months, all three rates remain at a low level compared to the unemployment rate. This means that, compared to the last 25 years, one would actually expect a more dynamic labor market with such a low unemployment rate - with more people quitting their jobs to find something better and more companies hiring new employees."
"One would think that such a lack of dynamism would be reflected in lower wage growth. However, this is not (yet) the case at the moment. This is because, when we look at the trend in average hourly earnings, we see that - compared to unemployment - they still present a very robust picture, with a most recent increase of 3.2%."
"All in all, it must be said that while there are initial signs that the sluggish momentum in the labor market is affecting wage growth, it will take a few more months to see whether this trend takes hold. Lower wages would certainly also have an impact on inflation and ease pressure on the Fed to raise interest rates. However, as mentioned, it will likely take some time for this to materialize. And until then, the US dollar is likely to remain supported."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP remains stalled near 0.8550 after bouncing up from lows near 0.8530.
- The Pound keeps struggling, weighed by Thursday's weak Industrial Production report.
- Rabobank analysts see BoE monetary policy and fiscal concerns weighing on the Pound in the mid-term.
The Euro (EUR) is trading practically flat against the British Pound (GBP) on Friday, holding moderate gains after bouncing from three-week lows on Thursday. The EUR/GBP pair, however, is struggling to find significant acceptance above 0.8550, and remains on track for a 0.2% weekly loss.
Eurozone data released on Friday revealed that German wholesale prices bounced 0.2% in July, following a 0.7 contraction in June, below the 0.4% increase forecasted by market analysts. The Year-on-year rate has accelerated to 5.3% from 4.9% in June. The impact on the Euro, however, has been negligible.
The Sterling retreated against its main peers on Thursday, as data released by the UK National Statistics Office revealed that the Gross Domestic Product (GDP) growth slowed in Q2, in line with market forecasts, and Industrial Production contracted unexpectedly in June amid a sharp drop in manufacturing output.
Looking ahead, Strategists at Rabobank see the Bank of England's (BoE) monetary policy as a hurdle for GBP rallies: “It is RaboResearch’s view that the BoE will likely keep interest rates on hold through to the end of the year.” Rabobank experts observe that “this could weigh on the Pound,” particularly as investors turn their attention to fiscal developments, as "headed into the October 28 UK budget, GBP could find itself on the back foot on fiscal concerns.”
Economic Indicator
Wholesale Price Index (MoM)
The wholesale price Index released by the Statistisches Bundesamt Deutschland shows value of sales made by wholesalers in Germany. A growing number in wholesales indicates increases in retail trade and consumption, that is seen as positive or bullish for the EUR, while a declining number indicates the weakened retail sectors, consumption, and the economy in Germany, that is seen as negative or bearish for the currency.
Read more.Last release: Fri Aug 14, 2026 06:00
Frequency: Monthly
Actual: 0.2%
Consensus: 0.4%
Previous: -0.7%
Source: Federal Statistics Office of Germany
Economic Indicator
Wholesale Price Index (YoY)
The wholesale price Index released by the Statistisches Bundesamt Deutschland shows value of sales made by wholesalers in Germany. A growing number in wholesales indicates increases in retail trade and consumption, that is seen as positive or bullish for the EUR, while a declining number indicates the weakened retail sectors, consumption, and the economy in Germany, that is seen as negative or bearish for the currency.
Read more.Last release: Fri Aug 14, 2026 06:00
Frequency: Monthly
Actual: 5.3%
Consensus: -
Previous: 4.9%
Source: Federal Statistics Office of Germany
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD is consolidating after a brief spike, with the pair expected to trade intraday in a slightly higher 1.1515–1.1550 range as the underlying tone firms. Over 1–3 weeks, they judge the Euro to be in a range-trading phase between 1.1480 and 1.1580, while a medium-term rebound needs a break above 1.1560/1.1565.
Euro consolidates inside defined ranges
"24-HOUR VIEW: Two days ago, EUR spiked to a high of 1.1562 and then pulled back sharply to close slightly lower at 1.1524. Yesterday, when EUR was at 1.1525, we stated that “further pullback is not ruled out, but given that downward momentum has not increased significantly, any decline is likely to be contained within a 1.1510/1.1545 range.” Our view turned out to be correct, as EUR dipped to 1.1510, rebounded to 1.1545 before settling at 1.1527 (+0.03%). Today, we continue to expect EUR to trade in a range, but the slightly firmer underlying tone suggests it is likely to trade within a higher range of 1.1515/1.1550."
"1-3 WEEKS VIEW: Our update from yesterday (13 Aug, spot at 1.1525) remains valid. As highlighted, EUR “appears to have entered a range-trading phase, and for the time being, we expect it to trade within a 1.1480/1.1580 range."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The Bank of Japan (BoJ) is set to raise interest rates as soon as September and is likely to hike more aggressively thereafter from the current pace of roughly twice a year, three sources familiar with its thinking told Reuters.
Such a move would reflect the Japanese central bank’s concerns over price pressures from the Middle East conflict, strong global AI demand and the Japanese Yen's weakness, which has persisted despite last month's rare US-Japan joint currency intervention.
One of the sources said, "An early rate hike has come into sight," indicating a strong chance the BoJ will raise rates at its next policy meeting on September 17 and 18.
The source stated, "The BoJ could also accelerate the pace of rate increases," a view echoed by another source.
Market reaction
At press time, the USD/JPY pair trades 0.04% lower at around 159.43.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- Silver falls as profit-taking, Fed policy expectations, and Middle East tensions weigh on investor sentiment.
- Market attention turns to upcoming US July Retail Sales data following soft inflation reports.
- CME FedWatch shows September Fed rate hike probability dropping from 40% to 34.8%.
Silver price (XAG/USD) extends its losses for the second consecutive day, trading around $63.50 per troy ounce during the Asian hours on Friday. Silver price falls as investors opted to take profits while weighing the Federal Reserve’s (Fed) monetary policy trajectory alongside ongoing geopolitical tensions in the Middle East.
Cooling inflation data further shaped market sentiment, as the Bureau of Labor Statistics reported that US wholesale prices for goods and services remained flat in July. This came in softer than the expected 0.2% growth and followed a revised 0.1% decline in June. Excluding the volatile food and energy sectors, core Producer Price Index (PPI) figures nudged up 0.2%, slightly below the consensus estimate of 0.3%. On a year-over-year basis, headline PPI rose 4.7% while core PPI increased 4.2%.
These softer inflation numbers have prompted market participants to recalibrate their expectations for Federal Reserve interest rate policy. According to the CME FedWatch Tool, the implied probability of a rate hike at the Fed’s September meeting dropped to 34.8%, down from 40% immediately following the PPI release. At the same time, diplomatic negotiations to reopen the Strait of Hormuz have stalled, leaving investors wary of a potential escalation that could spark higher energy costs and rekindle inflationary forces.
Silver draws strong CTA interest as prices test key trigger
According to TD Securities, "Silver stands out for near-term CTA flows," with the bank highlighting that "prices above $66.80/oz" are "likely to see further buying." Their models suggest that commodity trading advisers are "likely to add 3-4% of historic max length under all pricing scenarios into next week," underscoring robust systematic demand for the metal on sustained price strength.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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