Forex News

Standard Chartered strategists Anubhuti Sahay and Saurav Anand revise their FY27 Gross Domestic Product (GDP) growth forecast to 7.2% from 6.6% following a robust Q1-FY27 print and strong high-frequency indicators. They expect momentum to stay firm into the festival season, with Q2-FY27 GDP at 7.4% and H2-FY27 at 6.7%, despite headwinds from El Niño, higher inflation and fading GST tailwinds.

Growth forecasts lifted despite risks

"We revise our FY27 (year ending March 2027) GDP growth forecast to 7.2% from 6.6%. We have previously highlighted upside risks amid reasonably strong economic activity despite the oil supply and price shock."

"The revision reflects stronger-than-expected Q1-FY27 (quarter ended June 2026) GDP growth of 7.8%, versus consensus – including us – of 7.3%; continued momentum in July, as indicated by our composite economic indicator; and the likelihood that activity and sentiment remain supportive into the festival season."

"Given the strength of high-frequency indicators so far, we now expect Q2-FY27 GDP growth of 7.4%, versus 6.6% previously. "

"We still expect growth to slow in H2-FY27, reflecting the adverse impact of El Niño on agricultural output and rural demand, higher inflation, and fading tailwinds from GST cuts delivered from September 2025. However, momentum should be stronger than previously expected."

"We now forecast H2-FY27 GDP growth of 6.7%, versus 6.5% previously."

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

• Gold plunges as US-Iran strikes send Oil and yields higher.
• WTI nears $90 as Hormuz escalation revives inflation fears.
• Warsh remarks and Fed hike bets deepen bullion pressure.

Gold (XAU/USD) price collapses over 2.30% on Tuesday as the Middle East conflict escalates, with the US and Iran exchanging strikes, while US economic data was mixed but moved to the back seat amid geopolitical tensions. At the time of writing, XAU/USD trades at $4,342 after reaching a high of $4,461.

XAU/USD slides as Hormuz escalation fuels Oil, yields and Fed risks

Recently, newswires reported explosions in Southern Iran, while US President Donald Trump confirmed that the US Air Force launched strikes aimed at trimming Tehran’s capabilities to launch missiles and to add sea mines to the Strait of Hormuz, which, according to Trump, “currently has no mines (They have been completely removed or detonated!).“

This pushed US Treasury yields higher, particularly the 10-year benchmark note, which rose nearly four basis points to 4.792%. This is due to the jump in Oil prices, as West Texas Intermediate hit a high of the day near $90.00 per barrel and currently sits with gains of over 4.20%.

Last week, bullion prices edged lower following hawkish remarks by Federal Reserve (Fed) Chair Kevin Warsh at his Jackson Hole speech, in which he reassured that if inflation remains stubbornly high, then the central bank has “work to do.”

That statement triggered a U-turn on money markets. Before Warsh’s speech, the odds for a rate hike at the September meeting were below 40%. At the time of writing, Prime Terminal data indicate a 71% chance of an interest rate increase and a 29% chance of rates remaining unchanged.

Earlier, US data showed that business activity in the manufacturing sector cooled, as the ISM Manufacturing PMI in August was 54.6, down from 55.6 in July and below estimates of 55.2.  Other data included the Job Openings and Labor Turnover Survey (JOLTS) report for July, which showed steady hiring, with vacancies increasing to 7.217 million, below forecasts of 7.3 million.

Ahead, the US economic docket will feature the release of the Fed’s Beige Book, jobs data, the ISM Services PMI for August, followed by the Nonfarm Payrolls report on Friday.

XAU/USD technical outlook: Gold sinks below 100-day SMA, eyes on $4,300

From a technical standpoint, the escalation of the US-Iran conflict accelerated Gold’s downtrend. On its way down, XAU/USD breached key support levels, including the $4,400 figure and the 100-day Simple Moving Average (SMA) at $4,365, exacerbating a breakout below $4,350.

Of note, the Relative Strength Index (RSI), which was bullish, shifted bearish amid a vertical drop, indicating that sellers are gaining momentum.

For a bearish continuation, bullion must achieve a daily close below $4,350. Below is the low of the day (LOD) at $4,326, followed by the $4,300 mark. Once hurdled, the next area of interest is the 50-day SMA at $4,215.

On the other hand, Gold could shift to neutral if the yellow metal clears the 100-day SMA at $4,365, which would open the path to reclaiming $4,400.

Rabobank strategists highlight growing pressure on China’s trade model as US-led restrictions target links with Iran and Venezuela. They note China’s large trade surplus and weak domestic demand, with mixed Purchasing Managers' Index (PMI) signals suggesting either an exacerbated exportable surplus or mounting risks to the official growth target. Policy-driven barriers increasingly threaten China’s ability to export its way out of slowdown.

Export surplus and policy headwinds

"Combined with the US’s systematic shutting down of China’s low-cost energy flows from Iran and Venezuela, the promulgation of barriers to entry for Chinese goods is starting to look like death by a thousand cuts for China’s economy. Bessent yesterday pointed to China’s trade surplus equivalent to 1% of global GDP, saying that China is trying to export its way out of a problem of weak domestic demand. Official PMI figures released yesterday showed a slight improvement in China’s manufacturing sector but further deterioration in non-manufacturing, and both sectors remained below the threshold between contraction and expansion."

"Unofficial figures released today showed manufacturing expanding and at a faster rate than anticipated by surveyed economists. If that is a true reflection of what is going on, China’s problem with weak domestic demand and a large exportable surplus that needs to be soaked up by demand elsewhere is only exacerbated. If it is not a true reflection, even the export engine is seeing the walls closing in and the official growth target is in serious question."

"Even without US pressure, the realisation seems to be dawning that Ricardian comparative advantage isn’t actually a utility-maximising strategy when not everyone plays by the rules. Ursula von der Leyen recently said that if trade negotiations do not materially reduce the EU’s record trade deficit with China, the former will need to solve the problem via regulatory tools, including its famed ‘trade bazooka’ anti-coercion instrument. There are no free traders in a foxhole."

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

National Bank of Canada (NBC) strategists note that global equities, including the MSCI ACWI, remain on track for another positive quarter, helped by an August rebound. However, they stress that strained traffic in the Strait of Hormuz, depleting Oil inventories, surging refining margins and generational-high government bond yields leave the equity outlook vulnerable to any renewed inflation shock.

Energy, inflation and bond yield risks

"Global equities continue to advance, but the path remains fragile. The MSCI ACWI is on track for another positive quarter, yet the Strait of Hormuz remains far from normalized, energy inventories are being depleted and supply-chain pressures are building. With long-term bond yields already near generational highs, another inflation shock could prove particularly challenging for equities."

"We continue to view this positive trend as fragile. In that sense, the market backdrop bears some resemblance to Homer’s Odyssey, brought back into the popular imagination by this summer’s box-office hit: the journey may be moving forward, but there are still plenty of hazards along the way. For investors, one of the most immediate remains the global energy market."

"The energy price risk is particularly important given the length of the conflict. It has now been six months since the conflict began, and inventories of crude oil and liquid fuels are getting depleted, which could ultimately pressure up oil prices."

"As a result, if higher energy prices were to slow the normalization of inflation, markets could further scale back expectations for monetary easing, keeping long-term yields elevated or pushing them even higher."

"In the current government bond yield environment, the potential of higher/more persistent inflation is a risk for equities. Thirty-year government bond yields are already at generational highs, reflecting not only lingering inflation concerns but also large fiscal deficits, rising public debt and heavy sovereign issuance across several major economies—all of which are contributing to a rising term premium, or the additional compensation investors demand for holding longer-dated bonds."

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

• US10Y trades near 4.79%, its highest level since January 2025.
• The two-year is moving faster than the 10-year, up nearly five basis points.
• No cut priced at any meeting through the end of 2027.

The 10-year Treasury yield trades near 4.79%, roughly four basis points higher and at its highest level since January 2025, in a fifth consecutive session of selling. The two-year moved further still, adding closer to five basis points to trade near 4.39%, and it did so as American forces began striking Islamic Revolutionary Guard Corps (IRGC) targets inside Iran. An announced military escalation would ordinarily buy duration a bid, and this one produced the opposite.

The front end is doing the work

The shape of Tuesday's move matters more than its size. The two-year yield is up about 1.06% against 0.80% at the benchmark, and it has been the faster mover through the entire repricing, climbing from near 3.35% at the March low to within a few basis points of 4.40%. Front-end leadership is not what a geopolitical risk premium looks like.

A market genuinely buying war risk bids duration and steepens the curve on term premium. This one sold the two-year hardest, which is a statement about the September 16 meeting rather than about the Strait of Hormuz. The strait still matters, but it reaches the curve through the price of a barrel and therefore through the committee's inflation problem, not through any flight to safety.

The buyback has round-tripped

The 30-year sits back near 5.28%, roughly where it was before the Treasury Department doubled the size of its long-dated buyback operation in August, lifting the maximum from $2 billion to at least $4 billion for a programme running through November. That announcement initially pulled the yield down to 5.19%. All of it has been given back inside a fortnight.

Federal debt passed $40 trillion two weeks ago and the long end is being asked to absorb what that implies for issuance. A buyback is a liquidity instrument, and the round trip is the market's verdict on whether liquidity was ever the constraint. The problem is global rather than American: Japan's 10-year touched 3% for the first time since 1996 on Tuesday, and French and German long ends extended to multi-year highs alongside it.

A front end pricing a floor, not a cycle

Futures put a hike at the September 16 meeting near 68%, up from roughly 35% before the Jackson Hole keynote, and give the October 28 meeting a 95% probability of a target range at 3.75% to 4.00% or higher. December splits close to evenly on a second move, and the higher range is 81% priced by the January 27 meeting.

What the strip does beyond that is the part the two-year is actually trading. From December onward the current 3.50% to 3.75% range carries no probability at all, and every 2027 meeting on the board prices a floor of 4.00% to 4.25% or above. This is not a curve discounting a short defensive cycle with an exit. It is discounting a level.

The commentary is pulling the same way. A voting Federal Reserve governor said Tuesday morning that the committee should act decisively to raise rates if inflation does not appear to be moderating sufficiently, and pointed at the September 15-16 meeting. The Institute for Supply Management (ISM) manufacturing survey released the same morning made his case for him, with the headline missing at 54.6 against a 55.2 consensus while the prices paid index printed 71.1 for a second month.

The numbers that carry the week

Private payrolls land Wednesday at 12:15 GMT with 48K forecast against 44K, followed by the Beige Book at 18:00 GMT. The ISM services Purchasing Managers Index (PMI) arrives Thursday at 14:00 GMT with a 54.3 forecast against 54.1, and its own prices paid line was last at 70.3.

Friday's August employment report is forecast at 58K after a 23K contraction, with the unemployment rate held at 4.1% and average hourly earnings accelerating to 0.3% MoM from 0.1% against 3% YoY from 3.2%. Two more inflation readings, the Consumer Price Index (CPI) and the Producer Price Index (PPI), land the following week ahead of the vote. For a front end priced at 68%, the services price line and those two prints carry more weight than the payroll number.

Levels to watch

Resistance: The session high just short of 4.80% is the immediate line on the 10-year, with the January 2025 peak near 4.81% directly above it and nothing structural between there and 5.00%. The two-year faces 4.40% and then the 4.50% area.

Support: The 10-year holds above the session low near 4.75%, with 4.70% beneath it and the August range floor near 4.60% the level that would end the sequence. The two-year has 4.35% and then 4.25% under it.

Bias: Higher. The 10-year takes out the January 2025 peak and the two-year clears 4.50% while the September vote stays live, with a daily close back beneath 4.70% on the benchmark the only thing that argues otherwise. Both daily Stochastic Relative Strength Index (Stoch RSI) readings sit mid-range, near 47 on the two-year and 49 on the benchmark, so nothing here is stretched.

US Treasury yields, 2-year and 10-year

• The US Dollar Index rebounds on Tuesday, erasing Monday's losses as hawkish Fed bets and rising yields drive demand.
• Fresh US-Iran military strikes lift Oil prices and add a safe-haven bid to the Greenback, while intensifying inflation concerns.
• Traders await US employment data later this week.

The US Dollar Index (DXY) edges higher on Tuesday, reversing all of the previous day’s losses as hawkish Federal Reserve (Fed) expectations and rising US Treasury yields provide a strong tailwind. At the same time, fresh fighting between the United States (US) and Iran drives some safe-haven flows toward the Greenback. At the time of writing, DXY trades around 99.71, up roughly 0.30% on the day.

Reuters reported that the US military began striking Islamic Revolutionary Guard Corps (IRGC) targets inside Iran at 16:00 GMT on Tuesday. Iranian media reported explosions on Qeshm Island and in the southern cities of Bandar Abbas and Chabahar.

US President Donald Trump confirmed the operation in a Truth Social post, saying that the US was “striking Iranian targets near the Strait of Hormuz.” Trump warned that “if the failed Nation of Iran retaliates,” it would be “hit again at a much harder and higher level.”

Oil prices moved higher in reaction to the latest escalation, with West Texas Intermediate (WTI) climbing to its highest level since July 24 and trading around $88.70 per barrel. Higher energy prices add to inflation risks at a time when the Fed is already struggling to bring inflation sustainably back toward its 2% target.

Fed Chair Kevin Warsh’s tough rhetoric at the Jackson Hole Symposium revived expectations of an interest rate hike as soon as this month. Warsh warned that the central bank would have more work to do if policymakers were not confident that inflation was returning to target.

US Treasury yields rise as persistent inflation concerns and hawkish Fed expectations fuel bets on higher borrowing costs, with the benchmark 10-year yield trading around 4.80%, its highest level since January 2025.

According to the CME FedWatch Tool, traders see around a 68% probability that the US central bank will increase rates at its September 15-16 meeting, up from roughly 40% a week ago.

Softer US data provide little relief to Dollar bears

Softer-than-expected US economic data released on Tuesday briefly weighed on the Greenback but failed to generate sustained selling pressure. The ISM Manufacturing Purchasing Managers Index (PMI) fell to 54.6 in August from 55.6 in July, missing the market forecast of 55.2. JOLTS Job Openings rose to 7.271 million in July from 7.182 million but fell short of the 7.3 million forecast.

Attention now shifts to the ADP Employment Change report on Wednesday and the Nonfarm Payrolls (NFP) report on Friday. Strong employment figures could reinforce expectations of a September rate hike, while a weak report may challenge the Greenback’s advance.

ING economists Peter Virovacz and Zoltán Homolya see Hungary on a gradual but constrained growth path after Gross Domestic Product (GDP) rose 0.5% QoQ and 1.7% YoY in the second quarter. ING forecasts 1.7% growth in 2026, led mainly by consumption, while weak investment, net exports and structural demographic and capital-stock constraints remain key headwinds.

Resilient growth facing structural limits

"Based on the detailed data, the short-term outlook for the Hungarian economy has not changed significantly. The overall picture remains fundamentally positive. Further growth in consumption may be supported by the dynamic rise in real disposable income and the surge in consumer confidence."

"However, we can take some comfort from the fact that the decline in investment is partly due to the review and suspension of projects initiated by the previous government, so it may be only temporary. Meanwhile, investment activity could see a sharp rise towards the end of the year as a result of the drawn-down of EU funds. Export growth may be constrained by geopolitical uncertainties, rising production costs and potential supply disruptions, the signs of which are not yet evident in the second-quarter statistics."

"Our latest economic growth forecast for 2026 projects a 1.7% increase. Throughout the year, consumption is likely to drive the Hungarian economy, while investment may show modest growth in the second half if EU funding boosts year-end investment statistics. However, net exports could significantly dampen GDP growth, given the developments seen in the first half of the year and the expected negative impact of the nuclear energy crisis on the trade balance in the third quarter."

"Further ahead, in 2027–2028, a continued strengthening of domestic demand and an eventual pickup in external demand could lead to GDP growth of around 3.0%. However, the nearly four-year-long stagnation in capital stock and the deteriorating demographic situation make it increasingly unlikely that the Hungarian economy will be able to sustain growth above 3% without suffering a significant loss of internal and/or external balance in the long run."

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

US President Donald Trump posted on his Truth Social account on Tuesday that the US is striking Iranian targets near the Strait of Hormuz in retaliation for Iran’s "failed attempt" to add sea mines in the Strait, which currently “has no mines.”

Trump added that Tehran shot eight missiles, “all successfully knocked down,” at a US base in Jordan.

Full post:

The United States is, as we speak, striking Iranian Targets near the Strait of Hormuz. The strikes are large and powerful, and in retaliation for the Iranians’ failed attempt at adding sea mines to the Strait, which currently has no mines (They have been completely removed or detonated!), and the Iranians shooting eight missiles, all successfully knocked down, at our Military Base in Jordan. If the failed Nation of Iran retaliates for this very justified attack, they will be hit again at a much harder and higher level, but it will not be the biggest attack of them all, that is waiting in the wings and, when it is over, there will be very little left of the Islamic Republic of Iran! President DONALD J. TRUMP

The US Dollar (USD) has managed to leave behind the negative start to the week and regained balance on Tuesday. The recovery has come on the back of a generalised recovery in US Treasury yields and ongoing tensions in the geopolitical landscape.

Here is what you need to know on Wednesday, September 2:

The US Dollar Index (DXY) has regained some balance and recovered a big chunk of Monday’s losses, managing to briefly surpass the 99.60 level. The usual MBA Mortgage Applications are due seconded by the more relevant ADP Employment Change, Factory Orders, and the weekly report on US crude oil inventories by the EIA.

EUR/USD has traded on the defensive, slipping back below 1.1600 despite flash inflation data in the Euroland reigniting speculation of an ECB rate hike in September. Next on tap on the domestic docket will be the final S&P Global Services PMI in Germany and the euro zone alongside Producer Prices in the bloc, all due on September 3.

GBP/USD has resumed its decline and returned to the low 1.3500s, quickly forgetting about Monday’s optimism. Absent data releases in the UK tomorrow, the focus of attention is expected to shift to the publication of the final S&P Global Services PMI on September 3.

USD/JPY challenged the area of recent tops past the key 160.00 hurdle, resuming its uptrend and rapidly leaving behind Monday’s hiccup. The Monetary Base figures are due, followed by the speech of the BoJ’s Takada.

AUD/USD has set aside Monday’s decent advance, revisiting the 0.7140/0.7130 band, or multi-day lows. The key Q2 GDP Growth Rate will take centre stage in Oz, seconded by the Ai Group Manufacturing index.

Prices of WTI have built on Monday’s gains and reached fresh two-month highs just cents below the $90.00 mark per barrel in response to a flare-up in US-Iran tensions and increasing supply concerns.

Gold has retreated markedly, coming close to the $4,300 mark per troy ounce and flirting with three-week lows. The better tone in the US Dollar in combination with higher US Treasury yields across the curve has prompted the yellow metal to further extend its multi-day correction.