Forex News
DBS Group Research economist Chua Han Teng expects the Bank of Thailand (BoT) to keep its policy rate at 1.00% through 2026, following the unanimous decision on August 26 to stay on hold. Teng highlights low and uneven economic growth, constrained private consumption, and subdued inflation, implying stable short-end Thai government bond yields despite external currency volatility and ongoing supply-side inflation risks.
BoT seen holding at 1.00%
"We continue to expect the Bank of Thailand (BoT) to keep its policy rate stable at 1.00% through the remainder of 2026, resulting in ongoing stable short-end government bond yields."
"The central bank’s Monetary Policy Committee appears to have limited appetite to adjust interest rates in either direction."
"Lower-than-expected headline inflation, which has retreated from the upper end of the BoT’s 1-3% target range, has reduced the impetus for policy tightening, amid anchored medium-term inflation expectations."
"Nevertheless, the unresolved conflict in the Middle East, continued albeit gradual pass-through of energy costs, and upside risks to food inflation arising from adverse El Nino-related weather conditions will keep the authorities vigilant on inflation, even as they look through the supply-side shock that would ease after 1Q27."
"The BoT noted volatile movements in the Thai baht against the US dollar due to external developments."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Michael Pfister examines whether the weaker CNY explains China’s rising export market share. Using bilateral real exchange rates across major partners, he finds no systematic link between CNY moves and market share gains, including in advanced sectors like electric cars. The study suggests structural factors dominate and warns European policymakers that CNY appreciation alone is unlikely to reverse Euro-area market share losses.
Real CNY moves and export share
"Between 2019 and 2025, the CNY depreciated in real terms against many other currencies, including the Mexican peso by 33%, the British pound by 30%, the US dollar by 24%, and the euro by 22%. However, it also appreciated against some currencies, most notably the Japanese yen, against which it appreciated by almost 20%."
"Across all categories, however, no systematic relationship can be identified. In other words, on average across HS6 categories, the trend is actually slightly in the opposite direction; that is, a stronger CNY is very slightly associated with an increase in market share, even if the result is insignificant. At first glance, it appears as though the CNY plays no role."
"Perhaps analyses should not focus quite so heavily on movements in the CNY, but pay closer attention to other factors when examining the strength of Chinese exports. This does not mean that the CNY is not undervalued, as there are good reasons for this. But our analysis shows that changes in the real exchange rate do not explain the recent shifts in market share."
"For European policymakers, this suggests that CNY appreciation alone would probably not reverse the loss of market share."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Cleveland Federal Reserve (Fed) President Beth Hammack crossed the wires on CNBC on Thursday as the Jackson Hole Symposium begins. She was hawkish, saying that the recent inflation figure was expected, that “now” is the time to tackle persistent inflation and that monetary policy is not restrictive for the economy in the United States (US).
Key highlights:
Most recent inflation number was as expected.
Now is time to act given persistence of inflation.
I do not see Fed policy providing restriction for economy.
Above target has been persistent amid questions of how shocks will play out.
The main worry is that public will lose confidence inflation will return to 2%.
Contacts highly concerned about inflation and living expenses.
Concerned inflationary mindset may be taking hold.
You recognize neutral monetary policy when you see it.
Neutral rate seen higher than other Fed officials.
My neutral rate projection on upper end of committee range.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | 0.04% | 0.00% | -0.12% | -0.31% | -0.01% | -0.20% | |
| EUR | 0.00% | 0.05% | -0.02% | -0.15% | -0.32% | -0.10% | -0.20% | |
| GBP | -0.04% | -0.05% | -0.04% | -0.21% | -0.35% | -0.16% | -0.26% | |
| JPY | 0.00% | 0.02% | 0.04% | -0.14% | -0.29% | -0.13% | -0.19% | |
| CAD | 0.12% | 0.15% | 0.21% | 0.14% | -0.16% | 0.03% | -0.05% | |
| AUD | 0.31% | 0.32% | 0.35% | 0.29% | 0.16% | 0.20% | 0.10% | |
| NZD | 0.00% | 0.10% | 0.16% | 0.13% | -0.03% | -0.20% | -0.06% | |
| CHF | 0.20% | 0.20% | 0.26% | 0.19% | 0.05% | -0.10% | 0.06% |
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.
MUFG's Derek Halpenny examines how uncertainty over Strait of Hormuz oil flows and tight US fuel inventories are shaping crude prices. Conflicting shipping estimates, shifting diplomatic signals and large drawdowns in distillate and gasoline stocks are keeping energy markets highly sensitive to changes in supply expectations.
Hormuz flows and inventories in focus
"Crude oil prices are lower as well with President Trump stating that the Strait of Hormuz has been cleared of mines although there is scepticism over whether that is true."
"So, might this be the start of a renewed bounce in energy prices? The answer will surely depend on the degree of traffic that is currently getting through the Strait of Hormuz. It’s difficult to know for sure but the oil price level suggests the traffic is higher than previously."
"US Energy Secretary Chris Wright claimed that the US army helped ship over 15mn barrels through Hormuz in a single day last week, with a 7-day average of more than 8mn barrels a day. Tracking data (2mn-6mn barrels per day) suggest that’s an exaggeration but untracked ships (with no transponders on) could be a credible reason for the difference. It is certainly reasonable to think the true number may lie between, which would still by notable."
"Oil prices seem to respond more to good news and fall in response than rise on the back of bad news. A New York Times article on Tuesday suggesting the US was considering returning diplomats to the Middle East, suggesting Washington does not expect a return to full-scale conflict helped drive prices lower but developments yesterday saw some, but not all, of that drop reverse."
"The Iran-Oman charging Strait of Hormuz deal was viewed as evidence of defiance by Iran that could draw a response from the US while the energy inventory data saw very large drawdowns of distillates and gasoline. The EIA stated that distillate inventories are now at their lowest level on record on a seasonal basis."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold gives up earlier gains as buyers turn cautious after a strong August rally.
- A firmer US Dollar and sticky US inflation keep the upside in check ahead of Fed Chair Kevin Warsh’s Jackson Hole speech.
- XAU/USD retains a bullish technical bias above key daily SMAs, although RSI and MACD point to easing upside momentum.
Gold (XAU/USD) remains on the back foot at the start of American trading hours on Thursday after reversing its earlier intraday gains. At the time of writing, XAU/USD trades around $4,577, after reaching an intraday high of $4,643.
The precious metal climbed to $4,697 earlier this week, its highest level since May 14, but buyers appear hesitant to chase prices higher amid uncertainty over the Federal Reserve’s (Fed) interest rate path. Wednesday’s US Personal Consumption Expenditures (PCE) Price Index also showed that inflation remains sticky and well above the Fed’s 2% target.
Following the figures, the US Dollar (USD) staged a modest recovery as they reinforced expectations that the Fed may need to keep interest rates higher for longer. Gold is often viewed as a hedge against inflation, but higher interest rates reduce the appeal of the non-yielding metal. As a result, Gold ended Wednesday with a loss of around 1.40%.
Even so, the latest PCE figures, along with recent Consumer Price Index (CPI) and Producer Price Index (PPI) data, suggest inflation is no longer accelerating sharply. This reduces the chances of an immediate Fed rate hike and could help limit the downside in Gold. According to CME FedWatch Tool, markets currently see a near 62% chance that the central bank will keep borrowing costs unchanged in September.
Meanwhile, the weekly US labour-market data also offered some support to the Greenback. Initial Jobless Claims fell to 203K in the week ending August 22, below market expectations of 208K and the previous reading of 207K (revised from 206K).
Kansas City Fed President Jeff Schmid said on Thursday the energy shock is leaking into the economy and stressed that the Fed needs to return inflation to 2%. Chicago Fed President Austan Goolsbee said, “The biggest short-run fear is that inflation is not under control,” while describing the current “low hire and low fire” labour market as unusual. Goolsbee added that “the economy on balance has been stable.”
Traders now look ahead to Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium on Friday for greater clarity on the interest rate outlook. Middle East tensions also remain an important factor as elevated energy prices continue to pose upside risks to inflation, while there are still no clear signs that normal vessel traffic through the Strait of Hormuz will resume soon.
Iran and Oman recently said they had reached an agreement on the strait. However, a senior Iranian official told Reuters that the deal has not been finalised and that details are still being negotiated. Meanwhile, Qatar’s Prime Minister is visiting Tehran on Thursday for talks aimed at de-escalation and restoring US-Iran dialogue.
Technical analysis: XAU/USD bulls pause below $4,700 resistance
From a technical perspective, XAU/USD retains a bullish bias, although momentum indicators point to waning upside strength on the daily chart. The metal holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), supporting the broader uptrend.
Meanwhile, the Relative Strength Index (RSI) has eased to the mid-60s after climbing into overbought territory, while the Moving Average Convergence Divergence (MACD) remains positive but is losing momentum, suggesting that upside pressure is moderating rather than reversing.
On the upside, initial resistance is seen at the $4,700 psychological mark, followed by the $4,900 level. On the downside, the 200-day SMA at around $4,525 offers immediate support, followed by the 100-day SMA near $4,376 and the 50-day SMA around $4,200. A broader support zone is seen at the $4,000 psychological level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Nordea’s Jan von Gerich argues that the European Central Bank remains focused on upside inflation risks and is likely to continue tightening policy. The report highlights data dependence but still forecasts three more rate increases, in September, December and March 2027, which would take the deposit rate to 3%. Energy prices and broader price pressures are key to the path of rates.
ECB focus stays on inflation risks
"The monetary policy account of the ECB’s July meeting further supports the notion that the ECB remains mainly concerned about upside inflation risks for now and that, unless the price outlook improves materially, rates will have to be raised again."
"For now, the absence of second-round effects gives the ECB room to monitor developments, which we think is broadly consistent with a quarterly pace of 25bp rate hikes rather than more rapid monetary policy tightening. That said, the situation could still become more acute, favouring a more pre-emptive approach and faster rate increases."
"It was argued that pre-emptive action could be justified if the situation turned sufficiently acute, as reflected in an unanchoring of inflation expectations, clear signs of a pick-up in underlying price pressures, or firms moving to a more rapid pace of price adjustment than usual."
"As a result, we continue to think the ECB will hike rates several more times at a quarterly pace, i.e. we see hikes in September, December and March 2027, which would bring the deposit rate to 3%. For now, risks are tilted towards fewer hikes."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Kansas City Fed President Jeffrey Schmid warned on Thursday that inflation remains stubborn and that the energy shock is spreading into the broader economy. With the next meeting approaching, he said the Fed needs more information but remains committed to returning inflation to 2%.
Key Quotes
Inflation is stubborn and sticky.
The Fed will have its work cut out as the next meeting looms.
It is unclear what Fed policy is restricting right now.
The Fed needs more information.
The energy shock is leaking into the economy.
The Fed needs to get inflation back to 2%.
It will take time to change the Fed’s balance sheet.
There may be room to hold fewer Fed meetings.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Chicago Federal Reserve (Fed) President Austan Goolsbee said on Thursday that the economy remains broadly stable but warned that tariffs and war-related price increases are complicating the inflation outlook.
Key Quotes
Tariffs and war-related price increases are a challenge for the Fed.
Political pressure on the Fed “puts me on edge”.
Political interference with central banks generally leads to inflation.
The economy has, on balance, been stable.
The current low-hire, low-fire job market is unusual.
The biggest short-term fear is that inflation is not under control.
Three-month inflation “doesn’t look terrible”.
Watch what the data suggest for the policy outlook.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Forex Market News
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