Forex News

Commerzbank’s Carsten Fritsch sees continued volatility in Brent as Strait of Hormuz negotiations remain unresolved and inventories tighten. Fritsch expects energy agency reports to support prices near term but project a significant decline once an agreement emerges, cutting their year-end Brent forecast to USD 75 per barrel from USD 80 previously.

Hormuz talks and low inventories

"Ultimately, everything remains up in the air and we think that it will still take some time until a final agreement is found. In our view, price fluctuations on the oil market are therefore likely to continue for a while. Once an agreement emerges towards the end of the year, however, the oil price is likely to fall significantly, as it did in the case of the recent hopes of an agreement."

"We have therefore revised down our price forecast for a barrel of Brent oil at year-end to USD 75 (previously: USD 80)."

"Next week, the three energy agencies will also take a look at developments on the physical oil market in their monthly reports, which should rather support prices."

"The shortfall is largest in US inventories of middle distillates: They are almost 12% below the usual level and are at their lowest for this time of year in 30 years."

"Nevertheless, any disruption is critical in an already tight market."

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

ING’s Chief International Economist James Knightley notes that the weak July US jobs report has pushed market pricing away from a September Federal Reserve rate hike, with the Dollar softening and 2-year yields falling. He highlights that upcoming data – another jobs report, two CPI releases and the Jackson Hole Symposium – will be crucial for the Fed’s decision, but ING still expects an extended pause.

Markets scale back Fed hike odds

"The US jobs report for July was surprisingly weak, with payrolls falling 23k while there were 103K of downward revisions to the past two months' data, leaving the 3M average at 20,000. The unemployment rate fell to 4.1% from 4.2%, but not for good reasons. It was primarily because of a further drop in the participation rate – unemployed people leaving the workforce entirely. Average hourly earnings growth slowed to just 3.2% year-on-year from 3.5%."

"Reaction has been significant, with 2Y yields down 8bp and the dollar softening, while Fed funds futures contracts are now only pricing 10bp of a potential 25bp hike on 16 September. Today’s outcome supports our call for a prolonged pause from the Federal Reserve, but remember that ahead of the September FOMC meeting we have a further jobs report, two inflation prints and the Federal Reserve’s Jackson Hole Symposium"

"In terms of jobs, we would tentatively suggest a rebound is possible for August, but the Fed’s decision is more likely to come down to what happens on inflation. We expect next week’s July CPI to show headline prices rising 0.1% month-on-month and core prices rising 0.2%."

"Given we are expecting encouraging news on disinflation, we are consequently expecting the Fed to remain on hold well into 2027."

"Assuming we get a deal to reopen the Strait of Hormuz, that can feed through into lower gasoline prices and keep the disinflation trend in place through to year-end and beyond."

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

Thomas Barkin, President of the Federal Reserve (Fed) Bank of Richmond, participated in an online event hosted by the National Association for Business Economics on Friday. He said that the latest employment figures point to a labor market in weak balance rather than one in decline, describing the picture as low hiring alongside low firing. He added that corporate earnings remain strong and that he is watching them for signs of how they feed through to jobs.

Key takeaways:

Jobs data was very consistent with a sector in weak balance.

Jobs data is more low hire, low fire.

The jobs data doesn't feel very good, but it's where it is.

Corporate earnings are quite strong and growing nicely.

We're watching corporate earnings for linkages to the job market.

ING Commodities Strategist Ewa Manthey highlights that Copper has surged back near record highs as traders accelerate shipments into the US ahead of potential import tariffs, tightening physical markets and draining LME inventories. She notes constrained mine supply, low treatment charges and strong electrification-related demand, but warns that any policy disappointment or narrower-than-expected tariffs could trigger a correction and partially unwind recent gains.

Tariff expectations and market tightness

"Copper is trading above $14,000/t, close to its record high. At the same time, LME inventories have fallen further, and the cash-to-three-month spread has moved deeper into backwardation, highlighting increasingly tight physical market conditions."

"Copper shipments into the US have accelerated ahead of a potential tariff decision, pushing COMEX inventories to a record high. US copper imports exceeded 200,000 tonnes in July alone – the highest monthly level in at least 12 years."

"At the same time, the London copper market is showing increasing signs of tightness. LME inventories have fallen to a five-month low, while the cash-to-three-month spread has widened to around $120/t backwardation– up from about $40 a week ago and the widest since October, pointing to a squeeze on short-term supplies."

"Mine supply growth remains constrained, while low treatment charges continue to point to tight concentrate availability. Demand linked to electrification, power grid investment and AI infrastructure also remains supportive. We continue to expect the global refined copper market to record a deficit of around 35k tonnes in 2026."

"Much of the recent rally reflects expectations that tariffs will be implemented broadly as expected. But if the final measures are delayed, narrower than expected or exempt refined copper, part of the recent rally could unwind. Stockpiling into the US would slow, inventory flows would begin to normalise, and some of the current tightness outside the US would ease. Any correction could be amplified if investors unwind positions built on tariff expectations."

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

TD Securities economists Robert Both and Emma Lawrence highlight a strong Canadian labour market, with July employment up 75k and unemployment at 6.4%. Despite employment outpacing population growth and the employment rate at its highest since February 2025, they expect the Bank of Canada to stay on hold through 2026, returning to neutral policy in early 2027.

Jobs outpace population, BoC still patient

"The Canadian labour market was firing on all cylinders in July with another 75k jobs created to easily surpass expectations (TD & market) for another 20k print, as the unemployment rate fell another 0.1pp to 6.4% (lowest since 2024) despite a 0.1pp increase to the participation rate."

"Details were upbeat, with the private sector leading job growth and an even split between full/part-time employment. Hours worked rose 0.6% m/m, while wage growth slowed to 3.0% y/y with help from base-effects."

"The Bank of Canada was reluctant to embrace the recent stabilization at its last policy decision, where it acknowledged the job growth over May/June but repeated that labour market conditions remain soft. With job growth outpacing the population over the last six months, we could see the Bank shift its tone in September."

"However, there is still material slack in the economy even with a 6.4% unemployment rate, and with core inflation running below 2% the Bank can stay patient. We still look for the Bank to stay on hold through 2026, with a return to neutral in early 2027."

"On the CAD side, recent developments in the Canadian economy have evolved broadly in line with our forecasts. While the data surprise is briefly pushing USD/CAD below the 1.40 support level, we think the bearish USD momentum may not sustain unless US CPI also surprises lower to allow market to price out near-term Fed rate hiking odds."

"The sharp USD/CAD reaction to the contrasting payroll outcomes suggests the market remains focused on both central-bank divergence and Canada's domestic outlook. On the USD side, next week's US CPI report will be the next major test for near-term Fed rate hike pricing."

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

Societe Generale’s Dev Ashish reports that Banxico left its policy rate at 6.50%, signalling an extended pause as inflation hovers near target and real rates sit close to neutral. The bank now sees inflation converging to target in 4Q27, while external risks from Oil prices and a potentially hawkish Federal Reserve argue against further easing, keeping Mexican rates on hold for an extended period.

Banxico signals prolonged neutral stance

"Banxico kept the policy rate unchanged at 6.50% and reiterated guidance favouring an extended pause."

"Middle East-driven oil price risks and a potentially hawkish Fed reduce the scope for further policy easing."

"We continue to expect Banxico to keep rates on hold for an extended period."

"As widely expected, the Bank of Mexico kept its policy rate unchanged at 6.50%, with the current growth-inflation mix and external backdrop justifying a policy stance that is neither overtly accommodative nor restrictive."

"Overall, the August decision strengthens the case that the easing cycle has ended."

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

• Silver climbs nearly 4% as weak US payrolls pressure the US Dollar and Treasury yields.
• XAG/USD strengthens above the 50-day SMA, while rising RSI and MACD readings point to firm bullish momentum.
• The $65 mark caps the immediate upside, with a break higher bringing the 100-day SMA near $69 into focus.

Silver (XAG/USD) jumps nearly 4% on Friday as buying accelerates following a decisive break above the 50-day Simple Moving Average (SMA) near $62. At the time of writing, the grey metal trades around $63.94 after briefly testing the $65 psychological mark.

The advance comes after disappointing US Nonfarm Payrolls (NFP) figures drag the US Dollar (USD) and Treasury yields lower. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.50, down nearly 0.45% on the day.

The US economy lost 23K jobs in July, even though experts had expected an increase of 80K. The job growth for June was also revised down to 20K from the previously reported 57K.

As a result, traders quickly trimmed bets on a September Fed rate hike, with the probability falling to around 42% from 67% a week ago, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as Silver.

Technical analysis: Daily chart

On the daily chart, XAG/USD holds a bullish near-term bias as price stands above the 21-day and 50-day Simple Moving Averages (SMAs). Momentum backs the constructive tone, with the Relative Strength Index (RSI) rising into the low-60s and the Moving Average Convergence Divergence (MACD) indicator extending further into positive territory with a firm bullish spread and expanding histogram.

On the topside, initial resistance is aligned at $65, ahead of the 100-day SMA barrier at $69. A sustained break above this cluster would open the way toward the higher horizontal resistance near $75.

On the downside, immediate support is found at the 50-day SMA at $62, followed by the psychological horizontal floor at $60. Below there, the 21-day SMA at $58 and the lower horizontal level at $55 form a deeper demand zone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)