The dollar index rose above 98.1 on Monday, lifted by geopolitical developments and expectations ahead of the Federal Reserve’s Jackson Hole symposium later this week. At the White House, President Trump met with Ukrainian President Volodymyr Zelensky, expressing optimism about ending the war, pledging US involvement in maintaining peace, and saying he would call Russian President Vladimir Putin after the talks. Following his meeting with Putin on Friday, Trump said he would press Zelensky to reach a quick settlement, though no breakthrough has been achieved. On monetary policy, markets are pricing in an 84% chance of a 25 basis point Fed rate cut in September, while stronger-than-expected producer inflation and retail sales have tempered expectations for a larger 50 basis point move. Fed Chair Jerome Powell is set to provide further guidance at Jackson Hole.

Dollar Edges Higher as Trump-Zelensky Talks

The euro slipped to $1.168 ahead of a key meeting between Trump, Zelenskiy, and EU leaders on a potential Russia-Ukraine peace deal. Trump said he would press Zelenskiy for a quick settlement after talks with Putin, who signaled openness to US-European security guarantees for Ukraine. Meanwhile, focus in the US turns to Fed Chair Jerome Powell’s remarks at Jackson Hole and the release of Fed minutes, with markets betting on a September rate cut. In Europe, the ECB ended its easing cycle in July after eight cuts since 2022, though some still expect further action this year. Investors also eye flash PMIs for signs of momentum after Euro Area GDP grew just 0.1% in Q2 and inflation held steady at 2%. Trade tensions persist as the US imposes 15% tariffs on most EU exports.

Euro Edges Down on Monday

The Australian dollar rose to around $0.651 on Monday, as markets navigated a relatively quiet week for domestic economic data. Investor attention is now shifting toward the Westpac Consumer Confidence Index, consumer inflation expectations, flash PMIs, and speeches from RBA officials scheduled for this week. On the monetary policy front, investors are increasingly anticipating further easing by the RBA before year-end. While no immediate policy move is expected, traders are currently pricing in an additional 50 bps in rate cuts by November. At its August 2025 meeting, the central bank cut the cash rate by 25 bps to 3.60%, marking the third reduction this year and lowering borrowing costs to its lowest level since April 2023. Meanwhile, investors continued to assess the evolving US tariff policies, following the Trump administration’s move to expand its 50% tariffs on steel and aluminum to include hundreds more products, set to take effect today, August 18.

Australian Dollar Kicks Off the Week Higher

The offshore yuan held steady to around 7.19 per dollar on Monday, halting two consecutive sessions of losses to start the week on a muted note, as investors assessed the People’s Bank of China’s daily midpoint fix. The central bank set the USD/CNY reference rate at 7.1322 versus 7.1371 in the previous session, a slightly firmer signal that reinforced Beijing’s preference for stability. Market participants also weighed the likelihood of additional policy support from Beijing to support growth and cushion the impact of US tariffs, after recent data showed weaker factory activity and slowing retail sales. Sentiment was further restrained ahead of this week’s loan prime rate decision, with expectations leaning toward an unchanged stance. On the global front, attention is turning to the Fed’s Jackson Hole meeting, where Chair Powell could pave the way for a September rate cut, while political watchers track a Trump-Zelenskiy meeting in Washington.

Offshore Yuan Starts the Week Flat

The yen weakened to around 147.5 per dollar on Monday as the greenback gained ahead of a key meeting in Washington between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy aimed at advancing a peace deal with Russia. Investors also looked to the Federal Reserve’s annual Jackson Hole symposium this week for signals on the global interest rate outlook. In Japan, data released Friday showed the economy expanded more than expected in the second quarter, supported mainly by net exports despite headwinds from US tariffs. Meanwhile, Japanese officials downplayed remarks from US Treasury Secretary Scott Bessent, who said the Bank of Japan was “behind the curve” on policy in what appeared to be an attempt to pressure the central bank to raise rates. BOJ Governor Kazuo Ueda has also maintained a cautious tone, stressing that “underlying inflation” remains below the 2% target

Japanese Yen Slips as Dollar Rises

The New Zealand dollar rose to around $0.593 on Monday but stayed within recent ranges as traders awaited the Reserve Bank’s policy decision this week. Markets are fully priced for a 25bps cut, which would lower the official cash rate to 3% and bring the total easing cycle to 250bps. Investors also see scope for another cut to 2.75% early next year, with attention on the RBNZ’s updated rate outlook. Analysts noted that policy settings are near neutral and prior cuts are still filtering through, yet weak growth and spare capacity may justify further easing. Two-year swap rates are near its lowest since early 2022, leaving them vulnerable to any hawkish surprise. In economic news, New Zealand’s services sector shrank again in July, underscoring economic softness. Traders also looked ahead to key trade partner China’s rate decision, Fed Chair Powell’s speech at Jackson Hole for US policy clues, and a high-level US-Russia meeting that could sway risk sentiment.

New Zealand Dollar Rises

The South Korean won strengthened to around 1,384 per dollar on Monday, recouping earlier losses, as markets drew support from renewed diplomatic outreach and an accelerated ramp-up in nuclear output. President Lee Jae Myung’s plan to dispatch special envoys to Beijing, with talks underway for a meeting with Chinese Foreign Minister Wang Yi where they are expected to deliver a letter to President Xi Jinping inviting him to the APEC summit in Seoul. At the same time, data from Korea Electric Power Corp indicated nuclear generation expanded 8.7% year-on-year in the first half, almost three times the official growth target, while coal-fired output contracted 16%. The accelerated nuclear ramp-up has lowered dependence on imported fossil fuels and eased input cost pressures, contributing to an improved external balance.

SK Won Gains on Envoy Talks and Power Sector Gains

The dollar index hovered around 97.8 on Monday as investors awaited a pivotal meeting in Washington between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy, while also looking ahead to the Federal Reserve’s Jackson Hole symposium later this week. Trump said he would press Zelenskiy to reach a quick settlement following his Friday talks with Russian President Vladimir Putin. While the meeting did not produce a ceasefire breakthrough, Putin agreed to allow the US and Europe to provide Ukraine with robust security guarantees as part of a potential deal to end the war. In monetary policy, markets are pricing in an 84% chance of a 25 basis point Fed rate cut in September, though stronger-than-expected producer inflation and retail sales have reduced the likelihood of a larger 50 basis point move. Fed Chair Jerome Powell is expected to provide further guidance at Jackson Hole.

Dollar Holds Steady Ahead of Key Events

The South African rand traded around 17.6 per USD, not far from a recent one-month high of 17.5 against the greenback, benefiting from higher gold prices and a weaker dollar amid concerns over the health of the US economy and geopolitical risks. Domestically, traders remained focused on trade developments between US and South Africa, while awaiting inflation figures due next week. South African inflation has stayed close to the lower bound of the central bank’s 3%–6% target range for nine months in a row, prompting a cumulative 75 basis point rate cut to 7% in 2025, with the potential for further easing later this year. Meanwhile, encouraging economic indicators from mining, manufacturing, and retail point to a probable third straight quarter of growth for South Africa’s economy in the second quarter.

South African Rand Hovers Around 1-Month High

The dollar index slipped to 97.85 after US retail sales rose in July, easing fears of weaker consumer spending. Sales climbed 0.5%, boosted by cars and online promotions, following a 0.9% gain in June. Excluding autos, sales were up 0.3%. Import prices rose 0.4%, defying flat forecasts, adding to concerns that inflation could pick up after Thursday’s sharp jump in producer prices. Attention now turns to Friday’s Trump–Putin meeting in Alaska, where a Ukraine ceasefire remains uncertain, and to next week’s Jackson Hole symposium for Fed policy signals. The Fed faces a balancing act as tariff-driven inflation collides with signs of labor market softness. For the week, the dollar is down 0.3%, following a 1% drop in the previous period.

DXY Falls, Down for 2nd Week

The offshore yuan edged lower to around 7.18 per dollar on Friday, as investors weighed a batch of disappointing economic data. Industrial output slowed to a seven-month low in July 2025, from a recent three-month high and falling short of market forecasts. Adding to the unease, retail sales growth eased to a six-month low in July, while the unemployment rate edged up to a four-month high. Meanwhile, China’s new home prices in 70 cities contracted at a softer pace in July. Although this marked the 25th consecutive month of decline, it was the slowest rate of decline since March 2024.These underwhelming figures highlight the growing challenges for Chinese policymakers as they work to stabilize the economy amid soft demand and external pressures. Beijing has recently intensified policy efforts and pledged to spur consumption and curb excessive price competition to meet its 2025 growth target of around 5%. Over the week, the yuan is on track for its second consecutive week of stability.

Offshore Yuan Edges Lower

The Australian dollar held its decline around $0.649 on Friday, as the greenback strengthened overnight following a stronger-than-expected US producer inflation report that dampened hopes for aggressive rate cuts. US producer prices rose at its fastest pace in three years in July, contrasting with a more reassuring consumer inflation report earlier in the week, and pointing to broadening inflationary pressures that could complicate the Federal Reserve's policy decisions. As a result, the probability of a 25-basis-point rate cut by the Federal Reserve dipped slightly, according to CME’s FedWatch tool. Meanwhile, in Australia, investor sentiment remained cautious ahead of key data releases next week, including consumer inflation expectations, consumer confidence, and several PMI surveys, especially after recent employment figures indicated continued strength in the labor market. Overall, the currency is on track to post a weekly loss.

Aussie Dollar Set for Weekly Decline

The New Zealand dollar fell to $0.591 on Friday, extending the previous session’s decline, after a hot US PPI reading dented expectations for an aggressive Federal Reserve rate cut in September and lifted the greenback. Sentiment was further dampened by disappointing Chinese economic data released today, including weaker-than-expected retail sales and industrial production, which stoked concerns over China’s economic growth. China is New Zealand’s top trading partner and the kiwi is often used as a liquid proxy for the yuan. At home, markets imply a 95% chance of a 25bps cut by the Reserve Bank of New Zealand next week, with one more cut anticipated early next year that could take rates to a floor of 2.75%. In economic news, New Zealand's annual food inflation rose to 5% in July, the highest since November 2023, from 4.6% in June. Meanwhile, the country’s manufacturing sector returned to growth in July, with all economic indicators in expansion. For the week, the kiwi is down 0.6%.

New Zealand Dollar Extends Losses

The South Korean won weakened to around 1,390 per dollar on Friday, extending losses for a second session, as the dollar held firm following a stronger-than-expected US PPI data. The US wholesale prices in July rose 0.9% in from the previous month, the sharpest increase in three years, and 3.3% from a year earlier, both well above market forecasts. The figures prompted investors to scale back expectations for a larger half-point Federal Reserve rate cut in September, though a smaller 25-basis-point cut remains widely anticipated. On the domestic front, investor sentiment was dampened by a prolonged downturn in manufacturing activity, with key export-oriented sectors such as petrochemicals, steel, and autos facing weak demand, heightened foreign competition, and oversupply pressures. Persistent softness in these industries has raised concerns over Korea’s export outlook.

South Korean Won Falls on Dollar Strength

The Japanese yen firmed toward 147 per dollar on Friday, erasing the prior session’s losses amid stronger-than-expected GDP data and rising expectations for a Bank of Japan rate hike. Japan’s economy grew 0.3% in the second quarter, accelerating from 0.1% in Q1 which was also the consensus forecast. The upside was driven mainly by net exports, which contributed 0.3 percentage points to growth despite US tariff headwinds. The yen also drew support from comments by US Treasury Secretary Scott Bessent, who said the BOJ is falling behind in tackling inflation. Additionally, the central bank is under pressure to drop an inflation gauge tied to domestic demand and wage growth that has constrained policy tightening. BOJ Governor Kazuo Ueda has maintained a cautious tone, stressing that “underlying inflation” remains below the 2% target.

Yen Strengthens on GDP Beat and BOJ Speculation

The dollar index hovered above 98 on Friday after rising about 0.5% in the previous session, as hotter-than-expected US wholesale inflation dampened speculation of a supersized half-point Federal Reserve rate cut in September. July’s Producer Price Index surged 0.9% month-over-month, the largest jump in three years and well above the 0.2% forecast, while climbing 3.3% year-over-year. Markets still price in over a 90% chance of a 25-basis-point cut next month, but bets on a larger 50 bps move have been scrapped. Investors now turn to fresh readings on import prices, consumer sentiment, and retail sales for further clues, while next week’s annual Jackson Hole central banking symposium is expected to provide signals on future policy moves. Despite Thursday’s advance, the dollar index remains on track for a nearly 2% weekly loss.

Dollar Holds Gains After Hot PPI Print

The South African rand weakened to around 17.6 per USD, down from recent over one-month highs, pressured by a stronger dollar and falling prices of gold. At the same time, investors weighed mixed economic data, with stronger-than-expected manufacturing and mining figures in June contrasting with another increase in South Africa unemployment in Q2. However, the focus remained on whether South Africa can secure a more favorable agreement with the US, as a 30% tariff currently applies to a wide range of its exports.

South African Rand Loses Ground

The Mexican peso weakened toward 18.8 per USD, close to its one-month low of 18.88 seen earlier this month, as a stronger US dollar combined with a recent dovish shift from the Bank of Mexico and renewed tariff pressures. The sharp jump in US producer prices in July, the largest gain in three years, pushed bets for an imminent Fed rate cut lower supporting the greenback. Domestically, Banxico slowed the pace of easing but still cut rates by 25 bps on August 7th to 7.75% in a split decision that acknowledged weakness in economic activity, currency volatility, and global trade risks. The move reduced the policy premium that had underpinned the peso and signaled that more small cuts may follow if disinflation continues. Meanwhile, Washington’s tariff measures have resumed after a brief pause in July and new actions are reshaping earnings expectations and supply chain planning in North America.

Mexican Peso Drops Toward 1-Month Lows

The dollar index held around 97.9 on Thursday after stronger-than-expected US inflation data reduced chances of a September Fed rate cut. July’s producer price index jumped 0.9% month-on-month—the biggest rise in three years—driven by higher service costs, lifting annual PPI to 3.3%. Core PPI, excluding food, energy, and trade services, rose 0.6% from June and 2.8% year-on-year. Jobless claims fell by 3,000 to 224,000, showing employers remain reluctant to lay off staff despite slower hiring. Continuing claims stayed at 1.95 million, near a three-year high, indicating challenges in finding work. While the labor market is cooling, the inflation spike has tempered rate-cut expectations.

DXY Firms after PPI Data

The Swiss franc hovered around 0.81 per USD, near its June lows, amid continued pressure from U.S. tariffs and rising rate cut expectations. On August 7, President Donald Trump’s 39% tariff on Swiss imports— the highest among developed nations—took effect, targeting luxury and consumer goods such as watches, skincare products, cosmetics, precision instruments, and chocolates. Gold, silver, and pharmaceuticals remain exempt. Meanwhile, inflation remains below the Swiss National Bank’s 2% target, bolstering expectations that rates could be cut further, potentially back into negative territory. The central bank cut its policy rate by 25 basis points to 0% in June in response to a sustained decline in inflation.

Swiss Franc Subdued

The Hong Kong Dollar touched 7.85 against the USD, the highest since July 2025. Over the past 4 weeks, US Dollar Hong Kong Dollar lost 0.05%, and in the last 12 months, it increased 0.62%.

Hong Kong Dollar Hits 4-week High

The British pound changed hands at $1.588, the highest in around five weeks, after UK GDP beat forecasts. The economy grew 0.3% in Q2 versus expectations of 0.1%, with annual growth at 1.2%. June GDP also surprised on the upside, rising 0.4%. The stronger-than-expected data lowers the chances of further Bank of England rate cuts soon, after last week’s narrow 5-4 vote to cut by 25 bps. Earlier labour data showed payrolls fell just 8,000 in July, far better than the 20,000 drop expected, with previous losses revised lower. Unemployment stayed at 4.7% and private-sector wage growth eased slightly to 4.8%. At the same time, the dollar weakened after US inflation data boosted bets on a September Fed rate cut.

Sterling at 5-Week High

The offshore yuan strengthened past 7.17 per dollar on Thursday, marking its third consecutive session of gains, as the greenback weakened amid a more dovish outlook from the Federal Reserve. Markets have nearly fully priced in a rate cut for September, with some investors even anticipating a more aggressive 50 bps reduction amid softer-than-expected US inflation data and a cooling labor market. In Asia, Chinese companies are increasingly looking to expand or establish operations in Indonesia as they seek to mitigate the impact of steep US tariffs. Goods exported from Indonesia to the US face a tariff rate of only 19%, compared to over 30% for Chinese exports. Earlier this week, President Trump extended the US-China trade truce until November 10, offering continued relief from escalating tariffs and export restrictions that had rattled global markets. In China, investors now await key economic data, including home prices, industrial output, retail sales, and unemployment figures.

Offshore Yuan Logs 3rd Straight Gain

The South Korean won weakened to around 1,381 per dollar on Thursday, retreating from a two-day gain amid concerns over worsening trade terms, slowing exports, and subdued tech demand. Investors assessed official data showing export prices fell 4.3% year-on-year in July, weighed down by lower manufacturing prices and the lingering effects of US tariffs on Korean goods, now capped at 15% following a partial trade deal. Import prices also dropped 5.9% from a year earlier, reflecting higher global oil costs and a softer won. Additionally, sharp losses among major exporters, particularly in technology and transportation, underscored persistent market pessimism toward sectors that drive South Korea’s trade surplus, raising risks to both export revenue and foreign currency inflows. Traders are now turning their focus on upcoming trade data for signals on whether external demand can stabilize in the months ahead.

SK Won Slips on Soft Trade Terms, Sector Weakness

The New Zealand dollar strengthened to $0.598 on Thursday, marking its third straight daily gain and hovering near a more than two-week high, buoyed by continued weakness in the US dollar. The greenback’s decline came as markets priced in higher odds of Federal Reserve interest rate cuts this year, following Tuesday’s benign US CPI report and signs of a slowing labor market. Sentiment also improved after President Trump earlier this week extended the tariff truce with China by 90 days. Still, domestic headwinds weigh on the kiwi. The Reserve Bank of New Zealand is widely expected to lower its cash rate by 25bps, with markets anticipating one more cut later this year or early next. Concerns also persist about the impact of US tariffs on New Zealand’s export-reliant economy. Prime Minister Christopher Luxon recently conceded that the country is unlikely to win a reduction in the current 15% US tariff on its goods, a factor that could undermine export competitiveness in the months ahead.

New Zealand Dollar Rises for 3rd Day

The Australian dollar rose to around $0.656 on Thursday, marking its third straight session of gains to hit a more than two-week high, after a solid jobs report signaled resilience in the labour market. Australia’s jobless rate fell to 4.2% in July from 4.3% in June, matching forecasts and reversing last month’s peak at its highest level since late 2021. The decline reflected a drop of 10,200 in the number of unemployed to 649,600, while employment increased by 24,500 to 14.64 million, just shy of expectations for a 25,000 gain. The data followed the Reserve Bank of Australia’s decision to cut rates in August, citing easing inflation and a recent rise in the jobless rate. However, the latest jobs print suggests the labour market remains tight, and most economists expect the central bank to wait until November, when it will have another quarter of inflation data. Elsewhere, ongoing weakness in the US dollar amid mounting bets of a September Fed rate cut added momentum for the Aussie.

Australian Dollar Hits Over 2-Week High

The Japanese yen strengthened to around 146.5 per dollar on Thursday, its highest level in three weeks, as growing expectations for Federal Reserve rate cuts this year weighed on the greenback. Softer US inflation data suggested President Donald Trump’s tariffs are not adding to price pressures, while signs of labor market cooling reinforced the dovish outlook. US Treasury Secretary Scott Bessent added to the momentum, calling for multiple rate cuts and suggesting the Fed could begin with a 50-basis-point move. On the domestic front, the Bank of Japan faces pressure to abandon an inflation measure tied to domestic demand and wage growth that has limited further tightening. Governor Kazuo Ueda has maintained a cautious stance, noting that “underlying inflation” remains below the BOJ’s 2% target.

Japanese Yen Rallies to 3-Week High

The dollar index fell to around 97.6 on Thursday, its lowest level in more than two weeks, as traders increased wagers on Federal Reserve rate cuts this year. Softer-than-expected US inflation data suggested President Donald Trump’s tariffs are not fueling price pressures, while signs of a cooling labor market added to the dovish outlook. Markets have nearly fully priced in a September rate cut, with some positioning for a larger half-point move. Treasury Secretary Scott Bessent also called for multiple cuts, suggesting the Fed could start easing with a 50-basis-point reduction. Investors now await July’s producer price index and weekly jobless claims for further policy cues. The greenback weakened broadly, with the steepest losses against the Australian dollar and Japanese yen.

Dollar Languishes on Dovish Fed Bets

GBPUSD increased to 1.36, the highest since July 2025. Over the past 4 weeks, British Pound US Dollar gained 1.44%, and in the last 12 months, it increased 5.66%.

British Pound Hits 5-week High

The dollar index fell past 97.8 on Wednesday, extending the slide from the previous session as markets continued to bet on multiple rate cuts from the Fed following the latest market data. The headline inflation rate was unchanged at 2.7%, slightly below expectations that rounded to 2.8%, although the core inflation rate inched higher to a six-month high of 3.1%. Rate traders fully priced in a 25bps rate cut in the Fed's next meeting, adding to the momentum following sharp downward revisions to payrolls and pessimistic results from ISM PMIs, pressuring the dollar against other G10 currencies. In the meantime, President Donald Trump extended the US-China truce by another 90 days to allow more time for negotiations. The dollar extended losses against the euro and the pound sterling, while losing further ground to the yen despite BoJ officials showing a slight tilt toward keeping policy accommodative.

US Dollar Depreciates Sharply

The Mexican Peso touched 18.51 against the USD, the highest since August 2024. Over the past 4 weeks, US Dollar Mexican Peso lost 1.22%, and in the last 12 months, it decreased 1.62%.

Mexican Peso Hits 12-month High

The euro gained momentum, rising above $1.171, its highest in nearly three weeks and extending a second session of gains as the dollar weakened to its lowest since late July. US inflation data fueled expectations that the Federal Reserve could cut rates in September, supporting a risk-on mood globally. In Europe, the ECB ended its easing cycle in July after eight cuts over the past year, leaving borrowing costs at their lowest since November 2022, though some see the potential for another cut before year-end. Eurozone GDP grew 0.1% in Q2, with inflation steady at 2% in July. Trade risks linger, as the EU faces 15% tariffs on many exports to the US. Geopolitically, European and Ukrainian leaders are scheduled to speak with President Trump ahead of his summit with Russian President Putin.

Euro Rises Toward 3-Week High

The British pound rose to $1.355, a three-week high, after UK labour data showed smaller-than-expected job losses in July, easing concerns about the economy. Payrolls fell just 8,000, well below forecasts of 20,000, and earlier months were revised lower, suggesting the labour market is holding up despite the Labour government’s £26 billion tax increase. Unemployment remained at 4.7%, while private-sector wage growth eased slightly to 4.8%, still above the Bank of England’s 2% inflation target. The data highlights the BoE’s delicate balancing act between sticky inflation and a softening labour market, following last week’s narrow 25bps rate cut. Investors now focus on Q2 GDP, expected to show 0.1% growth. Trade and geopolitics remain in focus, with a US–China tariff pause extended 90 days and a US–Russia meeting on Ukraine scheduled for Friday. Meanwhile, the US dollar weakened on inflation data fueling bets on a September Fed rate cut.

Sterling Strengthens to 3-Week High

The South Korean won hovered around 1,384 per dollar on Wednesday, holding gains from the previous session as investors assessed July's domestic employment figures. South Korea’s unemployment rate edged down to 2.5% in July, the second straight monthly decline, with total employment up by about 171,000 from a year earlier. Externally, the dollar remained lower after US inflation data showed headline CPI holding at 2.7% in July, just under forecasts, reinforcing expectations for a 25-basis-point Federal Reserve rate cut in September. Political uncertainty also remained in focus after former first lady Kim Keon Hee was arrested on corruption charges, a development that some analysts warned could weigh on investor sentiment toward South Korean assets.

South Korean Won Holds Gains on Jobs Data

The Japanese yen weakened past 148 per dollar on Wednesday, giving up the previous session’s gains as a rally in global risk assets reduced demand for the safe-haven currency. The move came after US inflation data reinforced expectations that the Federal Reserve will cut interest rates next month. In Japan, sentiment among manufacturers improved for the second consecutive month in August following a trade agreement with Washington that lowered US tariffs on cars and other goods to 15% in exchange for a $550 billion Japanese investment package. Meanwhile, producer price growth slowed to an 11-month low in July, underscoring the pressure on local firms from higher US tariffs. On the monetary policy front, Bank of Japan board members remain split over the timing and pace of future rate hikes. Some officials favored keeping policy accommodative for now, citing uncertainty over whether the bank’s economic forecasts will materialize.

Japanese Yen Slips on Risk-On Mood

The New Zealand dollar held its recent advance to around $0.595 on Wednesday, supported by a weaker US dollar after a tame US consumer inflation reading bolstered expectations of a Federal Reserve rate cut in September. Back at home, the kiwi remains under pressure as markets increasingly expect the Reserve Bank of New Zealand to cut its official cash rate by 25bps next week, following weaker-than-expected inflation data and a soft labour market report. Sentiment was also weighed down by concerns over the impact of US tariffs on New Zealand’s export-driven economy. Earlier this week, Prime Minister Christopher Luxon conceded the government is unlikely to win a reduction in the 15% US tariff on New Zealand goods — a rate higher than that faced by some competitors, such as Australia and the UK, which are at 10%.

New Zealand Dollar Holds Gains

The Australian dollar weakened to around $0.652 on Wednesday, giving up gains from the previous session after a dovish rate cut by the Reserve Bank of Australia continued to pressure the currency. On Tuesday, the central bank cut its official cash rate as widely expected and signaled that further easing may be needed to achieve its inflation and employment goals amid a loss of economic momentum. It also downgraded its 2025 GDP forecast to 1.7% from 2.1%, pointing to subdued public demand early in the year that is unlikely to recover. Markets now imply only a 34% chance of another cut in September, though markets have fully priced in two additional cuts by early 2026, bringing the rate to around 3.1%. Meanwhile, a softer greenback amid mounting Fed rate cut bets in September, limited declines for the AUD. The commodity-linked Aussie also found support from higher iron ore prices, as the extension of the US-China trade truce boosted demand for Australia’s resource-rich exports.

Australian Dollar Dips on Dovish RBA

The dollar index hovered around 98 on Wednesday after sliding in the previous session, as the latest US inflation data bolstered expectations for a Federal Reserve interest rate cut next month. Headline inflation was unchanged at 2.7%, defying forecasts for a tariff-driven uptick to 2.8%, while core inflation edged up to 3.1%, its highest level in six months. Traders are now pricing in a 94% probability of a 25-basis-point cut in September, with another reduction before year-end also factored in. The greenback also faced pressure after White House spokeswoman Karoline Leavitt said President Donald Trump is considering legal action against Fed Chair Jerome Powell over his handling of renovations at the central bank’s headquarters, fueling concerns about the Fed’s independence. The dollar held losses against the euro and sterling but recovered some ground versus the yen and commodity-linked currencies such as the Australian and New Zealand dollars.

Dollar Holds Losses on Dovish Fed Bets

The Brazilian real strengthened toward 5.4 per US dollar in August, its strongest level in almost a year, as investors weighed the prospect of sustained tight policy from the central bank against a weakening US dollar and government steps to blunt tariff damage. Headline annual inflation slowed to 5.23% in July from 5.35% in June, below the 5.33% consensus, which together with the central bank’s decision to keep the Selic at 15% reinforced a message that policy will remain restrictive until inflation shows firmer convergence to target. At the same time talks with Washington and the announcement of a contingency package to shield exporters from the new 50% US tariff have reduced the immediate probability of a severe hit to export receipts and the current account. External forces amplified the move, because a softer than expected US CPI print of 0.2% for July lifted expectations for earlier Fed easing and mechanically weakened the dollar.

Brazilian Real Strengthens to 1-Year Highs

The US dollar index fell to 98.3 on Tuesday, holding the sharp decline since touching the two-month high of 100 on July 31st as the latest economic data consolidated bets of an incoming rate cut by the Fed in September. The headline inflation rate was unchanged at 2.7%, slightly below expectations that rounded to 2.8%, although the core inflation rate inched higher to a six-month high of 3.1%. Rate traders piled on bets of a 25bps rate cut in the Fed's next meeting following sharp downward revisions to payrolls and pessimistic results from ISM PMIs, pressuring the dollar against other G10 currencies. In the meantime, President Donald Trump extended the US-China truce by another 90 days to allow more time for negotiations. US-China truce by another 90 days to allow more time for negotiations. Elsewhere, a sharper drop for the DXY was prevented by soft payroll counts in the UK.

US Dollar Index Swings Lower after CPI

The South African rand traded around 17.7 per USD, hovering around its highest since July 24, helped by firm gold prices, a steady greenback, and upbeat local manufacturing and mining data. Meanwhile, attention remains on trade developments—particularly whether South Africa can secure a more favorable agreement with the United States, as a 30% tariff currently applies to a wide range of its exports. Trade Minister Parks Tau said the government is in ongoing talks with Washington while actively seeking to diversify trade partnerships, notably with China and other Asian countries. He also noted that a deal to export stone fruit to China is expected to be finalized next month. A revised proposal is set to be submitted to Washington, according to Reuters, aiming to soften the tariff burden on key sectors like autos and agriculture.

South African Rand at Near 3-Week High

The Indian rupee weakened to 87.7 per USD, remaining close to the record low of 88.1 on August 5th amid steeper US tariffs on India and the outlook of a dovish RBI. US President Trump announced a new tariff of 25% on Indian imports due to the country's continued buying and re-exporting of Russian oil. This was after PM Modi pushed back and stated that Indian firms buy the most favorable energy in an uncertain economic backdrop. The tariffs double the rate of the 25% imposed last week in the US's latest round of reciprocal tariffs, hurting the outlook of foreign exchange inflows into the world's fastest growing major economy. On the policy front, consumer inflation fell to 1.55%, well below market expectations, to surpass the lower bound of the RBI's inflation tolerance band of 2% for only the third occasion since adopting the target in 2016. The central bank held rates unchanged in its August meeting but a majority of the market has positioned itself for another rate cut this year.

Indian Rupee Holds Weak Momentum

The Swiss franc rose slightly to near 0.81 per USD, up from recent over one-week lows, amid a broadly stable greenback and after President Trump said gold imports would not be subject to tariffs. For Switzerland, a major gold refining center, a tax on gold would represent a further blow after the country was hit with heavy tariffs of 39% on its products entering the United States.

Swiss Franc Firms

The British pound rose to $1.344 after UK payrolls fell just 8,000 in July, the smallest drop since January and far better than forecasts for a 20,000 decline. Previous months’ losses were also revised lower, suggesting the labour market may be weathering the Labour government’s £26 billion tax hike better than expected. Unemployment held at a four-year high of 4.7%, while private-sector wage growth eased slightly to 4.8% from 4.9% but remains well above the Bank of England’s comfort level for its 2% inflation target. The data underscores the BoE’s challenge in balancing sticky inflation with signs of labour market weakness, after last week’s close vote to cut rates by 25 bps. Investors now look to Q2 GDP, expected to show just 0.1% growth. On trade, President Trump extended the US–China tariff pause by 90 days. Geopolitically, US President Trump and Russia’s Vladimir Putin will meet Friday in Alaska in an effort to broker a Ukraine peace deal.

Sterling Firms after Jobs Report

The Australian dollar depreciated past $0.650 on Tuesday, extending its decline from the previous session as investors weighed the latest monetary policy announcement from the Reserve Bank of Australia. As widely expected, the central bank cut interest rates by 25 basis points for the third time this year, bringing the official cash rate down to a two-year low of 3.60%. The move reflects easing inflationary pressures and a softening labor market, though the RBA struck a cautious tone regarding the potential for further rate reductions. Meanwhile, the RBA board noted that underlying inflation is expected to ease toward the midpoint of its 2%–3% target range, even under a scenario of gradual policy loosening. On the global trade front, the ongoing US-China trade truce has been extended by another 90 days—an encouraging development aimed at defusing tensions, allowing more time for negotiations, and reducing the risk of further escalation in the trade conflict.

Australian Dollar Falls After RBA Decision

The South Korean won rose to around 1,389 per dollar on Tuesday, snapping a two-day decline after President Trump extended reduced tariffs on Chinese goods for another 90 days, easing pressure on Korea’s export-driven economy and averting a return to the peak duties seen in April. The extension keeps current rates at 30% for US tariffs and 10% for China’s, maintaining a more favorable trade environment and reinforcing expectations for steady global demand in key sectors such as semiconductors. South Korean Trade Minister Yeo Han-Koo said the government will step up APEC engagement to address mounting trade, industry, and security fragmentation, while pushing to diversify supply chains and expand export links with ASEAN and India. The move is part of a broader strategy to mitigate external risks, strengthen economic resilience, and secure market access amid shifting global trade dynamics.

South Korean Won Gains on US-China Tariff Extension

The offshore yuan edged higher around 7.19 per dollar on Tuesday, halting two straight sessions of losses, after the US and China agreed to extend their tariff truce by 90 days. The move, signed by President Trump on Monday, delays steep duty hikes until mid-November, keeping US tariffs on Chinese goods at 30% and Chinese tariffs on US goods at 10%, instead of a steep 145% and 125%, respectively—a scenario that could have amounted to a near trade embargo. The delay offers relief to exporters and retailers ahead of the holiday season and preserves lower rates on key imports. Sentiment was further lifted by news that Nvidia and AMD agreed to give up 15% of their China chip revenue to the US government in exchange for restored market access. Meanwhile, Chinese exporters sold a record $132.5 billion in dollar-yuan options in H1 2025, reflecting strong hedging that helped stabilize the currency. Elsewhere, traders now await US CPI data that could reinforce bets of a more dovish Fed stance.

Offshore Yuan Firms After Trade Truce Extended

The yen slipped past 148 per dollar on Tuesday, marking its third consecutive decline as improving global trade prospects reduced demand for the safe-haven currency. The US-China trade truce was extended for another 90 days, easing tensions and giving negotiators more time to reach an agreement. At home, investors weighed the Bank of Japan’s policy outlook, with board members divided over the timing and pace of future rate hikes. Some officials favored keeping policy accommodative for now, citing uncertainty over whether the bank’s economic forecasts will materialize. Looking ahead, markets are awaiting key Japanese data releases for further cues, including Q2 GDP, the Reuters Tankan survey, producer prices, and machine tool orders.

Japanese Yen Weakens for Third Session

The dollar index hovered around 98.5 on Tuesday after sharp swings in the prior session, as investors awaited US consumer inflation data that could influence the Federal Reserve’s rate outlook. July CPI is expected to rise 0.2%, slightly below June’s 0.3%, while the annual rate is projected to accelerate for a third straight month to 2.8%. Core CPI is also forecast to quicken to 0.3%. Despite signs of persistent inflation, markets are pricing in nearly a 90% chance of a Fed rate cut in September. On the trade front, President Donald Trump extended the US-China truce by another 90 days to allow more time for negotiations. Investors also looked ahead to Friday’s meeting between Trump and Russian President Vladimir Putin, aimed at resolving the conflict in Ukraine.

Dollar Steady Ahead of CPI Report

The New Zealand dollar rose to around $0.594 on Tuesday, snapping a two-day losing streak, after US President Trump extended the China tariff deadline. Late Monday, reports said the Trump administration postponed sweeping tariffs on China for 90 days, just before the previous deal expired. In response, China’s Commerce Ministry announced it would also suspend additional tariffs on US goods for the same period. These positive trade developments lifted the China-proxy Kiwi, given China’s strong trade links with New Zealand. However, gains were capped after Prime Minister Christopher Luxon signaled that US tariff relief is unlikely, following a recent hike in tariffs on New Zealand exports to 15% from 10%. This raises risks for the export-driven economy, as the US is one of its key markets. On the monetary policy front, recent soft labor market data and tame inflation have fueled expectations of a Reserve Bank rate cut next week.

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