Forex News

Standard Chartered’s Jonathan Koh and Edward Lee now expect Bangko Sentral ng Pilipinas (BSP) to keep its policy rate unchanged at the 27 August meeting, abandoning a previously projected hike. The bank trims its 2026 Gross Domestic Product (GDP) growth forecast to 3.5% and lowers Consumer Price Index (CPI) expectations, while still projecting rate cuts in 2027 once inflation falls below 4%. BSP rhetoric is expected to stay hawkish.

BSP seen on hold but still hawkish

"We now expect Bangko Sentral ng Pilipinas (BSP) to keep its policy rate unchanged at its 27 August meeting, versus our previous forecast of a 25bps hike."

"We maintain our view of 25bps of rate cuts in Q2-2027 and Q3-2027 once inflation moderates to below 4% in Q2-2027."

"Consequently, we lower our end-2026 and end-2027 policy rate forecasts to 4.75% (5% prior) and 4.25% (4.5% prior), respectively."

"We lower our 2026 GDP growth forecast to 3.5% (4.0% prior) on softer-than-expected growth in H1."

"We also revise down our 2026 CPI inflation forecast to 5.9% (6.5% prior) on lower-than-expected inflation to date."

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

The US Dollar Index (DXY) fell below the 100.00 region after sinking through Friday's session. July Nonfarm Payrolls (NFP) showed the US economy shedding 23K jobs against forecasts of an 80K gain, with June revised down to 20K, and Average Hourly Earnings slowing to 3.2% on the year. Markets that had spent late July pricing a hawkish Federal Reserve (Fed) reversed course in the morning. This coming Wednesday's Consumer Price Index (CPI), projected at 3.4% YoY headline and 2.5% YoY on the core measure, now decides whether that repricing extends or stalls. Two Fed speakers follow on Thursday, with Hammack and Barkin both scheduled.

The second full week of August will test whether the US Dollar sell-off that followed July's payrolls collapse has further to run as investors turn from the labor market to prices. The spotlight falls on Wednesday's CPI report, with Producer Price Index (PPI), Retail Sales and the preliminary Michigan Consumer Sentiment survey filling out the week.

On the other side of the pond, the Reserve Bank of Australia (RBA) meets on Tuesday, and the United Kingdom (UK) publishes second-quarter Gross Domestic Product (GDP) on Thursday. China opens proceedings on Sunday with inflation figures that will shape the tone for commodity-linked currencies.

The EUR/USD pair ends the week above the 1.1550 region, near two-month peaks. The Eurozone calendar is heavy on confirmations rather than surprises: German and Italian final inflation figures land on Wednesday, followed by Spanish and French readings later in the week, while Thursday brings Eurozone Industrial Production. The main event is Friday's preliminary second-quarter GDP, expected at 0.4% on the quarter and 1% on the year, alongside the first read on Employment Change. With the European Central Bank (ECB) content to wait, the pair remains a Dollar story.

GBP/USD is trading near 1.3500 as it closes the week, testing the resistance level for the second time this month. The UK finally has something of its own to trade on. Thursday delivers second-quarter GDP, forecast to slow to 0.4% from 0.6%, with monthly GDP seen contracting 0.1% and Manufacturing Production expected to fall. A soft set of numbers would complicate the Bank of England's position and give Cable its first domestic drag in weeks.

USD/JPY ends the week beneath the 158.00 barrier after the Yen jumped on the US NFP miss, with traders still alert to intervention a week on from the joint Tokyo-Washington operation. Japan's calendar is thin with June Current Account figures on Sunday the only notable release. That leaves the pair hostage to US data and to the question of whether authorities return.

AUD/USD trades below the 0.7100 level, its best in two months as the Aussie has gained strength. The RBA will announce its interest rate decision on Tuesday and is universally expected to hold at 4.35%, shifting attention to the accompanying statement and Governor Bullock's speech on Thursday. Chinese CPI and PPI on Sunday matter as much: consumer prices are seen slowing to 0.8% annually and factory-gate inflation to 3.8%, and softer readings would revive the growth concerns that have capped the Aussie all year.

Gold ends the week above $4,300 after its strongest run since January. The metal has been carried by collapsing rate-hike expectations, which makes Wednesday's CPI the single most important release on its calendar. A soft print would confirm the move. A firm one would force a reassessment, particularly with Strait of Hormuz risk keeping energy prices unsettled and the inflation question unresolved.

• US Treasury yields fall as Hormuz progress pressures Oil prices.
• Weak NFP report pushes traders to trim Fed hike bets.
• Ten-year yield drops as markets price lower inflation risks.

US Treasury yields drop across the curve on Friday amid growing speculation that the Iran-Oman deal is about to be sealed, which has so far pushed energy prices lower, while investors also digest a weak Nonfarm Payrolls report in the US.

Yields slide across the curve as Oil declines, payrolls disappoint and traders price out September Fed tightening

Recently, a US official said that there has been progress between Oman and Iran on Hormuz, and that once a deal is announced to restore shipping without impediments, the US Navy will lift the blockade of Iranian ports.

West Texas Intermediate (WTI), the US crude benchmark, extended its losses of nearly 1%, down to $77.50.

Meanwhile, money markets are indicating a lower likelihood that the Federal Reserve (Fed) will hike rates in September. The probability has decreased to 30% from 58% yesterday, with a 70% chance that the Fed will keep rates steady, based on Prime Terminal data.

The US 10-year Treasury note is yielding 4.651%, down nearly three basis points, a signal that market participants have begun to price out a quick resolution to the US conflict, which could reduce the need for a rate hike by the Fed.

In July, US Nonfarm Payrolls declined by 23K jobs, falling short of the expected 80K increase. Revisions for May and June reduced the total by 103K jobs, lowering previous estimates. While this data backs the Fed’s decision to pause rate hikes, the Unemployment Rate decreased slightly from 4.2% to 4.1%.

The Greenback tumbled on the report, as the US Dollar Index (DXY), which measures the US Dollar's strength against six other currencies, fell 0.42% to 99.54.

Next week, investors are eyeing the release of US inflation on the consumer and producer sides, followed by jobless claims data and the University of Michigan (UoM) Consumer Sentiment.

US 10-year Treasury yield chart