The Canadian dollar strengthened to an eight-week high of 1.39 per USD as stronger-than-expected domestic employment data narrowed yield differentials between Canada and the US. Canadian employment rose by 75,100 jobs in July, far exceeding expectations for a 15,000 gain, while the unemployment rate fell to a two-year low of 6.4%. Meanwhile, the US economy unexpectedly shed jobs in July, and previous nonfarm payrolls were revised sharply lower. The stronger Canadian labor market raised the prospect of a BoC rate hike if energy prices remain elevated, while weaker US employment data reduced expectations of a Federal Reserve hike this year. Meanwhile, recent data suggests Canada's economy expanded an annualized 3.4% in the second quarter. Well above the Bank of Canada's expectation of a 2.5% growth rate.

Canadian Dollar Rises on Strong Labor Market

The South African rand traded around 16.2 per US dollar, its highest since early July, mainly supported by firmer prices of key precious metals, particularly gold, which benefited from reduced expectations of Federal Reserve rate hikes. Meanwhile, investors monitored negotiations involving the US, Iran and Oman over the Strait of Hormuz amid persistent geopolitical tensions. The rand hit a three-month low against the dollar last month after the SARB unexpectedly held rates steady on July 23, despite warning of rising inflation risks.The currency had already been affected by elevated oil prices after the Iran conflict erupted, given South Africa's status as a net energy importer. Still, investors see longer-term support from a stronger economy, healthy public finances, and the central bank's commitment to its 3% inflation target. Headline and core inflation rose to 5.0% and 4.1% in June, respectively, remaining above the SARB's target range.

South African Rand at 1-Month High

The British pound rose to $1.350 on Friday, its highest level since July 15, while the dollar weakened sharply as investors reduced expectations of a Federal Reserve rate hike in September following a weaker-than-expected US jobs report. Also, easing oil prices reduced concerns over inflation and the potential impact of higher energy costs on the UK economy. President Donald Trump said negotiations between Iran and Oman over the Strait of Hormuz were “moving along,” although a deal has yet to be finalized as details remain under discussion in Tehran. A reopening of the strategic waterway could support energy flows and potentially pave the way for broader talks to end the conflict. Lower energy prices have reinforced expectations that the Bank of England will maintain a gradual approach to monetary policy. At its latest meeting, the BoE left rates unchanged, while Governor Andrew Bailey said the disinflation process remained on track despite ongoing external uncertainties.

Sterling Strengthens to Over 3-Week High

The euro strengthened above $1.157, reaching its highest level since June 16, as the dollar weakened sharply following a disappointing US jobs report that reduced expectations of further Federal Reserve rate hikes. Meanwhile, easing oil prices reinforced expectations that inflationary pressures in the Euro Area will continue to moderate. Investors also monitored developments surrounding the Strait of Hormuz, with President Donald Trump saying negotiations between Iran and Oman were “moving along,” although no agreement has yet been finalized. A deal on managing the strategic waterway is seen as crucial to restoring energy flows, which have remained below pre-war levels amid continued regional tensions. A reopening could also help pave the way for broader negotiations aimed at ending the conflict. Against this backdrop, the European Central Bank left interest rates unchanged in July after raising its key rate by 25 basis points in June, its first increase in three years.

Euro Climbs to 7-Week High

The dollar index fell 0.5% to 99.4 on Friday, near a two-month low, after weaker-than-expected US employment data reduced expectations that the Federal Reserve will need to raise interest rates in the near term. Nonfarm payrolls unexpectedly fell by 23,000 in July, while substantial downward revisions to the previous two months pointed to a weakening labor market. The unemployment rate edged down to 4.1%, although labor force participation continued to decline. The data reinforced concerns that employment conditions are deteriorating amid persistent price pressures and uncertainty linked to the Iran conflict, while also increasing the likelihood that the Fed could delay further tightening. Investors subsequently reduced bets on a September rate hike. Meanwhile, President Donald Trump said negotiations between Iran and Oman over the Strait of Hormuz were “moving along,” although no agreement has been finalized.

DXY Falls Toward 2-Month Low After Jobs Report

The euro traded around $1.152 on Friday, slightly below Wednesday’s seven-week high of $1.155, as investors assessed the outlook for energy prices and monetary policy. Oil prices remained lower for the week but extended their gains over the past two sessions, with renewed supply concerns raising fears that higher energy costs could keep inflation elevated. Iran and Oman are reportedly working on an agreement to establish transit routes through the Strait of Hormuz, although no deal has yet been announced. Concerns intensified after Iran published a restrictive draft plan that could limit access for US and Israeli vessels and require compensation from countries it considers hostile. Still, investors remain hopeful that a deal to reopen the waterway would eventually lower oil prices and ease inflationary pressures. Meanwhile, the ECB left rates unchanged in July following a 25-basis-point hike in June, its first increase in three years, amid renewed energy-driven inflation pressures.

Euro Eases from 7-Week High

The British pound edged down to around $1.344 on Friday as investors remained cautious over the outcome of Iran-Oman talks and whether they will lead to the restoration of energy flows through the Strait of Hormuz. Although the two countries are reportedly working on an agreement to establish transit routes through the strategic waterway, no deal has yet been announced. Concerns over potential supply disruptions also persisted after Iran published a restrictive draft plan that could limit access for US and Israeli vessels and require compensation from countries it considers hostile. Investors continued to assess the implications for the energy outlook and monetary policy, with oil prices rising over the past two sessions despite remaining lower for the week. In July, the Bank of England left interest rates unchanged, while Governor Bailey said further tightening was not currently necessary, arguing that the disinflation process remained on track despite ongoing external uncertainties.

Sterling Edges Down

The Hong Kong Dollar touched 7.85 against the USD, the lowest since August 2025. Over the past 4 weeks, US Dollar Hong Kong Dollar gained 0.07%, and in the last 12 months, it decreased 0.06%.

Hong Kong Dollar Hits 51-week Low

The Indonesian rupiah firmed to below IDR 17,900 per U.S. dollar on Friday, recovering from the prior session's losses as renewed foreign inflows into government bonds and domestic equities in July ended several months of sustained selling. Sentiment was further lifted by subdued domestic inflation, with July's headline rate easing to a three-month low amid government food stabilisation efforts alongside the harvest season in parts of Java. Fresh data also showed Indonesia's forex reserves remained broadly stable in July, underscoring resilient external buffers. Meanwhile, the dollar index was little changed as investors awaited the closely watched U.S. July jobs report for fresh clues on labor market strength and the Fed's policy outlook. For the week, the rupiah was on track for its first weekly gain in three, rising about 0.5% so far, supported by improving fiscal sentiment after President Prabowo's administration recently announced notable cuts to its flagship spending program.

Rupiah Firms on Foreign Inflows, Steady Reserves

The Indian rupee fell to around 95.25 per dollar, retreating from four-week highs as a rebound in oil prices revived concerns over India's import bill and inflation outlook. Brent crude rebounded above $83 a barrel, extending gains for a third straight session after rising about 4% on Thursday. The move followed a proposal by Iran and Oman to restrict vessels deemed hostile, stoking fears over supply disruptions. Investors also turned cautious ahead of the US July nonfarm payrolls report, with economists expecting 80,000 jobs to have been added after 57,000 in June and the unemployment rate to remain at 4.2%, as the data could influence expectations for further Federal Reserve rate hikes. Meanwhile, traders monitored the Reserve Bank of India, whose recent dollar sales had helped lift the rupee to a one-month high, though persistent underlying demand for dollars suggested the currency's near-term direction would continue to depend on the extent of RBI support.

Indian Rupee Falls on Higher Crude

The Philippine peso weakened back toward the 61-per-dollar mark in early August after briefly touching a six-week high earlier this week, as markets reassessed the country’s economic outlook amid slowing growth and persistent inflation pressures. Philippine GDP expanded 2.3% year-on-year in Q2, the slowest pace since Q4 2009 excluding the COVID-19 period, as the economy faced an energy shock stemming from the Iran war and the fallout from a major corruption scandal. The weaker-than-expected growth added to concerns over the recovery, after the government’s DBCC revised down its 2026 growth target in June. Meanwhile, inflation remained elevated at 6.2% in July despite easing for a third consecutive month, staying above the BSP’s 3% target and keeping expectations for further tightening intact. The BSP has raised rates by 50 bps since April, with analysts expecting another 50 bps of hikes this year through 25 bps increases at the August and October meetings.

Philippine Peso Falls Back Toward 61 Mark

The offshore yuan held firm around 6.74 per dollar on Friday, remaining at its strongest level since early February 2023, as Beijing's efforts to accelerate the yuan's internationalization continued to bolster the currency. A growing number of Chinese commercial banks have added roughly a dozen currencies to their direct yuan settlement and clearing networks, including the Thai baht, Brazilian real, and Kazakhstani tenge. The latest move is expected to help Chinese firms further reduce their dependence on the US dollar as the country's trade ties and overseas investments continue to expand, while also supporting President Xi Jinping's ambition to build a "powerful currency." Meanwhile, investors awaited upcoming trade data after China unveiled fresh retaliatory measures against the US, including tighter drone export controls, sanctions on seven American firms, and its first national security probe linked to foreign trade.

Offshore Yuan Holds Firm at Multi-Year High

The Japanese yen weakened past 158 per dollar on Friday, surrendering part of the gains sparked by the joint currency intervention by Tokyo and Washington, fueling speculation that authorities may step in again to support the currency. The retreat underscored doubts over the effectiveness of intervention in reversing the yen’s longer-term weakness, which continues to be driven by wide interest rate differentials, growing fiscal concerns, and persistently high energy and import costs. The yen also faced additional pressure from a stronger dollar and rebounding oil prices following renewed tensions in the Strait of Hormuz. Meanwhile, data showed Japan’s household spending fell 3.3% in June, defying expectations for a 1% increase and highlighting continued softness in consumer demand. On the monetary policy front, investors are watching for a possible Bank of Japan interest rate hike in September after the central bank left policy settings unchanged last week.

Yen Retraces Some Intervention Gains

The Australian dollar fell to around $0.70, pulling back from a seven-week high and on track to finish the week largely unchanged as renewed tensions in the Middle East dampened risk sentiment. The US dollar strengthened, while oil prices climbed following reports of Iranian attacks in the Strait of Hormuz and a lack of clarity on an agreement to reopen the crucial waterway. Higher energy prices revived inflation concerns and reinforced expectations that global interest rates could remain higher for longer. In Australia, after three rate hikes this year, markets are pricing in virtually no chance of a rate increase at the Reserve Bank's monetary policy meeting next week following softer-than-expected second-quarter inflation data. Investors are also assigning little chance of a move in September, while pricing roughly a 60% probability of a rate hike in November if third-quarter inflation proves stronger than expected.

Australian Dollar Set for Muted Week

The dollar index was little changed around 99.95 on Friday after rebounding in the previous session, as investors cautiously awaited the closely watched July jobs report for fresh signals on labor market strength and the outlook for Federal Reserve monetary policy. Fed officials have increasingly signaled they are prepared to raise interest rates soon amid mounting inflationary pressures, with markets pricing in a 25-basis-point hike in September. The Financial Times reported that Chair Kevin Warsh would be willing to raise rates next month if inflation readings in the coming weeks remain elevated. The Fed chief is also expected to maintain his stripped-back communication style despite criticism from financial markets. Meanwhile, the dollar drew additional support from a rebound in oil prices as renewed tensions in the Strait of Hormuz reignited concerns over inflation and the interest rate outlook.

Dollar Holds Firm Ahead of Key Jobs Report

The Mexican peso strengthened to 17.21 per USD from the near four-month low of 17.60 reached on July 24th after Banxico kept its benchmark interest rate unchanged at 6.50% and signaled that it expects to maintain the current policy stance. The central bank held rates steady for a second consecutive meeting as policymakers balanced falling headline inflation and weaker economic activity against persistent services inflation and risks from the Middle East conflict. Banxico reiterated that future decisions will depend on incoming data and highlighted uncertainty surrounding geopolitical tensions and global trade policies. The peso continued to benefit from a wide interest rate differential, with Mexico's policy rate at 6.50% compared with the Federal Reserve's 3.50%-3.75% target range.

Mexican Peso Gains After Banxico Meeting

The dollar index edged up to 99.8 on Thursday but remained close to a seven-week low as investors balanced optimism over developments in the Middle East with caution ahead of Friday's closely watched US jobs report. Iran said it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, raising hopes that energy flows through the critical waterway could resume. However, a broader US-Iran agreement remains uncertain, with President Donald Trump saying negotiations were ongoing and that he would “see what happens.” Attention has also shifted to the upcoming nonfarm payrolls report, which is expected to provide fresh insight into the strength of the US labor market and the Federal Reserve's policy outlook. A stronger-than-expected employment reading would likely reinforce expectations of further interest rate hikes, while a weaker report could prompt markets to scale back tightening bets and reduce upward pressure on Treasury yields.

Dollar Holds Near Lows Before Payrolls Report

The Brazilian real strengthened to 5.11 per USD from the three-week low of 5.145 reached on August 4th after the Copom signaled a cautious approach to further rate cuts. The BCB lowered the Selic rate by a widely expected 25 basis points to 14.0%, its lowest level since March 2025. However, policymakers stressed that the pace and extent of further easing will depend on incoming economic data and the inflation outlook. The committee also highlighted heightened global uncertainty stemming from conflicts in the Middle East and uncertainty over monetary policy in advanced economies, calling for caution among emerging markets. The decision came one week after the Federal Reserve left its benchmark rate unchanged at a target 3.50%-3.75%, preserving a wide interest rate differential that continues to support the real.

Brazilian Real Gains After BCB Signals Caution

The British pound held above $1.345 as investors remained cautious over the outcome of Iran-Oman talks and whether they will lead to the restoration of energy flows through the Strait of Hormuz. Iran said it had reached an agreement with Oman on a proposed shipping route through the strategic waterway, raising hopes of improved oil supply and lower energy prices. However, a broader US-Iran agreement remains uncertain, with President Donald Trump saying he would “see what happens” in ongoing negotiations. The prospect of lower energy costs has eased concerns over inflation and slowing economic growth, reinforcing expectations that the Bank of England will maintain a gradual approach to monetary policy. That view was strengthened by last week’s Bank of England meeting, where policymakers left rates unchanged and Governor Andrew Bailey downplayed the need for further tightening, arguing that the disinflation process remains on track despite lingering external uncertainties.

Pound Holds Firm on Easing Inflation Outlook

The euro changed hands at around $1.154, remaining close to a seven-week high as easing energy prices supported expectations that inflationary pressures in the Euro Area will continue to moderate. Sentiment improved after Iran and Oman agreed on a proposed shipping corridor through the Strait of Hormuz, raising hopes that the critical waterway could soon reopen and help restore Middle Eastern energy supplies. Brent crude remained below $80 per barrel, reinforcing expectations that lower energy costs could reduce pressure on central banks to tighten monetary policy further. Markets now fully price in just one additional European Central Bank rate hike by year-end, with roughly a 40% probability of a second increase, after the ECB left interest rates unchanged at its latest meeting. Meanwhile, stronger-than-expected German factory orders in June added to signs that Europe's largest economy may finally be gaining momentum.

Euro Holds Close to 7-Week High

The Indonesian rupiah traded around IDR 17,900 per U.S. dollar on Thursday, edging lower after briefly strengthening to IDR 17,835 in the previous session. The currency remained supported by a weaker dollar index as the agreement to partially reopen the Strait of Hormuz weighed on crude oil prices, helping curb inflation concerns and reducing expectations for more aggressive Fed tightening. Locally, caution lingered ahead of Bank Indonesia’s July forex reserves release following June’s modest rise from a near two-year low. Meanwhile, Q2 annual GDP growth slowed to 5.29% from 5.61% in Q1 as consumption and state spending cooled. Despite the day’s pullback, the rupiah remained up about 0.4% for the week, aided by softer July inflation following food stabilisation efforts and harvest gains in Java. Foreign inflows into government bonds also helped underpin the rupiah, while overseas investors returned as net buyers of domestic equities in July after several months of sustained selling.

Rupiah Eases Ahead of BI Forex Reserves Data

The New Zealand dollar edged up to around $0.589, returning to a two-month high as improving developments in Middle East diplomacy supported risk sentiment. Iran and Oman announced an agreement on the geographic coordinates for a temporary commercial shipping route through the Strait of Hormuz, easing concerns over prolonged energy supply disruptions. The kiwi had weakened in the previous session following a softer-than-expected jobs report, which reinforced the case that any further interest rate increases would likely be gradual rather than aggressive. However, markets continued to price in a quarter-point rate hike in September after the Reserve Bank of New Zealand indicated at its latest meeting that further tightening may be needed to reduce monetary stimulus and bring inflation under control.

New Zealand Dollar Firms Up

The Australian dollar held above $0.705, staying near a seven-week high, supported by a weaker US dollar and upbeat domestic trade data. Australia’s balance on goods trade unexpectedly swung to a surplus of A$ 1.9 billion in June from a revised deficit of A$ 2.4 billion in May, as exports of gold and iron rebounded sharply, while imports flattened after a strong run. Attention now turns to the Reserve Bank of Australia’s policy meeting next week, where markets are pricing in virtually no chance of a rate hike after three increases this year, but a hike in November is still about 60% priced in. Meanwhile, the greenback remained under pressure as optimism over a Middle East deal to partially reopen the Strait of Hormuz weighed on oil prices, easing inflation pressures and diminishing expectations for more aggressive Federal Reserve tightening. Iran and Oman agreed to establish a shipping corridor through the strait, strengthening hopes for improved energy supplies from the Middle East.

Australian Dollar Remains Firm

The dollar index hovered around 99.6 on Thursday, remaining close to a seven-week low as the agreement to partially reopen the Strait of Hormuz weighed on oil prices, easing inflation pressures and diminishing expectations for more aggressive Federal Reserve tightening. Iran and Oman agreed to establish a shipping corridor through the strait, strengthening hopes for improved energy supplies from the Middle East. Investors have since reduced their expectations for Fed rate hikes this year, now anticipating only one increase by year-end, compared with two as recently as last week. Meanwhile, ADP data showed the US economy created just 44,000 private-sector jobs in July, marking the weakest monthly gain since January and falling well short of forecasts for 70,000. Separately, Fed Governor Lisa Cook said that she is willing to raise rates if inflation fails to moderate, cautioning that the central bank may have limited scope to delay action before returning inflation to its 2% target.

Dollar Holds Losses on Hormuz Deal

The South Korean Won touched 1416.00 against the USD, the highest since October 2025. Over the past 4 weeks, US Dollar South Korean Won lost 6.48%, and in the last 12 months, it increased 2.35%.

South Korean Won Hits 42-week High

The dollar index fell to below 99.8 on Wednesday, the lowest in seven weeks, holding the sharp decline triggered by intervention on the yen and foreign selling of long-term, dollar denominated fixed-income assets last week. The recent plunge for the yen and JGBs drove the US Treasury and the Japanese counterpart to buy an estimated $88 billion in JPY, with a portion of dollar selling featured in the intervention. The developments were in tandem with pressure from the Fed's latest rate hold. During the presser, Fed Chairman Warsh signaled some reluctance to confirm that a rate hike would be his preferred reaction to higher inflation, leading foreign markets to trim holdings of dollar-denominated assets. In turn, expectations of a Fed hike next month were dimmed by a fresh pullback in key energy prices and a soft ADP employment report.

US Dollar Index Holds at 7-Week Low

The South African rand traded around 16.4 per US dollar, close to the highest since July 22, supported by higher prices of key precious metal prices such as gold and PGMs. Signs of diplomatic progress to end the Middle East conflict tempered fears over inflation and interest rates increases. The currency slumped to a three-month low against the dollar last month after the South African Reserve Bank unexpectedly kept rates unchanged on July 23, even as it warned of rising inflation risks.

South African Rand Firmer

The British pound rose above $1.345 as improving risk sentiment supported demand for risk-sensitive currencies amid growing optimism that the US and Iran could reach a deal to end their five-month conflict and reopen the Strait of Hormuz. Crude oil prices have fallen about 10% this week after US President Donald Trump said the two countries were engaged in "very good discussions," raising hopes of a recovery in Middle Eastern energy supplies. Lower energy prices have eased concerns over inflation and weaker economic growth, reinforcing expectations that the Bank of England will take a gradual approach to policy tightening. Last week's Bank of England meeting strengthened that view, with Governor Andrew Bailey downplaying the need for further rate hikes and saying the disinflation process remains on track.

Pound Rises as Easing Middle East Tensions Boost Risk Appetite

The euro strengthened toward $1.155, its highest level since June 16, as improving risk sentiment lifted demand for the single currency amid growing optimism that the US and Iran could reach a deal to end their five-month conflict and reopen the Strait of Hormuz. Crude oil prices have fallen about 10% this week after US President Donald Trump said the two countries were engaged in "very good discussions," raising hopes of a recovery in Middle Eastern energy supplies. Lower energy prices have eased concerns over inflation and weaker economic growth, reinforcing expectations that the European Central Bank will take a gradual approach to policy tightening. Markets now fully price in just one additional ECB rate hike by year-end, with around a 40% chance of a second. The ECB raised rates in June but left policy unchanged at its latest meeting.

Euro Climbs to Near Seven-Week High on Easing Geopolitical Tensions

Indonesia's rupiah firmed to around IDR 17,930 per U.S. dollar on Wednesday afternoon after briefly slipping near IDR 18,050 in the prior session. Support came from a softer greenback after reports of a possible interim U.S.–Iran deal to reopen the Strait of Hormuz sent oil prices tumbling, easing inflation risks and trimming expectations for further global rate hikes. Domestically, sentiment brightened as Q2 GDP rose 5.29% yoy, beating forecasts despite slowing from Q1. On a quarterly basis, output jumped 3.73%, the fastest in a year, rebounding from a 0.77% drop in Q1. Inflation also cooled to 2.88% in July, a three-month low and well within Bank Indonesia’s target band. However, gains were capped by concerns over external balances amid a persistent trade gap in June following a surge in crude imports. Traders also stayed cautious amid leadership uncertainty at Bank Indonesia after Perry Warjiyo’s abrupt exit, with markets awaiting President Prabowo’s choice for the next governor.

Rupiah Strengthens After Q2 GDP Beats Forecasts

The South Korean won rose toward 1,422 per dollar, approaching its strongest level in more than nine months, as stronger external buffers and steady foreign inflows supported the currency. South Korea's foreign reserves rose for a second consecutive month to $427.95 billion in July, supported by foreign exchange stabilization bond issuance and higher foreign currency deposits, reinforcing confidence in the country's ability to manage external risks. Separately, US Treasury Secretary Scott Bessent pointed to recent volatility in the won, highlighting the importance of regional currency stability after the US-Japan intervention to support the yen and signaling continued attention toward excessive FX volatility. The currency also continued to benefit from foreign inflows linked to SK Hynix's ADR offering, with proceeds converted into won for domestic semiconductor investment.

South Korean Won Nears More Than 9-Month High

The Indian rupee strengthened to around 95 per dollar, reaching four-week highs after steadying in the previous session, as a sharp decline in crude oil prices boosted sentiment amid signs of progress in US-Iran talks. The currency was further supported by the Reserve Bank of India's regular market intervention and robust capital inflows linked to measures announced in June. Brent crude extended its retreat from a recent peak of around $102 per barrel to $78.80, after tumbling 5.2% on Tuesday, easing pressure on India's oil import bill. Meanwhile, investors awaited the RBI's policy decision, with economists widely expecting the central bank to leave interest rates unchanged, as reduced uncertainty surrounding growth, inflation, the West Asia conflict, and the monsoon outlook limited the scope for policy surprises. Over the past four weeks, the USD/INR pair has declined 0.36%, while remaining 8.31% higher than a year earlier.

Rupee Rises to Four-Week High

The offshore yuan held its gain around 6.74 per dollar on Wednesday, staying at its strongest level since early February 2023 as improving prospects for a renewed Middle East agreement boosted risk sentiment. Qatar said mediation efforts between the US and Iran had entered an advanced phase, with a draft agreement already prepared. US officials signaled growing confidence that a deal could be reached soon, raising hopes for the reopening of the Strait of Hormuz. On the domestic front, a private survey showed China’s Composite PMI fell to a one-year low of 50.8 in July 2026, reflecting slower momentum across the economy. The manufacturing PMI eased to a four-month low of 50.9, while the services PMI slipped to its weakest level in nearly two years at 50.4. Meanwhile, the People’s Bank of China announced a CNY 500 billion three-month outright reverse repo operation to maintain ample liquidity in the banking system, with bids determined through multi-tier interest-rate pricing.

Offshore Yuan Holds Firm at 2023 Peak

The dollar index remained below the 100 mark on Wednesday, coming under renewed pressure as reports of an imminent interim agreement between the US and Iran to reopen the Strait of Hormuz drove oil prices sharply lower, easing concerns over inflation and the need for additional interest rate hikes. On Tuesday, Qatar said an interim proposal had been prepared, while both Washington and Tehran signaled progress in negotiations to restore access through Hormuz. US Treasury Secretary Scott Bessent also said a deal could be reached as early as Tuesday or Wednesday. Markets reduced expectations for a September Federal Reserve rate hike to around 57%, down from 67% a day earlier. Investors are now awaiting a series of US labor market reports for further clues on the Fed’s policy outlook, with ADP’s July private payrolls data due later today. Meanwhile, the dollar continued to nurse losses against the yen after the US and Japan signaled they remain prepared to intervene again if necessary.

Dollar Pressured by Hormuz Deal Prospects

The Indian Rupee touched 94.96 against the USD, the highest since July 2026. Over the past 4 weeks, US Dollar Indian Rupee lost 0.36%, and in the last 12 months, it increased 8.31%.

Indian Rupee Hits 4-week High

The Australian dollar held above $0.70, sitting at a seven-week high, supported by improving global risk appetite, broad US dollar weakness, and strong domestic economic data. Australia's private sector gained further momentum in July, with the composite PMI revised up to 53.2, the highest since January, led by a six-month high in services activity and a return to manufacturing growth. Stronger-than-expected household spending also reinforced signs of resilient domestic demand, although markets have priced out almost any chance of a rate hike from the Reserve Bank at its policy meeting next week. Elsewhere, optimism that a deal to reopen the Strait of Hormuz is nearing completion has eased fears of major supply disruptions, lifting Australian equities to a record high. Meanwhile, the greenback remained under pressure following recent coordinated support for the Japanese yen by US and Japanese authorities, which has spilled over into broader Asian currencies.

Australian Dollar Holds at 7-Week Top

The Japanese yen traded around 157.5 per dollar on Wednesday, pausing its recent rally even as US Treasury Secretary Scott Bessent reaffirmed Washington’s ongoing support for Japan following a historic joint currency intervention. The yen had surged as much as 5% over three sessions after Tokyo and Washington carried out coordinated yen-buying on a scale not seen in decades, with both governments signaling they remain prepared to intervene again if necessary. Bank of Japan data showed Tokyo spent about ¥5.33 trillion during Friday’s operations, after reportedly conducting a record ¥8.45 trillion intervention the day before. The yen had weakened to four-decade lows last month amid higher energy costs, mounting fiscal concerns, and persistently wide interest rate differentials. Meanwhile, the latest data showed Japan’s real wages rose for a sixth consecutive month in June, reinforcing the case for additional BOJ interest rate hikes.

Yen Pauses Rally as Intervention Threat Remains

The New Zealand dollar slipped to around $0.587, retreating from a two-month high after a weaker-than-expected jobs report raised doubts about how far interest rates may rise this year. New Zealand's unemployment rate climbed to 5.6% in the second quarter, the highest level since the third quarter of 2015 and above the expected 5.4%, pointing to growing slack in the labor market. Although employment increased 0.5% from the previous quarter and outpaced forecasts of a 0.1% rise, the gain was largely driven by a sharp increase in the labor force participation rate. Meanwhile, annual wage growth remained subdued at 2.0%, suggesting wage pressures are unlikely to fuel inflation and reducing the case for an aggressive tightening cycle. Still, markets continued to price in a September rate hike after the Reserve Bank of New Zealand signaled last month that further tightening would likely be needed to remove monetary stimulus and keep inflation under control.

New Zealand Dollar Slips After Weak Jobs Report

AUDUSD increased to 0.71, the highest since June 2026. Over the past 4 weeks, Australian Dollar US Dollar gained 1.33%, and in the last 12 months, it increased 8.44%.

Australian Dollar Hits 7-week High

The British pound held above $1.34 as improving risk sentiment supported demand for riskier assets amid signs of easing tensions between the US and Iran. Qatar said mediators were making progress in negotiations, while US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be be reached as early as Tuesday or Wednesday. Meanwhile, last week's Bank of England meeting reinforced expectations that policymakers are in no rush to tighten monetary policy, prompting markets to pare bets on interest rate hikes in 2026. The BoE voted 6-3 to keep rates unchanged, with three members backing a hike versus expectations for a 7-2 split. However, Governor Andrew Bailey played down the prospect of imminent tightening, saying the disinflation process remains on track, while some policymakers suggested rate cuts could return to the agenda if Middle East tensions continue to ease.

Pound Holds Above $1.34 as Geopolitical Tensions Ease

The euro traded slightly above $1.15, hovering near its highest level since June 16 as easing geopolitical tensions improved risk sentiment. Oil prices tumbled on optimism that diplomatic efforts could end the US-Iran conflict, easing concerns over inflationary pressures. Qatar said mediators were making progress in negotiations, while US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday. Meanwhile, stronger-than-expected eurozone data continued to support expectations that the European Central Bank could raise interest rates at its next meeting in September. The bloc's economy expanded 0.4% in the second quarter, twice the expected pace and the strongest growth since early 2025, while annual inflation accelerated to 2.9% in July, with both core and services inflation also strengthening.

Euro Holds Firm Near Seven-Week High on ECB Rate Outlook

The dollar index hovered around 100 on Tuesday, while US Treasury yields declined as oil prices tumbled on growing optimism that diplomatic efforts could bring an end to the US-Iran conflict, prompting investors to scale back expectations for a Federal Reserve interest rate hike in September. Qatar said mediators were making progress in negotiations, while Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as early as Tuesday or Wednesday. Investors also assessed a fresh batch of US economic data. Job openings fell more than expected to 7.36 million in June, the trade deficit narrowed as imports declined more than exports, and factory orders unexpectedly fell 0.3%, marking a second consecutive monthly decline. The developments pushed the implied probability of a September Fed rate hike down to 57%. Markets now turn their attention to the ADP employment report and Friday's nonfarm payrolls for further clues on the Fed's policy outlook.

Dollar Holds Steady as Oil Slump Reduces Fed Rate Hike Bets

The British pound steadied around $1.34 as investors remained cautious, awaiting greater clarity on the Middle East peace process. Sterling found support after US President Donald Trump called off planned strikes on Iran, signaling that a diplomatic resolution to the conflict remained possible, although uncertainty persisted after Tehran denied any ongoing or planned negotiations. Meanwhile, last week's Bank of England meeting reinforced expectations that policymakers are in no rush to tighten monetary policy, prompting markets to scale back bets on interest rate hikes in 2026. The BoE voted 6-3 to keep interest rates unchanged, with three members favoring a hike versus expectations for a 7-2 split. However, Governor Andrew Bailey downplayed the prospect of an imminent tightening cycle, saying the disinflation process remains on track, while some policymakers suggested rate cuts could return to the agenda if tensions in the Middle East ease.

Pound Holds Steady as Markets Await Middle East Clarity

The euro traded just above $1.15, hovering near its highest level since June 16 as easing geopolitical tensions supported risk sentiment. The currency drew support after US President Donald Trump called off planned strikes on Iran, signaling that a diplomatic resolution to the conflict remained possible, although uncertainty persisted after Tehran denied any ongoing or planned negotiations. The common currency was also underpinned by stronger-than-expected eurozone economic data, reinforcing expectations that the European Central Bank could raise interest rates at its next meeting. The eurozone economy grew 0.4% in the second quarter, twice the pace forecast and the strongest expansion since early 2025. Meanwhile, annual inflation accelerated to 2.9% in July, with both core and services inflation also picking up.

Euro Holds Near Seven-Week High

The Indonesian rupiah weakened past IDR 18,000 per U.S. dollar on Tuesday, snapping a four-session winning streak as concerns over the country's external balance resurfaced. Sentiment was pressured after Indonesia posted another trade gap in June, largely driven by a surge in crude oil imports amid elevated global energy prices. Nerves also grew ahead of Q2 GDP data due Wednesday, with economic growth expected to slow from the strong 5.6% yoy rise in Q1. Traders remained focused on President Prabowo's upcoming nominations for Bank Indonesia governor following Perry Warjiyo's abrupt exit. Finance Minister Purbaya Yudhi reportedly said he would not seek the position. Still, the rupiah's losses were limited after July inflation eased to a three-month low of 2.88%, comfortably within the central bank's target range of 1-1/2-3-1/2%. Globally, the U.S. dollar steadied as investors continued to assess the outlook for Fed policy amid persistent uncertainty about the Middle East conflict.

Rupiah Retreats on External Balance Worries Ahead of GDP Data

The Indian rupee hovered around 95.34 per dollar, pausing its recent gains as renewed importer dollar demand and uncertainty over US-Iran diplomacy limited further appreciation. Companies stepped up hedging of future import payments after the currency's swift recovery, with traders noting that levels close to 95 were attractive for corporate dollar purchases. Meanwhile, oil prices edged higher after tumbling in the previous session as concerns over Middle East supply disruptions persisted. Sentiment remained cautious after US President Donald Trump said he was holding off on fresh attacks on Iran while talks continued, but Iran denied any negotiations were underway, keeping the risk of renewed tensions elevated and pressuring the oil-sensitive rupee. Despite the pause, the currency remained near its strongest level in four weeks, its biggest weekly gain since March, supported by the RBI's near-daily dollar sales.

Rupee Steady on Hedging Demand

The dollar index hovered near 100 on Tuesday after rebounding in the previous session, as investors continued to evaluate the outlook for Federal Reserve monetary policy amid ongoing uncertainty in the Middle East. Markets are currently pricing in about a 65% chance of a 25 basis point Fed rate hike in September after the central bank left interest rates unchanged in July. Bank of New York Fed President John Williams monetary policy remains well positioned, adding that inflation is expected to ease during the second half of the year. Investors are now awaiting the latest JOLTS job openings report and international trade data due later today for further insight into the strength of the US economy. Elsewhere, the dollar regained some ground against the yen after the US and Japan confirmed coordinated efforts to support the Japanese currency, though the possibility of additional interventions continues to keep markets on edge.

Dollar Steadies as Markets Assess Fed Outlook

The Australian dollar traded around $0.70, near multi-week highs as stronger-than-expected household spending reinforced signs of resilient domestic demand ahead of the Reserve Bank’s monetary policy meeting next week. Household spending rose 0.8% in June, well above forecasts of 0.2%, driven by another increase in discretionary spending, while annual growth accelerated to 6.0%, also exceeding expectations. The data supported the central bank’s view that consumer activity remains firm despite weak sentiment, although recent softer inflation and a cooling housing market have strengthened expectations that the central bank will leave its 4.35% cash rate unchanged next week. Markets are also pricing little chance of a rate hike in September, while assigning roughly a 50% probability of a move in November if third-quarter inflation proves stronger than expected. Investors now await upcoming final PMI figures and trade balance data this week for further clues on the economy’s health.

The Japanese yen traded near 157 per dollar on Tuesday, holding onto most of its gains from the previous three sessions as signals of coordinated support from the US and Japan kept markets alert for further intervention. US Treasury Secretary Scott Bessent urged the Federal Reserve to expand its Foreign and International Monetary Authorities Repo Facility, which allows foreign governments to obtain US dollars using their Treasury holdings as collateral. The remarks followed confirmation from both Bessent and President Donald Trump that the US had jointly intervened with Japan to support the yen. Meanwhile, Bank of Japan data showed Tokyo spent around ¥5.33 trillion during Friday’s operations, after reportedly carrying out a record single-day intervention worth ¥8.45 trillion a day earlier. The yen had fallen to four-decade lows last month amid rising energy costs, growing fiscal concerns, and persistently wide interest rate differentials.

Yen Holds Firm on Joint US-Japan Support

The dollar index fell to 99.8 at the start of August, the lowest in seven weeks amid fresh strength from the yen, while foreign investors maintained their partial pivot out of dollar positions from last week. The Japanese yen extended its surge after the US Treasury bought more of the Japanese currency with its large euro holdings, magnifying the initial yen rebound when Tokyo intervened in the currency market. The developments added to the dollar's slide following the Federal Reserve's last meeting. The US central bank maintained its rates unchanged, as expected. However, Fed Chairman Warsh signaled some reluctance to confirm that a rate hike would be his preferred reaction to higher inflation, leading foreign markets to trim holdings of dollar-denominated assets. Still, rate futures show that over half of the market is positioned for Fed hike in September.

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