Forex News
Danske Research Team notes that the United States (US) Personal Consumption Expenditures (PCE) Price Index inflation surprise triggered a hawkish market reaction, pushing US rates higher and weighing on EUR/USD. The pair dropped to 1.1650 as the US Dollar (USD) found support from stronger data. Markets also increased pricing for a potential September Fed rate hike, reinforcing downside pressure on EUR/USD.
Dollar strength weighs on Euro
"In the US, headline PCE inflation came in slightly above expectations at 3.7% y/y in July, unchanged from the previous month and above consensus at 3.6%. On a monthly basis, headline PCE rose 0.2% m/m versus expectations of 0.1%. Core PCE was in line with expectations at 3.3% y/y and 0.2% m/m."
"Markets reacted hawkishly to the print, with rates moving higher across both the short and long ends of the curve, while EUR/USD moved lower. Market pricing of a September Fed rate hike increased after the release."
"The USD found support in somewhat stronger-than-expected PCE inflation reading, with EUR/USD dropping to 1.1650."
"In the US, Fed's annual Jackson Hole conference will take place. This year's topic is "Financial Innovation: Implications for Payments and Policy". The main market mover during the conference is Fed chairman Warsh's speech on Friday. Markets will look for any hints about monetary policy in September. We expect Warsh to continue his pattern of providing little to no forward guidance."
"In the euro area, the minutes from the ECB's July meeting will be published today at 13:30 CET. They will reveal discussions from the meeting where the ECB held policy rates steady. We expect the minutes to show a bias for a rate hike in September, which is also fully priced in by markets. There will likely be limited signals beyond September, so it is not expected to be a market mover."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
UOB Global Economics & Markets Research notes that US PCE inflation for July slightly exceeded expectations, helping US Treasury yields to rise and supporting the US Dollar against most G10 currencies. The DXY index posted its largest daily gain in nearly four weeks and has retraced about half of its prior losses, as markets keep alive expectations that the Federal Reserve could resume rate hikes before year-end.
DXY recovers on PCE surprise
"The headline PCE price index rose 0.2% m/m in July, exceeding economists' expectations of a 0.1% increase. Core PCE, which excludes food and energy, also increased 0.2% m/m and 3.3% y/y, in line with market expectations. The July inflation report, coupled with flat real consumer spending, suggests the Federal Reserve retains some flexibility to keep interest rates unchanged in the near term."
"US Treasury yields rose after the Fed's preferred inflation gauge delivered mixed signals for July. Headline PCE inflation came in slightly above expectations at 3.7% y/y (consensus: 3.6%), while core PCE matched forecasts at 3.3% y/y. The US dollar strengthened against most G10 currencies as the inflation data kept alive expectations that the Federal Reserve may still resume rate hikes."
"The US dollar extended gains against most G10 currencies overnight after a closely watched inflation gauge came in broadly in line with expectations. The DXY rose as much as 0.3% to close at 99.165, marking its biggest daily gain in nearly four weeks. The index has now recovered roughly half of the losses triggered by Treasury Secretary Scott Bessent's surprise measures last week to support the bond market, as inflation data reinforced expectations that the Federal Reserve could begin raising interest rates before year-end."
"Interest rate swaps imply a 43% probability of a Fed rate hike at next month's meeting, while a 25bp increase is fully priced in by December."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP rallies for the third consecutive day, yet with bulls capped below 0.8580.
- The unexpected improvement in German GfK Consumer Sentiment has failed to boost the Euro.
- Rabobank Analysts see the Euro appreciating towards 0.8700 in the next few months.
The Euro (EUR) is trading higher for the third consecutive day against the British Pound (GBP) on Thursday, but the pair keeps ticking down from session highs at the European opening time, despite the bright German GfK Consumer Sentiment data released earlier on the day. The EUR/GBP pair trades at 0.8575 at the time of writing, after hitting intra-day highs near 0.8580 during Asian trading.
German consumers' confidence for September, as measured by the GfK index, improved to -26.6, from -29.4 in August, against market expectations of a moderate deterioration to -29.6. Data from the Nuremberg Institute for Market Decisions shows that the main reasons for the improvement are a significant increase in income expectations and, to a lesser extent, a decline in the willingness to save. The institute adds that economic prospects have shown a positive development, while willingness to buy remains practically unchanged.
German macroeconomic data beats expectations
Earlier this week, German Gross Domestic Product (GDP) figures were revised up to a 0.3% quarterly growth, matching the first quarter’s economic expansion. The yearly growth was revised to 1%, above the 0.9% previously estimated and more than double the 0.4% advance seen in the previous quarter.
Beyond that, the IFO Business Climate Index improved to its highest reading in the last 12 months, with the current business assessment and the economic expectations sub-indexes beating forecasts, which has contributed to improving investors’ confidence in the outlook of the Eurozone’s leading economy.
The UK calendar has remained practically void this week, and the Pound has traded lower against most peers. The GBP/USD is on track for a 0.4% weekly decline, which has been weighing the Sterling across the board in an otherwise calm week, as investors bide their time, awaiting the Jackson Hole Symposium for further clues about the Federal Reserve's (Fed) monetary policy plans.
Strategists at Rabobank consider that "since the market still sees some risk of higher rates this year, steady policy, in line with our view, could undermine the Pound." In this context, Rabobank "maintains a 3-month EUR/GBP forecast of 0.87."
Economic Indicator
GfK Consumer Confidence Survey
The GfK Consumer Confidence is a leading index that measures the level of consumer confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn. Generally speaking, a high reading is positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).
Read more.Last release: Thu Aug 27, 2026 06:00
Frequency: Monthly
Actual: -26.6
Consensus: -29.6
Previous: -29.6
Source: Growth from Knowledge
- WTI price tumbles to near $80.90 in Thursday’s early European session.
- Iran and Oman are working to finalize an agreement governing the Strait of Hormuz.
- US crude inventories increased by 95,000 barrels in the week ending August 21, EIA showed.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $80.90 during the early European trading hours on Thursday. WTI slumps as hopes grow for a reopening of the Strait of Hormuz amid diplomatic efforts involving Iran and Oman.
Bloomberg reported on Wednesday that the Islamic Revolutionary Guard Corps (IRGC) stated that it reached a revenue-sharing agreement with Oman on the critical waterway. The development goes further than a joint statement issued by the two countries’ foreign ministries on Tuesday, which said they discussed an “interim framework” for resuming ship transits but stopped short of announcing an agreement and didn’t mention fees.
Iran also warned that a reopening of the critical waterway will take more than a deal with Oman. Qatar’s Prime Minister will go to Iran on Thursday to restart diplomatic discussions aimed at ending the conflict, which has now lasted nearly six months.
Nonetheless, the US and Iran remain far apart on the conditions for ending the fighting. Earlier this week, Washington threatened damaging new sanctions on countries that refuse to cut economic ties with Iran. US Treasury Secretary Scott Bessent also warned that groups helping Tehran launder money face expulsion from the US financial system. Any signs of rising tensions between the US and Iran could raise fears of oil supply disruption and boost the WTI price.
US crude oil inventories see a modest weekly build. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending August 21 increased by 95,000 barrels, compared to a surge of 4.405 million barrels in the previous week. The market consensus was for a rise of 1.9 million barrels.
Oil eases as Strait of Hormuz risks recede, Wall Street slips
Strategists at UOB Group highlight that “oil prices declined on continued optimism over a resolution in the Strait of Hormuz, while Wall Street closed modestly lower overnight.” The bank notes that easing geopolitical tensions in this key shipping lane have weighed on crude benchmarks, even as US equities softened in the latest session.
Technical Analysis: WTI remains capped under the 100-day SMA
In the daily chart, WTI US Oil holds a bearish near-term bias as price sits below the 100-day simple moving average (SMA) and the Bollinger Bands 20-period middle band. The latest 14-day Relative Strength Index at 48.30 is broadly neutral, hinting at a consolidation phase rather than a decisive recovery while the contract remains capped by these overhead averages.
On the topside, initial resistance appears at the Bollinger middle band near $81.30, ahead of the 100-day SMA at $85.20, with the Bollinger upper band around $88.30 marking a stronger supply zone if a rebound extends. On the downside, the first meaningful support is aligned with the Bollinger lower band around $74.35, where buyers could attempt to stem deeper losses should the current bearish pressure persist.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- AUD/USD extends rally to near 0.7185 as the Australian Dollar outperforms its peers.
- A fresh escalation in hawkish RBA bets has strengthened the antipodean.
- Sticky US PCE Inflation report for July offered support to the US Dollar.
The Australian Dollar (AUD) is up 0.2% to near 0.7185 against the US Dollar (USD) during the European trading session on Thursday. The Aussie pair strengthens as hotter-than-projected Australian Consumer Price Index (CPI) data for July has prompted hawkish Reserve Bank of Australia (RBA) prospects.
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.03% | 0.02% | 0.06% | -0.20% | 0.01% | 0.03% | |
| EUR | 0.04% | 0.06% | 0.04% | 0.07% | -0.17% | -0.06% | 0.06% | |
| GBP | -0.03% | -0.06% | 0.00% | -0.00% | -0.21% | -0.11% | -0.01% | |
| JPY | -0.02% | -0.04% | 0.00% | 0.02% | -0.20% | -0.13% | 0.01% | |
| CAD | -0.06% | -0.07% | 0.00% | -0.02% | -0.23% | -0.14% | -0.00% | |
| AUD | 0.20% | 0.17% | 0.21% | 0.20% | 0.23% | 0.10% | 0.22% | |
| NZD | -0.01% | 0.06% | 0.11% | 0.13% | 0.14% | -0.10% | 0.15% | |
| CHF | -0.03% | -0.06% | 0.00% | -0.01% | 0.00% | -0.22% | -0.15% |
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).
AUD rallies as hot Australia CPI data boosts RBA hike pricing
Brown Brothers Harriman notes that the Australian Dollar is “outperforming” after hotter-than-expected July inflation data “ran hot, lifting rate hike bets.” The bank highlights that headline CPI “rose 1.0% m/m (consensus: 0.9%) vs. -0.1% in June driven in part by automotive fuel and clothing,” while on an annual basis headline CPI “eased less than expected to 3.5% (consensus: 3.3%) vs. 3.8% in June.”
BBH adds that the underlying trend remains firm, with the “trimmed mean CPI remained at 3.6% (consensus: 3.5%) for a second straight month and tracking above the RBA’s end-December 3.3% forecast.” In response, the bank points out that “RBA cash rate futures now almost fully price a 25bps hike to 4.60% by year-end, up from 60% before the July CPI data.”
Meanwhile, the US Dollar holds onto previous day’s gains, with investors awaiting Federal Reserve (Fed) Chairman Kevin Warsh’s remarks at the Jackson Hole Symposium on Friday.
The US Dollar gained on Thursday after the release of the United States (US) Personal Consumption Expenditure (PCE) Price Index report for July, which showed that price pressures remained sticky.
AUD/USD Technical Analysis
AUD/USD trades at 0.7185. The pair holds a bullish near-term bias as it advances firmly above the 20-day exponential moving average (EMA) at 0.7100, keeping recent gains supported by underlying trend demand.
The Relative Strength Index (14) at 69.2 hovers just below overbought territory, suggesting strong but potentially stretched upside momentum after the latest leg higher.
On the downside, initial support is located at the 20-day EMA at 0.7100, which marks the nearest pullback floor if buyers take profits or momentum cools. Looking up, the pair aims to rally further towards the four-year high at 0.7276.
(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.
- Jakarta protests and El Niño weather risks weigh on investor sentiment ahead of key economic data.
- Bank Indonesia nominee Destry Damayanti promises policy continuity, emphasizing stability while supporting growth.
- The US Dollar remains strong as July's PCE inflation accelerated to 0.2%, beating market expectations.
USD/IDR gains ground for the third successive day, trading around 17,800 during the Asian hours on Thursday. The currency pair is under downward pressure as the Indonesian Rupiah (IDR) struggles against fragile domestic sentiment.
Ongoing major protests in Jakarta have left investors wary of potential unrest reminiscent of last year's turmoil. Adding to this caution, markets are bracing for next week's August inflation report, where El Niño-related weather risks threaten to drive up food prices. These concerns are further compounded by lingering external pressures and ongoing uncertainty in global energy markets ahead of the upcoming July trade data release.
Despite these immediate headwinds, reassuring comments from central bank leadership helped cap broader losses. Destry Damayanti, the sole nominee for Bank Indonesia Governor, told parliament that closer policy coordination would not undermine the central bank’s independence. She emphasized that Bank Indonesia will maintain a stance centered on economic stability while actively supporting growth, helping to reinforce market confidence in policy continuity.
The USD/IDR pair remains stronger as the US Dollar (USD) holds its ground, bolstered by robust economic data. July’s PCE price index accelerated to 0.2% month-on-month, edging past the 0.1% consensus, while the annual rate remained at 3.7%. This surprise uptick has reinforced market bets that the Federal Reserve could deliver one final rate hike before year-end, leaving investors eagerly awaiting policy cues from Fed leadership at the upcoming Jackson Hole symposium.
Traders assess the shifting geopolitical and fiscal dynamics. Crude oil prices continued to slide following diplomatic headway in the Middle East, where Iran and Oman agreed on territorial waters and revenue-sharing along the Strait of Hormuz, easing immediate inflation anxieties.
Meanwhile, fiscal scrutiny intensified over the US Treasury’s plan to double bond buybacks, a move sharply criticized by billionaire investor Stanley Druckenmiller as detrimental to market credibility and a missed opportunity for meaningful debt reform.
Dollar bears eye renewed pressure on DXY
Strategists at Scotiabank highlight that the technical backdrop for the US Dollar Index remains fragile, cautioning that “bear pressure will build on the DXY again below 98.75,” a level they flag as an important threshold for renewed downside momentum.
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.
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