Forex News

Standard Chartered’s Aldian Taloputra notes Indonesia’s Q2 GDP grew 5.3% year-on-year, slowing from 5.6% but beating consensus. Stronger-than-expected H1 data leads the bank to raise its 2026 GDP forecast to 5.3%. However, a weak recovery in formal-sector employment and cautious private-sector investment suggest growth will remain modest, with government programmes and household consumption offsetting subdued external demand.

Growth beats but headwinds persist

"Indonesia’s GDP growth slowed to 5.3% y/y in Q2 from 5.6% in Q1 but beat market expectations of 5.1%. While a slowdown was expected as one-off factors such as Eid spending and the harvest season faded, Q2 GDP still expanded faster than in 2025."

"We raise our 2026 GDP growth forecast to 5.3% from 5.2% given stronger-than-expected H1 growth. We maintain our view that growth will remain modest, averaging 5.2% in H2, amid a weak recovery in formal-sector employment and still-cautious private-sector investment."

"Despite ongoing job creation – the unemployment rate fell to 4.65% in May from 4.74% in November 2025 – formal-sector jobs, which typically offer better income security, fell to 40.7% of total employment from 42.3% over the same period."

"We believe government priority programmes (including free meals, village cooperatives, social spending and infrastructure) and still-relatively healthy household consumption will support near-term growth."

"This should help to offset subdued external demand and still-cautious private-sector activity."

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

• DJIA trades near 54,000, roughly 800 points beneath this week's record.
• July payrolls fell 23K against an 80K consensus, a 103K miss.
• December carries zero probability of the current range surviving.

The American labour market contracted in July and the Dow Jones Industrial Average answered with a gain of roughly 65 points, a tenth of a percent, trading near 54,000 into the afternoon. The session high just above 54,100 printed in the minutes after the 12:30 GMT release and has not been beaten since. That is the entire equity response to a payrolls contraction.

A postponement dressed as a pivot

Rate futures did move on the number, and they moved in one direction only, which is outward. The 16 September meeting now carries a 44.1% chance of a quarter-point increase against 55.9% for a hold, down from 59.2% a week ago. The 28 October figure fell to 68.5% from 88.0% over the same stretch.

What did not move is the destination. On 9 December the current 3.50% to 3.75% range carries zero probability, meaning a quarter point is still fully priced by year end, exactly as it was before the labour market fell apart. The only genuine casualty was the second hike, whose December tail halved to 14.4% from 31.3%. A calendar shifted, a policy path did not.

The long end declined to celebrate

The bond market split the report cleanly by maturity. Two-year notes, which trade the next two meetings and nothing further, rallied more than four basis points to 4.204% and the lowest yield since 17 July. The thirty-year moved less than a single basis point, to 5.208%.

That is the same thirty-year yield that stood at its highest since 2007 a week ago, and an outright contraction in American payrolls was worth almost nothing to it. Ten-year notes gave up barely a basis point at 4.651%. The curve steepened because the front end believes the Fed is waiting while the long end does not believe that waiting changes the price of money over thirty years.

Three of the four improvements were subtractions

The unemployment rate fell to 4.1% from 4.2% against a consensus that had it holding, and it fell because the labour force participation rate slipped to 61.4%, the lowest in more than five years. The broader U6 underemployment rate did not improve at all, holding at 7.9%. A jobless rate that drops because people stop looking is not a labour market repairing itself.

Wage growth cooled to 3.2% YoY against 3.5% expected, with the prior reading revised down to 3.4% and June payrolls cut to 20K from the 57K first reported. Layoff announcements sit near a two-year low, which is the tell worth keeping: this is a hiring freeze rather than a firing wave. Frozen markets take considerably longer to thaw than they do to break.

The record came before the reason

The index printed a record just short of 54,750 earlier this week and is on track for a second consecutive weekly gain, close to 1,500 points and roughly 3%. Almost none of that advance was a labour-market trade, because the labour-market data did not exist until Friday morning. It was a bet on the Strait of Hormuz reopening.

The reopening trade that built those records remains a forecast rather than a fact. Tehran and Muscat are close to a transit framework that Iranian officials concede would not by itself reopen the waterway, Tehran denies negotiating directly with Washington, and eight vessels crossed the Strait on Tuesday against roughly 100 a day before the war. Crude Oil near $78.00 is pricing an outcome the shipping data has not delivered.

Two prints stand between here and September

With no meeting in August, the 16 September decision has one more payrolls report and Wednesday's Consumer Price Index (CPI) to absorb, after a 14:00 GMT speech on Friday that the calendar scored neutral. Headline inflation is forecast at 0.1% MoM against June's -0.4%, with the annual rate easing to 3.4% from 3.5%, while core is seen at 0.2% MoM and 2.5% YoY.

The Producer Price Index (PPI) follows on Thursday at 0.1% MoM against -0.3%, and Friday brings retail sales alongside a Michigan sentiment reading forecast to fall to 54 from 55.2. The inflation expectations buried in that survey, pinned at 4.2% one year out and 3.3% over five, decide whether September's coin flip becomes a hike again. Nothing in Friday's payrolls report touched them.

Levels and bias

Resistance: The session high just above 54,100 is the first line, and the afternoon rebound stopped short of it. Above that the record just short of 54,750 is the only structure left, with 54,000 behaving as a handle the index trades around rather than through.

Support: The 53,800 area holds both the overnight low and the floor of the cash-open flush, which makes it the only level this session has genuinely tested. Beneath it the tape thins toward the 53,500 area, and there is nothing structural until the 50-day Exponential Moving Average (EMA) near 52,000.

Bias: Bullish while the 53,800 area holds, with the record just short of 54,750 as the objective and a daily Stochastic Relative Strength Index (Stoch RSI) near 50 leaving room in either direction. A daily close beneath 53,800 opens the 53,500 area and turns this week's records into a failed breakout.

Dow Jones daily chart

• NZD/USD gains after a much weaker-than-expected US employment report.
• Sharp downward revisions to previous payrolls reinforce expectations of a more accommodative Fed.
• The Reserve Bank of New Zealand's hawkish stance continues to support the New Zealand Dollar.

NZD/USD trades around 0.5890 on Friday at the time of writing, up 0.36% on the day. The pair is benefiting from a sharp decline in the US Dollar (USD) following a much weaker-than-expected US employment report, while the Reserve Bank of New Zealand's (RBNZ) hawkish stance continues to support the New Zealand Dollar (NZD).

Data released by the Bureau of Labor Statistics (BLS) showed that US Nonfarm Payrolls (NFP) fell by 23K in July, compared with market expectations for an increase of 80K jobs. Previous months were also revised sharply lower, with June payrolls revised down from 57K to 20K and May from 129K to 63K, resulting in a combined downward revision of 103K jobs.

The Unemployment Rate edged down to 4.1% from 4.2%, while the annual Average Hourly Earnings growth slowed to 3.2% from a revised 3.4%, reinforcing evidence that the US labor market is gradually cooling.

The US Dollar weakens sharply as investors scale back expectations of further monetary tightening by the Federal Reserve (Fed). According to the CME FedWatch Tool, the chance of a 25-basis-point rate hike in September has fallen to 42%, down from 55% a day earlier and 67% a week ago.

Comments from Richmond Fed President Thomas Barkin, however, helped temper the most pessimistic interpretations of the report. Barkin said the latest employment figures reflect a labor market characterized by low hiring and low firing rather than a significant deterioration, while noting that corporate earnings remain strong.

Meanwhile, the New York Fed Survey of Consumer Expectations showed that one-year inflation expectations eased to 3.6% in July from 3.7% in June, while three-year and five-year expectations remained unchanged. The survey reinforces the view that inflationary pressures continue to moderate gradually, adding further pressure on the US Dollar.

The New Zealand Dollar also continues to benefit from the RBNZ's hawkish bias, with the central bank's monetary policy stance providing additional support for the Kiwi against a broadly weaker US Dollar.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5890, holding a constructive near-term bullish bias after reclaiming the downtrend resistance line, now offering a support level around 0.5884. The pair trades above both the 100-period and 200-period moving averages at 0.5876 and 0.5854 respectively, which together suggest an improving underlying trend structure. Momentum supports the topside bias, with the Relative Strength Index (RSI) hovering near 61, indicating firm bullish pressure but still shy of overbought territory.

On the downside, initial support is seen at the reclaimed trend-line area near 0.5884, followed by the 100-period moving average at 0.5876 and a more solid horizontal floor at 0.5860, while the 200-period moving average at 0.5854 marks a deeper structural cushion. On the topside, the next key obstacle emerges at the horizontal resistance level of 0.5909, and a clear hourly close above this barrier would likely open the path for a continuation of the recovery, while failure to do so could trigger a corrective pullback toward the nearby support cluster.

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

Royal Bank of Canada’s (RBC) Nathan Janzen reports that Canada’s labour market strengthened in July, with a 75k employment gain following robust increases in May and June and a decline in the unemployment rate to 6.4%. Despite modest average job growth for 2026, improving conditions are occurring alongside slower population growth, elevated retirements, easing energy prices, and persistent but contained U.S. tariff risks.

Labour data firm but still modest

"Canada's labour market showed further signs of improvement in July with a 75k increase in employment building on 106k increases over May and June, and the unemployment rate ticking down to its lowest level (6.4%) in two years."

"That still leaves average monthly job growth for 2026 to-date at a historically modest 10k/month after a soft start to the year."

"The unemployment rate is a better measure of per-worker labour market conditions, and the tick lower in July left the rate down half a percent from a year ago."

"But it has been improving despite still significant U.S. tariff uncertainty and higher energy prices."

"We continue to look for the unemployment rate to edge lower over the second half of the year."

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

• The Aussie strengthens on Friday, pushing past the 0.7070 barrier to reach its best level since mid-June.
• The US economy shed 23K jobs in July against forecasts of an 80K gain, with June revised down to 20K.
• Fed's Barkin still describes the labor market as low hire, low fire rather than one in decline.

The AUD/USD pair surged to its highest in nearly two months past 0.7070 earlier on Friday, following the release of the United States (US) Nonfarm Payrolls (NFP) report. The move owes nothing to Australia. Instead, the US Dollar (USD) came under broad and heavy selling pressure once the payrolls report landed, with the Australian Dollar (AUD) emerging as the biggest beneficiary on a board where every major currency gained against the Greenback.

Payrolls fell by 23K in July against expectations of an 80K increase, the first outright contraction since February, and June was revised down to 20K from the 57K originally reported.

The reaction across the complex tells the rest. The US Dollar Index (DXY) is posting losses , Gold ripped to seven-week highs, and Silver put in solid gains, while USD/JPY unwound the whole of Thursday's advance and slid back beneath the 157.00 handle.

Richmond Fed President Thomas Barkin said the figures were consistent with a sector in weak balance, characterizing the labor market as more low hire, low fire. He conceded the data "doesn't feel very good but it's where it is," while noting that corporate earnings are strong and growing nicely, and that he is watching them for linkages to the job market.

On another note, Iran's parliament speaker and top negotiator, Mohammad Bagher Ghalibaf, accused US President Donald Trump of staging "theater diplomacy" in a post on X on Thursday, as Washington and Tehran offered conflicting accounts of their engagement. Under the draft plan for managing the waterway, reported by Fars, US and Israeli ships would be barred from the Strait of Hormuz, with restrictions extending to countries Tehran says have caused it damage until compensation is paid.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7060, maintaining a bullish near-term bias as it holds above both the 20-period Simple Moving Average (SMA) at 0.7043 and the 100-period SMA at 0.7003. The pair is advancing toward the nearby horizontal barrier at 0.7064, while the Relative Strength Index (RSI) around 63 suggests firm but not overextended upside momentum.

On the topside, immediate resistance is seen at 0.7064, followed by a higher horizontal cap at 0.7078. On the downside, initial support emerges at 0.7049, reinforced by the 20-period SMA at 0.7043, with a deeper floor at 0.7035 and the 100-period SMA providing broader trend support near 0.7003.

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

The New York Fed Survey of Consumer Expectations shows that households’ inflation expectations decreased slightly over the short-term horizon and remained unchanged at the medium and longer-term horizons. One-year inflation expectations eased from 3.7% in June to 3.6% in July

For the next three years, the poll showed that households expect inflation to hold at 3.3%, unchanged from the previous release. Finally, in the five-year perspective, households still expect inflation to remain at 3% as in June.

The survey also showed that expectations for gas price growth partially rebounded after their sharp decline in June. Labor market expectations were mixed, with unemployment and job loss expectations deteriorating while job finding expectations improved somewhat.

Market’s reaction

The US Dollar Index (DXY) hovers around 99.60, relatively unchanged after the release. The DXY is down on the day, weighed on by the discouraging Nonfarm Payrolls (NFP) report published earlier in the day.

Norman Liebke at Commerzbank has revised Gas and German power price forecasts higher, citing tighter European storage, increased reliance on LNG and structural constraints on Qatari exports. The phase-out of Russian Gas from 2027 adds upside risk. Year-end Gas is now seen at EUR 50 per MWh and German power at EUR 110 per MWh, with only partial easing by end-2027.

European LNG and Russian phase-out

"We have revised our gas and power price forecasts upwards."

"We now expect the gas price to stand at EUR 50 per MWh at year-end (previously: EUR 45), while our forecast for end-2027 remains unchanged at EUR 40 per MWh."

"Moreover, even after a sustained reopening of the Strait of Hormuz, Qatari LNG production - and thus exports - will remain restricted by one fifth over the next three to five years due to the partial destruction of Qatar’s Ras Laffan LNG facility."

"A further upside risk to prices is the phase-out of Russian gas imports, which was approved in January and will take effect from early 2027 for LNG and from autumn 2027 for pipeline gas."

"We have also revised our forecast for the German power price (month-ahead) upwards accordingly."

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

TD Securities strategists note that the US Dollar (USD) weakened after the disappointing July Payrolls report, but see limited downside against G10 currencies unless softer US inflation further reduces Fed hike expectations. They say EUR/USD may struggle to break above 1.16 without a benign CPI print, while USD losses could extend further against select EM currencies. They continue to expect the Fed to keep rates unchanged through 2026 and 2027.

Dollar softer but still supported

"Markets bull steepened on the negative headline print despite a drop in the UE rate to 4.1%. The print eased concerns over a reaccelerating labor market, leading to markets pricing out hikes, with September's pricing declining by 3bp to 12bp of hikes."

"While the risk of a hike lingers, our expectations for core and headline CPI next week (0.20% m/m and 0.15% m/m, respectively) would likely lead to further pricing out of hikes. With the majority of the recent move higher in rates driven by Fed expectations, rates could move lower as hikes are priced out."

"While we continue to expect the Fed to keep rates on hold for 2026 and 2027, September pricing could remain substantial as the Fed will continue to look at data to make a decision in the months ahead."

"Without a removal of near-term Fed rate hike pricing, the USD's cumulative return in US trading hours is unlikely to dip to negative territory, in our view. Specifically for EUR/USD, the bar for an upside breakout above 1.16 without soft US CPI data remains high."

"The USD was broadly lower on the back of the US payrolls miss. We believe the USD should stay more supported vs G10 currencies but USD selloff could have more room to run against select EM currencies."

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

• Gold climbs above $4,350 to a fresh seven-week high after US Nonfarm Payrolls fall short of expectations.
• Lower Oil prices have prompted traders to trim Fed rate-hike bets, while Middle East developments remain in focus.
• XAU/USD maintains a bullish technical bias with buyers eyeing the 100-day SMA near $4,390.

Gold (XAU/USD) extends its recovery on Friday as weaker-than-expected US payroll growth weighs on the US Dollar (USD) and US Treasury yields. At the time of writing, XAU/USD trades around $4,356 after hitting $4,371, its highest level since June 17.

The US economy lost 23K jobs in July, well below market expectations of an 80K increase. June’s increase was revised sharply lower to 20K from 57K. However, the Unemployment Rate fell to 4.1% from 4.2%.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades around 99.60, down nearly 0.33% on the day after touching an intraday low of 99.41. US Treasury yields fell across the curve following the data before paring some of their decline, with the front-end 2-year yield trading around 4.197%, about six basis points below its intraday high of 4.254%.

The precious metal is heading for its strongest weekly rise since January, gaining more than 7% so far after breaking above the month-old $4,000-$4,200 range on Wednesday. The advance was initially fuelled by optimism that the Strait of Hormuz could reopen soon as Iran and Oman reportedly moved closer to an agreement on a proposed shipping route through the waterway.

The development pushed Oil prices sharply lower earlier in the week, easing concerns over energy-driven inflation and prompting traders to scale back bets on Federal Reserve (Fed) interest-rate hikes. Together with the weak payroll figures, this has further reduced expectations that the Fed will raise borrowing costs in the coming months. Gold tends to perform well in a low interest-rate environment, as it offers no yield.

According to the CME FedWatch Tool, markets currently see around a 42% probability of a rate hike at the September meeting, down from roughly 67% a week ago.

Nevertheless, energy-related inflation risks have diminished rather than disappeared, as Oil prices still carry a substantial geopolitical risk premium. Fars News reported on Friday that Iran had struck what it described as “hostile targets” in the Strait of Hormuz.

Meanwhile, the proposed Iran-Oman arrangement would not result in a complete reopening of the Strait. Tehran could collect transit fees under the framework and is also reviewing a bill that would bar US, Israeli and other hostile vessels from using the waterway.

Technical analysis: Daily chart

XAU/USD bounced back above the Bollinger Bands’ 20-period Simple Moving Average (SMA) at $4,086 and is now holding over the upper band at $4,268, hinting at firm underlying demand after the recent range-bound trade.

The Relative Strength Index (RSI) at 66 approaches overbought territory on the daily chart, and the Moving Average Convergence Divergence (MACD) histogram stays firmly positive, reinforcing bullish momentum.

On the topside, initial resistance is defined by the 100-day SMA at $4,390, and a sustained break above this barrier would open the way for a more decisive bullish continuation.

On the downside, immediate support is seen at the Bollinger upper band near $4,268, followed by the mid-line at $4,086, with a more solid floor at the horizontal level of $4,000.

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

ABN AMRO’s Chief Economist Nick Kounis highlights renewed US labour market weakness, with Nonfarm Payrolls falling and household employment data softening. He notes the unemployment rate declined as labour force participation dropped to multi-decade lows, signalling cyclical weakness. Kounis argues this could re-balance Federal Reserve concerns toward employment, while ABN AMRO still expects the Fed to stay on hold, with inflation risks skewing toward a hike.

Weak jobs data challenge Fed stance

"US nonfarm payrolls fell by 23K in July (+80K), while there were downward revisions to previous months, which left the 3-month average gain in employment at just +20K."

"Declining participation, although reflecting some structural elements, is usually an indicator of cyclical labour market weakness."

"The data support our view that some of the strength in payrolls in the last few months was flattered by transitory factors."

"Today’s report could re-balance those concerns to the labour market side of its dual mandate."

"We maintain the view that the Fed will remain on hold over the next few months, though high inflation still means that the risks are skewed towards a hike."

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