Forex News

Nomura’s Euro area team expects the European Central Bank to raise rates by 25 basis points to 2.50% at the 10 September meeting, citing higher HICP inflation and resilient growth. They highlight hawkish comments from ECB officials and note that Brent and Dutch TTF price dynamics could shape additional tightening risks into December 2026.

Hawkish officials and energy-linked risks

"We expect the ECB to raise rates at its 10 September meeting by 25bp to 2.50% in light of rising HICP inflation, due to the Iran war, and the euro area’s economic resilience. There are clear risks of further rate hikes beyond September, however."

"In a similar vein the ECB’s Radev made hawkish comments yesterday, suggesting that the neutral rate is “probably around 2.50%” and that the ECB may eventually be required to raise rates into restrictive territory."

"We maintain our view that the ECB will raise rates by 25bp at its 10 September meeting to 2.50%. In the near term, market pricing for the ECB by December 2026 is driven largely by the price of Brent crude oil, as we continue to focus on US-Iran headlines."

"However, there are clear risks that a December rate hike could occur should the price of Dutch TTF natural gas rise further. The bulk of the pass-through of moves in the price of Brent crude oil is largely contemporaneous and occurs via the vehicle fuel component within the HICP basket."

"However, the pass-through of moves in the price of Dutch TTF natural gas is more lagged and gradual, resulting in more persistent and broader inflationary pressures."

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

• Canada’s economy expands by 0.8% in the second quarter, accelerating sharply from the 0.1% growth recorded in the Q1.
• Annualized growth reaches 3.3%, slightly below market expectations of 3.4%.
• Economic activity rises by 0.3% in June, beating expectations for a slowdown to 0.2%.

Canada’s Gross Domestic Product (GDP) expanded by 0.8% QoQ in the second quarter, according to data released by Statistics Canada on Friday. The economy accelerated significantly from the 0.1% growth recorded in the first quarter, which was revised higher from an initial estimate of 0%.

On an annualized basis, Canadian GDP grew 3.3% in the second quarter, up from the upwardly revised 0.3% increase in the previous quarter but slightly below market expectations of 3.4%.

The monthly figures also provide an encouraging signal. GDP rose by 0.3% MoM in June, maintaining May's pace and exceeding expectations for a slowdown to 0.2%.

Statistics Canada reports that second-quarter growth was driven by stronger exports, household spending and business capital investment. Exports increased by 3.6%, marking their strongest quarterly rise since the first quarter of 2023, while household consumption expenditure advanced by 0.8%.

Business investment also strengthened during the quarter, supported by machinery and equipment as well as engineering structures. Meanwhile, real GDP per capita increased by 1%, as Canada's population declined for a third consecutive quarter.

Market reaction

USD/CAD remains broadly stable on Friday, trading around 1.3855 at the time of writing. The pair shows a limited reaction to the Canadian growth data, as investors remain cautious ahead of Federal Reserve (Fed) Chair Kevin Warsh’s speech at Jackson Hole later in the day.

BNY's Geoff Yu notes that month-end rebalancing flows leave the British Pound (GBP) vulnerable, with GBP seen as particularly exposed after strong performance and stretched GBP/USD levels. United Kingdom (UK) assets react to Chancellor Healey’s emphasis on fiscal discipline under the Labour government, while business confidence improves and pricing intentions ease, shaping expectations for the Pound and gilts.

Pound exposure and shifting UK backdrop

"MXN stood out as the clearest carry expression, while GBP and EUR benefited from hedging flows and relatively supportive rate profiles."

"GBP looks particularly exposed given stretched GBP/USD levels and the associated earnings-translation drag, while EUR faces a similar, if slightly less acute, risk."

"U.K. Chancellor John Healey said fiscal discipline will be the bedrock of the Labour government’s first budget under Prime Minister Andy Burnham, pledging to remain within existing fiscal rules while deferring decisions on raising defense spending to 3% of GDP until next year's spending review."

"The broader policy challenge is balancing tighter fiscal constraints with growing defense and resilience demands, as the U.K. responds to higher security risks, hybrid threats and pressure to increase military preparedness without undermining confidence in the public finances."

"The U.K.’s August 2026 Lloyds’ Business Barometer showed business confidence rose 4 points to 53% in August, the highest since March and above the 12-month average of 47%."

(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) is mixed near a one‑week high as major FX pairs test key technical levels, including EUR/USD at its 200‑day moving average and USD/JPY near 160.00. Haddad highlights divergent Fed commentary around Jackson Hole but aligns with Susan Collins’ view that policy is mildly restrictive, leaving the Dollar exposed to a dovish repricing of Fed rate expectations.

Dollar mixed as Fed views diverge

"USD is mixed near a one-week high, while stocks and bond yields are mostly firmer. Major FX pairs are pressing key technical levels that could trigger sharper moves if broken."

"We share Collins’s view, leaving USD vulnerable to a dovish repricing. Fed funds futures currently price in 35% odds of a 25bps hike to 3.75-4.00% at the next September 16 meeting and a total of nearly 50bps of tightening over the next twelve months."

"The BLS preliminary annual payroll benchmark revision is due today (3:00pm London, 10:00am New York). An 185k upward adjustment is expected, suggesting payroll growth was understated by roughly 15k per month in the twelve months to March 2026."

"The backward-looking revision won’t shift the dial on Fed rate expectations. But a downgrade could add to soft hiring concerns."

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

Rabobank’s Senior Macro Strategist Bas van Geffen notes that central bankers and market participants are focused on Jackson Hole, where FOMC Chair Warsh will give the keynote. Report highlights his aversion to forward guidance and suggests he may avoid clear policy signals. He also flags colleagues’ recent inflation warnings and the potential impact on US Dollar (USD) and rates markets.

Warsh keynote keeps guidance uncertain

"Central bankers, economists, and journalists flock to the town for the Fed’s annual policy symposium. Policymakers have plenty to discuss as the world transitions to a new world order, which generally does not happen smoothly. Geopolitics and AI are just two factors creating global shockwaves, and risks to security, the economy – and inflation."

"The FOMC’s own chairman is the exception. Warsh is scheduled to be the keynote speaker today. Previous Fed chairs have used this opportunity to flag turning points in US monetary policy, but since taking the helm at the Fed, Warsh has been avoiding every form of forward guidance."

"Will he stick to his script and tell people asking about the direction of Fed policy to do what made Jackson Hole the venue for the symposium – “go fish”? Or will he feel compelled to be a bit more outspoken, after Treasury Secretary’s Bessent’s interventions in the rates market pushing back against the long end of the Treasury curve? The lack of a monetary policy panel in this year’s schedule suggests that Warsh will stick with the first option."

"Several of his colleagues warned of inflationary pressures ahead of the event, and ECB speakers have started to lean into a September hike as well – although most are still non-committal about any moves beyond that horizon."

"Jackson Hole is either going to be the highlight of the day or a snoozefest for markets."

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

OCBC’s Christopher Wong keeps a firmer tactical bias on Platinum, favouring buy-on-dips despite a recent loss of momentum near 1860–1910. Mild bullish momentum remains intact, with key resistance at 1863–1943 and upside potential towards 2065 on a clean breakout. Supports are identified around 1815 and 1765, anchoring the constructive near-term view.

Rebound pauses but structure positive

"Platinum retains the firmer tactical bias. Platinum's mild bullish momentum and buy-on-dips bias remain intact, though it needs to clear 1863-1943 to extend towards 2,065."

"Platinum’s rebound has lost some momentum with the recent rally stalling around the 1860-1910 area. Last seen at 1850 levels."

"Mild bullish momentum remains intact. Key area of resistance at 1863 (23.6% fibo retracement of 2026 high to low) - 1943 (200 DMA). A clean break out is needed for bulls to gain greater conviction. Next resistance at 2065 (38.2% fibo). Bias to buy dips."

"Support at 1815 (100 DMA), 1765 (21 DMA)"

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