Forex News

• The RBA Minutes are due later in the Asian session and are expected to echo August's hawkish hold.
• Governor Bullock has kept the Middle East conflict front and center as the main upside risk to inflation.
• Treasury Secretary Bessent is due to announce new Iran sanctions in the late American session.

AUD/USD is pulling back to the 0.7150 region, consolidating just below its recent multi-month highs. Traders are largely focused on the Reserve Bank of Australia (RBA) Minutes due later in the Asian session.

At its August meeting, the RBA left the cash rate target at 4.35%, a unanimous decision that came after three hikes earlier in the year. Governor Michele Bullock used the press conference to describe policy as "restrictive and tight" and to make clear the board "did not discuss a rate cut"; the only options considered were a hike or a hold.

Traders will comb the account for any sign the board is softening its line or edging toward the cuts the market had been expecting heading into 2027. Based on the decision and the presser, there is little reason to expect a dovish tilt, and a Minutes set that simply confirms the hawkish hold would keep Australian yields, and the Aussie, supported near the highs.

The US Treasury is expected to broaden the secondary sanctions it can impose on entities and countries that maintain business ties with Iran, according to sources familiar with the matter and Reuters. The measure aims to limit Tehran's exports and keep the near-six-month conflict around the Strait of Hormuz contained.

Technical analysis:

In the 4-hour chart, AUD/USD trades at 0.7153, retaining a constructive bullish tone as it holds above both the 20-period Simple Moving Average (SMA) at 0.7138 and the 100-period SMA at 0.7073. The pair is pressing into a tight overhead band, with nearby horizontal resistance levels at 0.7158 and 0.7167, while the Relative Strength Index (RSI 14) around 60 suggests positive but not overextended momentum that could favor further probes higher as long as these supports remain intact.

On the downside, initial support aligns at the 0.7149 horizontal level, ahead of the 20-period SMA at 0.7138 and the deeper 100-period SMA support near 0.7073. On the topside, a sustained break above 0.7158 would expose the next resistance hurdle at 0.7167, with a further barrier waiting at 0.7177, where buying pressure would need to strengthen to extend the current advance.

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

• WTI retreats on Monday even as the Middle East backdrop remains tense.
• Fresh US sanctions on Iran and Tehran’s threat to halt Gulf Oil exports keep geopolitical risks elevated.
• Buyers retain a slight technical edge, but upside remains capped near the 100-day SMA.

West Texas Intermediate (WTI) Oil trades on the back foot on Monday after gaining more than 5% last week. The pullback comes even as the broader backdrop remains largely unchanged, with Middle East tensions elevated and shipping through the Strait of Hormuz still heavily restricted. At the time of writing, WTI trades around $84.37 per barrel, down about 2.28% on the day.

Markets also face an immediate geopolitical risk as the United States is expected to announce fresh sanctions against Iran later on Monday, while Tehran has warned that it could halt Oil exports through the Strait of Hormuz and elsewhere in the Persian Gulf if Washington proceeds with its plans.

Strategists at BBH highlight the scale of Scott Bessent’s proposed campaign, describing it as the “single greatest financial offensive ever marshalled against an adversary,” aimed not only at Iran but also at “the foreign networks that buy and transport its oil.” They stress that “China is the critical pressure point,” noting that it is Iran’s largest trading partner and “buys roughly 90% of its oil exports.” As a result, BBH argues that Beijing’s reaction will be pivotal, with “Beijing’s response…key to the direction of risk sentiment.”

Technical Analysis

From a technical perspective, the recent advance met resistance at the 100-day Simple Moving Average (SMA), which has capped further upside, though WTI continues to hold above the 21-day and 200-day SMAs

The prior downward resistance trend line, with a break level at $85, now acts as an immediate topside obstacle, yet momentum remains constructive with the Relative Strength Index (RS) on the daily chart near 55 and the Moving Average Convergence Divergence (MACD) in positive territory, hinting that buyers still have the upper hand despite a relatively weak Average Directional Index (ADX) around 19.

On the topside, initial resistance is seen near the former descending trend line around $85, followed closely by the 100-day SMA at $85.64. A sustained break above this area could open the door for further gains.

On the downside, the 21-day SMA at $81.37 offers immediate support, followed by the 200-day SMA near $76.84 and the former ascending trend line around $75. A deeper pullback could expose the $68.00 horizontal support area.

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

Scotiabank strategists Shaun Osborne and Eric Theoret report that the British Pound (GBP) is flat versus the Dollar but outperforming G10 peers despite broad USD strength. With data light, attention turns to PM Burnham’s visit to Kiev and the October 28 budget. Improved sentiment is visible in options markets, and they see scope for GBP/USD to advance toward the 2026 high in the upper‑1.38s.

Pound outperforms on crosses

"The pound is entering Monday’s NA session nearly unchanged vs. the USD while outperforming all of the G10 currencies in an environment of broadbased USD strength. The release calendar remains empty and near-term focus appears to be centered on PM Burnham’s visit to Kiev."

"Fiscal developments have been limited but media are already tightening their focus on the autumn budget scheduled for October 28. Measures of sentiment have revealed a material improvement in the market’s mood toward the GBP, with steady gains observed in risk reversals as the options market has faded the premium for protection against downside risk. We see scope for further gains toward the 2026 high in the upper1.38s."

"Bullish – as with EUR, the GBP’s RSI is hovering around the overbought threshold at 70 and just off last week’s peak."

"Recent price action has revealed resistance above 1.3650 and we see limited additional resistance between current spot and the 2026 peak in the upper-1.38s."

"We see near-term support at 1.3600 and 1.3550."

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

Wells Fargo Economics, led by Tom Porcelli and colleagues, expects July consumer spending to rise modestly, with nominal Personal Income up 0.3% and spending up 0.2%. They highlight fading support from tax refunds, leaving demand more reliant on income growth. PCE inflation is seen easing gradually, with the deflator and core PCE both slowing but still above the Federal Reserve’s target.

Consumer data and PCE signals

"Consumer spending appears to have held up in July, and we forecast a 0.2% gain in nominal spending. While headline retail sales disappointed, the weakness was largely traced to lower gasoline prices and an unusually large drop in nonstore (online sales), likely reflecting the calendar shift of Amazon Prime Day into June this year. Excluding those distortions, control group sales excluding nonstore retailers were up 0.4%, just above its average pace over the past six months and pointing to steady underlying goods demand."

"The more important story for markets is what comes next. The boost from larger-than-usual tax refunds that helped cushion households form higher gasoline prices has now largely faded, leaving consumer spending increasingly dependent on underlying income growth. We expect nominal personal income rose 0.3% in July."

"Even so, real disposable income should continue to gradually improve, and year-over-year growth is likely to grind modestly higher in coming months if labor market conditions remain stable, allowing consumer spending to continue."

"We're not expecting much surprise on inflation. The latest CPI and PPI reports point to a 0.1% gain in the PCE deflator in July, nudging the year-over-year rate down to 3.6%. Core PCE inflation is expected to rise 0.2% on the month, leaving the annual rate at 3.3%."

"While inflation remains above the Fed's target, the recent data are consistent with a gradual easing in underlying price pressure."

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

Societe Generale’s Commodity Compass Analytics team, led by Michael Haigh and Jeremy Sellem, argues that Copper has been increasingly driven by AI-related demand, arbitrage flows and US trade policy since February 2025. They show that limited mine supply, strong competition for concentrates and accelerating investment in AI, data centres, power grids and EVs have tightened Copper’s physical market and complicated traditional analysis of Copper returns.

AI, tariffs and arbitrage reshape Copper

"Since February 2025, copper has been driven not only by traditional supply and demand fundamentals but also by arbitrage flows and US trade policy. Limited mine supply, strong competition for concentrates, and growing demand from AI, data centres, power grids, and EVs have supported prices. At the same time, tariff-related arbitrage has redirected large volumes of copper inventories towards the United States, tightening physical availability elsewhere."

"We argue that these new forces have made the market increasingly difficult to analyse using traditional frameworks alone."

"Copper's performance since February 2025 reflects the interaction between traditional supply and demand fundamentals and a new set of market forces centred on geographic arbitrage and trade policy. On the supply side, a persistent lack of new mine capacity and intense competition for copper concentrates have continued to constrain raw material availability. On the demand side, accelerating investment in AI, data centres, power grid expansion, and rising EV sales has strengthened expectations for long-term copper consumption."

"In this report, we seek to decompose copper returns since February 2025, quantify the contribution of these various drivers to price performance, and provide a clearer framework for assessing the outlook for copper in a rapidly evolving market environment."

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

• USD/JPY edges higher as the US Dollar steadies after last week’s sharp sell-off.
• The Japanese Yen stays under pressure despite firm expectations for a BoJ rate hike in September.
• Markets await US PCE inflation and Fed Chair Kevin Warsh’s Jackson Hole speech later this week.

USD/JPY edges higher on Monday as the US Dollar (USD) finds some stability following last week’s sharp volatility, with geopolitical developments back in focus as the United States prepares to widen secondary sanctions against Iran. At the time of writing, the pair trades around 159.13, recovering from an intraday low of 158.55.

Hawkish Bank of Japan (BoJ) expectations are offering limited support to the Yen, with fiscal concerns still dominating sentiment. The BoJ is widely expected to raise interest rates in September. Recent inflation figures have only reinforced the case for higher rates.

According to strategists at Scotiabank, the prevailing story in USD/JPY is evolving as the immediate anxiety over potential Japan intervention begins to fade. They note that “the market narrative appears to be shifting from the official intervention that dominated through much of the summer,” with participants now “tightening their focus on fundamentals into the September 18 BoJ meeting.”

In Scotiabank’s view, the key issue is not a specific policy move but communication, as “greater risk lies with the central bank’s tone as policymakers manage expectations for the rate path into year-end and into early 2027.”

Meanwhile, the US Dollar is showing signs of stabilization after coming under heavy selling pressure in the previous week following the US Treasury’s decision to expand liquidity-support buybacks for longer-dated government bonds. The move revived the currency debasement theme as investors grew more concerned about the US fiscal outlook and rising government debt, pushing the Greenback to three-month lows.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 98.95 on Monday, attempting to regain the 99.00 psychological mark.

On the monetary policy front, traders will watch Wednesday’s US Personal Consumption Expenditures (PCE) Price Index for further clues on the Federal Reserve’s (Fed) September decision. Another soft inflation reading could strengthen expectations that the US Central bank will leave interest rates unchanged next month. Attention will then turn to Fed Chair Kevin Warsh’s Jackson Hole speech on Friday.

Scotiabank strategists Shaun Osborne and Eric Theoret note that the Canadian Dollar (CAD) is the main G10 underperformer after US/Canada trade talks collapsed. Ottawa’s pledge to respond to tariffs and provide domestic aid raises uncertainty for Canadian businesses. While the broader USD/CAD downtrend remains intact, the bank sees scope for short‑term USD gains toward the mid/upper 1.39s.

CAD slides as trade talks fail

"Unsurprisingly, the CAD is the main G10 currency underperformer on the session, falling 0.5% against the USD."

"The abrupt collapse of US/Canada trade talks at the 11th hour on Friday has torpedoed the positive sentiment that had developed around the CAD over the past four weeks and heralds a period of more intense uncertainty about our relationship with the US."

"The Canadian government has promised to respond “dollar for dollar” to the latest round of US tariffs and told provincial leaders that another round of domestic aid will be forthcoming."

"Economic headwinds are bound to intensify again as Canadian businesses deal with a renewed phase of uncertainty. Ottawa seems set for a prolonged trade war and developments place a clear question mark over the prospect of a broader agreement getting over the line."

"The initial CAD reaction to the news has been limited, suggesting that market participants feel the situation remains fluid and that a deal might yet emerge in the coming weeks. Uncertainty will keep the CAD on the backfoot against the USD and keep the CAD soft on the crosses."

"Neutral—Solid USD gains today are taking spot back to the 200-day MA (1.3844) but the broader technical picture is, as yet, undamaged by the USD rebound."

"The downtrend in place since late June remains intact and trend oscillators have not yet reflected a reversal in the underlying trend. Some additional USD gains appear likely in the short run, however, and a push through the mid-1.38s will likely signal a deeper rebound towards the mid/upper 1.39s."

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

Wells Fargo Economics argues that Jackson Hole is often overhyped, with only a couple of truly consequential speeches in the past 14 years. They expect Chair Warsh to avoid detailing a near-term reaction function and instead use the symposium to elaborate on task force work, balance sheet options and policy framework issues, while carefully avoiding commitments that could box in the FOMC.

Warsh’s strategy and policy signals

"We have always thought entirely too much attention has been placed on the Fed’s Jackson Hole event. Over about the last decade and a half there have been only two big speeches that we would describe as truly consequential for the near-term policy path (Powell’s “pain” speech in 2022 and Bernanke’s hint at QE3 in 2012). That’s it."

"You would think given Warsh’s proclivity to want to say less, not more, this would be another year when little actually happens. And while we tend to lean in that direction as it relates to JH, the one thing that has us wondering a bit more about this than typical is the “clean up” article that occurred in the FT following the last FOMC presser."

"Warsh has refrained from laying out his near-term reaction function, a tactic we do not think he'll abandon only a few months into his tenure. Besides, with the Committee clearly split on what to do next and another round of inflation and employment data between his speech and the FOMC's next meeting on Sep. 16, revealing his leaning now risks boxing in the Committee—the very issue he's trying to avoid by paring back guidance."

"Given his response about Jackson Hole at the last FOMC presser, we wouldn’t be surprised if Warsh uses his speech to expand upon some of the "big questions" his task forces are working on that will shape the FOMC's approach to monetary policy."

"That said, we think he will be careful not to get too far ahead of the task forces and commit to any changes. We think he'll also stress that he seeks to keep what's working at the Fed, not just come in and completely upend the place, to warm relations with existing FOMC members and help secure buy-in for the task forces' eventual recommendations."

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

TD Securities expects the Bank of Canada to maintain the Overnight Rate at 2.25% through 2026, despite headline CPI near the top of its target range. The bank projects a return to neutral at 2.75% in 2027 via two 25bp hikes, as excess supply is gradually absorbed and Oil-driven inflation shocks are assessed, shaping expectations for Canadian Dollar and rates markets.

Policy steady before 2027 normalization

"The Bank of Canada goes into its media blackout on Wednesday ahead of the September 2nd policy decision where TD and the market look for the Bank to hold rates unchanged at 2.25%."

"We look for the Bank of Canada to stay on hold at 2.25% through 2026 before a return to neutral (2.75%) next year, with 25bp hikes in January and March 2027."

"Oil prices have largely normalized after pushing above $100bbl in response to the US-Iran conflict, but this has still introduced a meaningful shock to the inflation outlook with headline CPI sitting near the top of its 1-3% target range."

"We look for the BoC to remain patient as it waits for more clarity on the geopolitical outlook and spillovers to domestic CPI as the combination of well-anchored expectations, narrower inflation breadth, and muted core inflation momentum leave the Bank well positioned to look through stronger headline CPI as excess supply is gradually absorbed."

"The minutes from that meeting will be published September 16th, but there are no other public events on the horizon."

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

United States (US) President Donald Trump has announced a sharp escalation in the trade fight with Canada, declaring that beginning January 1, 2027, the United States will raise tariffs to 50% on all cars, trucks, automotive parts, and steel imported from its northern neighbor. In a statement on Truth Social, the President said the increased duties would not apply to companies that manufacture inside the United States.

"Build in the US, and there are ZERO TARIFFS," Trump wrote, framing the measure as an incentive to move production onto American soil.

The President justified the move by accusing Canada of years of unfair trade practices, singling out what he described as steep Canadian tariffs on American farmers and farm products. He said those barriers had made business "impossible" for US agricultural producers and had contributed to what he put at a roughly $60 billion trade deficit between the two countries, a level he called unsustainable.

Trump also cast the decision in blunt political terms, saying Canada would "be treated like a State no longer" and asserting that the United States holds the upper hand in the relationship.

"WE DON'T NEED CANADA, THEY NEED US," he wrote, claiming that Canada conducts the overwhelming majority of its trade with the United States while the reverse is far from true. He closed with his customary sign-off: "Thank you for your attention to this matter!"