Forex News

• The Australian Dollar rises to a fresh three-month high as expectations of an interest-rate hike in Australia strengthen.
• Stronger-than-expected Australian growth reinforces expectations that policymakers could tighten monetary policy later this month.
• The US Dollar struggles to benefit from stronger US employment data as traders maintain expectations of further monetary easing.

AUD/USD advances on Monday, gaining 0.22% on the day to trade around 0.7220 at the time of writing, after reaching its highest level in more than three months. The Australian Dollar (AUD) remains supported by growing expectations that the Reserve Bank of Australia (RBA) could raise interest rates at its policy meeting later this month.

Expectations of tighter monetary policy strengthened after Australian Gross Domestic Product (GDP) data released last week showed that the economy expanded by 0.4% QoQ and 2.1% YoY in the second quarter, exceeding market expectations.

Analysts at Rabobank consider the Australian economy sufficiently resilient for the latest GDP figures to likely seal an RBA rate hike this month, reinforcing the monetary policy divergence supporting the Australian Dollar.

Investors now turn their attention to comments from RBA Deputy Governor Andrew Hauser, who is due to speak in an interview with ABC on Tuesday. Any indication that the central bank remains concerned about inflationary pressures could further strengthen expectations of an imminent rate increase.

Meanwhile, the US Dollar (USD) struggles to capitalize on stronger-than-expected United States (US) labor market data. Nonfarm Payrolls (NFP) for August exceeded market expectations, a result that supports a more cautious stance from the Federal Reserve (Fed), but has so far failed to generate significant demand for the Greenback.

The resilience of AUD/USD despite stronger US employment figures highlights the market's current focus on the prospect of tighter monetary policy in Australia. Further hawkish signals from RBA officials could therefore keep the Australian Dollar supported around its highest levels since June.

AUD/USD technical analysis

In the one-hour chart, AUD/USD trades at 0.7219. The pair holds a modest bullish bias as it trades above the day’s open and remains comfortably over the 100-period and 200-period simple moving averages (SMAs) clustered just under 0.7185, suggesting a constructive underlying trend. The Relative Strength Index (14) hovers near 60, indicating firm but not overextended upside momentum that keeps buyers in control while leaving room for further gains.

On the topside, immediate resistance emerges at the horizontal barrier around 0.7225, with a higher hurdle seen near 0.7278 if bulls extend the advance. On the downside, initial support is located at 0.7214, followed by 0.7198, while the 100-period SMA near 0.7183 and the 200-period SMA around 0.7179 form a deeper demand band that would need to hold to preserve the hourly bullish structure.

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

• WTI Oil extends its advance as attacks on vessels raise fresh supply concerns.
• A strike on Saudi Aramco’s Jazan refinery adds to worries over regional Oil infrastructure.
• The technical setup stays bullish, although the RSI approaches overbought territory.

West Texas Intermediate (WTI) Oil edges higher on Monday as fresh attacks by the United States and Iran over the weekend add to already elevated supply concerns from the months-long war in the Middle East. At the time of writing, WTI trades around $91.15 per barrel, its highest level since July 24.

US Central Command said it struck three Iranian vessels, including one near Kharg Island, another near Jask and an empty tanker in the Gulf of Oman, in response to earlier Iranian missile attacks on US Navy warships.

Iranian state media reported on Sunday that its forces struck an unmanned US vessel, although US Central Command denied the claim. Iran also said it targeted three commercial Oil tankers travelling along routes Tehran considers unauthorised.

Al Jazeera reported that Iran’s top security official, Mohsen Rezaei, said Tehran will declare a restricted zone near the Strait of Hormuz and announce a new shipping route agreed with Oman in the coming days.

Adding to supply concerns, the Financial Times reported that Saudi Aramco’s Jazan Oil refinery was hit by a fresh strike on Monday. The extent of the damage is still being assessed, while Aramco has not publicly commented. The facility can process around 400,000 barrels of crude per day.

Meanwhile, OPEC+ kept its Oil output policy unchanged for October at Sunday’s meeting. With no fresh supply increase announced, Oil prices are likely to stay sensitive to disruptions in the Middle East as the United States and Iran trade threats of further retaliation.

Technical Analysis

On the daily chart, WTI US Oil retains a bullish bias as it holds well above the 100-day Simple Moving Average (SMA) and the 200-day SMA.

Price also trades above the Bollinger Bands’ 20-day SMA around $84, while momentum remains constructive, with the Relative Strength Index (RSI) hovering near 65 and Moving Average Convergence Divergence (MACD) positive above zero, hinting that upside pressure remains in place but is edging toward overextended territory.

On the topside, initial resistance is defined by the Bollinger upper band around $91. A daily close above this level would open the door to further gains and extend the current bullish phase. On the downside, immediate support is seen near the current area, with a pullback toward the 100-day SMA at $85 and the Bollinger mid-line at $84 likely to attract dip-buying interest, while deeper declines would look to the Bollinger lower band and the 200-day SMA near $78 as a more significant demand zone.

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

HSBC highlights that markets now expect the Bank of Japan (BoJ) to tighten policy more quickly, with overnight index swaps implying about 75bp of cumulative hikes by April 2027 and assigning odds to a move at the 18 September meeting. The bank’s base case is for USD/JPY to remain range-bound, but it also outlines a risk scenario of a downtrend if BoJ shifts more aggressively.

BoJ path and USD/JPY scenarios

"Markets now expect the Bank of Japan (BoJ) to tighten policy faster than it has done in recent years. Overnight index swaps imply around 75bp of cumulative hikes by April 2027 and even assign meaningful odds of a hike at the 18 September meeting, which stands out as unusual. These moves suggest investors anticipate a change in how the BoJ responds to inflation and growth risks."

"Recent catalysts for such hawkish expectations in the market stem from US Treasury Secretary Bessent’s comments (the ‘Readout’ of his meeting with BoJ Governor Ueda published on 30 August, and “do the right thing”; Bloomberg, 31 August) as well as BoJ Board Member Takata’s comments that outsized rate hikes (>0.25%) and back-to-back rate hikes are possibilities (Bloomberg, 2 September). The question now is whether there are only small changes that stabilise USD/JPY in its recent range (our base case), or if there are big changes that can trigger a downtrend in USD/JPY (our “risk” scenario)."

"Overall, we believe investors may need clearer evidence of a policy shift – making the 18 September BoJ decision a critical test. We also remain cautious about broader structural concerns, especially around US fiscal sustainability, which could still return and weigh on the dollar yet again."

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

TD Securities economists Robert Both and Emma Lawrence highlight that the Bank of Canada adopted a more hawkish tone, emphasizing upside inflation risks even as core inflation stays subdued. They expect the Overnight Rate to remain at 2.25% through 2026, with a return to neutral at 2.75% in 2027 via two 25 bp hikes. Trade tensions and Oil shocks are seen as important but not yet rate-hike deterrents.

BoC seen on extended policy hold

"The Bank of Canada surprised the market with a more hawkish tone in Wednesday's policy decision where they placed a greater emphasis on upside risks to inflation and sounded less concerned over trade uncertainty."

"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."

"Trade tension have escalated with the Section 338 tariffs introduced August 22nd, but these should not prevent BoC rate hikes in Q1 if there is no further escalation."

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

ABN AMRO economists Bill Diviney and Jan-Paul van de Kerke expect Eurozone growth to remain resilient despite a renewed energy shock, supported by German fiscal spending and solid underlying activity. They have reverted to a 0.8% growth forecast for 2026 and kept 2027 at 1.2%, while warning that higher and more persistent inflation raises risks of second-round effects and further European Central Bank (ECB) tightening.

Growth holds as inflation pressures rise

"Growth is likely to stay resilient despite the resurgent energy shock, but inflation has become a worry. The longer high energy prices persist, the bigger the risk of second round effects… and the bigger the risk the ECB might have to tighten beyond next week’s expected rate hike."

"We expect that resilience to broadly continue in the quarters ahead, despite the renewed energy shock. While the consumption recovery is likely to see renewed headwinds from the hit to real incomes, German fiscal spending is expected to continue to support a recovery in the eurozone’s biggest economy, and this should remain a key pillar supporting the region. All told, the strength in Q2 alongside Germany’s upward revisions have led us to revert back to our 0.8% growth expectation for 2026, while keeping our 2027 forecast at 1.2%."

"Indeed, the resurgent energy shock is likely to leave a much bigger mark on inflation. Headline inflation has already rebounded from its June trough of 2.8% to reach a three year high of 3.3% in August. The rise was driven almost entirely by energy, although goods inflation picked up notably as well – something we had flagged in our Monthly just prior to the summer."

"Inflation is now expected to peak above 3.5% over the coming months, and to average 3.0% in 2026 – 0.5pp higher than our June forecast. The rebound in inflation will sharpen the focus on second round effects, and particularly wage inflation. We saw the first warning signs of a pickup in wage growth with the Indeed monthly data for July, but the ECB’s forward-looking tracker for negotiated wages has also picked up in recent months."

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

Deutsche Bank economists Sanjay Raja and Maui Brennan expect United Kingdom (UK) Gross Domestic Product (GDP) to have slipped slightly in July after strong growth earlier in 2026. They forecast a modest monthly contraction led by services and production, with construction only marginally higher. The bank still projects UK GDP to expand by 1.1% in 2026 and 1.3% in 2027, with momentum supported by productivity and AI-related investment.

UK growth eases but stays resilient

"UK GDP likely dropped a touch in July after a hot start to the year. This isn’t the start of a protracted fall in activity, however. Recent survey data have remained positive."

"Economic momentum remains steady. Instead, we believe the July drop reflects a small course correction for an economy running at an unsustainable 2% annualised pace of growth."

"What do we expect? We expect a small 0.1% m-o-m contraction in July, led by falls in services (-0.1% m-o-m) and production (-0.3% m-o-m)."

"Looking ahead, we expect momentum to remain range-bound. Some catch down from the energy shock still feels likely."

"We continue to see GDP expanding by 1.1% this year, followed by 1.3% next year. Signs of further momentum coming from higher productivity and delivery of AI investment, we think can keep GDP rising further and faster in the coming years."

(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 notes the US Dollar (USD) weakened on broad Japanese Yen strength before partially recovering as strong US August payrolls revived expectations for a September Fed hike. Haddad stresses that United States (US) August Consumer Price Index (CPI) and Producer Price Index (PPI) will be pivotal for the Federal Reserve’s (Fed) next move and for USD direction, with balanced risks suggesting potentially volatile price action.

US inflation data to drive USD

"USD fell last week, largely reflecting broad JPY strength after markets briefly repriced a more hawkish Bank of Japan. USD recovered some ground on Friday. The solid US August nonfarm payrolls revived bets of a September Fed funds rate hike, which New York Fed President John Williams and Fed Governor Christopher Waller had earlier tempered by highlighting the encouraging inflation trend."

"A September 16 Fed funds rate hike hinges on Friday’s US August CPI print. Fed Chair Kevin Warsh noted in his August Jackson Hole speech that he welcomed this summer’s better than expected PCE and CPI readings but cautioned “they do not tell me that underlying trends have meaningfully improved.” As such, a hot CPI print would all but seal a September hike and underpin a firmer USD."

"More importantly, even if a September Fed hike becomes a done deal, we doubt USD will make new cyclical highs. Tightening by other major central banks limits policy divergence, with the ECB widely expected to deliver its second 25bps increase of the year on Thursday."

"Risks around the US August CPI print are finely balanced, setting the stage for an exceptionally volatile market reaction. The August pick-up in the ISM Prices Paid index suggests upside inflation risks have yet to recede. However, the continued slowdown in US average hourly earnings growth in August remains an important disinflationary force."

"The US August PPI (Thursday) will serve as a warmup act for Friday’s pivotal CPI report. Watch out for PPI Services less Trade, Transportation, and Warehousing as it partially feeds into the policy-relevant PCE calculation. Portfolio management fees could again distort PPI, although the BEA’s September 30 methodology change is poised to fix that."

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

Societe Generale analysts Michael Haigh and Jeremy Sellem describe a broad-based Gold bull market in 2026, driven by ETFs, futures and options positioning. They highlight strong physical ETF inflows, near-record futures exposure by money managers and a structurally bullish options skew. The report stresses that multiple independent demand channels are reinforcing each other, supporting a constructive stance on Gold over the medium term.

Bullish signals across all channels

"Gold has entered a new phase of its 2026 bull run, one defined less by speculative momentum and more by broad-based, structural conviction across every category of market participant. What began as a geopolitical shock, evolved over the following months into something far more durable: a synchronised build-up of physical, futures, and options exposure that now spans retail investors, professional money managers, and derivatives traders alike."

"In August, gold ETFs registered a substantial 201 tonnes of net inflows, marking the third-largest monthly addition on record in tonnage terms after now famous world events: February 2009 and the stimulus package announced by the newly inaugurated Obama administration, and March 2020 with the start of the lockdown for Covid globally. This month's inflow surpassed the strong inflows recorded in March 2022 following Russia's invasion of Ukraine and in September 2012 after the Federal Reserve's announcement of QE3."

"In notional exposure terms (contracts x price x contract size), money managers' net positioning reached the second-largest long exposure on record, behind only January 2026, when gold broke through $5,400/oz to an all-time high. This time, with prices roughly $1,000/oz lower, the scale of the dollar exposure is even more striking: it is no longer simply a price story."

"Overall, investors appear to be pricing near-term uncertainty via puts while steadily building call exposure further out the curve, consistent with a constructive medium-term outlook for gold."

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

• USD/JPY drops to a seven-month low as the Japanese Yen outperforms its major peers.
• BoJ rate hike expectations, capital repatriation and carry-trade unwinding support the Japanese Yen.
• US inflation figures take centre stage later this week ahead of the Fed’s September meeting.

USD/JPY extends its steep decline on Monday as the Japanese Yen (JPY) rallies against the US Dollar (USD), supported by hawkish Bank of Japan (BoJ) expectations, capital repatriation and the unwinding of Yen-funded carry trades.

At the time of writing, the pair trades around 154.42, down more than 1% on the day at its lowest level since February. Thin trading conditions due to the US Labor Day holiday may also be amplifying the move, with US stock and bond markets closed on Monday.

Markets have fully priced in a 25-basis-point (bps) interest rate increase to 1.25% at the BoJ’s September 17-18 meeting. Expectations that the central bank could tighten policy at a faster pace also support the Yen amid persistent inflation concerns.

Strategists at OCBC remain “tactically constructive on JPY” in the near term, but caution that with “a Sept BoJ hike now largely priced,” further gains will increasingly hinge on “whether expectations shift towards a faster subsequent pace of normalisation and whether the recent repatriation chatter translates into more visible flows.”

Speculation over another currency intervention has also resurfaced following the Yen’s sharp moves in recent days. Japan spent ¥15.4 trillion, around $98.66 billion, supporting the currency between July 30 and August 26, marking its largest intervention operation on record for a single month, Ministry of Finance (MoF) data showed, according to Reuters.

Meanwhile, the US Dollar struggles to benefit from rising Federal Reserve (Fed) rate hike expectations. Friday’s employment report showed that Nonfarm Payrolls (NFP) increased by 162K in August, well above the market forecast of 56K, while the Unemployment Rate held steady at 4.1%. Traders currently price in around a 58% chance of a Fed rate increase at the September 15-16 meeting.

Attention now turns to US inflation data for more clues about the Fed’s next move. The Producer Price Index (PPI) is due on Thursday, followed by the Consumer Price Index (CPI) on Friday. Hotter inflation readings could revive demand for the US Dollar and slow the decline in USD/JPY, while softer figures may add to selling pressure.

TD Securities projects August Core CPI at 0.19% m/m and 2.3% y/y, with services driving gains and core goods slightly negative. Headline CPI is seen at 0.37% m/m and 3.4% y/y on higher energy and food. The bank notes upside risks from assumptions of large price declines in tariff‑exposed goods categories.

Core prices seen under control

"We expect August CPI to report that underlying inflation stayed under control, with core likely rising 0.19% m/m (2.3% y/y). The services segment should be the main driver, while core goods prices likely acted as a drag by posting a modest m/m drop."

"Headline CPI will likely be a stronger 0.37% m/m (3.4% y/y) due to rising energy prices and a slight pickup in food inflation."

"We see the risks to our forecasts as skewed to the upside given that we're assuming a number of large price declines in tariff-exposed goods categories, including apparel and household goods."

"This will also be the first month of PCE with the BEA's revisions, that we expect will push down y/y core inflation around 0.2pp."

"Inflationary risks are still prevalent, which was evident in the respondent comments from last week's ISMs."

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