Forex News

• DJIA trades near 53,700, roughly 2% beneath the August 5 record.
• Cisco down roughly 9%, close to 65 index points of a 75-point decline.
• December hike odds 68.3%, down from fully priced three sessions ago.

The Dow Jones Industrial Average trades near 53,700 on Thursday, roughly 75 points and a tenth of a percent lower, on a morning when the S&P 500 prints a fresh record intraday high and the Nasdaq Composite runs close to a percent higher. The obvious reading of that gap is an old-economy benchmark missing a technology rally on a soft inflation print, and it is the wrong one.

The arithmetic runs through a single component that reported its fiscal fourth quarter after Wednesday's session and is being marked down for it. That one reaction accounts for very nearly the whole decline, and what separates this index from the other two averages on Thursday is not the businesses it owns but the method by which it counts them.

One name, most of the move

Cisco (CSCO) trades roughly 9% lower after quarterly results the market read as a disappointment on margins rather than on revenue. The shares carried a price near $124 into the report, so a fall of that size strips close to $11 of share price out of the average. The index is price weighted, converting share-price Dollars into index points at roughly six points per Dollar across the thirty members.

One name therefore delivers something near 65 index points of a decline that runs to 75, which leaves the other twenty-nine roughly where the rest of the market is. Cerebras (CBRS) dropped 13% on its own results and cost the average nothing, because it is not a member, and neither are Meta Platforms (META), Micron (MU) or Netflix (NFLX), the three names doing most of the work in the Nasdaq Composite.

The curve stopped pricing a path

Futures put the odds of at least one increase by December 9 at 68.3%, against a December hike that was fully priced on Monday. September 16 carries 34.4%, down from close to a coin flip, and October 28 sits at 48.9% having been better than three in four. Three sessions and two inflation prints have produced the largest dovish repricing of the year.

The distribution underneath those numbers did not follow them down. The odds of two increases by December stand at 23.3% against 24.1% on Monday, effectively unmoved, while the probability of a cut is exactly zero at every 2026 meeting and does not clear one percentage point until the second half of 2027. This is a market pricing a fork rather than a path: the Strait reopens and there is no increase at all, or it stays shut and there are two.

A hawk spoke, then the print landed

A voting regional Fed president took a podium at 12:15 GMT to argue that the central bank should raise rates now rather than wait, scoring 8.2 against a 7.3 average for the speaker on the calendar's hawkish scale. Fifteen minutes later the July Producer Price Index (PPI) landed unchanged on the month against a 0.2% consensus, with core PPI at 0.2% against 0.3%. The second speaker of the morning, at 12:40 GMT, does not hold a vote this year.

The disinflation inside that release is a barrel rather than a policy, which is the part a rates market repricing off it has to own. Headline producer prices at 4.7% YoY and core at 4.2% sit nowhere near any target, and the sequential cooling tracks Crude Oil handing back its war premium, with Brent roughly 2% lower near $87.00 and West Texas Intermediate (WTI) just above $81.00 against prints above $100.00 last month.

Friday's data

Retail sales for July arrive at 12:30 GMT on Friday, the headline expected at 0.1% against 0.2% previously, sales excluding autos at 0.2% against -0.2%, and a control group whose prior reading was 0.5%. Preliminary University of Michigan sentiment for August follows at 14:00 GMT with a 54.5 consensus from 55.2, one-year inflation expectations last at 4.2% and the five-year at 3.3%.

The inflation-expectation components matter more here than the sentiment headline, because a survey that softens while both horizons hold still gives the front end nothing it can trade. Initial jobless claims at 209K against a 202K consensus already argued on Thursday that the labour side is loosening, which is the half of the mandate this committee has spent the year declining to price.

Levels

Resistance: Just above 54,000, where Thursday's high stalled within points of Monday's ceiling, and above that the record just short of 54,750.

Support: The 53,600 area, Thursday's low and the first print beneath the 53,800 floor that pinned the index through the week, then 53,500 and 53,250, with the 50-day Exponential Moving Average (EMA) near 52,300 far below.

Bias: Bearish while just above 54,000 caps. Three lower highs since the August 5 record, a floor near 53,800 given up, and a daily Stochastic Relative Strength Index (Stoch RSI) in the mid-70s that has climbed back through its upper half without buying any price progress leave the near-term path lower. Objectives 53,500 then 53,250, invalidation on a daily close above 54,100 reopening the record.

Dow Jones daily chart

• NZD/USD retreats to around 0.5850 on Thursday, losing 0.15% on the day.
• New Zealand’s two-year inflation expectations ease to 2.34% in the third quarter.
• The US Dollar remains under pressure following softer-than-expected US producer inflation data.

NZD/USD trades around 0.5850 on Thursday at the time of writing, down 0.15% on the day. The New Zealand Dollar (NZD) remains under pressure following the release of softer inflation expectations in New Zealand, which cast doubt on the prospect of further monetary tightening by the Reserve Bank of New Zealand (RBNZ). However, weakness in the US Dollar (USD) following subdued US inflation data helps limit the pair’s decline.

The RBNZ’s two-year inflation expectations, a closely watched horizon for assessing how monetary policy feeds through to prices, ease to 2.34% in the third quarter of 2026 from 2.53% in the previous quarter. One-year inflation expectations stand at 2.6%.

The decline could temper expectations that the New Zealand central bank will deliver another 25-basis-point interest rate hike at its September meeting. Financial markets had previously shown greater confidence in the prospect of another rate increase, which could support the Kiwi. However, lower inflation expectations reduce the need for the RBNZ to tighten monetary policy further.

On the US side, the Greenback remains under pressure following the release of the United States (US) Producer Price Index (PPI). Producer prices slowed sharply to 4.7% YoY from 5.5% previously, below the 4.9% market consensus. Underlying inflationary pressures also show signs of moderation. The core PPI slowed to 4.2% YoY from 4.7% previously.

These figures reinforce the disinflationary signal delivered on Wednesday by the Consumer Price Index (CPI). The simultaneous moderation in consumer and producer price pressures reduces pressure on the Federal Reserve (Fed) to tighten its monetary policy stance, weighing on the US Dollar.

US labor market data released on Thursday also provide limited support to the Greenback. Initial Jobless Claims rose to 209K for the week ending August 8, up from 200K previously and above the 202K expected. Continuing Jobless Claims, however, declined by 22K to 1.777M for the week ending August 1.

Geopolitical risks could nevertheless limit losses in the US Dollar by supporting demand for safe-haven assets. US President Donald Trump says the United States has “total control” over the strategic waterway amid persistent tensions between Washington and Tehran and stalled diplomatic negotiations. The Trump administration is also seeking to increase economic pressure on Iran, including through broader sanctions and measures aimed at restricting Iranian Oil exports.

Kiwi steadies as RBNZ expectations stay anchored but swaps price further tightening

Strategists at Brown Brothers Harriman note that “NZD/USD dropped briefly under its 200-day moving average (0.5832)” after the release of the RBNZ’s Q3 inflation expectations survey, which they describe as “mixed but still well anchored.” According to BBH, the survey showed that “expectations for one-year-ahead annual CPI inflation decreased -81bps to 2.60%, two-year ahead decreased -19bps to 2.34%, five-year-ahead increased +9bps to 2.31%, and ten-year ahead increased +1bps to 2.20%.” They conclude that “overall, inflation expectations remain close to the RBNZ 2% target midpoint for inflation, underscoring the bank’s credibility.”

BBH argues that the policy backdrop still points to further tightening, noting that “nonetheless, above target inflation, more favorable domestic growth outlook, and a policy rate near the lower-end of the RBNZ’s neutral range (2.20%-4.10%) argue for additional RBNZ rate hikes.” In rates markets, they highlight that “the swaps curve more than fully price in 75bps of tightening over the next twelve months to 3.25% which bodes well for NZD.”

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5848, retaining a bearish near-term tone as it holds beneath both the 100-period simple moving average (SMA) and the 200-period SMA, clustered around 0.5874, as well as the horizontal barrier at 0.5860 and the descending trend-line resistance near 0.5879. The Relative Strength Index (RSI) at 47.8 sits just below neutral, hinting at subdued downside momentum rather than an oversold condition, which suggests scope for further consolidation while the pair remains capped by this overhead structure.

On the topside, initial resistance is located at the horizontal line at 0.5860, ahead of a dense supply zone defined by the 100- and 200-period SMAs around 0.5874, with the downward-sloping trend line near 0.5879 acting as the next hurdle for any recovery attempt. On the downside, the key support level emerges at the horizontal floor at 0.5821; a clear break below this base would likely extend the decline, while holding above it keeps NZD/USD in a tight range under the aforementioned moving average and trend-line caps.

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

• Japanese Yen struggles despite softer US PPI data and falling Fed rate-hike expectations.
• Higher energy prices keep longer-term inflation risks tilted to the upside.
• BoJ hike expectations and the threat of currency intervention cap USD/JPY near 160.

The Japanese Yen (JPY) struggles to gain traction against the US Dollar (USD) on Thursday, even as the Greenback weakens modestly following softer-than-expected US Producer Price Index (PPI) data. The Yen strengthened immediately after the release, briefly pushing USD/JPY toward 159.

At the time of writing, USD/JPY trades around 159.37. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 99.90, retreating from 100.08, its highest level in two weeks.

Data from the US Bureau of Labor Statistics showed that the headline PPI was unchanged in July after falling by 0.1% in June, while the annual rate slowed to 4.7% from 5.5%. Core PPI rose by 0.2% month-on-month, easing from 0.4%, while the yearly rate declined to 4.2% from 4.7%.

The latest figures follow Wednesday’s in-line US Consumer Price Index (CPI) report. The run of softer inflation data has prompted traders to scale back expectations for an imminent Federal Reserve (Fed) interest-rate increase, which had already weakened after the July Nonfarm Payrolls (NFP) report surprised to the downside.

According to the CME FedWatch Tool, markets now assign around a 32% probability of a September rate hike, down from 55% a week ago. The repricing is driving a sharper decline in front-end US Treasury yields, but the move is less pronounced at the longer end as higher energy prices keep inflation risks tilted to the upside.

The US Dollar remains supported within its recent range, keeping the Yen under pressure despite growing expectations of a September Bank of Japan (BoJ) rate hike, although the prospect of further currency intervention limits USD/JPY’s upside near 160.00.

Analysts at MUFG note that market participants are increasingly focused on whether Japan is prepared to re-enter the FX market to shore up the Yen. They argue that, at a minimum, "Japanese policymakers will be hoping the heightened threat of intervention helps to slow the pace of yen weakness," even if actual action is delayed. MUFG also stresses that "recent price action highlights that it will be difficult for the BoJ to avoid hiking rates in September and disappointing market expectations," warning that such a scenario "would encourage further yen selling."

• GBP/USD rises as softer US PPI weighs on the US Dollar.
• Jobless claims increase, reinforcing September Fed hold expectations.
• UK GDP meets estimates, keeping BoE inflation data in focus.

The Pound Sterling (GBP) registers modest gains versus the Greenback on Thursday as US inflation data in the producer side came in below or in line with estimates, showing that the disinflation process continues. At the time of writing, the GBP/USD pair trades at 1.3503, up 0.06%.

GBP/USD firms as softer US PPI bolsters Fed hold expectations

Data from the US has weakened the Greenback, as indicated by the US Dollar Index (DXY), which tracks the performance of six currencies against the Greenback, down 0.14% to 99.83.

The US Producer Price Index (PPI) in July ticked lower from 5.5% to 4.7% YoY, below forecasts of 4.9%. Core figures, which exclude volatile items, decreased as expected from 4.7% to 4.2% YoY. At the same time, the US Department of Labor reported that Initial Jobless Claims for the week ending August 8 rose from 200K to 209K, above estimates of 202K

Recent US jobs data have suggested that the labor market remains solid but have also shown some signs of weakness. This, along with July’s benign inflation readings on the consumer and producer sides, might prevent an interest rate hike by the Federal Reserve (Fed) at the September 16 meeting.

Money markets continued to price in a 60% chance of a Fed hold at the September meeting, with a slim chance of a 25-basis-point rate hike, according to Prime Terminal data.

Fed officials remained hawkish

Cleveland Fed Beth Hammack crossed the wires, saying that the US central bank should raise rates to restrain growth and inflation. She commented that when talking to businesses, they’re excited to borrow so they can continue investing as they see “growth opportunities.” However, she added that a strong reacceleration of the economy could affect the disinflationary process.

Richmond Fed President Thomas Barkin said it is an “open question” whether a rate hike is needed to meet the inflation target. He said that inflationary pressures come from shocks which “should pass.”

In the UK, the economy showed that the Gross Domestic Product (GDP) grew 0.4% on a quarterly basis in Q2 2026. The reading was in line with estimates, a small dip from the 0.6% increase in the previous period, but it remains solid.

Ahead this week, the US economic docket will feature the release of the University of Michigan Consumer Sentiment. Across the pond, the UK schedule will feature a tranche of inflation data, which could trigger a reaction in the bond market regarding expectations for the Bank of England (BoE) monetary policy.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3497, holding above the cluster of the 50/100/200-day simple moving averages (SMA) around 1.3370 and the reclaimed trend-line levels at 1.3425 and 1.3344, which together reinforce a bullish near-term bias. The Relative Strength Index (14) at 59.3 stays in positive territory without being overbought, hinting that upside momentum is constructive rather than stretched, while the FXS Fed Sentiment Index near 136.6 suggests a still-elevated but cooling policy anxiety backdrop that may keep directional moves sensitive to incoming US data.

On the topside, immediate resistance emerges at the descending trend line break near 1.3510, followed by the higher upward-support trend-line break around 1.3575, where the recent advance could meet stronger supply. On the downside, first support is seen at the former resistance trend line now turned floor around 1.3425, ahead of the grouped long-term SMAs near 1.3370 and the lower structural trend support at 1.3344, levels that would need to give way to undermine the current bullish technical tone.

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

OCBC’s Sim Moh Siong and Christopher Wong note that in-line United States (US) inflation and a modestly lower probability of a September Federal Reserve (Fed) hike have left the US Dollar (USD) broadly range-bound while risk assets continue to rally. They argue this constructive environment, together with improved risk sentiment, should keep carry trades supported, though warn that higher long-end US yields driven by AI-related financing and US fiscal deficits remain a key risk.

Carry trades supported by stable USD

"Market reaction was relatively muted following an in-line US CPI report and mixed developments in the Middle East. Fed pricing shifted modestly, with the probability of a September rate hike easing to 40% from 50% after the inflation release. Most FOMC members are likely to view the July CPI print as acceptable but will want to assess August inflation data before making a September policy decision."

"The initial market response saw US Treasury yields fall and the USD weaken. However, the move quickly reversed, with the yield curve twist steepening and the broad USD finishing the session little changed. The standout development overnight was the continued rally in risk assets, supported by strong AI infrastructure-related earnings and investment themes."

"A broadly range-bound USD and constructive risk backdrop should continue to support carry trades, despite ongoing volatility in oil markets and lingering FX intervention risks for JPY. The main risk to this positive market environment is a further rise in long-end US yields, driven by substantial AI-related financing needs, persistent US fiscal deficits, and the resilience of US economic growth."

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

TD Securities reports that United Kingdom (UK) Gross Domestic Product (GDP) for June surprised to the upside at 0.3% m/m, driven by a strong services sector expanding 0.4% m/m. May was revised to flat, leaving June as the only positive month in Q2. Quarterly growth reached 0.4% q/q, slightly above Bank of England (BoE) projections, but TD argues this does not signal a fundamental growth story or a clear case for rate hikes.

Stronger data yet cautious policy view

"UK GDP surprised to the upside in June, coming in at 0.3% m/m (TDS: 0.0%; mkt: -0.1%; prior: 0.0%), and driven by strength in the services sector of 0.4% m/m (TDS/mkt: 0.0%; prior: 0.1%). The latter saw broad based growth, with only wholesale trade showing any real contraction."

"Simultaneously, May was revised to flat, making June the only positive growth month in Q2."

"Ultimately though, on a quarterly basis, UK economy grew in line with market expectations of 0.4% q/q, which is just above the BoE projections of 0.3% q/q."

"Given that this is at least partially driven by the strength in Q1, it should not be taken as a fundamental growth story and is unlikely to stir those MPC members that currently voting for a hold into choosing to hike at their next meeting."

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

• Gold stays under pressure after hitting a fresh two-month high.
• Fading Fed rate-hike expectations and falling US Treasury yields help cushion the downside in the non-yielding metal.
• XAU/USD struggles around the 100-day SMA, while bullish RSI and MACD readings suggest buyers still retain some control.

Gold (XAU/USD) trades under pressure on Thursday after hitting a fresh two-month high of $4,449 during Asian trading hours. The metal fails to capitalise on softer-than-expected US Producer Price Index (PPI) data, even as the US Dollar and Treasury yields edge lower. At the time of writing, the precious metal trades around $4,377, down 0.70% on the day.

The pullback appears to be driven mainly by profit-taking as market participants remain reluctant to chase prices higher amid an uncertain macroeconomic backdrop. The recent rally from near $4,000 has largely been fuelled by softer US economic data, including a broadly in-line Consumer Price Index (CPI) and weaker-than-expected Nonfarm Payrolls (NFP) reports for July. These releases have reduced the chances of an imminent interest-rate hike by the Federal Reserve (Fed).

Data released by the US Bureau of Labor Statistics on Thursday showed that the headline PPI was unchanged in July after falling by 0.1% in June, while the annual rate eased to 4.7% from 5.5%. Core PPI rose by 0.2% MoM, down from 0.4%, while the annual rate slowed to 4.2% from 4.7%.

According to the CME FedWatch Tool, markets now assign a 32% probability of a September rate hike, down from 55% a week ago. US Treasury yields are falling across the board, while the US Dollar Index (DXY) retreats below 100 after touching a two-week high earlier in the day.

The 2-year Treasury yield trades around 4.14%, its lowest level since July 17. Lower yields and a softer US Dollar (USD) are limiting Gold’s downside.

Analysts at MUFG/BTMU highlight that the CPI data “supports our view that Fed is likely to leave rates on hold in September,” although they caution that “it is unlikely that the US rate market will scale back rate hike expectations much further in the near-term given a hike still can’t be ruled out.” They also flag ongoing upside risks to the inflation outlook, warning that “the lack of progress to reopen the Strait of Hormuz and elevated energy prices continues to pose upside inflation risks in the near-term.”

At the same time, they argue that “the lack of clear forward guidance from Fed Chair Kevin Warsh makes it harder to assess how they are likely to set policy going forward,” leaving markets to navigate a still uncertain policy path despite the latest CPI print.

Against this backdrop, falling US Treasury yields and a softer US Dollar are likely to keep Gold supported, although uncertainty over the Fed’s policy path and heightened energy-driven inflation risks could cap the upside.

Technical analysis: Buyers struggle to clear the 100-day SMA

XAU/USD is fluctuating just around the 100-day Simple Moving Average (SMA) at $4,387 and well below the 200-day SMA at $4,502, while it holds comfortably above the 50-day SMA at $4,145, leaving the metal trapped between medium-term support and longer-term overhead resistance and hinting at a capped, neutral tone.

On the daily chart, the Relative Strength Index (14) at 65 sits in bullish territory, and the Moving Average Convergence Divergence (MACD) remains positive, which suggests underlying buying interest.

On the upside, a sustained move above the 100-day SMA at $4,387 could expose the $4,500 psychological mark, which closely aligns with the 200-day SMA at $4,502.

On the downside, the first meaningful support is located at the 50-day SMA at $4,145, followed by the psychological and structural floor at $4,000.

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

ING’s Adam Antoniak explains that Poland’s July CPI rose mainly due to higher fuel prices after VAT normalization, removal of the fuel cap and increased Oil costs following the US–Iran MoU collapse. Other price pressures remain subdued, with broad-based food disinflation and competitive retail chains. Core inflation edged slightly higher but shows no broad-based upward trend, keeping headline CPI within the central bank target.

Fuel shock but core pressures muted

"The final reading of July CPI inflation confirmed that consumer price growth accelerated to 3.0% YoY from 2.5% YoY in June. However, the increase was driven almost entirely by a renewed surge in fuel prices following the restoration of the standard 23% VAT rate from the temporarily reduced 8% rate and the removal of the fuel price cap at the beginning of July."

"Combined with higher oil prices after the collapse of the Memorandum of Understanding (MoU) between the US and Iran, this pushed retail petrol and diesel prices in Poland up by 15.8% MoM. As a result, annual fuel price inflation accelerated to 7.0% YoY in July from 1.3% YoY in June, contributing around 0.5-0.6 percentage points to headline CPI inflation."

"Fortunately, price pressures remain subdued elsewhere in the basket. Housing energy inflation eased slightly, reflecting lower prices of liquid fuels compared with June, while food price inflation continued to decline."

"We estimate that core inflation excluding food and energy edged up by 0.1pp to 3.1% YoY in July from 3.0% YoY in June, but we see no signs of broad-based upward pressure on prices. Annual inflation in the information and communication category increased slightly, driven by higher prices for computers, data storage devices and mobile phone services."

"Headline inflation remains within the central bank's target range of 2.5% ±1 percentage point despite the increase in fuel prices, and we believe that neither the current inflation picture nor the outlook warrants a monetary policy response. In our view, underlying price pressures remain contained, supported by moderating wage growth and a cooler labour market."

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

Standard Chartered strategists have raised its FY27 Consumer Price Index (CPI) inflation forecast to 4.9% from 4.5%, citing higher food and retail fuel prices. They now expect broader price pressures, excluding Gold and Silver, with food and beverage CPI seen at 6.3%. Quarterly CPI projections for FY27 have also been revised higher on food-price risks.

Higher food and fuel lift CPI outlook

"We raise our FY27 CPI forecast to 4.9% from 4.5%, reflecting higher food and beverage inflation and higher fuel inflation; we remove our assumed c.2% retail fuel-price cut in September."

"Price pressures likely to rise across the board, barring gold and silver."

"Our quarterly CPI forecasts now stand at 4.8% (prev: 4.3%) for Q2-FY27, 5.8% (prev: 5.1%) for Q3-FY27 and 5.3% (prev: 4.9%) for Q4-FY27, driven by revisions to food prices."

"We expect MPC to maintain the status quo in FY27; risk of 50bps+ hike remains if food prices rise further."

"The revision to our FY27 core CPI forecast is marginal, however, as the upward pressure from removing our assumed September retail fuel-price cut has been partly offset by lower gold prices so far."

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