Forex News
Brown Brothers Harriman’s (BBH) Elias Haddad reports that USD/JPY briefly fell about five big figures to 158.00 on suspected Japanese intervention before rebounding near 161.00 and then dropping again. The Bank of Japan (BoJ) kept its policy rate at 1.00% with a hawkish bias and upgraded its risk assessment, while swaps now price higher odds of a September BoJ hike, supporting the Japanese Yen (JPY) outlook.
Hawkish BoJ repricing favors Yen
"USD/JPY dropped yesterday as much as 5 big figures to a low of 158.00 on possible FX intervention. USD/JPY recovered to near 161.00 ahead of today’s Bank of Japan (BoJ) policy decision before an intervention-like kneejerk drop to 158.55 later in the session."
"Japan’s Ministry of Finance (MoF) released its July report on Foreign Exchange Intervention Operations today. The report is for the period from June 29 through July 29."
"BoJ delivered a hawkish hold. As was widely expected, the BoJ kept policy rate at 1.00% and stuck to its hawkish bias stressing it “will continue to raise the policy interest rate.”"
"The BoJ has delivered just 50bps of tightening since December 2025 but its updated Outlook Report points to a faster normalization path toward the middle of its estimated 1.10%-2.50% neutral range."
"Bottom line: there is room for a hawkish BoJ repricing in favor of JPY. The swaps curve already raised the implied odds of a September BoJ hike to roughly 40% from 20%."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING economists Deepali Bhargava and Lynn Song expect the Reserve Bank of India to keep the repo rate at 5.25% this week. They note that while June headline inflation rose on higher fuel prices, core inflation remains below target. This gives policymakers room to maintain current settings while monitoring risks from elevated Oil prices and a possible severe El Niño impact on food.
RBI seen holding as risks monitored
"We expect the Reserve Bank of India to keep the repo rate unchanged at 5.25% on Wednesday."
"While headline inflation surprised to the upside in June, largely due to higher fuel prices, underlying price pressures remain contained."
"Core inflation continues to run below the RBI's target, providing policymakers with sufficient room to keep policy rates unchanged while monitoring evolving risks to the inflation outlook."
"Particularly from elevated oil prices and the potential impact of a severe El Niño event on food prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The Euro weakens as the US Dollar rebounds after Thursday's sharp sell-off.
- Hawkish comments from Federal Reserve officials reinforce expectations for higher US interest rates.
- Eurozone inflation data reinforce expectations for another European Central Bank rate hike.
The Euro (EUR) weakens against the US Dollar (USD) on Friday as short-covering in the Greenback following the previous day’s sharp sell-off pushes EUR/USD back below 1.1500. At the time of writing, the pair trades around 1.1488, easing from the six-week high of 1.1537 touched on Thursday.
Meanwhile, the war in the Middle East and hawkish Federal Reserve (Fed) expectations continue to provide underlying support to the US Dollar. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 100.34, up 0.37% on the day.
Despite limited forward guidance from Fed Chair Kevin Warsh at this week’s monetary policy meeting, traders still see a meaningful chance that the central bank will raise interest rates later this year as elevated Oil prices keep inflation risks tilted to the upside.
According to the CME FedWatch Tool, traders currently price in around a 66% probability of a 25-basis-point rate hike in September. Traders now await the final University of Michigan Consumer Sentiment and Inflation Expectations data due later on Friday.
The Fed left interest rates unchanged within the 3.50%-3.75% range on Wednesday, with three policymakers voting for an immediate 25-basis-point rate hike.
Two of the three dissenters reinforced their hawkish positions on Friday. Cleveland Fed President Beth Hammack said monetary policy is not restrictive enough and argued that the central bank should focus on inflation while the labour market remains stable.
Minneapolis Fed President Neel Kashkari said, “If inflation remains elevated, a potential series of small policy moves would be better than waiting and concluding that bolder actions were necessary.”
Across the Atlantic, preliminary Eurozone inflation data for July failed to lift the Euro. The Harmonized Index of Consumer Prices (HICP) rose 2.9% YoY, matching forecasts and edging up from 2.8% in June. Core inflation accelerated to 2.5% from 2.4%.
Eurozone inflation data keep ECB on track for September hike
Analysts at Societe Generale note that the latest Euro area inflation release "points to limited indirect spillovers from the energy shock to consumer prices so far," even as energy-driven volatility keeps the outlook uncertain. They caution, however, that "this should not be taken as evidence that broader second-round effects will fail to materialise, as upstream energy price pressures typically take time to pass through supply chains."
In their view, "Friday's figures are consistent with the ECB's June forecast of 2.5% YoY for 3Q26" and, "together with the solid 2Q26 GDP print, the latest release should support another ECB rate hike in September."
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
UOB economist Ho Woei Chen highlights that China’s July CFLP PMIs slipped into contraction, with both manufacturing and non-manufacturing gauges signaling broad-based weakness in activity. The report notes particularly soft industrial output and services, while construction also declined. UOB expects growth to stay the main policy priority, with further easing skewed toward fiscal tools and limited room for additional monetary loosening, including steady PBOC policy rates through 2026.
PMIs weaken as policy stays supportive
"China’s CFLP composite PMI slumped 1.3 pts to 49.3 in Jul to its lowest since Dec 2022. The manufacturing and non-manufacturing PMIs concurrently fell into contraction (reading<50), signaling a broad-based weakening in economic activity. The softening in industrial activity is particularly concerning, as policymakers have been relying on external demand and export growth to offset the prolonged weakness in domestic demand."
"The CFLP manufacturing PMI recorded its first contraction in five months, declining 1.1 pts to 49.2 in Jul (Bloomberg est: 50.1, Jun: 50.3). All the key constituents were in contraction with a large drop in production (49.9 from 51.4 in Jun), new orders (48.5 from 51.2 in Jun) and new export orders (49.6 from 50.1 in Jun). However, employment (49.0 from 48.5 in Jun) picked up to its highest reading in 40 months."
"The Politburo meeting on 30 Jul pledged to promptly plan and introduce practical and effective incremental policies, increase counter-cyclical adjustments, intensify efforts to expand domestic demand and optimize supply, and continue to comprehensively address "involutionary" competition. The pace of fiscal spending and bond fund utilization will be accelerated to promote the construction of key projects and new infrastructure, as well as new social development initiatives. Monetary policy tools will be comprehensively utilized and adjusted in a timely manner."
"Growth is expected to remain the primary policy focus in the near term, after 2Q26 GDP growth undershot the official target range of 4.5%-5.0%. Consistent with signals from the Politburo meeting, any additional policy easing is likely to be measured and increasingly driven by fiscal rather than monetary stimulus. We continue to expect the PBOC to keep its benchmark seven-day reverse repo rate unchanged at 1.40% through 2026."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD trades around 1.4045 on Friday, up 0.23% on the day after recovering from its two-week lows.
- Canada's economy expanded by 0.3% in May, matching expectations for a second consecutive month of growth.
- The US Dollar finds support from persistent Federal Reserve tightening expectations despite stronger Canadian data.
USD/CAD trades around 1.4045 on Friday at the time of writing, recovering from a two-week low hit on Thursday at 1.3991.
Statistics Canada reported that the economy expanded by 0.3% MoM in May, following an upwardly revised 0.6% increase in April. Growth was broad-based, with both goods-producing and services-producing industries contributing to the expansion, while 13 of the 20 industrial sectors posted gains.
However, the positive impact of the data on the Loonie proved short-lived. The US Dollar (USD) regained momentum as markets continued to price in the risk that the Federal Reserve (Fed) may need to keep monetary policy restrictive for longer. Rising energy price volatility and ongoing geopolitical tensions in the Middle East continue to fuel inflation concerns, supporting expectations that the US central bank could still deliver a 25-basis-point interest rate hike in September.
Fed Chair Kevin Warsh reiterated this week that the central bank remains committed to restoring price stability after leaving interest rates unchanged at 3.5%-3.75%, while three policymakers voted in favor of an immediate rate increase. According to the CME FedWatch tool, markets currently assign around a 65% chance to a 25-basis-point Fed rate hike at the September meeting.
Investors now turn their attention to the final University of Michigan Consumer Sentiment survey, Consumer Expectations and one-year and five-year Consumer Inflation Expectations, due later in the day, for additional clues on the outlook for US monetary policy.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.34% | 0.32% | 0.55% | 0.20% | 0.23% | 0.35% | 0.65% | |
| EUR | -0.34% | -0.03% | 0.20% | -0.14% | -0.12% | 0.02% | 0.33% | |
| GBP | -0.32% | 0.03% | 0.22% | -0.11% | -0.10% | 0.03% | 0.37% | |
| JPY | -0.55% | -0.20% | -0.22% | -0.33% | -0.30% | -0.17% | 0.15% | |
| CAD | -0.20% | 0.14% | 0.11% | 0.33% | 0.03% | 0.17% | 0.49% | |
| AUD | -0.23% | 0.12% | 0.10% | 0.30% | -0.03% | 0.13% | 0.45% | |
| NZD | -0.35% | -0.02% | -0.03% | 0.17% | -0.17% | -0.13% | 0.33% | |
| CHF | -0.65% | -0.33% | -0.37% | -0.15% | -0.49% | -0.45% | -0.33% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
TD Securities notes the Bank of Japan (BoJ) left its policy rate at 1% with an 8–1 vote, as Governor Ueda delivered notably hawkish remarks. Despite this, the Japanese Yen (JPY) reaction was muted, and the TD forecasts the next 25 bps hike only in December. It expects traders to stay wary of intervention and sees USD/JPY trading in a wide range in coming weeks.
BoJ on hold with next hike seen in December
"The BoJ left the target rate on hold at 1% in an 8-1 vote."
"Governor Ueda delivered his most hawkish remarks in a long while, but JPY registered a muted reaction."
"Contrary to market pricing, we forecast the next 25bps hike to come only in December."
"Traders are likely to be wary of follow-up intervention efforts given JPY's muted reaction."
"We see USD/JPY in a wide trading range in coming weeks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Canada's economy grew at a monthly rate of 0.3% in May.
- USD/CAD reverses part of the recent weakness and approaches the 1.4050 zone.
Canada’s economy cooled a tad in May. Indeed, the Gross Domestic Product (GDP) grew by 0.3%, adding to the previous month's 0.6% expansion (revised from 0.5%), according to data released by Statistics Canada.
From the press release: “Real gross domestic product (GDP) grew 0.3% in May, rising for a second consecutive month, as both goods-producing and services-producing industries expanded in the month. Overall, 13 of 20 industrial sectors contributed to the growth. Goods-producing industries expanded 0.6%, as most sectors comprising the aggregate rose in May. Services-producing industries rose 0.2%, driven in large part by increases in real estate and rental and leasing and public administration."
Market reaction
The Canadian Dollar (CAD) keeps its bullish stance on Friday, motivating USD/CAD to add to the weekly leg lower and breach below 1.4000 in the wake of the release of Canadian GDP data.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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