Forex News
The Federal Reserve (Fed) released its Beige Book on Wednesday, in which the US central bank stated that economic activity increased modestly since early July, while overall employment rose slightly. Regarding inflation, prices rose in eight districts.
Input pressures were elevated in manufacturing and construction across multiple districts due to price increases in energy, raw materials, transportation, and petrochemicals.
Key highlights:
Employment rose very slightly overall, with three districts showing modest gains in employment, four reporting slight gains, and five districts experiencing no change.
Economic activity increased modestly since early July.
The general outlook for the coming months was positive, but sentiment was mixed across sectors, with contacts reporting heightened uncertainty surrounding the effects of higher energy prices, policy, and international conflict.
Prices increased moderately in eight districts, with two districts reporting modest increases, one slight increases, and one robust increases.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.19% | -0.81% | -0.41% | -0.36% | 0.79% | 0.17% | |
| EUR | -0.04% | 0.15% | -0.83% | -0.45% | -0.38% | 0.72% | 0.13% | |
| GBP | -0.19% | -0.15% | -0.99% | -0.60% | -0.54% | 0.55% | -0.02% | |
| JPY | 0.81% | 0.83% | 0.99% | 0.40% | 0.46% | 1.57% | 0.99% | |
| CAD | 0.41% | 0.45% | 0.60% | -0.40% | 0.05% | 1.17% | 0.59% | |
| AUD | 0.36% | 0.38% | 0.54% | -0.46% | -0.05% | 1.11% | 0.55% | |
| NZD | -0.79% | -0.72% | -0.55% | -1.57% | -1.17% | -1.11% | -0.57% | |
| CHF | -0.17% | -0.13% | 0.02% | -0.99% | -0.59% | -0.55% | 0.57% |
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).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- WTI Oil fluctuates near its highest level since July 24 as Middle East tensions keep supply concerns elevated.
- US crude stocks fall by 4.45 million barrels, exceeding market expectations.
- WTI holds above key moving averages, but the $90-$92 resistance zone caps immediate gains.
West Texas Intermediate (WTI) Oil sees two-way price swings on Wednesday as escalating tensions in the Middle East keep energy markets volatile and the geopolitical risk premium elevated. At the time of writing, WTI trades around $89.70 per barrel after reaching an intraday high of $90.78, its highest level since July 24.
Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Wednesday that two Oil tankers struck naval mines while attempting to transit the waterway. According to the IRGC, the vessels were disabled and their crews forced to disembark after they ignored warnings against taking what it described as an “illegal route.”
Oil prices also draw support from a larger-than-expected decline in US inventories. The Energy Information Administration (EIA) reported that crude stocks fell by 4.45 million barrels last week, well above expectations for a 1.1-million-barrel draw and reversing the previous week’s modest increase of 95,000 barrels.
Strategists at Brown Brothers Harriman argue that "further upside in Oil prices appears limited as Persian Gulf oil exports recover." They highlight Goldman Sachs estimates that oil flows from the region have "returned to roughly two-thirds of their pre-war level of 20 million barrel per day," a view they say is broadly consistent with the US Energy Secretary’s assessment that, on average, "8 million barrels a day are passing through the Strait of Hormuz, while another 4 to 5 million barrels are bypassing it through pipelines." Together, these figures suggest that supply disruptions are easing even as geopolitical tensions remain elevated.
Looking ahead, traders await the OPEC+ meeting on Sunday. The alliance is likely to leave its Oil production policy unchanged for October, Reuters reported on Wednesday, citing three sources familiar with the matter.
Technical analysis
On the daily chart, WTI Oil retains a constructive bias as it holds comfortably above the 100-day and 200-day Simple Moving Averages (SMAs). However, the $90-$92 region forms a key resistance zone capping the immediate upside.
The Relative Strength Index (RSI) stands near 64, while the Moving Average Convergence Divergence (MACD) remains in positive territory. However, the Average Directional Index (ADX) near 16 suggests that the broader bullish trend lacks strength.
A sustained break above $92 could open the door toward $95, followed by the psychological $100 mark. On the downside, the 100-day SMA around $85 offers initial support. A decisive break below this level would expose the 200-day SMA near $77, while the horizontal floor around $67-$65 would come into focus only if the moving-average supports fail.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
MUFG’s Lloyd Chan remains cautious on the Indonesian Rupiah as domestic inflation accelerates and Gross Domestic Product (GDP) growth stays above 5%. The trade balance has improved slightly but remains weaker than 2025 averages due to higher Oil and gas imports. While Bank Indonesia’s (BI) policy support and intervention framework offer near-term backing, sustained Brent prices above $90 could pressure Indonesia’s fiscal and external positions and weigh on IDR.
Rupiah support tested by Oil prices
"Meanwhile, we remain cautious on the rupiah. August CPI inflation accelerated to 3.19%yoy and with GDP growth continuing to exceed 5%, inflation risks remain skewed to the upside."
"July's trade balance returned to a modest surplus of $0.12bn after two months of deficits, largely due to a narrowing in the oil and gas trade deficit to $2.9bn from $3.5bn previously."
"Nonetheless, the trade balance remains substantially below 2025 averages, highlighting the ongoing drag from higher oil and gas imports."
"Bank Indonesia's policy support and intervention framework should continue to provide near-term support for the rupiah, but sustained Brent prices above $90/bbl would place increasing pressure on both Indonesia's fiscal and external balances."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The US Dollar (USD) has traded in quite a volatile fashion on Wednesday, always amid the unabated tensions from the US-Iran crisis, speculation over another bout of FX intervention by Japanese authorities and bets for whatever the Fed might do or not do in the next few months.
Here is what you need to know on Thursday, September 3:
The US Dollar Index (DXY) has maintained a vacillating tone in the 99.50-99.60 band on Wednesday, coming under fresh downside pressure soon after hitting fresh three-week tops earlier in the day. The weekly Initial Jobless Claims are due seconded by the ISM Services PMI, the Balance of Trade results, quarterly Unit Labor Costs and the speeches by the Fed’s Waller and Hammack.
EUR/USD has traded with a slight downward bias, easing modestly but managing to bounce off two-week lows near 1.1570. Next on tap in the Euroland will be the final S&P Global Services PMI in Germany and the euro zone alongside Producer Prices in the bloc.
GBP/USD could not maintain the break above the 1.3500 hurdle, retreating to as low as the vicinity of 1.3470, where it seems to have met some contention for now. On the UK docket, all the looks will be on the publication of the final S&P Global Services PMI.
USD/JPY dropped markedly, briefly breaching its key 200-day SMA near 158.40, amid increasing market chatter about another FX intervention by the BoJ/MoF to support the Yen. The final S&P Global Services PMI is due next, along with the weekly Foreign Bond Investment figures.
AUD/USD has rapidly left behind Tuesday’s decline, resuming its upside bias and advancing past 0.7170. Next of note in Oz will be the final S&P Global Services PMI, seconded by the Balance of Trade results and speeches by the RBA’s Jones, Hunter and Brischetto.
There was no respite for the upside momentum in WTI prices. Indeed, this time the commodity surpassed the $92.00 mark per barrel to hit fresh six-week highs on the back of escalating concerns in the US-Iran-Hormuz trifecta.
Gold has shown some signs of life, managing to make a U-turn and advancing markedly to the boundaries of the $4,400 mark per troy ounce. Indeed, the precious metal has broken the multi-day decline that has been in place since the August tops near the $4,700 yardstick. Modest losses in the Greenback and mixed US Treasury yields have also accompanied the daily uptick.
OCBC’s Sim Moh Siong and Christopher Wong note that USD/SGD is rebounding alongside a stronger US Dollar (USD), supported by higher US Treasury yields and firmer Fed hike expectations. The pair’s relatively higher beta to broad USD moves suggests further US Dollar Index (DXY) strength could lift USD/SGD near term, though they expect SGD’s underlying resilience and the S$NEER framework to temper the magnitude of any move.
Higher beta to DXY supports rebound
"USD/SGD traded higher alongside the rebound in USD, as higher US Treasury yields and firmer Fed hike expectations lend support to the dollar."
"The recent move reinforces USD/SGD’s relatively higher beta to broad USD moves compared with several ASEAN FX peers. A more sustained DXY rebound could therefore see USD/SGD extend higher in the near term."
"That said, SGD’s underlying resilience and the S$NEER policy framework should help temper the magnitude of the move."
"Mild bearish momentum on daily chart faded while RSI rose. Risks skewed to the upside in the interim. Resistance here at 1.2740 levels (61.8% fibo retracement of 2026 low to high), 1.2760/90 levels (50% fibo, 21 DMA). Support at 1.2680 (76.4% fibo), 1.2650."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- DJIA trades near 53,000, up roughly 250 points, after a low beneath the 50-day EMA.
- Ship trackers logged five vessels through Hormuz on Monday, none of them tankers.
- September hike odds near 66%, up from roughly 40% a week ago.
The Dow Jones Industrial Average trades near 53,000 and roughly 250 points higher, having opened just above 52,750, dipped to a session low beneath the rising 50-day Exponential Moving Average (EMA) near 52,700, and recovered the whole of that ground. The rebound attempt arrives after three consecutive lower sessions and is worth about half a percent. What it is not is an equity event, because nothing in the case for owning these thirty companies changed between Tuesday and this morning.
The bid was placed in the bond market
The benchmark 10-year Treasury note yield touched 4.818% during the session, a level last seen in November 2023. The 30-year sits above 5.28% and the 2-year near 4.40%, with British, German and French paper all cheaper on the day and Japanese 10-year debt parked at multi-decade highs. Equities turned at the moment the long end stopped climbing, which is the whole of the mechanism.
Officialdom spent the morning talking to that tape. The New York Federal Reserve president described the yield surge as the product of a strong economy rather than any dysfunction in the market, and declined to say whether further tightening is required. The commerce secretary offered the mirror image, arguing that faster growth and a shrinking deficit will pull rates lower over roughly six months. Neither moved the pricing, which now puts a September hike near 66% against roughly 40% a week ago.
The barrel count nobody can check
The bullish case circulating on desks is that Crude Oil is topping out, and that a barrel rolling over takes the inflation premium out of the long end. West Texas Intermediate (WTI) trades above $90.00 and Brent above $94.50, the latter some $20 above where it sat before the war began on February 28. American forces struck Islamic Revolutionary Guard Corps (IRGC) targets near Bandar Abbas and along Iran's southern coast on Tuesday, after two tankers were hit while transiting the Strait of Hormuz.
The number underwriting the topping-out thesis is a government estimate. The energy secretary said more than 17 million barrels moved through the strait on Monday, a record for the war, and that regional exports beat pre-war levels once the Saudi and Emirati bypass pipelines are counted against a pre-war throughput near 20 million barrels per day. Preliminary tracking data logged five commodity vessels that day against a ten-day average near 14, and not one of them was a liquid tanker. Dark transits are real and the same tracker has since revised its crude flow estimate up to roughly 8.6 million barrels per day, which is still about half the figure now doing the work.
The labour print that bought nothing
Private payrolls added 38K in August against a 47K consensus and 46K in July, the smallest monthly gain since January, with the hiring concentrated in health care and a scatter of sectors shedding staff outright. In an ordinary cycle a miss of that size arrives as an equity tailwind, on the reasoning that a cooling labour market pulls the central bank toward easing and lifts the multiple.
That transmission is broken here. The chair used last week's symposium keynote to say the summer inflation readings did not persuade him that the underlying trend has improved, and the committee is being priced for a hike into a labour market that is visibly softening. An index that rallies on the day it receives evidence of a slowing economy is not expressing a growth view. Nvidia (NVDA) and Johnson & Johnson (JNJ) supplied most of today's lift, and neither did so for a reason traceable to the payroll estimate.
The week's actual tests
The Beige Book lands at 18:00 GMT today and two policymakers speak Thursday, at 12:30 and 19:00 GMT. The Institute for Supply Management (ISM) services Purchasing Managers Index (PMI) arrives Thursday at 14:00 GMT, forecast at 54.3 against 54.1 prior, with the prices paid component last at 70.3 and the employment index last at 47.4. Those two subindices carry the policy content, because they are where an energy shock reaches the services economy first and where the labour cooling either confirms itself or does not.
August payrolls follow Friday at 12:30 GMT, forecast at 58K after a 23K contraction, with the unemployment rate held at 4.1%, average hourly earnings accelerating to 0.3% MoM from 0.1% and decelerating to 3% YoY from 3.2%. Composite PMI is due Thursday at 13:45 GMT unchanged at 56, and jobless claims the same morning at 205K against 203K. The decision lands September 16, and with the front end already carrying two thirds of a hike, the earnings line on Friday matters more to this index than the headline count does.
Levels to watch
Resistance: The session high just above 53,200 is the first obstacle, with the 53,500 handle above it, a shelf that has capped every attempt since it broke last week. Beyond that sit the band just above 53,800, then 54,000, and the record just short of 54,750, roughly 3% overhead.
Support: The 53,000 handle is the floor this session reclaimed and the level bulls need to defend into Friday. Beneath it the rising 50-day EMA near 52,700 marks today's low and the line the entire August advance was built on, with 52,500 the next shelf. The 200-day EMA near 50,000 is nowhere in play.
Bias: Bullish while 52,700 holds, with objectives at the 53,500 handle and then 53,800. The daily Stochastic Relative Strength Index (Stoch RSI) near 34 has flattened in the lower half of its range rather than pressing lower, which fits a low made and defended. A daily close beneath 52,700 hands the tape back to the sellers and opens 52,000.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Scotiabank strategists Shaun Osborne and Eric Theoret describe GBP/USD as soft but mid-pack within the G10, with domestic data and Bank of England (BoE) events limited ahead of Governor Bailey’s speech. They stress the role of political sentiment under PM Burnham in prior Pound strength, now challenged by higher Oil prices. Technically, the break of 1.35 refocuses attention on support in the mid‑1.34s and 1.33.
Political sentiment and Oil weigh on Pound
"The GBP is soft, down 0.3% vs. the USD but still a mid-performer among the G10 in an environment of broad-based USD strength. Domestic releases have been limited and the BoE calendar is empty ahead of Friday’s speech from Gov. Bailey."
"Political developments have been equally limited, offering little to market participants in search of domestic drivers. We continue to highlight the importance of sentiment – specifically, politically-related sentiment – in driving the recent strength in the pound following the arrival of PM Burnham in late June."
"The shift had been clearly observed in risk reversals as the options market had faded its premium for protection against downside risk. However the latest surge in oil prices appears to be eroding this key source of support, and riskies are once again pricing a higher premium for downside protection. "
"Neutral/bearish – the RSI’s plunge into bearish territory has been swift however the momentum indicator is already in the mid-40s and spot’s defensive price action suggests little scope for near-term stabilization."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD hits three-week low despite softer US hiring.
- Middle East tensions keep energy-driven inflation risks elevated.
- BoE hearings, Bailey speech and NFP drive next catalysts.
The Pound Sterling (GBP) falls by some 0.11% and hits a three-week low against the US Dollar (USD) on Wednesday, even though the US Dollar Index (DXY) is in red territory, following US jobs data that were below estimates but signaled some cooling in the labor market. The GBP/USD pair trades at 1.3500, after reaching a low of 1.3474.
GBP/USD slips despite softer US jobs data and weaker Dollar
Geopolitical tensions in the Middle East keep energy prices higher, igniting fears for a second round of inflation. In the last two days, the US and Iran exchanged strikes, while US President Donald Trump insisted that Iran is not ready for a deal. Recent headlines reported that the US State Department paused plans to redeploy diplomatic staff to the Middle East, suggesting talks are off the table.
US data showed that private hiring in August was softer than forecast at 38K, versus estimates of 47K and down from 46K in July, according to the ADP Employment Change National report.
Even though jobs data was moderately weak, US Treasury yields remain high, boosted in part by Federal Reserve (Fed) Chair Kevin Warsh’s speech last week at Jackson Hole, in which he recognized that if prices remain high, the Fed has “work to do.”
Across the pond, the UK Finance Minister Healey said that he will present Burnham’s first budget on October 28. He pledged to stick to the borrowing rules set by former minister Rachel Reeves.
In the meantime, money markets are still seeing a rate hike by the Bank of England (BoE) in December, with investors expecting 32 basis points of tightening towards the end of the year, according to Prime Terminal.
Ahead of the UK economic schedule, the BoE Monetary Policy Hearing and a speech by the BoE’s Governor, Andrew Bailey, will feature. In the US, the docket will feature jobs data, the ISM Services PMI for August, and will end the week with the awaited Nonfarm Payrolls report.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3495. The pair holds a modestly constructive bias as it trades above the simple moving average triple around 1.3442, suggesting underlying demand remains intact despite the recent pullback from the highs. Momentum has cooled, with the 14-period Relative Strength Index slipping toward the mid-40s, hinting at consolidative rather than impulsive downside pressure while price compresses between former trend structures.
On the topside, immediate resistance emerges near 1.3508 at the first descending trend line, with the next cap seen around 1.3544 from the more recent downtrend; a break above these levels would expose former rising trend supports now turned resistance near 1.3606 and 1.3631. On the downside, initial support is provided by the clustered simple moving averages around 1.3442; a daily close below this zone would weaken the current constructive tone and open the door to a deeper correction toward lower levels not yet in play on the present chart.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
(This story was corrected on September 2 at 18:02 GMT to say that the ADP Employment Change print in July was 46K, not 44K.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.16% | -0.83% | -0.37% | -0.33% | 0.81% | 0.19% | |
| EUR | -0.05% | 0.11% | -0.87% | -0.41% | -0.37% | 0.74% | 0.15% | |
| GBP | -0.16% | -0.11% | -0.96% | -0.52% | -0.49% | 0.61% | 0.04% | |
| JPY | 0.83% | 0.87% | 0.96% | 0.45% | 0.49% | 1.61% | 1.01% | |
| CAD | 0.37% | 0.41% | 0.52% | -0.45% | 0.04% | 1.16% | 0.56% | |
| AUD | 0.33% | 0.37% | 0.49% | -0.49% | -0.04% | 1.12% | 0.53% | |
| NZD | -0.81% | -0.74% | -0.61% | -1.61% | -1.16% | -1.12% | -0.58% | |
| CHF | -0.19% | -0.15% | -0.04% | -1.01% | -0.56% | -0.53% | 0.58% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The Bank of Canada (BoC) left its overnight interest rate unchanged at 2.25% on Wednesday, as widely anticipated, but delivered a more cautious message as inflation risks increased and the recovery became harder to assess. Governor Tiff Macklem said multiple rate increases could be required if inflation remained a problem, while stressing that decisions would be guided by the inflation outlook and the risks surrounding it.
The bank’s statement highlighted a difficult combination of subdued labour demand, continued excess supply and rising uncertainty about the sustainability of the economic rebound. New US tariffs and the threat of further trade action are clouding growth prospects, while the ongoing Middle East conflict is keeping energy prices higher for longer.
Macklem acknowledged that inflation was too high, although he noted that the increase was heavily concentrated in gasoline and Oil prices. The key question for policymakers is how long energy prices remain elevated and how far they rise. The BoC’s tolerance for higher inflation is limited, and it remains prepared to adjust monetary policy as risks shift.
Macklem was explicit that multiple rate increases could be needed if inflation became a broader problem. However, he did not present that as the central scenario, instead emphasising that future decisions would depend on inflation forecasts and the risks surrounding them. Rogers added that monetary policy could not respond to a single risk or isolated data point.
The recent bond-market sell-off was also discussed. Macklem said global bond yields were spilling over into Canada, while Rogers described the move as a repricing of risk rather than a sign of drying liquidity, dysfunction or financial instability. That distinction gives the BoC room to monitor market conditions without treating the bond-market move as an immediate policy emergency.
All in all
The BoC delivered a cautiously hawkish hold. It kept rates unchanged because economic slack and trade uncertainty argue for patience, but the inflation message has become less comfortable. Macklem’s warning that multiple hikes could be necessary means that a renewed tightening cycle remains a genuine possibility if oil prices stay high or price pressures broaden beyond energy.
Societe Generale strategists highlight that the Indian Rupee’s (INR) strong start to September is reflected in a move back below the 100dma, raising questions about whether Reserve Bank of India (RBI) intervention has helped the currency turn a corner despite a hawkish Fed and higher Oil prices. The bank notes robust 2Q Gross Domestic Product (GDP) but warns that inflation dynamics and RBI’s record net short Dollar position keep the broader backdrop structurally challenging.
Rupee strength versus structural headwinds
"In EM, the strong start to September for the INR is captured by the return below the 100dma at 95.15 yesterday for the first time since July 2025."
"This raises the obvious question whether the currency turned the corner thanks to RBI intervention and can kick on from here irrespective of the hawkish Fed backdrop and higher oil prices."
"The stronger-than-expected 2Q GDP print of 7.8% yoy suggests the economy has so far weathered the external shock."
"Our economist Kunal Kundu notes that the weak GDP deflator, alongside sharply higher CPI, food prices and WPI inflation, may be overstating the underlying pace of real activity. The net short dollar position of the RBI reached a record $136.8bn at end-July, up from $103.3bn compared to June."
"In short, the broader backdrop remains structurally challenging"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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