Morgan Stanley Research previews Australia Q2 GDP report due on Wednesday.

"We expect GDP for Q2 to increase 0.5%Q, with annual growth slowing from 2.5% to 2.1%Y. This would be consistent with growth around trend rates, but only very modest per capita growth. We expect relatively broad contributions across categories. Consumer spending growth is expected to be similar to the prior quarter, with modest growth - a solid outcome given some of the income headwinds in the quarter," MS notes.

"Investment growth slowed sharply in the quarter although this entirely reflected a reversion of data centre machinery spending, the vast bulk of which was imported. We expect an offsetting positive contribution from trade (net exports+0.4ppts), with underlying capex trends still quite positive. Government spending is also expected to be a contributor to growth," MS adds.

Soft U.S. economic data and a lack of fresh catalysts are taking some momentum out of Tuesday's USD/JPY advance.

The pair has pulled back to 160 as the dollar eases after weaker-than-expected August ISM manufacturing and lackluster JOLTS data. An elevated ISM prices component should help preserve the Fed's hawkish bias, limiting the scope for a deeper dollar correction.

But the latest U.S. data does little to ease concerns over rising oil prices and expanding fiscal deficits keeping the yen defensive.

For Japan, rising debt burdens and higher interest rates remain particular challenges. Yen bulls expecting a more aggressive BOJ tightening path under U.S. pressure for hikes and higher domestic inflation risk being disappointed.

Government claims that fiscal discipline and stronger growth can resolve debt concerns remain unconvincing to many yen investors, while rising yields are also encouraging Samurai bond issuance, potentially adding support to USD/JPY if proceeds are converted into foreign currencies.

As such, USD/JPY remains cautiously bullish within the ascending channel that has been in place since the 155.20 intervention low.

While comments from Finance Minister Satsuki Katayama have kept intervention concerns alive and markets nervous above 160, a close above the upper Bollinger near 160.43 and channel resistance would expose the 61.8% Fibonacci retracement at 160.63 and the April 30 intervention high at 160.72.

Conversely, a break below 159.60 and the 21-day moving average near 159.08 would significantly weaken the bullish outlook.
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

Goldman Sachs Research previews the US August jobs report due on Friday.

"We expect a 40k increase in payrolls in August (vs. 55k consensus), in part reflecting a negative first print bias. Our forecast reflects a softer signal from alternative data. August payrolls have also shown a consistent negative bias—particularly in initial prints—over the last decade.

"We expect a 0.4% increase in average hourly earnings, reflecting positive calendar effects. AHE growth fell to just 3.2% year-over-year last month, and our broader wage tracker has stabilized in the mid-3s. We expect the unemployment rate to stay at 4.1%, reflecting a stabilization in continuing claims," GS adds.

Sterling looks vulnerable to further downside as it consolidates below 1.36, with bulls on the back foot amid heightened UK fiscal uncertainty, relentlessly rising long-end gilt yields and Middle East ructions lifting oil prices in a sign of persistent global inflation.

Amid subdued end-of-summer trading, cable found support near 1.3525, its recent trend lows.

The dollar strengthened following hawkish Federal Reserve policy expectations spurred by Chair Kevin Warsh's comments at the Jackson Hole Symposium last week. Adding to the dollar bid is the rise in global yields after Japanese yields climbed above 3% for the first time in 30 years. Sterling yields followed suit, rising 7 basis points and ticking a new multi-decade high at 5.26% as traders returned from Monday's UK Bank Holiday.

With oil rising, it seems increasingly likely that elevated inflation expectations globally are likely to persist. That may lift UK second-round inflation expectations, tempering optimism for a near-term recovery in Britain and further exacerbating fiscal concerns, which will add downside pressure to UK assets, including sterling.

Technically, sterling finds initial support at today's 1.3526 low, then 1.3475, the August 13 low, with more significant support at 1.3444-37, the 100-,200- and 50-DMA area. Bulls need a close above 1.3599, the flattening 10-DMA, to stall the mounting bearish outlook.
GBP$ Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

RBC Research summarizes its latest outlook and targets for Gold.

"We remain of the view that gold should spend most of its time in the $4500-5000/oz range for what remains of this year (a view unchanged and with high conviction), and we now specifically highlight our middle-to- high scenario range for Q3 and Q4 (as well as annual) for gold prices going forward," RBC notes.

"By year-end, we are leaning towards our 2026 high scenario ($4929/oz), and similarly, in 2027, we favor our high of $5296/oz. Regardless, our mid-to-high scenario range remains the most likely price band across our forecast horizon," RBC adds.

Bank of America Global Research notes that USD downside protection remains attractive, particularly versus EUR and CHF.

(Repeat with no changes )

• FX option strikes expire at 10am New York/14:00 GMT on Tuesday September 1

• EUR/USD: 1.1540-50 (1.6BLN), 1.1580-90 (1.9BLN), 1.1600 (2.3BLN), 1.1625-35 (1.5BLN), 1.1650 (2.1BLN)

• USD/CHF: 0.8060 (220M), 0.8100 (606M), 0.8170 (580M)

• GBP/USD: 1.3550 (603M). EUR/GBP: 0.8525-30 (537M)

• AUD/USD: 0.7100-10 (1.1BLN), 0.7125 (369M), 0.7155 (488M)

• NZD/USD: 0.5850-65 (245M), 0.5940-50 (233M), 0.5975 (210M)

• AUD/NZD: 1.1995 (337M), 1.2100 (250M)

• USD/CAD: 1.3855-60 (455M), 1.3920 (451M)

• USD/JPY: 159.45-50 (605M), 159.68 (626M), 160.00 (440M), 161.00 (595M)

• AUD/JPY: 114.35 (423M). EUR/JPY: 183.83 (420M)(Richard Pace is a Reuters market analyst. The views expressed are his own)

• GBP/USD holds a narrow range but bias leans lower as U.S. yields surge

• Dollar continues to firm post-Warsh, with market pricing now at 67% for a Sept Fed hike

• Cross-selling in EUR/GBP offers some support, but cable remains driven by USD dynamics

• Initial support at 1.3527 (last week's low), a break opens 1.3500 then 1.3442 (200-day MA)

• Resistance sits at 1.3600, then 1.3675
GBPUSD daily

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• AUD under pressure as bonds sell-off, weighs on risk appetite. Range: 0.7145-81

• U.S. 10yr yield breaks 4.75%, now at highest level since January 2025

• Eyes on the 30yr yield, currently at 5.28%, a break above the 5.34% YTD high would likely extend USD bid

• Dollar firmly in the ascendancy, underpinned by the hawkish Fed repricing

• Market implied odds now price a 67% chance of a Sept Fed hike, up from 60% on Monday

• With the USD bid broad based, AUD strength still looks better expressed on the crosses
US 10yr yield

Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• FX option risk reversal contracts are an FX volatility strategy, but their pricing reveals directional sentiment

• Price action in risk reversals shows the FX direction expected to increase volatility - often the most vulnerable side

• Benchmark 1-month 25 delta EUR/USD risk reversals went from a neutral bias to 0.25 EUR puts over calls since Friday

• Hawkish Warsh comments at Jackson Hole are driving this shift in EUR/USD risk premium from upside to downside

• Recall, 1-month risk reversals flipped from downside to topside strikes in mid August for the first time since February

• Building on this fresh downside skew would confirm bearish momentum is regaining control of EUR/USD sentiment

• Related - Finding value in FX options for NFP, CPI and the Fed

• Related - EUR/USD boxed in by techs and huge option hedging before NFP
EUR/USD 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• EUR/USD recovers 1.1625 Tuesday since the post US Fed chair Warsh inspired drop from 1.1660-1.1578 Friday

• The 100-dma at 1.1570 underpins, while the 200-dma at 1.1634 adds resistance to the current range

• Big FX option expiries and related hedging flows help contain FX as London returns from a bank holiday weekend

• €4.2 billion strikes between 1.1580-1.1600 and €1.5 billion 1.1625-35 expire at 10-am New York/14.00 GMT Tuesday

• More 1.1600 strikes expire all week, with hedging likely to contain EUR/USD in the absence of any fresh catalysts

• Market may stay sidelined into Friday's US jobs data, leaving FX option hedging flows dominant near term
EUR/USD daily chart (EBS)

EUR/USD FX option strikes expiring between September 1-4 Click here

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY has seen a 159.64-159.98 range, on Tuesday, according to EBS data

• Yen lingers near 160 as U.S. Treasury Secretary Bessent leans on BOJ

• Bessent expects Japan to take action to boost yen, signals BOJ rate-hike chance

• Bullish as trading remains above 159.60 Fibo, 50% retrace of 163.99-155.20 intervention fueled drop

• There is scope for bigger gains to 160.63 Fibo, a 61.8% retrace of the same fall

• Fin Min Katayama: Japan, US confirmed policy behind joint yen action to achieve "orderly" moves

• USD/JPY and EUR/JPY tend to move in tandem, log correlations are high above +0.5

Daily Chart


Correlation Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• FX option strikes expire at 10am New York/14:00 GMT on Tuesday September 1

• EUR/USD: 1.1540-50 (1.6BLN), 1.1580-90 (1.9BLN), 1.1600 (2.3BLN), 1.1625-35 (1.5BLN), 1.1650 (2.1BLN)

• USD/CHF: 0.8060 (220M), 0.8100 (606M), 0.8170 (580M)

• GBP/USD: 1.3550 (603M). EUR/GBP: 0.8525-30 (537M)

• AUD/USD: 0.7100-10 (1.1BLN), 0.7125 (369M), 0.7155 (488M)

• NZD/USD: 0.5850-65 (245M), 0.5940-50 (233M), 0.5975 (210M)

• AUD/NZD: 1.1995 (337M), 1.2100 (250M)

• USD/CAD: 1.3855-60 (455M), 1.3920 (451M)

• USD/JPY: 159.45-50 (605M), 159.68 (626M), 160.00 (440M), 161.00 (595M)

• AUD/JPY: 114.35 (423M). EUR/JPY: 183.83 (420M)(Richard Pace is a Reuters market analyst. The views expressed are his own)

• GBP/USD consolidates in a narrow range with UK markets closed Monday

• Holds near Fri's 2-week low hit after Warsh's hawkish Jackson Hole speech

• Rising Fed rate hike bets cap GBP; odds of Sep 16 hike at 66% from 35% Fri

• U.S. payrolls this Friday, inflation data next week key for direction

• UK retailers raise prices by most since 2024, BRC data shows

• Support 1.3525-30, 1.3500,1.3475-80; resistance 1.3570-75, 1.3600-05

• Monday range 1.3531-1.3565, Asia 1.3543-1.3568
GBP:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• EUR/USD rallied to 1.1620 EBS yesterday, Asia to 1.1624 before off to 1.1607

• Holding for now between 100-DMA at 1.1569 and 200-DMA above at 1.1634

• Also holding in 1.1601-18 hourly Ichimoku cloud, descending 100-HMA 1.1632

• Option expiries today to again help contain spot action

• Between 1.1500-95 E5.4 bln, at 1.1600 E2.3 bln, 1.1625 to 1.1700 E5.2 bln

• EUR/JPY 185.46-62 EBS, at top of 184.92-185.47 daily Ichimoku cloud

• Below 185.62 100-HMA, 185.66-70 hourly Ichimoku cloud, above 185.15 200-HMA

• EUR/GBP indicated 0.8574, in 0.8536-92 tapering daily Ichimoku cloud

• Sideways action may see break above cloud, also above 0.8571-74 hourly cloud

• Option expiries today E804 bln between 0.8500-60, smattering 0.8575-0.8650

• EUR/CHF well bid again Asia 0.9390-96 EBS, towards 0.9409 peak August 14

• Seems CHF-funded carries being put back on after recent dips

• Related comments , also , for more click on [FXBUZ]

EUR/USD:


EUR/USD nearby option expiries this week:


EUR/CHF:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD -0.2% from Tue morning's 0.71805 high as oil prices continue to rise

• AU Q2 current account -27.2 bln (poll -30.0), Jul building approvals -3.6%

• Renewed U.S.-Iran hostility driving energy prices higher, Brent crude +0.6%

• AUD needs 0.7210 break to resume uptrend, below 0.7100 would encourage bears

• AU Q2 real GDP due Wed, Reuters poll consensus +0.3% q/q, +1.8% y/y

• RBA's Sarah Hunter & Dr James Bishop appear before Senate Committee Thur

• U.S. Aug non-farm payrolls due Fri, Reuters poll consensus +55k

• Range Asia 0.7164-805 support 0.6920 0.6866, resistance 0.7210 0.7277-82
AUD Daily 21/55/100-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Shares of Australia's West Coast Silver fall as much as 13% to A$0.100, marking their biggest intraday pct loss since June 10

• Stock was on trading halt since August 28

• Shares hit their lowest level since August 17

• Diversified miner announces A$6 million ($4.31 million) placement at A$0.095 per share, a 17.4% discount to stock's last close

• Says proceeds will be used for exploration and development drilling at Elizabeth Hill South and West project in Western Australia, among others

• Nearly 2.4 mln shares change hands, about 2.5x the 30-day average

• YTD, stock down 51.1%, including session's moves

($1 = 1.3933 Australian dollars)

(Reporting by Subhalakshmi Dey in Bengaluru)

• USD/JPY looks to be on hold again below recent highs, Asia 159.72-84 EBS

• Holding for now in 159.65-92 hourly Ichimoku cloud, 100-HMA 159.52 below

• Cloud to begin to taper during course of global day, break below? Above?

• 100-DMA 160.01 above, daily Ichimoku cloud too between 161.29-162.61

• JGB-US Treasury 2-year rate differentials wider overnight, @258 bps

• Differential in 10s still narrow at around 177 bps

• Option expiries look to help contain USD/JPY spot, massive both sides

• Below between 159.00-75 total $2.4 bln, above between 160.00-25 $1.1 bln

• Japanese exporter sales to continue to help cap, absorb importer demand

• Month-end flows also seemed to favour JPY buy-backs, helped cap upside

• Word from US TsySec Bessent, Japan FinMin Katayama meeting eyed

• Bessent earlier said he expects Japan to take action to boost yen

• Related comments , , also

• US markets , , ,

• On Bessent-speak , for more click on [FXBUZ]

USD/JPY daily:


USD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD +0.2% from Mon 0.71515 low despite flaring U.S.-Iran hostilities

• Brent crude +3.0% to $90.75 a barrel, DXY down 0.3%, 30Y UST yields +4 bps

• AUD needs 0.7210 break to resume uptrend, below 0.7100 would swing narrative

• AUD Q2 current account due Tue, Q2 real GDP due Wed (poll +0.3% q/q)

• RBA's Sarah Hunter & Dr James Bishop appear before Senate Committee Thur

• U.S. Aug non-farm payrolls due Fri, Reuters poll consensus +55k

• Overnight range 0.71555-70 support 0.6920 0.6866, resistance 0.7210 0.7282
AUD Daily 21/100/200-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Credit Agricole CIB Research previews the US August jobs report due on Friday.

"The jobs report was much softer than expected in July, though we expect some rebound in August. Specifically, we tentatively look for NFP to rise by +65k following the -23k decline in July, not as strong as in the spring but still bouncing back somewhat," CACIB notes.

"We expect the unemployment rate to edge back up to 4.2% from 4.1% last month, as we see the possibility for some payback in participation after the dip over the past two months, which could add some upward pressure. For average hourly earnings, we look for a firmer MoM print of 0.3%, though the YoY would still edge down to 3.1% from 3.2%," CACIB adds.

The euro rose against a broadly weaker dollar on Monday, supported by short-covering after Friday's outsized decline, month-end flows, softness in U.S. equities, and expectations that the European Central Bank will raise interest rates next week.

Treasury Secretary Scott Bessent believes the Japanese government and BOJ will take steps to strengthen the yen and hinted at information not yet reflected in markets.

Bessent also said he will meet Canada's finance minister at the G20 and said he had a "very robust" meeting with China's central bank governor, Pan Gongsheng.

Federal Reserve Chairman Kevin Warsh said a global investment surge is replacing the savings glut, supporting growth and capital spending.

Vice President JD Vance said Trump's social media post on Kharg Island was intended as a message to Iran, after President Donald Trump vowed further strikes.

German inflation accelerated less than expected in August to 2.9% year-on-year, preliminary data from the federal statistics office showed on Monday.

DXY is pulling back after Friday's dollar surge stalled at the 100-DMA near 99.70, with reversal signals suggesting fading momentum but little conviction toward either a bullish or bearish directional bias.

EUR/USD firmed on month-end dollar selling and short-covering, but lower highs, large 1.16-1.7 expiries this week and resistance at the 200-DMA of 1.1633 keep the outlook cautious, unless it clears the 1.1710-11 August double top.

GBP/USD held a modest gain above its 21-DMA of 1.3540, despite rising U.S. yields, with a break above the day's high of 1.3565 potentially targeting 1.36 ahead of the key U.S. payrolls on Friday.

AUD/USD edged up as stronger commodity prices and expectations for further RBA tightening offset rising U.S. yields, with a break above 0.7170 strengthening a bullish case.

USD/JPY remained capped below 160 as softer dollar sentiment and intervention concerns offset support from higher Treasury yields and oil, though the bias stays constructive above 159.

Treasury yields rose as much as 4 basis points as the curve steepened. The 2s-10s curve was up about 3 basis points to +40.2bp.

The S&P 500 fell 0.45%.

WTI oil rose 2.8% amid rising US-Iran tensions.

Gold fell 0.5% while copper gained 0.2%.

Heading toward the close: EUR/USD +0.28%, USD/JPY -0.13%, GBP/USD +0.06%, AUD/USD +0.10%, DXY -0.28%, EUR/JPY +0.10%, GBP/JPY -0.09%, AUD/JPY -0.14%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• GBP$ up a touch NY afternoon trade, +0.08% at 1.3549; NorAm range 1.3565-1.3540

• Long-end UST yields lead higher hold little sway over GBP$ in either direction

• LSEG's WS indicating UK 10-yr gilts on the rise, may have fiscal implications going forward

• IRPR- BoE on hold in Sept, +27bp by Dec MPC meet; Fed 64% odds for Sept hike, +37bp by Dec

• End-of summer liquidity light into month-end; US payrolls Sept 4, mid-Sept US, UK CPI in focus

• GBP$ supt 1.3530 Friday/Monday low area, 1.3488 rising 30-DMA, 1.3440 200-DMA

• Res 1.3564 Monday high, 1.3598 the 10-DMA, 1.3648 daily high Aug 26

GBP$ Chart:

(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research discusses its Fed rate outlook after Fed Warsh's remarks at Jackson Hole.

"Our economists expect that the data releases between now and the September FOMC meeting will meet the bar that Chairman Warsh laid out: that underlying inflation is moving to the Fed's 2% objective, clearly and at sufficient speed. As a result, we don't think the Fed will hike rates in September, which should lower front-end US yields relative to yields abroad since roughly +15bp are currently priced for the September FOMC meeting," MS notes.

"Therefore, we think the USD can decline broadly in line with front-end US yields, given the broad relationship between the USD and front-end yield differentials so far this year," MS adds.

USD/JPY remains pinned below 160 after U.S. Treasury Secretary Scott Bessent said he expects Japanese government and Bank of Japan policies to support a stronger yen, adding that he is aware of information not yet reflected in markets.

Markets are likely to expect this to mean the Takaichi administration's pro-growth agenda and higher BOJ rates, though a stronger yen may be difficult to achieve given the BOJ's slow normalization pace and growth that has largely accompanied yen weakness.

Bessent's comments may hint at the timing of intervention or other measures that could help keep USD/JPY near or below the key 160 level and prevent a return toward 164. Markets are also awaiting comments from Japanese officials at the G20.

There remains optimism that long-yen positions will eventually be rewarded as investors anticipate a faster BOJ tightening cycle and government policies that support a recovery in the undervalued currency. Options markets are less convinced, suggesting any yen recovery is more likely against the euro than the dollar if U.S. inflation remains elevated. Focus is squarely on next week's CPI report and mid-September policy meetings.

To shift momentum decisively in favor of USD/JPY bears, the pair would need to close below its 21-day moving average at 158.95 and 200-day moving average at 158.43. A break below a rising channel from the post-intervention low at 155.20 opens the door for further losses. By contrast, a close an upper Bollinger at 160.34 helps build the bull case.
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own)