Forex News
- USD/JPY stabilizes during the Asian session following the previous day’s modest losses.
- Japan’s fiscal concerns and the wide US-Japan rate gap keep JPY bulls on the defensive.
- Rising September Fed rate hike bets and geopolitical risks support the USD and the pair.
The USD/JPY pair holds steady below the 160.00 psychological mark during the Asian session on Tuesday and remains close to a one-month peak, which was retested the previous day.
Anxiety over Japan's massive national debt burden, surging long-term borrowing costs, and expansionary fiscal policies continue to undermine confidence in the Japanese Yen (JPY). Furthermore, the persistently wide interest rate gap between Japan and other major economies, including the US, keeps JPY bulls on the back foot, which, in turn, acts as a tailwind for the USD/JPY currency pair.
The US Dollar (USD), on the other hand, attracts fresh buyers following the previous day's pullback from an over two-week top amid hawkish US Federal Reserve (Fed) expectations and escalating US-Iran tensions. Traders ramped up bets for a rate hike by the US central bank in September following Fed Chair Kevin Warsh's comments at the Jackson Hole Symposium on Friday.
In fact, Warsh acknowledged that inflation is running hot and hinted on Friday that interest rates could need to move higher if more progress isn’t made on easing price pressures. Adding to this, inflation fears stemming from higher energy prices back the Fed's tightening bias, which, along with geopolitical uncertainties, continue to lend some support to the safe-haven Greenback.
In the latest developments surrounding the Middle East crisis, US forces struck two rocket launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, prompting an Iranian counterattack on American air bases in Jordan. US President Donald Trump threatened more strikes on Iran after the first exchange of direct attacks in a month, supporting crude oil prices and the USD.
The aforementioned fundamental backdrop seems tilted in favor of bulls, though fears of another joint intervention by Tokyo and Washington cap the upside for the USD/JPY pair. Traders now look to this week's important US macro releases, starting with the ISM Manufacturing PMI later today. The focus, however, will be on the US Nonfarm Payrolls (NFP) report on Friday.
USD/JPY 4-hour chart
Technical Analysis
The USD/JPY pair holds in a neutral near-term stance as it consolidates above the 100-period Simple Moving Average (SMA) at 159.19 on the 4-hour chart, which hints at an underlying bid. Spot prices, however, remain capped by the 200-period SMA at 160.26, keeping upside attempts in check while the pair fluctuates around the 50.0% Fibonacci retracement at 159.59.
Immediate resistance above the 200-period SMA is located at the 61.8% Fibo. at 160.62, while higher barriers emerge at 162.09 and 163.96. On the downside, initial support aligns with the 50.0% retracement at 159.59 and the 100-period SMA at 159.19, ahead of deeper Fibonacci supports at 158.56 and 157.28, with the broader structural floor seen near 155.21.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
China's RatingDog Manufacturing Purchasing Managers' Index (PMI) climbed to 51.5 in August from 50.9 in July the latest data published by RatingDog showed on Tuesday. The market forecast was for a 50.9 reading.
Market reaction to China’s RatingDog Manufacturing PMI
The China-proxy Australian Dollar (AUD) has little to no impact following China’s PMI data. At the press time, the AUD/USD pair is up 0.10% on the day to trade at 0.7173.
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.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 6.7809 compared to the previous day's fix of 6.7828 and 6.7170 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.
- USD/CAD struggles to lure buyers as rising crude oil prices continue to underpin the Loonie.
- A softer USD contributes to capping the upside, though Fed rate hike bets help limit losses.
- Traders now look to this week’s US data, starting with ISM Manufacturing PMI on Tuesday.
The USD/CAD pair is hovering around mid-1.3800s during the Asian session on Tuesday, though the lack of follow-through selling warrants caution before positioning for an extension of the previous day's retracement slide from an over two-week top.
A further escalation of tensions between the US and Iran acts as a tailwind for crude oil prices, underpinning the commodity-linked Loonie. Apart from this, a softer US Dollar (USD) turns out to be another factor exerting some pressure on the USD/CAD pair. That said, rising bets for a rate hike by the Federal Reserve (Fed) in September, along with geopolitical uncertainties, could limit deeper losses for the safe-haven Greenback.
Speaking at the annual symposium in Jackson Hole, Wyoming, Fed Chair Kevin Warsh acknowledged that inflation is running hot and hinted on Friday that interest rates could need to move higher if more progress isn’t made on easing price pressures. Traders were quick to react and are now pricing in around a 65% chance that the US central bank will raise borrowing costs at the upcoming September 15-16 policy meeting.
Meanwhile, the US forces on Sunday attacked two Iranian rocket launchers that were preparing to deploy sea mines in the Strait of Hormuz, prompting an Iranian counterattack on American air bases in Jordan. US President Donald Trump threatened more strikes on Iran after the first exchange of direct attacks in a month. This led to a further rise in oil prices, fueling inflation fears and bolstering hawkish Fed expectations.
The outlook, in turn, favors USD bulls, while a deepening US-Canada trade war could act as a headwind for the Canadian Dollar (CAD), backing the case for the emergence of some dip-buying around the USD/CAD pair. Traders now look to this week's key US macro data, scheduled at the start of a new month, starting with the ISM Manufacturing later today, though focus will remain on the US Nonfarm Payrolls (NFP) report on Friday.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair’s failure ahead of the 100-day Simple Moving Average (SMA) at 1.3917 suggests that rallies remain capped, keeping focus on the downside. A sustained break above this barrier would be needed to ease the prevailing bearish pressure and open the way for a more constructive recovery phase. Until then, spot prices seem vulnerable to decline further, with traders likely to watch for fresh lows to define the next demand area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- WTI advances due to resumed US-Iran strikes and threats to Kharg Island, sparking intense energy supply concerns.
- A supertanker mine strike highlights severe operational risks in the Strait of Hormuz.
- Ukrainian strikes on Russian refineries further tighten fuel supplies, pushing margins to record highs.
West Texas Intermediate (WTI) oil price gains ground for the second successive day, trading around $85.60 per barrel during the Asian hours on Tuesday. Crude oil prices are climbing following a fresh wave of hostilities in the Middle East that has renewed fears over potential disruptions to regional energy flows.
The escalation broke a month-long lull as US forces targeted Iranian rocket launchers on Larak Island, prompting Tehran to strike targets in the UAE and Jordan. Escalating the rhetoric, President Donald Trump warned of potential military action against Kharg Island, which serves as Iran's primary oil export hub.
Maritime risks in the region were highlighted when a supertanker caught fire after striking two naval mines in the Strait of Hormuz. Despite these severe hazards, crude shipments through the critical choke point have not ground to a complete halt, with major Gulf producers, including Saudi Arabia, the UAE, Kuwait, and Iraq, continuing to ship partial volumes.
Compounding the pressure on global energy markets, drone and missile strikes on Russian refineries have squeezed overall refining capacity. This reduction in fuel processing capabilities, combined with Middle Eastern supply anxieties, has driven refined-product margins to new record highs.
US–Venezuela oil deal claims add to energy market uncertainty
BNY’s Wee Khoon Chong highlights that President Trump has injected a fresh source of uncertainty into energy markets by announcing that the US has struck a deal with Venezuela “to secure majority control of more than 65 billion barrels of oil reserves.” Chong notes that Trump has framed the agreement as coming at “no cost” to US taxpayers and has claimed it would “strengthen bilateral ties while helping to lower gasoline prices.” However, Chong points out that the lack of detail on the legal terms and implementation, set against already elevated energy costs and tighter global crude flows, leaves investors cautious about how and when any purported benefits might feed through to the market.
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.
- EUR/USD posts modest gains near 1.1620 in Tuesday’s early Asian session.
- Germany’s CPI inflation rose to 2.9% YoY in August.
- Traders raise bets on a rate hike after Fed's Warsh remarks on curbing inflationary pressure.
The EUR/USD pair trades with mild gains around 1.1620 during the early Asian session on Tuesday. The US Dollar (USD) strengthens against the Euro (EUR) despite a hawkish Jackson Hole speech from Federal Reserve (Fed) Chair Kevin Warsh. Traders will take more cues from the preliminary reading of the Eurozone August Harmonized Index of Consumer Prices (HICP), which is due later on Tuesday.
Data released by the German statistics office Destatis on Monday showed that the country’s Consumer Price Index (CPI) inflation climbed to 2.9% YoY in August from 2.8% in July. This figure came in line with the market consensus and registered a third consecutive monthly increase. On a monthly basis, the CPI rose 0.2% in August, compared to 0.8% in the previous reading, softer than the 0.3% expected.
The European Central Bank (ECB) policymakers have lifted borrowing costs once and are likely to hike again at the upcoming policy meeting on September 10. Traders are betting on monetary policy being tightened further still next year.
Across the pond, hawkish remarks from the US central bank might underpin the Greenback and cap the upside for the major pair. Traders increased their bets on a September rate hike after Warsh said the Fed will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target.
Warsh clarifies policy stance after July FOMC ambiguity
Strategists at Scotiabank note that Kevin Warsh used his Jackson Hole appearance to recalibrate market perceptions of his policy stance. In their words, Warsh “used his Jackson Hole comments to correct the impression of evasiveness and opacity that characterized his remarks following the July FOMC,” helping to address concerns over communication and restore a clearer policy signal ahead of the September FOMC.
Technical Analysis: EUR/USD
In the daily chart, EUR/USD trades at 1.1622. The pair holds a constructive bias as spot advances above the 20-period Bollinger middle band at 1.1600 and the 100-day simple moving average (SMA) near 1.1570, suggesting a supportive underlying structure after the recent recovery from the mid-1.15s. Momentum is positive, with the Relative Strength Index (14) around 57, which hints at persistent buying interest without yet reaching overbought conditions.
On the topside, immediate resistance aligns with the upper Bollinger band at roughly 1.1713, where gains could start to face profit-taking. On the downside, initial support is located at the Bollinger middle band at 1.1600, followed by the 100-day SMA around 1.1570; a deeper pullback would expose the lower Bollinger band near 1.1488 as a stronger demand area.
(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.
The United Kingdom Maritime Trade Operations (UKMTO) said on Monday that a tanker has reported being struck by three projectiles while sailing out of the Strait of Hormuz, Reuters reported.
The incident was reported 17 nautical miles east of Khasab in Oman. No casualties or environmental damage reported.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 3.22% on the day at $85.44.
(This story was corrected on September 1 at 00:50 to say, the United Kingdom Maritime Trade Operations (UKMTO) said on Monday that a tanker has reported being struck by three projectiles while sailing out of the Strait of Hormuz, not Tuesday.)
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.
- Gold price drifts lower to around $4,445 in Tuesday’s early Asian session.
- Renewed Middle East tensions have fueled inflation concerns and bets the Fed could raise interest rates in September.
- Traders are pricing in nearly a 65.4% chance of a September hike after Fed’s Warsh vowed to fight inflation.
Gold price (XAU/USD) declines to near $4,445 during the early Asian trading hours on Tuesday. The precious metal loses momentum as ongoing tensions in the Middle East stoked concerns about inflationary pressures that could make the Federal Reserve hike interest rates.
US President Donald Trump on Monday threatened to forcefully strike Iran after Washington and Tehran exchanged fire for the first time in a month. Meanwhile, Iran's Revolutionary Guard Corps (IRGC) said it targeted US military bases in the two Middle Eastern countries in response to the first US strikes on Iran in weeks. The US military announced an attack Sunday on what it said were Iranian rocket launchers on Larak Island, in the Strait of Hormuz.
Traders assess rising bets of a Fed rate hike following hawkish comments from Chair Kevin Warsh as a surge in oil prices further added to inflation concerns. At the Fed’s annual Jackson Hole symposium, Warsh reiterated the central bank’s commitment to its inflation target and indicated policymakers were not yet confident price pressures were easing sufficiently.
“The move toward a more hawkish stance was surprising to many investors, so some short-term headwinds on gold should continue,” said GAMA Asset Management Global Macro Portfolio Manager Rajeev De Mello.
Traders are now pricing in more than 65.4% odds of a rate hike at the Fed’s September meeting, up from around 39.9% before the speech, according to the CME FedWatch tool.
Gold eases as markets reassess Fed path after Jackson Hole
According to TD Securities, Gold “settles lower near $4,600/oz as markets weigh Fed monetary policy path, following Chair Warsh's Jackson Hole remarks,” with the move reflecting a reassessment of the rate outlook in the wake of the latest Fed communication.
Warsh flags unfinished inflation fight, keeps Dollar bulls alert
Fed Chair Warsh delivered a notably more hawkish-leaning tone, with the FXS Speechtracker score at 7.4 versus a 6.5 historical average, underscoring heightened concern on price stability despite solid growth and stable labor markets. The insistence that the Fed must be confident underlying inflation is moving to objective or “we have work to do,” combined with comments that financial conditions are not restrictive and credit markets show few signs of policy restraint, signals openness to further tightening if inflation trends fail to improve meaningfully. Warsh’s emphasis that the 2% PCE target is “firm and fixed” and that the predominant focus should be on prices supports a Dollar-positive bias, even as near-term patience from the July meeting is acknowledged.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated 129.70, confirming that the broader policy narrative remains firmly in hawkish territory according to the FXS Speechtracker. The lack of index movement suggests the speech reinforced, rather than shifted, existing expectations that the Fed will prioritize delivering price stability, a backdrop that should continue to underpin the Dollar against lower-yielding peers.
Technical Analysis: Gold price
In the daily chart, XAU/USD holds a constructive near-term bias as price remains above the 100-day Moving Average (MA) at $4,370.48 and the Bollinger Bands’ 20-day simple moving average (SMA) center line at $4,430.23, suggesting the broader uptrend is still supported. The Relative Strength Index (RSI) at 54 keeps momentum in neutral-to-positive territory, hinting that bullish pressure persists but without overstretched conditions.
On the topside, the Bollinger Bands’ upper boundary near $4,723.68 acts as the next significant resistance, where buyers could start to hesitate. On the downside, immediate support is located around the $4,430 area at the 20-day SMA, followed by the 100-day MA at $4,370.48, while a deeper pullback would likely be cushioned by the lower Bollinger band near $4,136.78.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- AUD/USD trades flat as Oil spike lifts Treasury yields.
- Warsh’s hawkish tone keeps Fed tightening risks in focus.
- Australia PMIs, permits and GDP data drive next catalysts.
The Aussie Dollar traded sideways on Monday, unchanged at 0.7165, as a jump in energy prices sparked by the Middle East conflict pushed US Treasury yields higher, but not the Greenback. Meanwhile, the AUD/USD failed to gain traction, ending the session flat as market participants await a busy US economic calendar this week.
Aussie steadies as Middle East tensions lift yields before key US data
As mentioned, oil prices rose after the US and Iran exchanged strikes, indicating that a swift resolution is unlikely in the short term. At the same time, US President Trump promised to retaliate, saying that Iran's strikes would be limited, confirming rumours from a story revealed earlier by Axios.
Last week, hawkish comments by the Fed Chair, Kevin Warsh, weighed on the Aussie Dollar, proposing the Greenback’s recovery. Nevertheless, Monday’s economic docket was absent, with just the release of the Dallas Fed manufacturing survey, which exceeded estimates in August.
In Australia, the economic docket will feature the release of S&P Global Manufacturing PMI for August, with the previous reading being 52.0. If the numbers exceed the latter, this would indicate that the economy is growing in a sustained trend.
Besides this, the schedule will feature Building Permits for July, ahead of the release of Gross Domestic Product (GDP) figures on September 2.
Australia’s Trimmed mean CPI revealed on August 26 was 3.6% YoY, an indication that persistent core readings could increase the chances for a rate hike by the Reserve Bank of Australia (RBA).
The RBA’s last meeting minutes showed the board kept a hawkish backstop: members debated a 25bp move vs holding, and several judged upside inflation risks could crystallise.
AUD/USD Price Forecast
In the daily chart, AUD/USD trades at 0.7166, maintaining a bullish near-term bias as spot holds above the latest simple moving average triple value around 0.7016 and a series of rising trend-line supports drawn from the 0.6673–0.6897 region. Momentum is constructive, with the 14-period Relative Strength Index hovering in the low-60s, which reinforces buying pressure but stops short of overbought territory.
On the topside, initial resistance is seen at the horizontal barrier near 0.7198, ahead of the longer-term descending trend line originating around 0.8015. On the downside, a first layer of support is provided by the rising trend structure starting near 0.6897, which converges with the supportive simple moving averages around 0.7016; a deeper pullback would expose additional trend-line floors at roughly 0.6865, 0.6833 and 0.6673.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.27% | -0.07% | -0.19% | -0.35% | -0.01% | -0.07% | -0.12% | |
| EUR | 0.27% | 0.18% | 0.07% | -0.08% | 0.22% | 0.23% | 0.15% | |
| GBP | 0.07% | -0.18% | -0.09% | -0.27% | 0.02% | 0.02% | -0.02% | |
| JPY | 0.19% | -0.07% | 0.09% | -0.18% | 0.16% | 0.14% | 0.09% | |
| CAD | 0.35% | 0.08% | 0.27% | 0.18% | 0.35% | 0.33% | 0.25% | |
| AUD | 0.01% | -0.22% | -0.02% | -0.16% | -0.35% | -0.01% | -0.04% | |
| NZD | 0.07% | -0.23% | -0.02% | -0.14% | -0.33% | 0.01% | -0.05% | |
| CHF | 0.12% | -0.15% | 0.02% | -0.09% | -0.25% | 0.04% | 0.05% |
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).
- GBP/USD holds near 1.3550, more than a cent beneath the August high.
- BoE Bank Rate at 3.75%, with three of nine members voting to hike.
- September Fed hike pricing near 65%, up from roughly 35% on Thursday.
GBP/USD trades near 1.3550 on Monday, a fraction higher on the session after three consecutive declines took the pair more than a cent off the six-month high just short of 1.3700. Price still sits well clear of a 50-day Exponential Moving Average (EMA) a shade beneath 1.3500 and a 200-day near 1.3400. The daily Stochastic Relative Strength Index (Stoch RSI) has rolled over from above 90 and reads near 82.
The slide halted on an empty calendar, not on a bid
Monday delivered nothing from the United Kingdom and nothing scheduled from the United States, and the pair duly did nothing, ranging inside thirty-five pips and finding buyers only where sellers had run out. That is worth separating from a genuine reversal. A currency that stops going down on a day with no catalyst has not found support so much as found a gap in the fixture list.
What did happen on Monday was fought in the Gulf. American forces struck Iranian rocket launchers on Larak Island on Sunday, Tehran answered against US bases in Jordan, and Crude Oil rose more than 2% with longer-dated Treasury yields following. For Sterling that is a second-order input, though it is an unhelpful one for a country whose July Consumer Price Index (CPI) inflation is already running at 2.9%.
Three dissenters and nothing to show for them
The Bank of England (BoE) held Bank Rate at 3.75% on July 30 by a vote of six to three, with the three preferring 4.00% and the hawkish bloc growing by one. The accompanying central projection has inflation peaking around 3.2% in the fourth quarter. On paper that is a hawkish setup with a live minority attached to it. It also came with the last full forecast round before November, so the September meeting arrives with no new projections for that minority to lean on.
It has been in place for a month and the September 17 meeting is still priced for a hold. Sterling's August advance was not built on any of it. The rally ran while the Dollar had no story of its own, and the moment the Dollar acquired one it turned around, which tells you which side of the pair was doing the work.
Sterling has spent most of the summer as a passenger dressed up as a hawk, and the costume comes off whenever the Dollar has something of its own to say. The three dissents are real and the inflation problem behind them is real, but neither has been the marginal price-setter in this pair since the spring.
The Dollar's leg moved in a single afternoon
Friday's Jackson Hole keynote from the Federal Reserve chair reset September without a data point behind it. Aggregated futures probabilities now put an increase at the September 16 decision near 65%, October at 92%, and December close to evenly split between one increase and two. The July 29 vote had already gone nine to three with three dissenters wanting a hike, so the committee had the votes and was short only the framing.
Both currencies now carry a three-vote hawkish minority. Only one of them is attached to a meeting the market expects to deliver. The Pound's dissenters have had a month to be priced and have not shifted the September expectation an inch, while the Dollar's moved roughly thirty points of probability in an afternoon once the chair endorsed them. That asymmetry, not the fiscal picture and not the inflation gap, is what is pulling this pair lower.
Tuesday belongs entirely to the other currency
Nothing lands from the United Kingdom until the Monetary Policy Report hearings on Thursday, where the committee answers questions rather than reads a statement, and the Governor's speech at 08:50 GMT on Friday, less than four hours before August payrolls. Sterling gets one day to author a move and then hands itself straight back.
The American docket restarts on Tuesday at 14:00 GMT with the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) against a 55.2 consensus and 55.6 prior, prices paid at 72 against 71.1, and Job Openings and Labor Turnover Survey (JOLTS) openings at 7.3 million. Private payrolls follow on Wednesday at 47K, jobless claims and ISM Services on Thursday, and Friday brings Nonfarm Payrolls at a 58K consensus against a 23K contraction, with unemployment at 4.1% and average hourly earnings at 0.3% MoM.
Levels
Resistance: 1.3600 is the level the pair lost and the first line back, with the August high just short of 1.3700 above it and 1.3750 beyond that on a break.
Support: 1.3500 is the shelf that matters and has the 50-day EMA sitting immediately beneath it, which makes a clean break through the round number expensive to reverse. Below that cluster, 1.3450 and the 200-day near 1.3400 are the next marks.
Bias: Bearish. A lower high, an oscillator unwinding from above 90, and a week where every scheduled catalyst before Thursday belongs to the Dollar all point the same way, and 1.3500 is the obvious destination. Invalidation on a daily close above 1.3600.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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