Forex News

OCBC strategists Sim Moh Siong and Christopher Wong have recalibrated Asian FX forecasts slightly firmer against the US Dollar (USD), with more notable upgrades for KRW and MYR. They note stronger Korean domestic fundamentals, improved exporter flows and reduced capital outflow concerns, while Malaysia benefits from resilient growth, supportive external balances, fading political noise and earlier measures to encourage FX inflows.

Differentiated gains across Asian currencies

"Asian FX forecasts were calibrated modestly firmer vs USD, reflecting developments over recent weeks. Revisions are more notable for KRW, on firmer domestic/flow dynamics, and MYR, where resilient fundamentals, supportive external balances and fading political noise have improved the backdrop."

"Revisions to Asian FX forecasts. We have recalibrated some of our Asian FX forecasts to reflect a slightly firmer profile against the USD. The revisions incorporated recent market developments and shifts in underlying FX drivers over the past few weeks."

"More broadly, we continue to expect a differentiated path across Asian currencies rather than a uniform trend, with the extent and pace of gains likely to remain dependent on country-specific fundamentals, monetary policies, fund flows and external developments including shifts in yields, oil price movements."

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

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note that USD/SGD has retreated sharply after last week’s spike, but downside momentum remains limited. The pair is expected to stay within a broader 1.2680–1.2780 band in coming weeks, with intraday pullbacks likely holding above 1.2695 and resistance at 1.2725/1.2735. The S$NEER remains elevated, implying a 1.2676–1.2740 trading range.

Dollar-Singapore range widens on volatility

"24-HOUR VIEW: Following last Friday’s sharp rise to 1.2754, we highlighted the following yesterday: “While the rapid rise has scope to extend, overbought conditions suggest any advance could be contained within a range of 1.2725/1.2765. Even if USD were to break above 1.2765, the major resistance at 1.2780 is unlikely to come into view.” Our assessments turned out to be incorrect, as USD staged a surprisingly sharp pullback to 1.2710. This time around, the pullback has scope to extend, but given that there has been no clear increase in downward momentum, any decline is unlikely to break below 1.2695. Resistance is at 1.2725, followed by 1.2735."

"1-3 WEEKS VIEW: After maintaining a negative USD view for about a month, we indicated yesterday (31 Aug, spot at 1.2750) that “we are revising our view from negative to neutral, and from here, we expect USD to trade in a range between 1.2705 and 1.2780.” We did not expect USD to retreat sharply to a low of 1.2710. Despite the sharp retreat, USD remains neutral for now, as there has been no clear increase in downward momentum to suggest a resumption of the recent weakness. However, the increase in volatility points to wider range-trading between 1.2680 and 1.2780."

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

• USD/MXN steadies near 17.00 as US-Iran strikes sour sentiment.
• Solid ISM activity keeps Fed rate-hike expectations supported.
• Banxico survey sees lower inflation and USD/MXN at 17.50.

The Mexican Peso (MXN) erases some of its earlier gains against the US Dollar (USD) on Tuesday as the US and Iran launched successive strikes against each other, souring risk appetite and weighing on the emerging market currency. The USD/MXN pair trades at 16.99, virtually unchanged.

USD/MXN stalls as risk appetite fades before US jobs data

Geopolitics are driving price action in the financial markets. The White House ordered attacks near the shores of the Strait of Hormuz, aimed at diminishing Iran’s capabilities to disrupt sailing near the Strait. Iran retaliated as Fars reported the launching of retaliatory attacks against US bases and interests.

This pushed the Greenback higher, as measured by the US Dollar Index (DXY). The DXY, which measures the buck’s performance against six currencies, is up 0.27% at 99.68.

Data from the US suggested the Federal Reserve (Fed) could raise rates, as the labor market remains solid. Business activity in the manufacturing sector, although cooling, remains solid, according to the ISM report.

The ISM Manufacturing PMI in August continued in expansion territory, down from 55.6 to 54.6, but missing forecasts of 55.2. The JOLTS job openings survey showed that hiring was weaker than the forecast of 7.3 million, at 7.217 million.

Ahead, the US economic calendar includes the Fed’s Beige Book, jobs data, the ISM Services PMI for August, and the Nonfarm Payrolls report on Friday.

In Mexico, the schedule was light as S&P Global released the August Manufacturing PMI, which contracted from 51.3 in July to 49.8. Besides this, traders are eyeing the August Consumer Confidence on Thursday.

The Bank of Mexico (Banxico) released its survey of private economists. The poll showed that most analysts trimmed their 2026 inflation projection from 4% to 3.90%, and their 2027 projection to 3.84%. Underlying measures of inflation are expected to drop from 4% to 3.99% by the end of the year, and for 2027 are expected to dip from 3.86% to 3.80%.

The survey showed that the economy is expected to grow by 1.30% in 2026 and 1.80% in 2027. The USD/MXN exchange rate is projected to end at 17.50 by the end of the current year, and at 18.05 by the end of 2027.

USD/MXN Price Forecast: Technical outlook 

In the daily chart, USD/MXN trades at 17.0000, retaining a bearish tone as spot holds below the triple simple moving average cluster around 17.2893 and the shorter-term descending trend-line barrier near 17.3217. Price location under these overhead levels suggests rallies remain capped, while the Relative Strength Index (14) at 38.9 stays below neutral, hinting at weak but not extreme downside momentum after the recent bounce off late-August lows.

On the topside, initial resistance is seen at the downtrend line coming from 18.1651, now projecting around 17.3217, with the grouped 50/100/200 simple moving averages clustered near 17.2893 reinforcing this supply zone. On the downside, there is no nearby technical floor until the longer-term support reference at the prior trend-line break around 15.4181, leaving the pair vulnerable to further declines should sellers push decisively away from the 17.00 handle.

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

Standard Chartered strategists Anubhuti Sahay and Saurav Anand revise their FY27 Gross Domestic Product (GDP) growth forecast to 7.2% from 6.6% following a robust Q1-FY27 print and strong high-frequency indicators. They expect momentum to stay firm into the festival season, with Q2-FY27 GDP at 7.4% and H2-FY27 at 6.7%, despite headwinds from El Niño, higher inflation and fading GST tailwinds.

Growth forecasts lifted despite risks

"We revise our FY27 (year ending March 2027) GDP growth forecast to 7.2% from 6.6%. We have previously highlighted upside risks amid reasonably strong economic activity despite the oil supply and price shock."

"The revision reflects stronger-than-expected Q1-FY27 (quarter ended June 2026) GDP growth of 7.8%, versus consensus – including us – of 7.3%; continued momentum in July, as indicated by our composite economic indicator; and the likelihood that activity and sentiment remain supportive into the festival season."

"Given the strength of high-frequency indicators so far, we now expect Q2-FY27 GDP growth of 7.4%, versus 6.6% previously. "

"We still expect growth to slow in H2-FY27, reflecting the adverse impact of El Niño on agricultural output and rural demand, higher inflation, and fading tailwinds from GST cuts delivered from September 2025. However, momentum should be stronger than previously expected."

"We now forecast H2-FY27 GDP growth of 6.7%, versus 6.5% previously."

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

• Gold plunges as US-Iran strikes send Oil and yields higher.
• WTI nears $90 as Hormuz escalation revives inflation fears.
• Warsh remarks and Fed hike bets deepen bullion pressure.

Gold (XAU/USD) price collapses over 2.30% on Tuesday as the Middle East conflict escalates, with the US and Iran exchanging strikes, while US economic data was mixed but moved to the back seat amid geopolitical tensions. At the time of writing, XAU/USD trades at $4,342 after reaching a high of $4,461.

XAU/USD slides as Hormuz escalation fuels Oil, yields and Fed risks

Recently, newswires reported explosions in Southern Iran, while US President Donald Trump confirmed that the US Air Force launched strikes aimed at trimming Tehran’s capabilities to launch missiles and to add sea mines to the Strait of Hormuz, which, according to Trump, “currently has no mines (They have been completely removed or detonated!).“

This pushed US Treasury yields higher, particularly the 10-year benchmark note, which rose nearly four basis points to 4.792%. This is due to the jump in Oil prices, as West Texas Intermediate hit a high of the day near $90.00 per barrel and currently sits with gains of over 4.20%.

Last week, bullion prices edged lower following hawkish remarks by Federal Reserve (Fed) Chair Kevin Warsh at his Jackson Hole speech, in which he reassured that if inflation remains stubbornly high, then the central bank has “work to do.”

That statement triggered a U-turn on money markets. Before Warsh’s speech, the odds for a rate hike at the September meeting were below 40%. At the time of writing, Prime Terminal data indicate a 71% chance of an interest rate increase and a 29% chance of rates remaining unchanged.

Earlier, US data showed that business activity in the manufacturing sector cooled, as the ISM Manufacturing PMI in August was 54.6, down from 55.6 in July and below estimates of 55.2.  Other data included the Job Openings and Labor Turnover Survey (JOLTS) report for July, which showed steady hiring, with vacancies increasing to 7.217 million, below forecasts of 7.3 million.

Ahead, the US economic docket will feature the release of the Fed’s Beige Book, jobs data, the ISM Services PMI for August, followed by the Nonfarm Payrolls report on Friday.

XAU/USD technical outlook: Gold sinks below 100-day SMA, eyes on $4,300

From a technical standpoint, the escalation of the US-Iran conflict accelerated Gold’s downtrend. On its way down, XAU/USD breached key support levels, including the $4,400 figure and the 100-day Simple Moving Average (SMA) at $4,365, exacerbating a breakout below $4,350.

Of note, the Relative Strength Index (RSI), which was bullish, shifted bearish amid a vertical drop, indicating that sellers are gaining momentum.

For a bearish continuation, bullion must achieve a daily close below $4,350. Below is the low of the day (LOD) at $4,326, followed by the $4,300 mark. Once hurdled, the next area of interest is the 50-day SMA at $4,215.

On the other hand, Gold could shift to neutral if the yellow metal clears the 100-day SMA at $4,365, which would open the path to reclaiming $4,400.

Rabobank strategists highlight growing pressure on China’s trade model as US-led restrictions target links with Iran and Venezuela. They note China’s large trade surplus and weak domestic demand, with mixed Purchasing Managers' Index (PMI) signals suggesting either an exacerbated exportable surplus or mounting risks to the official growth target. Policy-driven barriers increasingly threaten China’s ability to export its way out of slowdown.

Export surplus and policy headwinds

"Combined with the US’s systematic shutting down of China’s low-cost energy flows from Iran and Venezuela, the promulgation of barriers to entry for Chinese goods is starting to look like death by a thousand cuts for China’s economy. Bessent yesterday pointed to China’s trade surplus equivalent to 1% of global GDP, saying that China is trying to export its way out of a problem of weak domestic demand. Official PMI figures released yesterday showed a slight improvement in China’s manufacturing sector but further deterioration in non-manufacturing, and both sectors remained below the threshold between contraction and expansion."

"Unofficial figures released today showed manufacturing expanding and at a faster rate than anticipated by surveyed economists. If that is a true reflection of what is going on, China’s problem with weak domestic demand and a large exportable surplus that needs to be soaked up by demand elsewhere is only exacerbated. If it is not a true reflection, even the export engine is seeing the walls closing in and the official growth target is in serious question."

"Even without US pressure, the realisation seems to be dawning that Ricardian comparative advantage isn’t actually a utility-maximising strategy when not everyone plays by the rules. Ursula von der Leyen recently said that if trade negotiations do not materially reduce the EU’s record trade deficit with China, the former will need to solve the problem via regulatory tools, including its famed ‘trade bazooka’ anti-coercion instrument. There are no free traders in a foxhole."

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

National Bank of Canada (NBC) strategists note that global equities, including the MSCI ACWI, remain on track for another positive quarter, helped by an August rebound. However, they stress that strained traffic in the Strait of Hormuz, depleting Oil inventories, surging refining margins and generational-high government bond yields leave the equity outlook vulnerable to any renewed inflation shock.

Energy, inflation and bond yield risks

"Global equities continue to advance, but the path remains fragile. The MSCI ACWI is on track for another positive quarter, yet the Strait of Hormuz remains far from normalized, energy inventories are being depleted and supply-chain pressures are building. With long-term bond yields already near generational highs, another inflation shock could prove particularly challenging for equities."

"We continue to view this positive trend as fragile. In that sense, the market backdrop bears some resemblance to Homer’s Odyssey, brought back into the popular imagination by this summer’s box-office hit: the journey may be moving forward, but there are still plenty of hazards along the way. For investors, one of the most immediate remains the global energy market."

"The energy price risk is particularly important given the length of the conflict. It has now been six months since the conflict began, and inventories of crude oil and liquid fuels are getting depleted, which could ultimately pressure up oil prices."

"As a result, if higher energy prices were to slow the normalization of inflation, markets could further scale back expectations for monetary easing, keeping long-term yields elevated or pushing them even higher."

"In the current government bond yield environment, the potential of higher/more persistent inflation is a risk for equities. Thirty-year government bond yields are already at generational highs, reflecting not only lingering inflation concerns but also large fiscal deficits, rising public debt and heavy sovereign issuance across several major economies—all of which are contributing to a rising term premium, or the additional compensation investors demand for holding longer-dated bonds."

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

• US10Y trades near 4.79%, its highest level since January 2025.
• The two-year is moving faster than the 10-year, up nearly five basis points.
• No cut priced at any meeting through the end of 2027.

The 10-year Treasury yield trades near 4.79%, roughly four basis points higher and at its highest level since January 2025, in a fifth consecutive session of selling. The two-year moved further still, adding closer to five basis points to trade near 4.39%, and it did so as American forces began striking Islamic Revolutionary Guard Corps (IRGC) targets inside Iran. An announced military escalation would ordinarily buy duration a bid, and this one produced the opposite.

The front end is doing the work

The shape of Tuesday's move matters more than its size. The two-year yield is up about 1.06% against 0.80% at the benchmark, and it has been the faster mover through the entire repricing, climbing from near 3.35% at the March low to within a few basis points of 4.40%. Front-end leadership is not what a geopolitical risk premium looks like.

A market genuinely buying war risk bids duration and steepens the curve on term premium. This one sold the two-year hardest, which is a statement about the September 16 meeting rather than about the Strait of Hormuz. The strait still matters, but it reaches the curve through the price of a barrel and therefore through the committee's inflation problem, not through any flight to safety.

The buyback has round-tripped

The 30-year sits back near 5.28%, roughly where it was before the Treasury Department doubled the size of its long-dated buyback operation in August, lifting the maximum from $2 billion to at least $4 billion for a programme running through November. That announcement initially pulled the yield down to 5.19%. All of it has been given back inside a fortnight.

Federal debt passed $40 trillion two weeks ago and the long end is being asked to absorb what that implies for issuance. A buyback is a liquidity instrument, and the round trip is the market's verdict on whether liquidity was ever the constraint. The problem is global rather than American: Japan's 10-year touched 3% for the first time since 1996 on Tuesday, and French and German long ends extended to multi-year highs alongside it.

A front end pricing a floor, not a cycle

Futures put a hike at the September 16 meeting near 68%, up from roughly 35% before the Jackson Hole keynote, and give the October 28 meeting a 95% probability of a target range at 3.75% to 4.00% or higher. December splits close to evenly on a second move, and the higher range is 81% priced by the January 27 meeting.

What the strip does beyond that is the part the two-year is actually trading. From December onward the current 3.50% to 3.75% range carries no probability at all, and every 2027 meeting on the board prices a floor of 4.00% to 4.25% or above. This is not a curve discounting a short defensive cycle with an exit. It is discounting a level.

The commentary is pulling the same way. A voting Federal Reserve governor said Tuesday morning that the committee should act decisively to raise rates if inflation does not appear to be moderating sufficiently, and pointed at the September 15-16 meeting. The Institute for Supply Management (ISM) manufacturing survey released the same morning made his case for him, with the headline missing at 54.6 against a 55.2 consensus while the prices paid index printed 71.1 for a second month.

The numbers that carry the week

Private payrolls land Wednesday at 12:15 GMT with 48K forecast against 44K, followed by the Beige Book at 18:00 GMT. The ISM services Purchasing Managers Index (PMI) arrives Thursday at 14:00 GMT with a 54.3 forecast against 54.1, and its own prices paid line was last at 70.3.

Friday's August employment report is forecast at 58K after a 23K contraction, with the unemployment rate held at 4.1% and average hourly earnings accelerating to 0.3% MoM from 0.1% against 3% YoY from 3.2%. Two more inflation readings, the Consumer Price Index (CPI) and the Producer Price Index (PPI), land the following week ahead of the vote. For a front end priced at 68%, the services price line and those two prints carry more weight than the payroll number.

Levels to watch

Resistance: The session high just short of 4.80% is the immediate line on the 10-year, with the January 2025 peak near 4.81% directly above it and nothing structural between there and 5.00%. The two-year faces 4.40% and then the 4.50% area.

Support: The 10-year holds above the session low near 4.75%, with 4.70% beneath it and the August range floor near 4.60% the level that would end the sequence. The two-year has 4.35% and then 4.25% under it.

Bias: Higher. The 10-year takes out the January 2025 peak and the two-year clears 4.50% while the September vote stays live, with a daily close back beneath 4.70% on the benchmark the only thing that argues otherwise. Both daily Stochastic Relative Strength Index (Stoch RSI) readings sit mid-range, near 47 on the two-year and 49 on the benchmark, so nothing here is stretched.

US Treasury yields, 2-year and 10-year

• The US Dollar Index rebounds on Tuesday, erasing Monday's losses as hawkish Fed bets and rising yields drive demand.
• Fresh US-Iran military strikes lift Oil prices and add a safe-haven bid to the Greenback, while intensifying inflation concerns.
• Traders await US employment data later this week.

The US Dollar Index (DXY) edges higher on Tuesday, reversing all of the previous day’s losses as hawkish Federal Reserve (Fed) expectations and rising US Treasury yields provide a strong tailwind. At the same time, fresh fighting between the United States (US) and Iran drives some safe-haven flows toward the Greenback. At the time of writing, DXY trades around 99.71, up roughly 0.30% on the day.

Reuters reported that the US military began striking Islamic Revolutionary Guard Corps (IRGC) targets inside Iran at 16:00 GMT on Tuesday. Iranian media reported explosions on Qeshm Island and in the southern cities of Bandar Abbas and Chabahar.

US President Donald Trump confirmed the operation in a Truth Social post, saying that the US was “striking Iranian targets near the Strait of Hormuz.” Trump warned that “if the failed Nation of Iran retaliates,” it would be “hit again at a much harder and higher level.”

Oil prices moved higher in reaction to the latest escalation, with West Texas Intermediate (WTI) climbing to its highest level since July 24 and trading around $88.70 per barrel. Higher energy prices add to inflation risks at a time when the Fed is already struggling to bring inflation sustainably back toward its 2% target.

Fed Chair Kevin Warsh’s tough rhetoric at the Jackson Hole Symposium revived expectations of an interest rate hike as soon as this month. Warsh warned that the central bank would have more work to do if policymakers were not confident that inflation was returning to target.

US Treasury yields rise as persistent inflation concerns and hawkish Fed expectations fuel bets on higher borrowing costs, with the benchmark 10-year yield trading around 4.80%, its highest level since January 2025.

According to the CME FedWatch Tool, traders see around a 68% probability that the US central bank will increase rates at its September 15-16 meeting, up from roughly 40% a week ago.

Softer US data provide little relief to Dollar bears

Softer-than-expected US economic data released on Tuesday briefly weighed on the Greenback but failed to generate sustained selling pressure. The ISM Manufacturing Purchasing Managers Index (PMI) fell to 54.6 in August from 55.6 in July, missing the market forecast of 55.2. JOLTS Job Openings rose to 7.271 million in July from 7.182 million but fell short of the 7.3 million forecast.

Attention now shifts to the ADP Employment Change report on Wednesday and the Nonfarm Payrolls (NFP) report on Friday. Strong employment figures could reinforce expectations of a September rate hike, while a weak report may challenge the Greenback’s advance.

ING economists Peter Virovacz and Zoltán Homolya see Hungary on a gradual but constrained growth path after Gross Domestic Product (GDP) rose 0.5% QoQ and 1.7% YoY in the second quarter. ING forecasts 1.7% growth in 2026, led mainly by consumption, while weak investment, net exports and structural demographic and capital-stock constraints remain key headwinds.

Resilient growth facing structural limits

"Based on the detailed data, the short-term outlook for the Hungarian economy has not changed significantly. The overall picture remains fundamentally positive. Further growth in consumption may be supported by the dynamic rise in real disposable income and the surge in consumer confidence."

"However, we can take some comfort from the fact that the decline in investment is partly due to the review and suspension of projects initiated by the previous government, so it may be only temporary. Meanwhile, investment activity could see a sharp rise towards the end of the year as a result of the drawn-down of EU funds. Export growth may be constrained by geopolitical uncertainties, rising production costs and potential supply disruptions, the signs of which are not yet evident in the second-quarter statistics."

"Our latest economic growth forecast for 2026 projects a 1.7% increase. Throughout the year, consumption is likely to drive the Hungarian economy, while investment may show modest growth in the second half if EU funding boosts year-end investment statistics. However, net exports could significantly dampen GDP growth, given the developments seen in the first half of the year and the expected negative impact of the nuclear energy crisis on the trade balance in the third quarter."

"Further ahead, in 2027–2028, a continued strengthening of domestic demand and an eventual pickup in external demand could lead to GDP growth of around 3.0%. However, the nearly four-year-long stagnation in capital stock and the deteriorating demographic situation make it increasingly unlikely that the Hungarian economy will be able to sustain growth above 3% without suffering a significant loss of internal and/or external balance in the long run."

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