Forex News
ING strategist Frantisek Taborsky says Central and Eastern European markets opened positively, with rates markets outpricing hikes while FX stayed sidelined. Pricing implies around two Czech National Bank (CNB) hikes, a little more than one in Poland and three cuts in Hungary, but Taborsky expects unchanged rates in Czech Republic and Poland and more cuts in Hungary. He sees scope for further rates rally if global conditions stay supportive.
Zloty and forint seen outperforming
"Markets opened on a positive note, as expected, following weekend headlines from the Middle East, with rates markets outpricing rate hikes. FX, however, remained sidelined at the start of the week, with limited movement."
"Market pricing now implies around two CNB hikes over the next 18 months, a little more than one hike in Poland and around three rate cuts in Hungary. We continue to expect rates to remain unchanged in the Czech Republic and Poland, while the Hungarian central bank is likely to deliver more cuts than currently priced in."
"Rates, therefore, have more scope to rally if the global backdrop remains supportive. In the Czech Republic and Hungary in particular, inflation prints and this week’s CNB meeting should provide additional support."
"Yesterday’s moves largely tracked core markets, with little change in rate differentials. Our views from yesterday are unchanged: a stronger zloty and forint should benefit from global relief, while the koruna is likely to underperform on a dovish interpretation of this week’s CNB meeting."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Dow Jones futures advance as Trump canceled planned strikes on Iran, easing immediate concerns over oil supplies and inflation.
- Iranian leadership rejected Trump's negotiation offer, refusing to permit a second corridor in the Strait of Hormuz.
- Tech stocks led Monday's Wall Street rally, with Amazon hitting a $3 trillion market capitalization.
Dow Jones futures rise 0.17% to trade around 53,430 during European hours on Tuesday. Meanwhile, S&P 500 futures gain 0.23% to trade near 7,650, while Nasdaq 100 futures advance 0.68%, trading near 29,090.
US stock futures tick higher as investor sentiment got a boost from easing geopolitical tensions. The market rallied after President Donald Trump canceled planned military strikes against Iran in favor of reviving negotiations. This decision helped alleviate immediate concerns surrounding oil supply disruptions, rising inflation, and the broader outlook for interest rates.
However, diplomatic friction remains high. President Trump characterized his offer for talks as a "last chance" following the called-off military action. Iranian leadership quickly dismissed the proposal, with General Mohsen Rezaei, an advisor to Iran's Supreme Leader, rejecting the conditions outright and asserting that Iran will not permit a second corridor in the Strait of Hormuz.
Despite the back-and-forth, Wall Street kicked off the week on a high note, propelled by falling crude prices and a powerful rally in heavyweight technology shares. During Monday’s regular trading session, the tech-heavy Nasdaq Composite surged 2.13%, while the S&P 500 and the Dow Jones Industrial Average advanced 1.48% and 1.32%, respectively.
Megacap tech stocks led the charge, highlighted by Amazon soaring 4.6% to cross the $3 trillion market capitalization threshold for the first time. Investor attention now shifts toward the next wave of corporate earnings due Tuesday, featuring reports from major names including SpaceX, AMD, Caterpillar, Merck, and McDonald’s.
Williams reiterates confidence in Fed path as markets test hawkish resolve
Fed’s Williams delivers a moderately hawkish message, with a 6/10 FXS Speechtracker score slightly above the 5.8/10 historical average, underscoring confidence that current rate policy is “well positioned” to achieve 2% inflation. The repeated emphasis on acting if inflation drifts off the 2% path, strong support for the latest FOMC decision, and a firm commitment to price stability signal a willingness to tighten further if needed, even as optimism about gradually easing inflation and a cooling impact from Middle East tensions tempers the tone. Acknowledgment of market pricing as “valuable information” but not binding, alongside dismissal of financial stability risks from AI investment, reinforces a stance that keeps the Fed’s reaction function clearly data-dependent and somewhat above the established baseline in hawkishness.
The FXS Fed Sentiment Index fell by 1.47 points to 146.76, indicating a modest pullback in perceived hawkishness despite remaining firmly in hawkish territory above the 100 neutral line. This suggests that while the speech is still clearly restrictive in tone, markets see a slightly less aggressive path for the Dollar relative to recent Fed communications, consistent with the balanced but vigilant stance reflected in the FXS Speechtracker score.
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.
- GBP/JPY gains strong positive traction on Tuesday amid broad-based JPY weakness.
- Traders looked past a joint US-Japan intervention amid concerns over Japan’s finances.
- The wide UK-Japan rate gap keeps the JPY carry trade active and further lends support.
The GBP/JPY cross builds on the previous day's recovery move from the vicinity of mid-209.00s, or the lowest level in nearly five months, and gains some follow-through positive traction on Tuesday. Spot prices now look to build on intraday gains beyond the 212.00 mark during the early part of the European session amid a broadly weaker Japanese Yen (JPY).
As traders look past a joint US-Japan intervention in the FX market, renewed concerns about Japan's worsening fiscal situation prompt fresh JPY selling. In fact, Japan's ruling Liberal Democratic Party (LDP) backed a proposal to cut the food consumption tax from 8% to 1% for two years starting in April 2027. Adding to this, the Japanese government proposed roughly ¥600 billion a year in cash transfers targeted at low- and middle-income households as part of a relief package. However, the lack of a clear funding mechanism is seen as the key concern, which is putting pressure on the JPY and acting as a tailwind for the GBP/JPY cross.
Apart from this, the persistently wide interest rate differential between Japan and other major economies, including the UK, contributes to JPY's relative underperformance. The Bank of Japan (BoJ) moved away from its ultra-loose monetary easing era and lifted the short-term interest rate in June to 1.00%, the highest since 1995. Meanwhile, the Bank of England's (BoE) base rate is 3.75%, leaving a gap of around 275 basis points (bps). This keeps the JPY carry trades active amid concerns that Japan's economy will remain under strain due to the Middle East crisis, which, in turn, is seen as another factor supporting the GBP/JPY cross.
According to TD Securities, the latest bout of official support for the Yen is best understood as a tactical move rather than a structural shift. Analysts argue that “the latest JPY intervention episode” reflects the Japanese government “buying time in the FX market for fiscal policy to fundamentally induce global demand for JPY-based assets,” suggesting that durable currency strength will ultimately depend on how fiscal measures reshape investor appetite for Japan risk. On the monetary side, TD Securities cautions that, “unless the BoJ delivers a series of hikes in a swift manner (possibly every quarter) to 2%”, the JPY is believed to resume its downtrend.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.01% | 0.39% | -0.00% | -0.30% | 0.00% | -0.07% | |
| EUR | 0.04% | 0.01% | 0.45% | 0.05% | -0.27% | 0.02% | -0.02% | |
| GBP | 0.00% | -0.01% | 0.45% | 0.02% | -0.27% | 0.00% | -0.04% | |
| JPY | -0.39% | -0.45% | -0.45% | -0.40% | -0.69% | -0.42% | -0.35% | |
| CAD | 0.00% | -0.05% | -0.02% | 0.40% | -0.29% | -0.02% | -0.06% | |
| AUD | 0.30% | 0.27% | 0.27% | 0.69% | 0.29% | 0.28% | 0.23% | |
| NZD | -0.00% | -0.02% | -0.01% | 0.42% | 0.02% | -0.28% | -0.04% | |
| CHF | 0.07% | 0.02% | 0.04% | 0.35% | 0.06% | -0.23% | 0.04% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- USD/JPY bounces to the mid-157.00s from Monday's lows at the 155.20 area.
- FX analysts from some of the world's leading commercial banks see risks skewed to the downside for the US Dollar.
- The experts see doubts about the Fed's commitment to fight inflation and threats of further interventions keeping a lid on USD/JPY rallies.
The Japanese Yen (JPY) trims some gains against the US Dollar (USD) on Tuesday, with the USD/JPY pair picking up to the mid-157.00s from Monday’s lows at 155.23. Analysts from some of the world’s leading commercial banks, however, affirm that last week’s coordinated US-Japan intervention might have altered the pair’s near-term bias.
FX analysts at Rabobank observe that JPY net shorts had climbed to their highest levels since 2024 ahead of the intervention, and expect positioning "to be sharply changed" in the next data release.
Support from the US provides more authority to Tokyo interventions
MUFG/BTMU flags an important liquidity backstop, noting that comments by the Japanese Finance Minister, Satsuki Katayama, “revealed that Japan also plans to utilize the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility in the future.” The facility “enables Japan to access up to USD60 billion per day without selling Treasuries for up to seven days”.
In MUFG/BTMU’s view, with support from the US, intervention, Tokyo's actions to shore up the Yen "will be viewed as more credible and if it proves more effective it could then mean that less intervention is ultimately required requiring less Treasury sales.”
Overall, MUFG/BTMU’s analysts conclude that “the latest development give us more confidence in our forecasts that the yen is in the process of bottoming out. The threat of further joint intervention and a faster pace of BoJ hikes should provide more support for the yen, and discourage speculators from running elevated short yen positions.”
Fed's inflation-fight credibility likely to hurt the USD
In the same line, experts at BBH note that “markets questioned the Fed’s inflation-fighting credibility, while suspected joint Japan and US intervention to strengthen JPY added to the dollar’s decline.”
BBH estimates that “the US Treasury has apparently stepped in alongside Japan to buy $5-10bn worth of Japanese yen on Friday,” and stresses that “history is clear, joint FX intervention packs a punch, and investors should lean with the official flow, not against it.”
Strategists at UOB Group retain a cautious stance on USD/JPY over the one-to-three-week horizon, reiterating that “the risk for USD remains firmly on the downside, and the levels to watch are 155.00 and 154.10.” They acknowledge that “downward momentum has slowed with the subsequent rebound,” but stress they will “continue to hold the same view as long as the ‘strong resistance’ at 160.00 (no change in level) is not breached.”
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- Trump issued a "last chance" diplomacy warning to Iran, but Tehran swiftly rejected the proposal.
- Iranian military leadership threatened foreign warships, refusing to permit a second corridor in the Strait.
- Fed Official Williams expressed confidence that current interest rates are properly positioned to bring inflation down to 2%.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its gains for the second successive day and trading around 100.00 during the European session on Tuesday.
The Greenback holds firm against its major peers as geopolitical tensions mounted following US President Donald Trump’s characterization of his recent proposal as a "last chance" for diplomatic resolution with Iran. The statement followed his decision to call off a major military strike, with Trump signaling expectations that formal negotiations would soon begin to safeguard the Strait of Hormuz and address long-standing US concerns regarding Iran’s nuclear program.
However, Iranian leadership swiftly rejected the overture. General Mohsen Rezaei, an advisor to Iran’s Supreme Leader, firmly dismissed the conditions, declaring that Tehran would absolutely not allow a second corridor in the Strait. He further warned that any foreign warships or military forces deployed to enforce such a corridor would be targeted directly.
Against this backdrop, currency and financial markets are continuing to digest economic policy cues following the central bank's decision to leave interest rates unchanged in July. According to the CME FedWatch tool, traders are currently pricing in roughly a 65% probability of a 25-basis-point rate hike at the Federal Reserve's upcoming September meeting.
Williams reiterates confidence in Fed path as markets weigh hawkish stance
Fed’s Williams delivers a moderately hawkish message, with a 6/10 FXS Speechtracker score slightly above the 5.8/10 historical average, underscoring confidence that current rate policy is “well positioned” to achieve the 2% inflation goal. The repeated commitment to act if inflation is not on track, alongside optimism that price pressures will gradually ease and that the Middle East war’s inflation impact will cool, signals a steady-hawkish stance rather than an escalation. Acknowledging market pricing as valuable but not binding, and downplaying financial stability risks from AI investment, reinforces a message of policy patience within a firmly anti-inflation framework.
The FXS Fed Sentiment Index fell by 1.47 points to 146.76, indicating a modest pullback in perceived hawkishness. Despite the decline, the index remains well above the neutral 100 mark, showing that Fed communication is still firmly in hawkish territory even as the tone edges slightly closer to the established baseline.
US financial conditions tighten but remain supported by earlier market rallies
Analysts at Standard Chartered report that their “subsequent FCI-G estimate – updated after the July FOMC meeting – shows that while the equity-market sell-off, a stronger USD and higher long-term rates tightened financial conditions between the June and July meetings, these moves were moderate compared to the financial-market rallies of the past few months.” They suggest that, in aggregate, the earlier strength in risk assets continues to offset the more recent bout of tightening.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
TD Securities strategists argue that recent Japanese Ministry of Finance (MoF) interventions and talk of joint United States (US)/Japan action have not changed the broader USD/JPY regime. They see momentum allowing a brief dip toward 153.00, but expect the pair to hold above that level and maintain a year-end forecast of 159.00.
Intervention seen as buying time only
"USD/JPY fell sharply to the 200d SMA for the first time in 2026 after two days of aggregate ~$87bn intervention from the MoF and headlines of potential joint intervention from both Japan and the US."
"Our trend-following model shows USD/JPY trend turned from uptrend to neutral, but it is not yet in downtrend."
"In the absence of more hawkish BoJ monetary policy and prolonged direct US involvement to intervene JPY, the combination of valuation, positioning, and trend-following would suggest limited short-term USD/JPY downside to 153.00, in our view."
"For now, we maintain our year-end forecast of 159.00 for USD/JPY."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Rabobank’s Senior Market Strategist Benjamin Picton notes Brent futures fell over 7% and Singapore gasoil nearly 11%, despite ongoing geopolitical and logistical disruptions to Oil and refined products. Picton stresses that recent price declines contrast with persistent supply risks, underscoring market “capriciousness” and suggesting traders may be prematurely pricing in resolution of product market problems and an emerging Oil glut.
Oil prices fall despite disruptions
"The front Brent crude future fell by more than 7%, despite the fact that there is no confirmation of material progress in loosening restrictions on global energy flows."
"ICE gasoil futures declined by more than 8.5% despite Russia’s ongoing diesel export ban, continued Ukrainian strikes on energy infrastructure, the Houthis’ recent decision to spread the Iran conflict to Saudi oil infrastructure in the Red Sea and low water levels in the Rhine disrupting energy shipping and forcing freight rates higher."
"Similarly, Singapore gasoil spot prices were down by almost 11% yesterday."
"On those figures you would think all of the problems in product markets are solved."
"This again highlights the capriciousness of markets; it was only a few weeks ago that I was reading articles making straight-faced suggestions of an emerging oil glut."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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