Forex News
- DJIA trades roughly 430 points higher, back above 53,200 near session highs.
- Flash composite PMI at 56, the strongest reading since April 2022.
- Thirty-year yield back above 5.25%, erasing the buyback rally inside a day.
The Dow Jones Industrial Average trades roughly 430 points higher at just above 53,200, taking back the larger part of a Thursday decline that ran close to 690 points. The session low printed in the 52,800 area inside the opening stretch, and the index has ground higher in almost every hour since, changing hands within a handful of points of the 53,250 area that marks the session high.
The catalyst was a preliminary August activity survey that beat hard on services and missed on manufacturing, and the equity market read the composite as an all-clear on growth. The bond market read the same page and sold the long end again, which is precisely the arrangement that produced this week's drawdown in the first place.
The print that removes the escape route
The preliminary August composite Purchasing Managers Index (PMI) printed 56 against a 54.5 prior, the strongest expansion on the series since April 2022. Services drove it at 56.8 against a 54 consensus, the sharpest reading in that sector since December 2024, while manufacturing missed at 53.2 against 53.9 and goods output ran at a 13-month low. Delivery times lengthened and backlogs built across both sectors.
An economy expanding at a 56 composite does not need the policy help this equity market has spent the summer demanding, and it gives a committee that has held five times in a row no reason to supply it. Every point of this week's decline was blamed on Treasury yields. Friday's rebound is bought with the one print that makes those yields harder to bring down.
The inflation side of the same release did nothing to soften that, with input costs still rising at a marked pace across both sectors. The supply constraint behind them is not a mystery. Brent Crude Oil printed just short of $94.00 this week, its highest since late July, with Hormuz transit running at two or three tankers a day, and July inflation in both the United Kingdom and the euro area came in at 2.9% with energy named as a contributor.
The bid that lasted a day
Wednesday's announcement that liquidity-support buybacks in longer-dated coupons would at least double, from 2 billion Dollars an operation to at least 4 billion, took nine basis points off the thirty-year and lifted equity futures. By Thursday the entire move was gone. The thirty-year has climbed back above 5.25% and added roughly three basis points more on Friday, with the ten-year above 4.70%.
The Treasury Secretary spent Thursday explaining that the ceiling was a floor, that yields do not reflect fundamentals, and that a fiscal consolidation plan is coming from the White House within days. Set against federal debt that crossed 40 trillion Dollars this week and a deficit tracking past 2 trillion Dollars for the fiscal year, roughly 14 billion Dollars of extra quarterly purchases is a rounding error with a press release attached.
Membership decides the week, again
Healthcare carries Friday's advance through Merck (MRK) and Johnson & Johnson (JNJ), which makes it the second advance in three sessions bought with the same catalyst. Moderna (MRNA) is 17% higher on further late-stage data from the personalized cancer program it develops with Merck, having delivered a far larger move on the first instalment on Wednesday.
The tape's actual leadership sits outside the index altogether. Robinhood (HOOD) is 12% higher and Coinbase (COIN) 9% as Bitcoin runs more than 20% higher on the week, and the average collects nothing from either because neither is a member. The largest member move of the week ran the other way, with Walmart (WMT) more than 9% lower on Thursday on sales growth at a six-year low.
Next week does the repricing
July Personal Consumption Expenditures (PCE) prices land Wednesday at 12:30 GMT, with core expected at 0.2% MoM against a 0.1% prior and 3.3% YoY unchanged, alongside preliminary second-quarter Gross Domestic Product (GDP) at 1.5% and July durable goods at 0.7%. Nvidia (NVDA) reports after Wednesday's bell, and unlike almost everything that moved this week it is a member.
The Jackson Hole symposium runs August 27-29, and Friday packs the rest of the week into a single minute. At 14:00 GMT the Fed chair delivers a first keynote in the role, the preliminary nonfarm payrolls benchmark revision lands, and final August Michigan sentiment prints with one-year inflation expectations running at 4.3% into it. A revision that subtracts materially from the payrolls base would reset the growth argument this session just paid for.
Dow Jones Industrial Average technicals
Resistance: The 53,250 area caps this session, and Thursday's breakdown point near 53,500 is the level that decides whether the rebound is more than a bounce. Above it sit the 53,800 shelf, the early-August ledge near 54,100 and the record just short of 54,750.
Support: The 52,800 area held the session low and Thursday's close sits just beneath it. Below that, 52,500 and the rising 50-day Exponential Moving Average (EMA) form one band, with the 200-day near 49,750 far below and out of play.
Bias: Bearish while 53,500 caps. Lower highs in each of the past three weeks leave this a rebound inside a downtrend, and the daily Stochastic Relative Strength Index (Stoch RSI) near 62 is mid-range rather than washed out, so the index is not lifting off an exhausted base. Objectives the 52,800 area then 52,500. Invalidation on a daily close above 53,750.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
Rabobank's Bas van Geffen, analyses how forthcoming structural Longer-term Refinancing Operations (LTROs) could complement the European Central Bank's (ECB) standard refinancing operations as excess liquidity declines. The report argues that 12‑month LTROs, likely auctioned via variable‑rate tenders once Main Refinancing Operations (MROs) demand reaches about €100‑125bn, may slightly flatten EUR money market term rates without fully countering the impact of quantitative tightening.
Structural LTROs and reserve demand
"The ECB could start discussions about the design of structural LTROs towards the end of this year, but the launch date depends on banks’ demand for reserves. We believe 12 months is a plausible maturity for these operations. Moreover, the ECB may issue the LTROs by auction, instead of the fixed-rate, full-allotment procedure."
"If the ECB proceeds with its reported plans to raise the minimum reserve requirement, that may accelerate discussions about the design of structural LTRO. We could see the Governing Council discussing this in Q4, or early next year, with launch later in 2027. But, ultimately, the launch date of these LTROs hinges on banks’ demand for reserves."
"To the extent that historical context extrapolates to the present liquidity situation, data suggests that LTROs could start when MRO demand reaches €100 to 125 billion. The smallest 3-month LTRO tender was €15 billion, when MRO demand was structurally at least €100 billion."
"Various metrics of term funding availability and costs are currently being watched as indicators of how close liquidity is to the inflection point. As quantitative normalisation continues, we expect more pressure on term rates. However, LTROs may reverse some of this."
"This implies that, in aggregate, LTRO will probably be allotted to banks with the highest funding costs in term markets. Their switch to central bank liquidity could skew weighted average term funding rates lower – although we are sceptical that it will meaningfully compress Euribor-OIS spreads, due to the composition of the Euribor panel."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD dips slightly but remains on track for weekly gains.
- US services PMI beats estimates, lifting yields and US Dollar.
- Weak UK Retail Sales fail to erase BoE hike bets.
The Pound Sterling (GBP) loses some ground against the US Dollar (USD) on Friday, though it remains poised to end the week with gains of over 0.60%, even as UK Retail Sales disappointed investors and US business activity improved in August. The GBP/USD pair trades at 1.3626, down some 0.02%, retreating from a daily high of 1.3675, its highest level since February 11.
GBP/USD slips as weak UK sales meet stronger US services data
Data in the US was mixed, with S&P Global releasing Flash PMIs. On the positive side, the Services PMI in August rose from 54.6 to 56.8, crushing estimates of 54, while the Manufacturing PMI was 53.2, below estimates and July’s print of 53.9.
In the meantime, the US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is flatlined at 98.88, underpinned by the rise in US yields. The US 10-year T-note yield is up nearly three basis points to 4.736%, approaching weekly highs, following the US Treasury bond buyback.
On Wednesday, the US Treasury announced that it would buy $4 billion in long-end bonds, in the 10-30-year range, to provide liquidity. Although the market initially priced in the move, it has now faded, with US yields soaring as traders see it as a Yield Curve Control (YCC) move.
Now eyes turn to Jackson Hole meeting, with traders awaiting the speech by Federal Reserve (Fed) Chair Kevin Warsh, which is expected to outline the forward path for interest rates.
In the UK, Retail Sales disappointed markets, shrinking 0.5% MoM in July compared to the previous 0.7% print.
In the meantime, money markets are still pricing in one rate hike by the Bank of England, following the release of recent inflation and GDP data, a sign that the BoE may need to raise rates further.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3638. The pair holds firmly above the cluster of structural supports, including the triple simple moving average (50, 100 and 200 SMAs) around 1.3395 and a series of trend lines that now sit below price, which together suggest a bullish near-term bias. Momentum is stretched, with the Relative Strength Index (14) hovering near 70.6, hinting at overbought conditions but not yet signaling a clear reversal, while the latest Fed Sentiment Index reading at 132.4 points to a still-elevated but moderating policy-pressure backdrop.
On the downside, initial support appears at the upward trend line from 1.3159 near 1.3612, ahead of the former resistance trend line from 1.3653 now acting as support around 1.3498. Below there, the downward trend line linked to the earlier 1.3869 high offers additional support near 1.3407, closely followed by the triple SMA zone around 1.3395 and another rising trend line anchored at 1.3140 near 1.3370. With no clear resistance levels above the current price in this dataset, any pullback toward these supports would likely define whether the bullish bias can be preserved or transitions into a broader consolidation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Gold heads for a third straight weekly gain, reaching its highest level since mid-May.
- A broadly weaker US Dollar and reduced expectations of an imminent Fed rate hike support the precious metal.
- XAU/USD rises above major daily moving averages, with $4,600 acting as the immediate resistance.
Gold (XAU/USD) is heading for a third consecutive weekly gain on Friday, extending an impressive rally that has lifted the precious metal by around 13% so far this month. At the time of writing, XAU/USD trades around $4,603, its highest level since May 15.
The rally is driven by a combination of factors that have heightened macroeconomic uncertainty and encouraged traders to seek exposure to the precious metal. The biggest trigger this week was the US Treasury’s surprise decision to double its liquidity-support buybacks for longer-dated government securities to at least $4 billion per operation.
Long-term US Treasury yields initially fell sharply after the announcement but have since recovered most of their losses. However, the rebound has done little to stop Gold’s advance. Concerns about rising US government debt, large budget deficits and persistent inflation are eroding investor confidence in US assets, with the US Dollar (USD) paying the price.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 98.86, near a three-month low. However, the index has pared its intraday losses after touching a low of 98.56.
Uncertainty surrounding the Federal Reserve (Fed) is also adding to the nervous mood. Under Chairman Kevin Warsh, the central bank has placed less emphasis on forward guidance, leaving markets with fewer clear signals about the direction of interest rates. However, recent US employment and inflation data have reduced expectations of a rate hike at the upcoming meeting, providing the spark for Gold’s rally earlier this month.
Meanwhile, continued central-bank purchases, particularly from China, and stronger inflows into Gold exchange-traded funds (ETFs) keep underlying demand firm.
Still, Gold faces some hurdles. Treasury yields remain elevated, increasing the opportunity cost of holding the non-yielding metal. Energy-driven inflation is another concern, as higher Oil prices linked to the US-Iran stalemate could keep inflation above the Fed’s 2% target for longer and maintain pressure on the central bank to raise interest rates.
On the data front, preliminary S&P Global PMI figures showed that the Composite PMI rose to a 52-month high of 56.0 in August from 54.5, while the Services PMI climbed to a 20-month high of 56.8 from 54.6. The Manufacturing PMI eased to a five-month low of 53.2 from 53.9.
Technical Analysis: Bulls stay dominant as RSI nears overbought levels
XAU/USD holds a clear bullish bias as it extends above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), which collectively underpin the recent uptrend. The Relative Strength Index (RSI) on the daily chart is near 70 and flags overbought conditions, while the Average Directional Index (ADX) is around 32, suggesting a moderate trend, and the Moving Average Convergence Divergence (MACD) indicator remains constructive, hinting that upside momentum is strong but getting stretched.
On the topside, immediate resistance emerges at the nearby horizontal level around $4,600, ahead of a higher barrier at $4,750. On the downside, initial support is seen at the 200-day SMA at $4,514, followed by the 100-day SMA at $4,379 and the 50-day SMA at $4,172, before a more distant structural floor at $4,000.
While the trend favors further gains, the overbought RSI warns that any failure to clear $4,600 could trigger a corrective pullback toward these underlying demand zones.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- AUD/USD climbs to its highest level since June 3 as the Australian Dollar outperforms all its major peers.
- Broad US Dollar weakness, rising Gold prices and the RBA’s hawkish stance support the Aussie.
- The technical bias remains positive, although the daily RSI is now flirting with overbought territory.
AUD/USD edges higher on Friday, climbing to its highest level since June 3 as the Australian Dollar (AUD) outperforms all its major peers. A broadly weaker US Dollar (USD), strength across the commodity complex led by rising Gold (XAU/USD) prices, and the Reserve Bank of Australia’s (RBA) hawkish policy stance boost the commodity-linked Aussie.
At the time of writing, AUD/USD trades around 0.7167, up 0.77% on the day and on track for an eighth consecutive weekly gain. The intraday advance comes even as the US Dollar shows signs of stabilizing after its recent weakness. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 98.82 after recovering from an intraday low of 98.56.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.03% | -0.02% | -0.13% | -0.78% | -0.51% | 0.16% | |
| EUR | -0.03% | -0.00% | -0.07% | -0.20% | -0.82% | -0.53% | 0.13% | |
| GBP | -0.03% | 0.00% | -0.07% | -0.19% | -0.80% | -0.54% | 0.14% | |
| JPY | 0.02% | 0.07% | 0.07% | -0.11% | -0.76% | -0.50% | 0.19% | |
| CAD | 0.13% | 0.20% | 0.19% | 0.11% | -0.65% | -0.37% | 0.30% | |
| AUD | 0.78% | 0.82% | 0.80% | 0.76% | 0.65% | 0.26% | 0.95% | |
| NZD | 0.51% | 0.53% | 0.54% | 0.50% | 0.37% | -0.26% | 0.69% | |
| CHF | -0.16% | -0.13% | -0.14% | -0.19% | -0.30% | -0.95% | -0.69% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
The technical outlook also supports the bullish case, with AUD/USD forming a steady sequence of higher highs and higher lows since rebounding from the mid-0.6800s in late June.
Technical analysis
AUD/USD keeps a bullish near-term tone as it holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs) clustered between 0.6952 and 0.7070.
The Relative Strength Index (RSI) on the daily chart is at 69 and flirts with overbought territory, while the Moving Average Convergence Divergence (MACD) indicator remains slightly positive, suggesting the latest advance is stretched but still supported by constructive momentum within a relatively low-trend ADX backdrop.
On the topside, initial resistance emerges at the horizontal barrier near 0.7200, ahead of a higher cap at 0.7300. On the downside, immediate support is provided by the latest close area at 0.7166, with deeper demand seen at the 100-day SMA around 0.7070 and the 50-day SMA near 0.6999, before the 200-day SMA at 0.6952 and the structural floor at 0.6850.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Commerzbank’s Senior Economist Dr. Vincent Stamer notes that Euro area business sentiment has stabilized at a moderate level, with the composite PMI edging up from 52.0 to 52.1 in August, slightly above consensus. Manufacturing PMI has risen to a four-year high, supported by German public investment, while services remain stagnant and below 50 in France and Germany.
Manufacturing outperforms services in PMIs
"Business sentiment in the euro area has stabilized at a moderate level. Following the strong recovery in recent months, the composite Purchasing Managers’ Index rose marginally in August from 52.0 to 52.1. The consensus had expected a slightly lower figure."
"Apparently, the uncertainty caused by the conflict in the Persian Gulf and the resulting rise in energy prices are currently weighing significantly less on businesses in the euro area than they did in the spring."
"Overall, the PMI thus remains in a range where the economy has historically experienced moderate growth (Chart 1). In the eurozone’s two largest economies, the composite sentiment indicator declined slightly in each case—in France from 49.4 to 48.8 and in Germany from 51.3 to 51.0."
"While the composite index has moved sideways, the PMI for manufacturing has continued to rise (Chart 2). At 52.8, the sub-index reached its highest level in four years. Public investment in Germany likely contributed to this as well: In Germany, the industrial indicator also rose to a multi-year high of 54.1."
"In contrast, the services sector remained stagnant in August. The fact that the sub-index for service providers did not decline is likely due to the figures for Spain and Italy, which have not yet been released. In France and Germany, sentiment among service providers fell noticeably below the 50-point mark again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Nomura’s European Economics team highlights that UK composite output PMI rose to 52.5 in August, with services offsetting weaker manufacturing. GfK consumer confidence improved to its highest level in two years, supporting activity. However, UK composite input and output price indices climbed further above February levels, leaving Nomura forecasting no BoE rate change but flagging upside risks if price pressures persist.
Stronger services and rising inflation signals
"Meanwhile, the manufacturing output index declined in August in the UK, and it was the services sector that contributed to the overall increase in the composite index. UK GfK consumer confidence data out this morning showed a further notable improvement in August, rising to -14 from -17 and marking the highest reading for two years."
"By contrast, in the UK, composite price indices increased in August, due to rises in the service sector which outweighed declines in manufacturing. The composite input price index increased 1.4pts to 67.2 and the composite output price index was up 0.7pts to 57.1. Both are higher than in February."
"However, the rise in UK service sector price indices highlights the risk that the BoE may need to raise rates, against our forecast of no change this year. However, other price indicators, most crucially the BoE’s own DMP survey are important to watch to understand forward-looking price pressures, which help policymakers gauge potential for second-round effects."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Flash Purchasing Managers Index (PMI) surveys beat forecasts in both the Eurozone and the United Kingdom.
- German manufacturing led the beat at a multi-year high, but German services slipped back into contraction, keeping the Euro mixed.
- Iranian President Masoud Pezeshkian said Iran wants to end its conflict with the US now.
The Euro (EUR) is falling against the British Pound (GBP). EUR/GBP held the mid-0.8500s on Friday, hovering just below the 0.8570 area, even after a strong round of August flash Purchasing Managers Indexes (PMIs) on both sides of the cross. The reaction was muted for a simple reason: the data was good for both currencies.
The Eurozone composite PMI rose to a nine-month high, with Manufacturing the standout. German factory activity hit its highest level in more than four years. The soft spot was German Services, which slipped back below the 50 line that separates growth from contraction, keeping the Euro's read mixed. In the UK, the composite also beat, driven by Services, while Manufacturing eased broadly in line. Weaker-than-expected UK Retail Sales did little to dent Sterling.
Iranian President Masoud Pezeshkian said on Friday that Iran wants to end its conflict with the US now, "from a position of strength", with the world acknowledging "its victory". Speaking at the Islamic Medical Association's assembly, he said those who "sit across the border and invite the enemy to invade" the country are "not Iranians". The tone points to de-escalation, and it is the Middle East risk backdrop, more than the growth surveys, that has kept European currencies on a tight leash this week.
Technical analysis:
In the 4-hour chart, EUR/GBP trades at 0.8563, capped by the 20-period Simple Moving Average (SMA) at 0.8566 and a dense band of nearby resistance, which keeps the short-term bias slightly bearish despite the pair holding just above the 100-period SMA at 0.8559. The Relative Strength Index (RSI 14) around 49 suggests neutral momentum, reinforcing the view of a capped market rather than a directional breakout.
On the topside, immediate resistance is clustered at 0.8565 and the 20-period SMA at 0.8566, followed by higher hurdles at 0.8571 and 0.8576. On the downside, the horizontal line at 0.8563 acts as a pivotal level currently being tested, with the 100-period SMA at 0.8559 providing the next layer of support if sellers regain control.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
TD Securities strategists argue that Kevin Warsh’s Jackson Hole speech will focus on structural themes such as productivity, AI-driven growth and Federal Reserve (Fed) regime change. They expect rate expectations to stay anchored, with US Dollar (USD) price action driven more by volatility and perceptions of inflation credibility than by new forward guidance.
Dollar seen volatility-prone on Warsh
"USD risks are skewed modestly to the downside. Any hawkish clarification on inflation credibility may provide only limited USD support. Alternatively, failure to address inflation credibility could weigh more materially on the dollar."
"Warsh's speech will likely focus on broader structural themes such as productivity, AI-driven growth, supply-side dynamics, and longer-term institutional reforms at the Fed. The immediate implication for FX is that rate expectations will remain relatively anchored, limiting the scope for a sustained directional move in the USD."
"From an FX perspective, the most likely outcome is that Jackson Hole generates more volatility than trend. A speech centered on structural economic themes and Fed regime change would likely leave markets searching for policy clues that are not there. In that environment, the dollar may struggle to establish a sustained direction unless Warsh delivers a clear message on inflation credibility."
"The asymmetry, however, may lean modestly USD-negative. Markets appear more concerned about the absence of a hawkish reaffirmation of the Fed's inflation mandate, especially after recent Warsh appearances led investors to price out expectations of further Fed hikes despite lingering concerns about elevated inflation. As a result, any effort by Warsh to "clear the air" around inflation credibility is likely to provide only modest support for the dollar."
"By contrast, any failure to address concerns around the credibility of the Fed's inflation-targeting framework could continue to weigh more heavily on the USD."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s (BBH) Elias Haddad reports EUR/USD is firmer on broad US Dollar (USD) weakness and stronger-than-expected Eurozone August Purchasing Managers' Index (PMI) data. Elias Haddad highlights the composite PMI at a nine-month high, driven by manufacturing. He notes swaps have virtually fully priced a 25 bps European Central Bank (ECB) hike in September and around 60 bps of tightening over twelve months, placing rates near the top of the ECB’s neutral range.
Eurozone data underpins EUR/USD
"EUR/USD is firmer on broad USD weakness and encouraging Eurozone economic activity. The Eurozone August PMI was stronger than anticipated."
"The composite PMI increased to a nine-month high at 52.1 (consensus: 51.7, prior: 52.0) reflecting a solid and accelerated rise in manufacturing activity. The pace of expansion in services activity was unchanged from July."
"That’s reasonable and would leave the policy rate near the top of the ECB’s estimated neutral range (1.75%-3.00%)."
"The swaps curve has virtually fully priced in a 25bps ECB rate hike to 2.50% at the next September 10 meeting and a total of 60bps of tightening over the next twelve months."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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