Forex News
- NZD/USD strengthens to around 0.5915 in Monday’s early European session.
- China's Manufacturing PMI recovered to 49.8 in August, stronger than expected.
- Markets now see a 56.9% probability of a US rate hike in September.
The NZD/USD pair gains momentum to near 0.5915 during the early European trading hours on Monday. Better-than-expected Chinese economic data provides some support to the China-proxy New Zealand Dollar (NZD) against the US Dollar (USD).
China's Manufacturing Purchasing Managers' Index (PMI) improved to 49.8 in August, up from 49.2 in July, according to the latest data released by the National Bureau of Statistics (NBS) on Monday. This figure came in above the market consensus of 49.7. Meanwhile, the NBS Non-Manufacturing PMI held steady at 49.0 in August.
On the other hand, Federal Reserve (Fed) Chair Kevin Warsh's speech at the Jackson Hole Economic Symposium sent a strongly hawkish signal. This, in turn, might lift the Greenback and act as a headwind for the pair.
Warsh said on Friday that “While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved.” Fed Chairman also signalled that further tightening may be needed to curb price pressure.
Bets among Fed funds futures traders that the Fed will raise interest rates in September rose to 56.9% on Friday, according to the CME FedWatch tool. That’s up from 39.9% before the speech.
The attention will shift to the incoming US economic data on Friday, including Nonfarm Payrolls (NFP) and the Unemployment Rate. These readings could shape expectations ahead of the September Fed meeting.
RBNZ seen keeping hawkish guidance as OCR stays within neutral range
Strategists at Brown Brothers Harriman expect the Reserve Bank of New Zealand to maintain a firm policy tone at the upcoming meeting, noting that the central bank is likely to reiterate that “further OCR increases appear likely at upcoming meetings” given that the Official Cash Rate “remains well within the bank’s neutral range estimate (2.20%-4.10%).” This guidance would be consistent with BBH’s view that ongoing above-target inflation and solid domestic growth warrant additional tightening, even as the policy rate is still judged to be within a neutral, rather than restrictive, zone.
Warsh flags unfinished inflation work as financial conditions stay loose
Fed Chair Warsh delivered a notably more hawkish-toned speech, with a FXS Speechtracker score of 7.4 versus a historical average of 6.5, underscoring that the Fed must be confident underlying inflation is moving to target or “we have work to do.” Warsh highlighted healthy consumer spending, stable labor markets, and rapid business investment while stressing that financial conditions are not restrictive and that recent better-than-expected summer inflation prints do not yet signal a meaningful change in underlying trends, keeping the predominant focus squarely on prices and the firm 2% PCE objective. The emphasis on durable yet fragile inflation expectations and loose credit conditions reinforces a bias toward further policy tightening if price stability progress stalls.
The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 129.70, consistent with solid hawkish positioning despite no incremental shift in the aggregate signal. This stable but high reading, alongside the above-baseline FXS Speechtracker score, suggests the Fed narrative remains firmly in hawkish territory, supportive of the Dollar on any data that questions the durability of current inflation improvements.
Technical Analysis: NZD/USD keeps a positive bias in the near term
In the daily chart, NZD/USD maintains a mildly bullish near-term bias as spot holds above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping price anchored in the upper half of the recent range. The Relative Strength Index (14) at 54.4 sits just above neutral, hinting that buying pressure dominates but lacks the kind of momentum extension seen earlier in the month.
On the topside, the immediate obstacle is the upper Bollinger band near 0.5985, which caps the recent advance and marks the next resistance hurdle for bulls. On the downside, initial support is seen at the Bollinger middle band around 0.5910, ahead of a deeper cushion at the 100-day SMA near 0.5845, while the lower Bollinger band at 0.5835 adds to the same demand area should a corrective pullback gain traction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The Indian Rupee drops against the US Dollar at the start of the US data-packed week.
- Higher oil prices due to renewed US-Iran tensions have weighed on the Indian Rupee.
- Fed’s Warsh reiterates that officials are committed to countering high inflation.
The Indian Rupee (INR) opens slightly lower against the US Dollar (USD) at the start of the week. The USD/INR pair ticks up to near 95.43, as higher oil prices due to renewed tensions between the United States (US) and Iran have weighed on the Indian currency.
In the opening session, the MCX Crude Oil price contract expiring on September 21 trades 2.13% higher to near Rs. 8,160.
Lower oil prices bode well for currencies from economies such as India, which rely heavily on oil imports to meet their energy needs.
US and Iran exchange attacks near Hormuz Strait
The exchange of attacks between the US and Iran over the weekend has refreshed fears of military aggression in the Middle East. On Sunday, the US Central Command (CENTCOM) struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, following weeks of relative calm, Bloomberg reported.
In response, Iran's Islamic Revolutionary Guard Corps (IRGC) launched ballistic missile strikes on two US bases in Jordan in retaliation for the US attack on Larak Island.
The restart of the war could prompt fears of a prolonged global oil supply disruption. Financial market participants might not have anticipated US military aggression, as it said earlier this month that it would pursue economic pressure on Tehran to force it to a deal.
Fed’s Warsh reiterates upside inflation risks
At the Jackson Hole Symposium on Friday, Federal Reserve (Fed) Chairman Kevin Warsh reiterated that board members are committed to bringing inflation down to the 2% target.
“This summer's inflation data better than expected, but do not tell me underlying trends have meaningfully changed," Fed Chair Warsh said and added, "Fed's predominant focus right now should be on prices."
Warsh didn’t deliver any remarks regarding the monetary policy outlook, as expected; however, traders raised Fed interest rate hike bets following his remarks.
According to the CME FedWatch tool, the odds of the Fed leaving interest rates unchanged again in the September meeting have diminished to 39.4% from almost 60% seen a week ago.
US NFP will be key event
This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for August, which will be released on Friday. Investors will closely track the official employment data to get fresh cues regarding the Fed’s interest rate outlook.
July’s NFP report strongly impacted the Fed’s interest rate expectations after it revealed that US employers fired 23K workers while they were anticipated to hire 80K fresh workers.
USD/INR Technical Analysis
In the daily chart, USD/INR trades at 95.43, maintaining a neutral near-term bias as spot remains close to the 20-day exponential moving average (EMA) at 95.53.
The Relative Strength Index (RSI) around 45 stays below the neutral 50 line, reinforcing a lack of bullish momentum rather than signaling oversold conditions.
On the topside, immediate resistance is located at the 20-day EMA near 95.53, which needs to be reclaimed to ease the current bearish tone and open the way for a more sustained recovery. Above the dynamic EMA, the 96.00 level could act as a key hurdle for the pair. Looking down, the August 5 low at 94.92 could be the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Fed's Chair Warsh speech
Kevin Warsh took office as chairman of the Board of Governors of the Federal Reserve in May 2026, for a four-year term ending in 2030. His term as a member of the Board of Governors will expire in May 2040. Warsh, born in Albany (New York) on April 13, 1970, is an American financier and attorney who already served as a member of the Fed Board of Governors from 2006 to 2011 and was significantly involved in the central bank's response to the financial crisis.
Read more.Last release: Fri Aug 28, 2026 14:00
Frequency: Irregular
Actual: -
Consensus: -
Previous: -
Source: Federal Reserve
OCBC FX Strategist Sim Moh Siong and Christopher Wong highlight that the Japanese Yen (JPY) has already benefited from aggressive market pricing for Bank of Japan (BoJ) tightening, with an 85% chance of a September hike implied. They argue further JPY gains may require additional policy tools beyond rate increases, such as measures to encourage repatriation of overseas assets, as BoJ faces constraints on how far and fast it can raise rates.
BoJ tightening expectations already rich
"A September move would break from the BoJ's pattern in the current tightening cycle, where rate increases have typically come about every six months. The last hike was delivered in June. Even so, it will be difficult for the BoJ to out-hawk market expectations."
"Japan's rates market is already pricing an roughly 85% chance of a September hike, alongside a faster pace of tightening thereafter. Current pricing implies the policy rate rising from 1.00% to 1.75% by July 2027."
"Given the constraints on how quickly and how far the BoJ can raise rates, additional measures may still be needed to counter more persistent JPY depreciation pressures. One option could be policies aimed at encouraging the repatriation of overseas assets."
"Looking ahead, attention will turn to the September BoJ meeting, a potential Ueda-Takaichi meeting, and this week's G20 Finance Ministers and Central Bank Governors gathering for further policy signals."
"Future JPY gains may require policy support that goes beyond the pace and extent of rate increases."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Asian stock markets start the week on a cautious note amid renewed Middle East tensions.
- The exchange of attacks between the US and Iran has pushed oil prices higher.
- Hawkish Fed bets accelerate as Fed’s Warsh reiterates high inflation risks.
Asian equity markets remain under pressure at the start of the week, as risk sentiment turns sour due to renewed tensions in the Middle East and a sharp increase in Federal Reserve (Fed) interest rate hike expectations.
At the time of writing, Nikkei225 is down 0.25% to near 66,250, Hang Seng decline 0.36% slightly below 22,500. However, Chinese stock markets are positive upto 0.7%, and KOSPI rises 0.46% at around 6,820.
Tensions between the United States (US) and Iran have revived as Iran retaliates by attacking US bases in Jordan after Washington struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, Bloomberg reported.
This has resulted in a sharp increase in oil prices. At press time, the WTI Oil price trades 2.5% higher to near $84.85.
Higher oil prices bode poorly for various Asian economies, given their significant reliance on oil imports to meet their energy needs.
Meanwhile, remarks from Fed Chair Kevin Warsh at the Jackson Hole Symposium that the central bank is committed to bringing price pressures down have lifted hawkish Fed bets.
According to the CME FedWatch tool, the odds of the Fed leaving interest rates again in the September meeting have diminished to 39.4% from almost 60% seen a week ago.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
ING analysts Warren Patterson and Ewa Manthey note that oil prices, including ICE Brent, started the week stronger after US strikes on Iran raised concerns over Persian Gulf supply. They highlight Strait of Hormuz flows and Russia’s extended diesel export ban as key factors supporting the oil complex.
Brent underpinned by Gulf tensions
"Oil prices started the week stronger following the first military strikes between the US and Iran in a month. ICE Brent briefly moved back above US$90/bbl in early morning Asia trading. The US struck Iranian launchers over the weekend amid suggestions that Iran was about to launch mines into the Strait of Hormuz."
"Obviously, the key is whether this ignites further rounds of strikes from both sides, and whether it leaves shippers hesitant to navigate the Strait of Hormuz."
"Oil producers in the region have grown more comfortable shuttling crude through the key chokepoint in recent weeks. Reports have 6-8m b/d transiting the strait, although we assume an average of 5m b/d. Further escalation could put these flows under renewed pressure."
"Unsurprisingly, Russia announced over the weekend that it would extend its ban on diesel exports by another month until the end of September 2026. This move will only add to the supply stress facing the global diesel market amid disruptions from the Persian Gulf and Russia. The market is moving toward stronger demand."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that GBP/USD fell sharply to 1.3527 and closed at 1.3540, contradicting expectations for range trading. Intraday, they see limited further losses within 1.3520–1.3570 due to oversold conditions. Over the coming weeks, risk stays skewed lower toward 1.3480 while the pair remains capped below 1.3600.
Pound under pressure near supports
"24-HOUR VIEW: Last Thursday, GBP fell to a low of 1.3571 before recovering to close little changed at 1.3594 (-0.03%). When GBP was at 1.3595 on Friday, we highlighted that “oversold conditions, combined with slowing momentum, suggest that instead of continuing to decline today, GBP is more likely to trade in a range of 1.3570/1.3620.” We were incorrect. Instead of trading in a range, GBP fell sharply to a low of 1.3527 before settling 0.40% lower at 1.3540. Conditions remain deeply oversold, and further sustained decline appears unlikely. Today, GBP may edge lower, but any decline should remain within a range of 1.3520/1.3570."
"1-3 WEEKS VIEW: We turned slightly negative on GBP last Friday (28 Aug, spot at 1.3595), indicating that “there has been a slight increase in downward momentum, and GBP could edge lower.” However, we highlighted that “based on the prevailing momentum, any decline could be contained within a 1.3550/1.3645 range.” We did not anticipate downward momentum to increase so quickly, as GBP plunged to a low of 1.3527. The risk remains on the downside, and the level to watch is 1.3480. Overall, GBP is likely to remain under pressure as long as it holds below 1.3600 (‘strong resistance’ level). "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD remains capped below 1.3550, just above two-week lows on Monday.
- Fresh hostilities in Iran are wighing on risk appetite and supporting the safe-haven US Dollar.
- Fed's Warsh boosted bets of an upcoming rate hike on his speech at Jackson Hole on Friday.
The British Pound (GBP) edges up on Monday but remains close to two-week lows against the US Dollar (USD). Risk aversion amid fresh hostilities between the US and Iran and rising bets that the US Federal Reserve (Fed) might finally hike rates in September are keeping the Greenback's dips subdued at the start of the week.
Investors' appetite for risk remains frail on Monday, following reports that the US launched the first attack on Iran in about a month, targeting missile launchers on Larak Island, where the Islamic Revolutionary Guard Corps (IRGC) were allegedly preparing rockets to place sea mines in the Strait of Hormuz.
Tehran responded by attacking US military sites in Jordan, according to reports by Fox News citing a US source, and the IRGC vowed “response and punishment” to the US.
Fed Warsh hints at rate hikes
The US Dollar ended last week on strong footing, boosted by comments by Fed Chairman Kevin Warsh at the Jackson Hole Summit, hinting at upcoming monetary tightening moves if inflationary pressures remain at high levels.
FX strategists at OCBC note that “debasement concerns faded following Fed Chair Warsh's Jackson Hole speech, with the USD strengthening, gold falling and the US yield curve flattening.” Warsh “stressed that inflation remains too high and remains the Fed's primary concern.” This has reaffirmed the central bank's commitment to achieving its “2% PCE inflation target,” say the analysts in a note.
Against this backdrop, OCBC suggests that “USD dips may also prove more restrained for now, with USD bears likely needing softer US data to rebuild conviction.” They add that “focus turns to incoming US labour and inflation data ahead of the Sept FOMC,” as markets reassess the near-term policy path in light of Warsh’s remarks and the evolving data pulse.
The UK calendar is thin on Monday, and markets will be attentive to the G20 finance ministers' meeting in North Carolina, starting on Monday, where US Treasury Secretary Scott Bessent will strive to convince the world's major economies, namely China, to sever its links to Iran, while trying to calm growing concerns about the ballooning US government debt and rising bond yields.
(This story was corrected on August 31 at 06:30 to say the GBP/USD is capped just above two-week lows, and not highs, as previously stated.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Danske Research Team notes that Federal Reserve (Fed) Chair Kevin Warsh’s hawkish Jackson Hole speech pushed EUR/USD lower, with markets now pricing September as nearly a coin-flip for a rate hike. The team highlights that the Dollar strengthened versus both the Euro and Japanese Yen, while EUR/USD is broadly unchanged in early Asian trading despite the repricing in US rates.
Hawkish Fed rhetoric pressures Euro
"In the US, Fed Chairman Warsh struck a notably hawkish tone in his speech at Jackson Hole, reaffirming that the 2% PCE target is "firm" and "fixed" and signalling that more work remains if inflation does not move towards target with sufficient speed."
"This represents a step away from his July press conference tone, where Warsh had emphasised markets' role in determining the direction of rates. The remarks sent EUR/USD lower. Overall, Warsh's message was consistent with a central banker open to hiking at the next meeting, with September now priced as nearly a coin-flip."
"Also on the wires, Fed's Hammack, who voted for a rate hike at the last meeting, struck a hawkish tone, calling for immediate action on rate hikes and warning that waiting risks creating further pain. She expects inflation to end the year around 3%, well above the 2% target, and does not view current financial conditions as restrictive."
"Focus turns to the German flash inflation figures for August, ahead of the euro area release tomorrow. Headline HICP inflation is expected to increase to 3.1% y/y (prior: 2.8%), driven by energy prices. Attention will centre on momentum in underlying inflation, which remained unaffected by the energy shock in the figures from Spain and France last week."
"This week we have another crucial event for the US market with the labour market report for August, which is released on Friday. On top of this we have inflation data from the eurozone."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
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