Forex News

• AUD/USD hits three-month high as risk appetite improves.
• Solid Australian spending keeps RBA hike risks alive.
• Warsh speech and sentiment data may steer Dollar direction.

The Aussie Dollar climbed to a three-month high of 0.7198 on Thursday, even though the US Dollar steadied on solid jobs data and hawkish comments by Federal Reserve officials. The AUD/USD trades at 0.7194, up 0.34%.

AUD/USD climbs as resilient spending and Wall Street gains offset Fed hawkishness

Wall Street extended its gains, boosted by NVIDIA earnings report, US data was mixed, as Initial Jobless Claims dipped from 207K to 203K, coming below estimates of 208K. Other data showed that the Goods Trade Balance widened from $-102.1 billion to $-118.8 billion in July.

The US Dollar Index (DXY), which tracks the buck’s value against six currencies, is flat at 99.12, even though US Treasury yields rose. The US 10-year T-note rises almost three basis points at 4.676%.

Some Federal Reserve officials crossed the wires at the Jackson Hole Symposium. Cleveland’s Fed Beth Hammack said that the time to act is now, to curb sticky inflation, while Chicago Fed Austan Goolsbee said that the three-month inflation average “doesn’t look terrible. In the meantime, Boston Fed Susan Collins was neutral, though she added that a rate hike is warranted if inflation disappoints, as revealed by the WSJ.

Market participants' focus shifts to Fed Chair Kevin Warsh, who will speak on Friday at Jackson Hole. In addition, traders will also digest the University of Michigan (UoM) Consumer Sentiment Index on its final reading in August.

In Australia, household spending rose by 1.1% in July, data showed on Thursday. This suggests that consumer demand remained resilient, adding upward pressure on inflation. The Reserve Bank of Australia (RBA )'s last meeting minutes revealed that the board discussed a possible rate hike.

The Aussie economic schedule will be absent, leaving the pair leaning on US Dollar dynamics.

AUD/USD Price Forecast: Technical Outlook

In the daily chart, AUD/USD trades at 0.7195, maintaining a bullish near-term bias as spot holds above the triple simple moving average (50, 100, 200) clustered around 0.7010. The pair is pressing against a nearby horizontal cap at 0.7198, while the Relative Strength Index (14) at about 70 suggests overbought conditions that could temper the pace of further gains without yet signaling a clear reversal.

On the topside, immediate resistance is located at the horizontal barrier near 0.7198, and a sustained break above this pivot would open the way for an extension of the current advance. On the downside, initial support sits at the current trading area around 0.7195, with stronger underlying demand coming in from the rising trend-line structure and the triple SMA cluster near 0.7010, where a deeper corrective pullback would likely be tested.

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

• USD/JPY holds just beneath 159.50, flat and still capped by the 160.00 handle.
• Tokyo core is seen easing to 1.7% at 23:30 GMT from 1.9% in July.
• September BoJ pricing sits just under 80%, from roughly 65% on August 7.

USD/JPY holds just beneath 159.50 on Thursday, ahead 0.05% across a range of forty-two pips, a fifth consecutive session of grinding higher without getting anywhere. The pair remains beneath a declining 50-day Exponential Moving Average (EMA) that now sits directly on the 160.00 handle, comfortably above a rising 200-day just under 158.00, with the daily Stochastic Relative Strength Index (Stoch RSI) near 69 and climbing.

The intervention has been half given back

Late July took the pair to a high just short of 164.00 and then broke it, in the first joint operation between Tokyo and Washington since 1998, down to the 155.00 area inside two sessions. A record single-session commitment of 8.45 trillion Yen was followed by roughly 5.3 trillion more. Four weeks on, spot sits within about a dozen pips of the exact midpoint of that move, which means the market has taken back close to half of what the largest currency defence on record removed.

The reason it did not hold is that nothing in the operation touched the thing driving the pair. Japan's policy rate is 1.00% against a US target range of 3.50% to 3.75%, a gap of roughly two and a half percentage points, and an intervention moves the level while leaving the carry intact. Even a September move to 1.25% still leaves better than two points of it, which is why the question has stopped being whether the increase arrives and become whether it is the opening of a cycle or another single step. Standing behind that gap is a fiscal position the market has spent the summer marking down, with the government's stimulus programme and tax cuts widening a deficit no quarter point addresses, which is the second reason a defended level keeps leaking.

The increase is not an inflation decision

Tokyo Consumer Price Index (CPI) core, the measure excluding fresh food, accelerated to 1.9% in July from 1.6% in June, a six-month high that beat a 1.7% expectation and marked a second straight month of acceleration. Thursday's consensus takes it straight back down to 1.7%. National core sat at 1.8% in July, also beneath the 2% target, and only the central bank's own underlying gauge is running above it.

Pricing has moved the other way regardless. September odds have climbed from roughly 65% on August 7 to just under 80%, driven in part by reports that the government would welcome earlier tightening, which is a political input rather than a price one. The inflation that does exist is imported, raw material and energy costs passing into ordinary household goods through a weak currency, so the exchange rate is both the complaint and the remedy. On that reading a soft Tokyo print changes the alibi and not the decision, and a deputy governor spent Thursday saying the committee will discuss further tightening.

What lands, and when

The Tokyo numbers arrive at 23:30 GMT Thursday, headline and the ex food and energy measure both from a 2% prior, core from 1.9%, with July unemployment alongside at 2.5% unchanged. One caveat travels with the print: the statistics bureau moved the CPI base year from 2020 to 2025 with July's data, so MoM comparisons across that seam are not clean. Friday then belongs to the Dollar. The Fed Chair's first Jackson Hole keynote lands at 14:00 GMT as prepared text with no questions taken, sharing the minute with the preliminary annual benchmark revision to the establishment survey, and the Chicago Purchasing Managers Index (PMI) precedes it at 13:45 GMT with a 57 consensus from 57.6. Japan's Governor is not in Wyoming this week.

Japanese retail trade follows at 23:50 GMT Sunday from 0.5% on the year and minus 4.1% on the month. Next week is a US labour week: the manufacturing survey Tuesday at 14:00 GMT with a 55.3 consensus from 55.6, job openings at 7.359 million, the private payrolls estimate Wednesday at 12:15 GMT from 44K, the Beige Book that evening, the services survey Thursday from 54.1, and August payrolls Friday at 12:30 GMT with the prior at minus 23K and unemployment 4.1%. The Bank of Japan meets on September 17 and 18.

Levels

Resistance: The 160.00 handle is the line and a declining 50-day EMA now sits on top of it, a confluence the pair has not reclaimed in the four weeks since the operation. Above it 160.50, then the 161.50 area.

Support: 159.00 is the near shelf, then 158.50 and the rising 200-day EMA just under 158.00, with the intervention low in the 155.00 area far beneath that.

Bias: Bearish while 160.00 caps. A Stoch RSI near 69 with room above it allows one more attempt at the handle, but a level defended by a falling average, a policy meeting three weeks out and the memory of a record operation is the wrong one to buy into. Invalidation on a daily close above 160.00.

• Gold holds above $4,600 despite solid US jobless claims.
• Fed hawks stress sticky inflation before Warsh’s Jackson Hole speech.
• Hormuz deal uncertainty keeps geopolitical risk supporting bullion.

Gold (XAU/USD) extended its gains on Thursday, up 0.17% as US jobs data was solid, while the US trade deficit widened. In the meantime, investors eye Fed Chair Warsh's speech, keeping the precious metal near familiar levels. The XAU/USD trades at $4,601 at the time of writing.

XAU/USD steadies as geopolitics and Fed risks keep traders cautious

The yellow metal resumed its uptrend on Thursday, even though the US jobless claims report was better than expected, indicating a strong labour market. The number of Americans filing for unemployment benefits dipped from 207K to 203K, below forecasts of 208K, according to the US Department of Labour.

At the same time, the US trade deficit widened from $101.4 Billion to $118.8 Billion in July, according to the US Census Bureau.

Aside from this, geopolitics continued to grab the headlines, as the Iran-Oman deal on the Strait of Hormuz doesn’t matter, according to the New York Post, citing a US official. According to an IRGC spokesman, both parties reached a deal on Wednesday, but it remains subject to internal approval and lacks US recognition.

 Worth noting that Gold barely flinched following hawkish statements by Federal Reserve officials attending the Jackson Hole Symposium.

Cleveland Fed's Beth Hammack stated that “now is the time to act given the persistence of inflation.” Earlier, the Kansas City Fed's Jeffrey Schmid described inflation as "still stubborn" and "still sticky,” while the Chicago Fed's Austan Goolsbee also said inflation is his top concern.

Aside from this, the focus shifts towards Fed Chair Kevin Warsh. Traders should remember that he is against forward guidance for the markets, though any remarks about the economy could provide hints about the future path of interest rates.

As of writing, money markets expect the Fed to hold rates unchanged at the September 16 meeting, with odds standing at 68%. However, for the December meeting, traders eye a rate hike, with the chances at 72%, according to Prime Terminal.

The US Dollar Index (DXY), which tracks the dollar's performance against six currencies, remains steady at 99.14 after strong data were released over the past two days.

The Greenback recovered some ground, as recent US Core PCE data show that inflation remains stickier than expected and far from reaching the Federal Reserve’s 2% target.

On Friday, the US economic docket, in addition to featuring Warsh, also includes the University of Michigan Consumer Sentiment data.

XAU/USD technical analysis: Gold reclaims $4,600, but it's poised for consolidation

Gold has climbed above $4,600, but it remains shy of a decisive break. Momentum, although bullish, is failing to propel the yellow metal towards a retest of weekly highs near $4,697, as indicated by the Relative Strength Index (RSI). Given the backdrop, further sideways action lies ahead, while traders remain uncertain about Bullion’s direction.

On the upside, the first key resistance is the psychological $4,650 mark. Above, the next ceiling level is $4,700, before buyers drive XAU/USD to May’s 7 peak at $4,764.

Downwards, bullion's first support is $4,600. A breach of the latter would expose the August 24 daily low of $4,594. If XAU/USD achieves a daily close beneath the latter, this clears the path for a move to the 200-day Simple Moving Average (SMA) at $4,376. Ahead of challenging the August 19 swing low of $4,324 and $4,300.

Geoff Yu at BNY reports that China is opposing potential new U.S. Section 301 tariffs while keeping communication channels open. Beijing has threatened “necessary measures” in response to additional duties but continues high-level engagement ahead of a possible Trump–Xi summit. The combined stance suggests China will resist trade pressure yet avoid jeopardizing the broader U.S.–China relationship.

Tariff risks with open diplomatic channels

"China pushed back against possible new U.S. tariffs while signaling that high-level communication between Beijing and Washington remains open. The Commerce Ministry said it firmly opposes reported U.S. consideration of an additional 7.5% tariff on Chinese imports linked to a Section 301 investigation into alleged overcapacity across 16 economies, describing the move as unilateral and protectionist."

"Beijing said it will closely assess any further U.S. measures and reserved the right to take all necessary steps in response. Separately, the Foreign Ministry said China and the U.S. remain in contact over arrangements for potential interaction between their leaders later this year. The combined message suggests Beijing is preparing to resist further trade pressure while keeping the diplomatic channel open."

"Beijing is pairing tough rhetoric with reassurance that dialogue remains open. China has threatened “necessary measures” against U.S. actions while continuing high-level engagement ahead of the prospective Trump–Xi summit. Neither side appears eager to sacrifice the broader relationship."

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

• GBP/USD holds near 1.3600, flat on a 32-pip range, 90 pips off the high.
• The Pound is up 2.2% since late July, the Dollar Index down 2.3%.
• Select committee hearings Thursday are the first BoE event since July 30.

GBP/USD holds near 1.3600 on Thursday, effectively unchanged at minus 0.05% across a range of barely thirty pips, a third session of drift beneath the high just short of 1.3700 posted earlier this week. The pair sits more than a cent above a steeply rising 50-day Exponential Moving Average (EMA) near 1.3450, and the daily Stochastic Relative Strength Index (Stoch RSI) above 90 has started to roll over.

The month is borrowed

Sterling has added roughly 2.2% against the Dollar since the last days of July, when the pair sat near 1.3300. Across the same stretch the Dollar Index has lost roughly 2.3%, falling from just beneath 101.50 to just above 99.00. The two figures differ by about a tenth of a percentage point, which accounts for the entire four-cent move on the other side of the quote.

The Bank of England has been on hold since July 30 and the next decision is September 17, so there has been no domestic policy event in five weeks for any of this to attach itself to. July inflation printed 2.9% with services easing to 3.4% and producer input prices falling, the labour figures softened, and none of it argued for urgency. The Pound has not been bought so much as the Dollar has been sold in front of it, which is a different trade with a different owner.

The posted gap explains none of it. Bank Rate sits at 3.75% against a US target range of 3.50% to 3.75%, so on the nominal spread the two are level, exactly as they were level at 1.3300. What moved is the expected gap, and it moved on the American side: a chair who has removed forward guidance entirely, three July dissents for a hike the committee did not deliver, and a market that has spent August deciding it cannot read the reaction function. Sterling's advantage this month is the absence of somebody else's.

The yield bidding Sterling is a charge

The conventional case rests on a real-rate advantage of roughly 62 basis points and long gilt yields holding above 5%, with the ten-year sitting some 35 to 45 basis points above its Treasury equivalent. Read as carry, that is a reason to own the currency. Read against a country carrying the second-lowest gross debt burden in the Group of Seven, it is a premium being charged rather than a return being offered, and the distinction decides whether the last four cents survive an autumn.

The bill arrives October 28. Borrowing across the first four months of the fiscal year already runs a couple of billion pounds beyond the official forecast, last month produced an unexpected deficit as inflation-linked staff costs consumed strong income tax receipts, and a government installed in July on a promise to use every inch of give inside the existing rules has to show the arithmetic in public. A currency bid on a term premium is long the exact thing that Budget tests.

The British side gets a microphone next week

Friday belongs entirely to the Dollar. The Fed Chair's first Jackson Hole keynote lands at 14:00 GMT as prepared text with no questions taken, sharing the minute with the preliminary annual benchmark revision to the establishment survey. The Chicago Purchasing Managers Index (PMI) precedes it at 13:45 GMT with a 57 consensus from 57.6 prior, and the final August Michigan readings hold at 51 on sentiment and 50.6 on expectations, with one-year inflation expectations at 4.3% and the five-year at 3.3%, each unchanged from the preliminary.

Next Thursday brings the first genuinely British event since July 30. Monetary Policy Report hearings put the committee in front of a select committee under questioning, which for a nine-member panel carrying three hike votes against a Governor resisting is a higher-information setting than any set-piece speech. The Governor then speaks at 08:50 GMT Friday, roughly four hours before August payrolls, where the prior print was minus 23K and unemployment 4.1%. The pair gets one day to establish a domestic reason and then hands itself straight back to the Dollar.

Levels

Resistance: The high just short of 1.3700 is the first line, with the 1.3700 handle immediately above it and 1.3750 the next mark on a break.

Support: 1.3550 is the near shelf and 1.3500 the one that matters, with the 50-day EMA near 1.3450 and the 200-day near 1.3400 beneath.

Bias: Bullish above 1.3500. The trend is intact with price more than a cent clear of both rising averages, but a Stoch RSI above 90 rolling over after a four-cent month argues for consolidation rather than extension into the keynote. Invalidation on a daily close beneath 1.3500, which puts the 50-day EMA in play.

GBP/USD daily chart

• NZD/USD holds just beneath 0.5950, unchanged on a 22-pip range.
• The RBNZ decision Wednesday carries a 2.75% consensus from 2.50%.
• Consumer confidence prints at 22:00 GMT against a 99.3 prior.

NZD/USD holds just beneath 0.5950 on Thursday, unchanged on the session across a range of twenty-two pips and some forty-five pips under the window high just short of 0.6000 set in early June. The pair sits close to ninety pips above a rising 50-day Exponential Moving Average (EMA) near 0.5850, with the 200-day a shade beneath that, and the daily Stochastic Relative Strength Index (Stoch RSI) near 65 with room above it.

The currency did the job the hike was for

The Reserve Bank of New Zealand raised the Official Cash Rate a quarter point to 2.50% on July 8, its first increase since 2023, and gave two reasons for it. The first was that 2.25% sat somewhat beneath neutral, so the move removed stimulus rather than applied restraint. The second was that standing still risked letting financial conditions loosen further, named explicitly as a softer currency or lower rate expectations.

The Kiwi has since climbed close to 5.7% from its early-July low just above 0.5600 and now trades within touching distance of its high for the window. A currency that strong tightens financial conditions without help, which retires the second of those two reasons before the September meeting arrives. Wednesday's consensus 2.75% would in any case leave the rate inside the Reserve Bank's own 2.50% to 3.50% neutral uncertainty band, so a second increase buys less accommodation rather than actual restraint.

Not all of the rally is the Dollar leaving, but most of it is. The Kiwi has added roughly 2.6% since the last days of July, when it traded near 0.5800, while the Dollar Index has lost roughly 2.3% across the identical stretch. That leaves something like a third of a percentage point that belongs to New Zealand rather than to Washington, and that fraction is the whole of what Wednesday has to justify.

The domestic case has been thinning

Headline inflation is now expected to have peaked at 3.9% in the June quarter and to fall to 3.3% in the September quarter. Surveys of households, businesses and professional forecasters all recorded lower inflation expectations in the September quarter, back to roughly where they sat before the oil spike. That is the entire case for a second increase moving in the wrong direction.

The activity side offers no more help. House prices ran 0.4% lower on the year in May, residential investment contracted in the March quarter despite strong consent growth, and the central bank's own nowcast for September-quarter growth sits at 0.6%. A committee that needed a casting vote to hold in May and then reached July's increase by consensus arrives at September with the data pointing away from the number the market has already paid for. Most major New Zealand banks still carry the rate near 3.00% by year-end on two more quarter-point moves, and the May projections implied a peak around 3.3%, so the distance between a fully priced Wednesday and a disappointed one runs through the track rather than the decision.

Sixty hours of its own story, then payrolls

The immediate mark is Thursday at 22:00 GMT, when consumer confidence prints against a prior of 99.3, beneath the hundred line separating net optimism from net pessimism. Building permits follow Tuesday at 22:45 GMT with a prior of minus 3.6%. The decision lands Wednesday at 02:00 GMT with the Monetary Policy Statement and policy review attached and a press conference an hour behind it, and the projected rate track rather than the number itself is the event.

Then the pair hands itself back. The US block runs the manufacturing survey Tuesday at 14:00 GMT with a 55.3 consensus from 55.6, the private payrolls estimate Wednesday at 12:15 GMT from 44K, the Beige Book that same evening at 18:00 GMT sixteen hours behind Wellington, the services survey Thursday from 54.1, and August payrolls Friday at 12:30 GMT with the prior at minus 23K and unemployment 4.1%. The Kiwi gets roughly sixty hours to trade its own story before a US labour print that last came in negative decides the rest of it.

Levels

Resistance: Just short of 0.6000 is the window high and the first line, with the 0.6000 handle immediately above it and little marked beyond.

Support: 0.5900 is the near shelf, then the moving-average band around 0.5850 where the 50-day and 200-day EMAs sit within fifteen pips of each other, with 0.5800 beneath that.

Bias: Bullish while 0.5900 holds, capped at 0.6000. The trend is clean with price above both rising averages and momentum unstretched, but the increase is already in the price, so the break needs the projected track rather than the decision. Invalidation on a daily close beneath 0.5850.

NZD/USD daily chart

• USD/MXN edges higher as solid jobless claims support the US Dollar.
• Fed hawks keep tightening risks alive before Warsh speech.
• Hawkish Warsh tilt could push pair back above 17.00.

The Mexican Peso (MXN) loses ground modestly against the US Dollar (USD) on Thursday after economic data in the United States showed that the jobs market is solid, while inflation remains above the Federal Reserve’s (Fed) 2% goal. This suggests that higher interest rates are warranted, a tailwind for the Greenback. The USD/MXN pair trades near 16.97, up 0.09%.

USD/MXN rises modestly as traders await Warsh’s Jackson Hole speech

Price action shows that the Mexican currency has failed to gain traction over the last four trading days, perhaps awaiting Fed Chair Kevin Warsh's speech at Jackson Hole on Friday. In the meantime, solid economic data frm the United States (US) keeps the USD/MXN within familiar levels.

US data showed that jobless claims for the week ending August 22 were below estimates of 208K, coming in at 203K. This reaffirms the strength of the labor market, while the US trade deficit widened, according to the US.

Despite this, the US Dollar remained contained, as reflected in the US Dollar Index (DXY). The DXY, which measures the buck’s value versus six currencies, is flat at 99.14.

Market participants' focus is on what Fed Chair Kevin Warsh will say on Friday at Jackson Hole. Some of his colleagues spoke with the media, reaffirming their monetary policy stance,

Boston Fed Susan Collins commented that the recent PCE data did not change the overall outlook that the current monetary policy stance is restrictive, but recognised that a rate hike is “warranted if inflation disappoints,” via the WSJ.

Earlier, Cleveland Fed's Beth Hammack was hawkish, saying the job market is broadly in balance and adding that “now is the time to act” on tightening monetary policy.

Ahead of the Mexican economic docket, the US will see the release of the University of Michigan's Consumer Sentiment and Warsh's speech.

Given the backdrop, a hawkish tilt by Warsh can drive USD/MXN back above 17.00, paving the way for further gains. On the flip side, the pair can retest yearly lows below 16.90.

USD/MXN Price Forecast: Technical outlook 

In the daily chart, USD/MXN trades at 16.9782, extending a bearish near-term tone as spot remains capped beneath the triple simple moving average cluster (50, 100 and 200-day SMA) at 17.3142 and the descending resistance trend line coming from 18.1651, which now projects around 17.3487. The latest 14-day Relative Strength Index at 34.55 hovers just above oversold territory, hinting that downside momentum is still dominant but could be losing some intensity as the pair consolidates below the aforementioned moving averages.

On the downside, the key structural floor emerges at the long-term trend-line break level near 15.47, which marks the next major support if selling resumes. On the topside, initial resistance is aligned at the triple SMA around 17.31, followed closely by the descending trend-line barrier at 17.35; only a sustained recovery above this resistance zone would ease the current bearish bias and open the way for a more meaningful rebound.

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

BNY’s Geoff Yu highlights that the Bank of Korea’s 25bp hike to 3.00% and upgraded growth and inflation forecasts underline ongoing tightening risks. Robust exports and investment are supporting the economy, though stronger demand could fuel inflation and household debt. Yu continues to see undervalued APAC (Asia-Pacific) currencies such as South Korean Won (KRW) as preferred vehicles for expressing potential US Dollar (USD) weakness.

BoK tightening underpins Korean won

"The BoK raised its policy rate by 25bp to 3.00%, delivering a second consecutive hike as strong semiconductor demand lifts growth and adds to inflation pressure. The BoK raised its 2026 GDP forecast to 3.3% from 2.6% and its 2027 forecast to 2.9% from 2.1%; core inflation projections were also revised higher to 2.5% for both years."

"Policymakers highlighted robust exports, investment and gradually improving consumption, but warned that stronger demand could reinforce inflation, housing prices and household debt. The won strengthened after the decision, while the Kospi also rose. The BoK’s projections point to further tightening, though at a slower pace, suggesting the focus is shifting from front-loaded hikes toward more measured normalization."

"We continue to see undervalued APAC currencies such as KRW as the best expression of potential dollar weakness, rather than G10 names."

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

OCBC Bank strategists Sim Moh Siong and Christopher Wong note that USD/SGD traded slightly firmer as resilient US data halted US Dollar downside pressure, though the pair remains subdued and rangebound ahead of Chair Warsh’s Jackson Hole speech. Daily momentum remains mildly bearish, but RSI is turning higher from near-oversold conditions, leaving room for some near-term upside in USD/SGD and therefore downside risks for the Singapore Dollar. Resistance is seen at 1.2740 and 1.2780/90, with support at 1.2680 and 1.2650.

Rangebound trade before Jackson Hole

"USD/SGD traded a touch firmer overnight as resilient US data halted USD downside pressure."

"That said, the pair continues to trade in subdued and within recent range, as markets await catalysts later this week – Chair Warsh’s speech at Jackson Hole later this Fri (10pm SGT)."

"Pair was last seen at 1.2720 levels. Mild bearish momentum on daily chart intact but RSI shows signs of rising from near oversold conditions. Some upside risks not ruled out in the interim."

"Resistance at 1.2740 levels (61.8% fibo retracement of 2026 low to high), 1.2780/90 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.)

Brown Brothers Harriman’s (BBH) Elias Haddad sees the Philippine Peso underperforming its Asian peers after the Bangko Sentral ng Pilipinas (BSP) delivered a third consecutive 25 bps rate hike to 5.00%. Despite the BSP describing the move as preemptive, Haddad argues that policy remains behind the curve as inflation stays above the central bank’s tolerance band, markets price further tightening, and negative real rates continue to weigh on PHP.

Philippine Peso seen underperforming

"Philippine central bank (BSP) delivered a third straight 25bps hike to 5.00%.Most analysts polled by Bloomberg (20 of 25) had an increase penciled in, the rest expected a hold."

"According to the statement, today’s hike was a “preemptive monetary action” against upside price risks from “severe El Niño conditions on agricultural prices” and “potential wage adjustments.”"

"The markets imply nearly 75bps of tightening over the next 12 months, but negative real rates should keep PHP lagging its Asian peers."

"However, with inflation already above the bank’s 4% upper tolerance band, the move looks more reactive than preemptive and leaves policy behind the curve."

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