Forex News
- USD/JPY advances toward 160.05 on Tuesday, gaining 0.19% on the day.
- Japan’s 10-year government bond yield reaches 3% for the first time since 1996.
- Scott Bessent expects Japanese authorities to take measures that could support the Japanese Yen.
USD/JPY trades around 160.05 on Tuesday at the time of writing, gaining 0.19% on the day, as the Japanese Yen (JPY) remains under pressure against the US Dollar (USD). The Japanese currency fails to benefit from rising domestic bond yields or comments from US Treasury Secretary Scott Bessent supporting a stronger Japanese Yen.
Japan’s 10-year government bond yield reaches 3% for the first time since September 1996. The rise comes amid inflation risks stemming from higher energy prices and speculation that the Bank of Japan (BoJ) may need to raise interest rates more quickly.
The increase in yields also reflects concerns over Japan’s public finances. Prime Minister Sanae Takaichi’s government plans significant investment spending, while a sustained rise in borrowing costs could increase the cost of servicing Japan’s massive public debt. These fiscal concerns appear to limit the support provided to the Japanese Yen by expectations of tighter monetary policy.
Meanwhile, US Treasury Secretary Scott Bessent says on Tuesday that he expects the Japanese government and the BoJ to take measures that would lead to a stronger Japanese Yen. His comments suggest that US authorities would like to see the Japanese central bank further normalize monetary policy.
Japanese Finance Minister Satsuki Katayama also says she met with Bessent, adding that both officials agreed on the importance of orderly Japanese Yen movements for global market stability. The United States (US) and Japan also reaffirm their willingness to continue cooperating on foreign exchange matters.
However, the Japanese Yen remains weak despite these comments and the rise in Japanese yields, allowing USD/JPY to approach the psychological 160.00 level once again. The Japanese currency’s limited reaction suggests that fiscal concerns continue, for now, to offset expectations of further monetary tightening by the BoJ.
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.08% | 0.19% | 0.24% | 0.19% | 0.20% | 0.22% | |
| EUR | -0.16% | -0.08% | 0.06% | 0.08% | 0.03% | 0.03% | 0.06% | |
| GBP | -0.08% | 0.08% | 0.11% | 0.17% | 0.12% | 0.14% | 0.14% | |
| JPY | -0.19% | -0.06% | -0.11% | 0.05% | -0.01% | 0.00% | 0.00% | |
| CAD | -0.24% | -0.08% | -0.17% | -0.05% | -0.06% | -0.07% | -0.04% | |
| AUD | -0.19% | -0.03% | -0.12% | 0.01% | 0.06% | 0.00% | 0.01% | |
| NZD | -0.20% | -0.03% | -0.14% | -0.01% | 0.07% | -0.01% | 0.03% | |
| CHF | -0.22% | -0.06% | -0.14% | -0.01% | 0.04% | -0.01% | -0.03% |
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).
Commerzbank’s Dr. Vincent Stamer notes that Euro area headline inflation rose to 3.3% in August from 2.9% in July, driven mainly by higher energy prices linked to the Middle East conflict. Core inflation edged down to 2.4%, but the renewed move above 3% is seen as cementing an ECB rate hike in September, with further hikes unlikely as inflation is projected to ease next year.
Inflation dynamics and ECB outlook
"Inflation in the euro area jumped to 3.3% in August, up from 2.9% in July. Once again, rising energy prices in the wake of the conflict in the Middle East were largely responsible for this. Overall, the inflation rate was in line with expectations, but the core rate unexpectedly fell from 2.5% in July to 2.4% in August."
"We expect that in the coming months, many businesses – particularly in the manufacturing and food production sectors – will pass on the higher energy prices. In particular, high natural gas prices are likely to drive up costs in these sectors in the coming quarters. As a result, the core inflation rate is set to rise significantly over the course of the coming year."
"With the headline rate rising to 3.3%, inflation has moved further away from the ECB’s 2% target. Furthermore, inflation is moving ever closer to the ECB’s staff projections (Chart 2), in which the ECB has factored in two interest rate hikes. This clearly points to another interest rate hike by the ECB in September."
"It is unlikely that further rate hikes will follow after that, as the inflation rate is expected to fall again next year, in line with the ECB’s projections."
"According to preliminary data from Eurostat, headline inflation in the euro area jumped to 3.3% in August – up from 2.9% in July. Economists surveyed in advance had expected this. By contrast, the inflation rate excluding energy, food, alcohol and tobacco (core inflation) unexpectedly fell from 2.5% in July to 2.4% in August."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Federal Reserve Governor Michael Barr said inflation remains too high and warned that a rate hike could become necessary if price pressures fail to moderate soon. Although he favours keeping rates steady while disinflation continues, solid economic growth and a stable labour market mean that persistent inflation remains a significant policy risk.
Key Quotes
Inflation remains too high.
Favours keeping rates steady if confident that inflation is moderating.
The labour market is stable, with low unemployment.
The economy is growing solidly, boosted by artificial intelligence investment.
If inflation does not moderate soon, it will be time for an interest rate hike.
Persistent inflation above target creates risks.
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.
- USD/CHF rises as hawkish Fed expectations and higher Treasury yields support the US Dollar.
- Subdued Swiss inflation reinforces expectations that the SNB will keep interest rates unchanged.
- Technically, USD/CHF holds above the 50-day SMA as bullish momentum rebuilds.
USD/CHF ticks higher on Tuesday as the US Dollar (USD) recoups most of the previous day’s losses. Hawkish Federal Reserve (Fed) expectations and rising US Treasury yields keep the Greenback underpinned near its recent highs. At the time of writing, the pair trades around 0.8103, up roughly 0.24% on the day.
Fed rate hike expectations have strengthened following Chair Kevin Warsh’s tough stance on inflation at the Jackson Hole Symposium. Warsh said the central bank would have more work to do if policymakers were not confident that inflation was returning to the 2% target. According to the CME FedWatch Tool, traders now see around a 65% probability of a rate hike at the September 15-16 meeting.
In contrast, subdued inflation in Switzerland, near the lower end of the Swiss National Bank’s (SNB) 0%-2% price-stability range, supports expectations that the central bank will keep its policy rate unchanged at 0% at its upcoming meetings. Switzerland’s August Consumer Price Index (CPI) data are due on Wednesday. Headline inflation is expected to be flat on a monthly basis after declining 0.1% in July, while the annual rate is forecast to rise to 0.5% from 0.4%.
Technical analysis
On the daily chart, USD/CHF holds above the key moving averages and retains a constructive bullish tone. The 50-day Simple Moving Average (SMA) at 0.8091 underpins the pair as immediate support, with the 100-day SMA at 0.7987 and the 200-day SMA at 0.7934 reinforcing a broader positive backdrop.
The Relative Strength Index (RSI) near 54 suggests moderate upside momentum, while the Moving Average Convergence Divergence (MACD) has turned slightly positive, hinting that buying pressure is gradually rebuilding after a recent pullback.
On the topside, initial resistance aligns with the horizontal barrier at 0.8150, ahead of a higher cap at 0.8200, where fresh offers could emerge. On the downside, a daily close below the 50-day SMA at 0.8091 would weaken the short-term bias and expose the next support layers at 0.7987 and 0.7934, where the longer-term SMAs are clustered and would be expected to attract dip-buying interest.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.13% | 0.22% | 0.22% | 0.25% | 0.25% | 0.24% | |
| EUR | -0.22% | -0.08% | 0.02% | -0.01% | 0.03% | 0.02% | 0.02% | |
| GBP | -0.13% | 0.08% | 0.09% | 0.09% | 0.11% | 0.11% | 0.10% | |
| JPY | -0.22% | -0.02% | -0.09% | -0.00% | 0.01% | 0.03% | -0.00% | |
| CAD | -0.22% | 0.00% | -0.09% | 0.00% | 0.02% | 0.00% | -0.01% | |
| AUD | -0.25% | -0.03% | -0.11% | -0.01% | -0.02% | 0.00% | -0.04% | |
| NZD | -0.25% | -0.02% | -0.11% | -0.03% | -0.01% | -0.00% | -0.01% | |
| CHF | -0.24% | -0.02% | -0.10% | 0.00% | 0.01% | 0.04% | 0.01% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- Joachim Nagel says the global economy remains on a growth path despite the Middle East crisis.
- The policymaker welcomes easing core and services inflation and sees no second-round inflation effects.
- Nagel says he would have preferred coordinated intervention on the Yen and notes that the use of the Euro was discussed at the G20.
Joachim Nagel, European Central Bank (ECB) Governing Council member and Bundesbank President, expressed confidence on Tuesday in the global economic outlook despite geopolitical tensions in the Middle East.
According to comments reported by Reuters, Nagel said the global economy remains “on a growth path” despite the Middle East crisis.
On inflation, the ECB policymaker welcomed the easing in core and services inflation. He added that he is not seeing second-round effects on inflation.
Nagel also commented on recent foreign exchange interventions involving the Japanese Yen (JPY). He said he would have welcomed coordination on these interventions and noted that the use of the Euro (EUR) in US and Japanese interventions was discussed at the Group of Twenty (G20) meeting.
Key takeaways
The global economy is on a growth path, despite the Middle East crisis.
Easing in core and services inflation is good news, I am not seeing second-round effects on inflation.
I would have welcomed coordination on yen intervention.
Euro use in US/Japan interventions was discussed at the G20.
Market reaction
The Euro (EUR) showed little reaction to Nagel’s comments. EUR/USD trades around 1.1590 at the time of writing on Tuesday, down 0.24% on the day.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
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 European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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’s Jester Koh expects the Reserve Bank of India (RBI) to deliver two consecutive 25bps rate hikes starting from the December 2026 Monetary Policy Committee (MPC) meeting, as headline inflation is projected to breach the upper end of the RBI’s 2–6% band by 3QFY27. Koh highlights strengthening food inflation, rising household inflation expectations and hawkish August RBI minutes as key drivers of tighter policy expectations.
RBI tightening outlook strengthens
"We now expect the RBI to deliver two back-to-back 25bps rate hikes starting from the Dec 2026 MPC meeting."
"Under our baseline inflation projections, headline inflation could breach the upper bound of the RBI's 2-6% tolerance band by 3QFY27 (Oct-Dec 2026) and remain above 6% until early 1QFY28, implying negative (ex post) real rates that may necessitate tighter monetary conditions to constrain demand-driven inflationary pressures."
"While price pressures remain highly concentrated in the food component for now, in our view the RBI cannot entirely look past this, given the relatively high frequency of food consumption and its potential influence on households' inflation expectations, which have strengthened meaningfully since the start of 2026."
"Furthermore, minutes of the Aug RBI MPC meeting tilted hawkish in our assessment, with several MPC members foreshadowing rate hikes on the horizon by mentioning that they are adopting a wait-and-see approach before recalibrating the policy rate."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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