(Fed hike odds updated)

• EUR/USD slipped back to retest 1.16 post-Warsh

• Inflation fight not over message lifted Fed hike bets

• Sept hike odds now around 56%, but outcome remains depend on data/oil dependent

• Spot back at pre-Treasury buyback level (1.1603), a break below leaves EUR vulnerable to deeper retracement

• Next downside objective would be last week's low at 1.1557 on a 1.1600 break
EURUSD hourly chart


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

ING Research previews next week's RBNZ policy meeting.

"We expect the Reserve Bank of New Zealand to increase its overnight cash rate (OCR) by 25bp to 2.75% on 2 September. When rates were last hiked in July, the RBNZ said that “some further reduction in monetary stimulus is likely to be required”. In its May projections, based on higher oil price assumptions, signalled rates could reach 3.0% by year-end and remain there throughout 2027.

Markets are currently matching those projections for 2026, but are even more hawkish for 2027, despite lower energy prices. A September hike is fully priced, with another expected by year-end. Beyond that, the OIS curve implies a further 50bp of tightening, taking rates to 3.50% by mid-2027," ING notes.

"Against this backdrop, we see scope for dovish risks heading into the meeting. The bar for the RBNZ to validate the market's aggressive tightening expectations appears high.For FX, we see downside risks for the NZD around this meeting, given the high hurdle for the RBNZ to validate market pricing," ING adds.

USD/JPY bulls remained in command after Fed Governor Kevin Warsh struck an upbeat tone on the U.S. economy and warned that inflation has remained elevated for too long.

The pair climbed to a post-intervention high above 160 amid broad-based dollar strength, extending a bull channel from the intervention low near 155.20.

Further gains are possible if investors rebuild dollar longs and yen shorts after August's position trimming. Weekly CFTC data show leveraged funds have begun cautiously adding short-yen exposure as volatility declines. However, yen futures open interest has dropped to its lowest level since April, suggesting bearish conviction remains limited.

Intervention concerns could re-emerge if USD/JPY remains above the 160 psychological level and approaches its 160.34 upper Bollinger and 160.63 cloud bottom as upward momentum builds.

For now, however, option convexity sees only modest intervention risk despite next week's G20 meeting involving Japan Finance Minister Satsuki Katayama, U.S. Treasury Secretary Scott Bessent and BOJ Governor Kazuo Ueda.

While past intervention episodes have often coincided with major policy events such as the G20, the yen may be more focused on equity performance and upcoming U.S. payrolls and CPI reports, along with mid-September Fed and BOJ meetings. On the downside, a break below 159.60, followed by the 21-day moving average at 158.84, would temper the bullish outlook with a close below a flat 200-day moving average at 158.41 inviting bears.
Yen


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

CIBC Research reviews Fed Warsh's remarks at Jackson Hole.

"It’s ironic after a speech in which the Fed Chair decried forward guidance, markets took his remarks as signaling a higher probability of rate hikes ahead. Certainly, if this speech had come from any one of his recent predecessors, that would have been a reasonable conclusion to draw from the final segment of his Jackson Hole remarks. In that section, Warsh effectively downplayed any of the items that might have been raised to bolster the case for remaining on pause. On the growth side of the ledger, he didn’t focus on higher long term bond yields and mortgage rates and concluded that financial markets are not restrictive, and similarly showed no concern about slower net hiring, focusing on the low jobless rate. On inflation, he dismissed the importance of some recently slower monthly core CPI and PCE prints, rightly noted that slower wage growth often failed to steer inflation, and argued that stable inflation expectations could disappear in a hurry. That said, at the end of his speech, he opted to reiterate that these words don’t tell you about what he’ll opt to do, saying “I stand before you committed to a discipline, not a decision.”  CIBC notes.

"The reality is that he could have given this exact same speech just ahead of the July meeting, since nearly all of the points he raised would have been equally valid then. The only real change is that oil prices have headed higher, and if there’s a sign of a turn in the other direction for fuel costs before year end, the FOMC could stay in its watchful waiting stance," CIBC adds.

• GBP$ lower after Fed Chief's J-Hole comments, -0.47% at 1.3532 in early NorAm

• Warsh says Fed has 'work to do' if above-target inflation persists

• Warsh notes lack of recent progress on lowering inflation

• Says Fed needs market signals as 'unfiltered' as possible

• LSEG's IRPR now sees Fed Sept hike odds at 52%, was near 40% pre-Warsh

• USD Index +0.4%, U.S. equities lower post-Warsh but not considerably lower

• GBP$ supt tested at 21-DMA by 1.3537, close below puts 30-DMA at 1.3484 in view

• Bears gaining control while below the 10-DMA by 1.3597, 200-DMA a likely target

GBP$ Chart:


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

ANZ Research discusses AUD/USD outlook fot the coming week.

"We have revised our RBA call and now expect a 25bp hike in November, with a clear risk of an earlier move as a 1.0% q/q trimmed mean print in Q3 now looks more likely than 0.9%. The upside risks flagged in August are therefore closer to crystallising. The RBA left the cash rate unchanged at 4.35% on 11 August in a unanimous decision, while Governor Bullock kept the door open to further tightening if inflation risks build. The domestic calendar is light into month-end, leaving the AUD more exposed to offshore drivers," ANZ notes.

"Jackson Hole on 27–29 August is the key event, with Warsh's keynote in focus. A non-committal or dovish tone could extend the AUD/USD's rally toward 0.72 and then the year-to-date high near 0.7280, while a hawkish surprise would likely cap gains near term, with downside probably limited to around 0.7120. We retain a constructive near-term bias on hawkish RBA repricing, with Jackson Hole the main swing factor and dips toward 0.71 likely to attract buyers unless the USD receives a hawkish surprise," ANZ adds.

• EUR/USD flat ahead of Fed Chair Warsh's speech at Jackson Hole (1400GMT)

• Though spot has been in a holding pattern since rejecting 1.1700 on the topside

• Headwinds are growing for EUR, as European nat gas prices grind higher

• At current levels this would argue that EUR/USD belongs closer to 1.1400, not mid-1.16s

• That said, the recent lift in EUR/USD has been more about the pullback in the dollar than genuine EUR strength

• Given the backdrop, fading any fresh topside from above 1.17 than chasing weakness looks the cleaner expression

• Resistance sits at 1.1700-10, then 1.1790-1.1800. Support: 1.1640-50, then 1.1615-34
EURUSD vs nat gas


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

• Cable remains below 1.36 before Warsh's Jackson Hole speech at 1400 GMT

• 1.3580-1.3597 is Friday range-to-date. 1.3571-1.3602 was Thursday range

• GBP/USD was on 1.36 handle before hotter than expected U.S. PCE data Wednesday

• Three Fed officials issued inflation warnings at Jackson Hole on Thursday

• Next Fed rate decision is on September 16, day before next BoE rate verdict

• Pound can bank on another 6-3 rate hold vote in September

GBPUSD


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

• Yen has surrendered part of its intervention-driven gains, set for a monthly drop

• USD/JPY has risen from 159.30 to 159.65, on Friday, EBS data shows

• It could be set for a sustained break above the August 18 159.78 peak, buy stops likely above

• That would unmask 160.63 Fibo, a 61.8% retrace of the 163.99 to 155.20 (July to August) fall

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

• Financial markets are focusing on whether Katayama and Ueda will meet Bessent next week

Daily Chart


Correlation Chart


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

• Traders are betting $8.5 billion that euro drops

• EUR/USD has risen since specs sold short

• Pair rising from 1.1353 on Jul 28 to 1.1711 on Aug 21

• Rise followed by a shallow dip to 1.1637 on Aug 27

• The 200-DMA at 1.1634 is underpinning EUR/USD

• Bullish cross (21-DMA at 1.1589 above 100-DMA at 1.1573)

• Crowded dollar longs set to shape Jackson Hole market reaction

•
EURUSD


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• Cable has traded a 14.5 pip range thus far Friday; 1.35825-1.3597

• Those parameters are within Thursday's 1.3571-1.3602 range

• 1.3571 is low since August 19 (when USD fell on U.S. bond buyback gambit)

• Dollar may react to Jackson Hole speech from Warsh at 1400 GMT

• Three Fed officials issue inflation warnings at Jackson Hole

• 1.3548 and 1.3525 (August 19 low) are GBP/USD support levels under 1.3571

GBPUSD


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

• FX options expire at 10am New York/15:00 GMT on Friday August 28

• EUR/USD: 1.1495–1.1500 (651M), 1.1550–1.1555 (369M), 1.1560–1.1565 (277M), 1.1570–1.1575 (700M), 1.1580–1.1585 (307M)

• EUR/USD: 1.1600–1.1605 (842M), 1.1625–1.1630 (845M), 1.1640–1.1645 (373M), 1.1650 (1,148M), 1.1680–1.1685 (956M)

• EUR/USD: 1.1700 (277M), 1.1725–1.1730 (901M), 1.1750–1.1755 (488M), 1.1770 (205M), 1.1900 (252M), 1.2150–1.2155 (374M)

• USD/JPY: 158.00 (302M), 158.15–158.34 (1.499B), 158.40–158.44 (420M), 158.50 (217M), 159.00 (216M), 159.50 (423M), 159.95–160.00 (205M)

• USD/JPY: 160.45–160.50 (344M), 160.69 (276M), 161.00 (665M), 161.10 (441M), 162.09 (271M), 162.50 (310M), 163.00 (1.447B)

• EUR/JPY: 167.00 (450M), 170.00 (1.076B), 175.00 (900M), 178.00 (700M), 179.00 (200M), 188.00 (400M), 193.00 (400M)

• GBP/USD: 1.3225 (282M), 1.3400 (210M), 1.3470 (281M), 1.3610 (279M), 1.3700 (832M)

• USD/CHF: 0.8000 (1,542M), 0.8150 (201M)

• AUD/USD: 0.7000 (746M), 0.7125 (394M), 0.7175 (251M)

• USD/CAD: 1.3545 (260M), 1.3650 (200M), 1.3750 (317M), 1.3825 (240M), 1.3870-1.3875 (682M), 1.3900 (269M), 1.3995 (360M)

• USD/CAD: 1.4030 (250M), 1.4305 (276M), 1.4335 (359M), 1.4450 (294M)
(Martin Miller is a Reuters market analyst. The views expressed are his own)

• AUD/USD breaks above key 0.7200 technical resistance in Asia, +0.45% wtd

• Firming RBA hike bets pushes pair towards 0.72825 last traded Jun 3, 2022

• Futures pricing now implies 53.7% probability of RBA 25 bps hike in Sep

• Fed Chair Warsh speech at Jackson Hole Fri looms as pivotal event Fri

• Fed officials Schmid, Goolsbee, & Hammack state concern on U.S. inflation

• Range Asia 0.71855-0.7204 support 0.6920 0.6866, resistance 0.7200 0.7277-82
AUD Weekly 52-WMA

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

• GBP/USD steady in Asia as markets brace for key risk events

• Warsh's keynote address Fri, Aug 31-Sep 1 G20 finance meeting in focus

• Fed chair speaks at 1400 GMT(10AM NYT),traders seek clarity on rates outlook

• Investors await clues on how Fed plans to tackle sticky U.S. inflation

• Uncertainty on future policy path risks further damage to Fed credibility

• Support 1.3550-55, 1.3525-30, resistance 1.3620-25, 1.3645-50, 1.3675

• Ranges: Thursday 1.3571-1.3602, Asia 1.3589-1.3597
GBP:

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

• AUD/USD +0.1% Fri in subdued trading as markets eye Jackson Hole Symposium

• AUD still pressing against crucial 0.7200 technical resistance zone

• Challenge of 0.72825 50-month high likely amid building RBA hike bets

• Futures pricing now implies 58.5% probability of RBA 25 bps hike in Sep

• Fed Chair Warsh speech at Jackson Hole Fri looms as pivotal event Fri

• Fed officials Schmid, Goolsbee, & Hammack issue warnings on U.S. inflation

• Range Asia 0.71855-0.7200 support 0.6920 0.6866, resistance 0.7200 0.7277-82
AUD Weekly 52-WMA


AUD Daily 21/55/100-DMA

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

• USD/JPY doesn't look to be going anywhere soon, another quiet Asia day?

• USD/JPY 159.33-39 EBS, between daily Ichimoku tenkan/kijun at 158.90/159.57

• Also between wider 200/100-DMAs at 158.41/159.99, below 160.63-162.51 cloud

• Again heading towards 159.18-24 hourly Ichi cloud, recently good support

• Option expiries today 158.00-50 $2.4 bln, some at 159.50, above from 160.50

• Options themselves do not seem to be a factor today

• JGB-US Treasury rate differentials see 2s @251 bps, 10s heavy @175 bps

• Little in way of news from Jackson Hole, some Fed off'ls hawkish, Sept hike?

• US economic data out yesterday did little to stir FX

• Related comments , , , also

• US markets , , ,

• On Fed-speak , , , on G20
USD/JPY daily:


USD/JPY hourly:

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

• NZD/USD flat Fri as traders eye key market moving events over coming days

• Fed Chair Warsh speech at Jackson Hole Fri looms as critical focal point

• RBNZ monetary policy meeting outcome due Wed, 25 bps hike widely anticipated

• Fed officials Schmid, Goolsbee, & Hammack all warning on U.S. inflation

• NZD targeting break above 0.5990-95, expect stop-loss buying above

• Range NZ 0.59485-52, support 0.5831 0.5762, resistance 0.5995 0.6012
NZD Daily 55-DMA

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

• AUD/USD +0.5% from Thur 0.7160 low with pressure mounting on RBA

• Futures pricing implies Sep RBA hike more likely than not, probability 56.3%

• AUD 0.7200 resistance holding, but multiple approaches wearing sellers down

• 0.72825 50-month high a very realistic target with scant resistance above

• Fed officials Schmid, Goolsbee, & Hammack issue warnings on U.S. inflation

• Fed Chair Warsh speech at Jackson Hole Fri looming as pivotal event Fri

• Overnight range 0.7175-98 support 0.6920 0.6866, resistance 0.7200 0.7277-82
AUD Daily 21/55/100-DMA

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

ING Research discusses RBA rate outlook and AUD/USD targets.

"This morning, Australia reported very strong household spending data for July (7% YoY), further helping the case for more tightening. However, our macro team is still leaning towards a prolonged hold by the Reserve Bank of Australia, but we admit the hawkish risks have increased," ING notes.

"Markets are pricing in 12bp for the 29 September meeting, and we expect that pricing to be unwound, limiting AUD gains for now. Our view on AUD/USD remains upbeat into year-end with a 0.730 target, but that’s relying on our dovish Fed call, which should have a net-positive impact on the pair even if a dovish repricing in the AUD curve happens," ING adds.

• GBP$ a tad soft in NY afternoon trade, -0.05% at 1.3591; NorAm range 1.3602-1.3571

• USD broadly mixed among majors near flat ahead of Friday's Jackson Hole event

• Fed's Warsh speaks at 10AM NYT; given his bent for no guidance a likely non-event

• LSEG's IRPR indicating 1-25bp hike by Fed, BoE in 2026; note oil steady in $80/bbl

• High oil may hint that U.S., UK inflation likely to remain abv target for longer

• GBP$ res 1.3602 Thursday high, 1.3655 daily high Aug 21, 1.3688 upper 30-d Bolli

• Supt 1.3571 Thurs low, 1.3548 23.6% Fib of 1.3140-1.3675, 1.3519 Aug 18 low

Chart:


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

JP Morgan discusses the USD outlook amid the USD debasement theme.

"Given recent interventionist moves into Yen and Treasury markets, the Dollar Debasement, aka 'Sell America' theme has seemingly returned. This theme has implications for bond yields, FX, and Equities. A dovish Fed is a key missing ingredient, and we would also flag that this theme may not have the same strength or duration as previously witnessed," JPM notes.

"In FX, the move in the USD, proxied by DXY, has been a -2.6% decline, dragging the index below the 100-level. The move appears mostly played out as our JPM FX Strategy team flag that they would not chase the move lower from current levels. In USD/JPY, it has moved below the 160 level that continues to act as a catalyst for intervention and may see additional pressure from increasing BOJ rate hike expectations," JPM adds.

• EUR flat in NY trade, dips find support from 200-hour MAs at 1.1640-48

• Price action remains tepid and likely to stay that way until Fed Chair Warsh's JH speech on Friday

• With Warsh inclined to avoid forward guidance, directional cues may be limited

• Near-term playbook continues to lean towards consolidation than a trend

• Resistance sits at 1.1700-10, with additional hurdles at 1.1790-1.1800

• Aside from the 1.1640-48 MA cluster, deeper support lies at 1.1615-30
EURUSD hourly chart


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

Credit Agricole CIB Research maintains a bullish and long Gold position.

"Gold has emerged as one of the key beneficiaries from the USD sell-off triggered by the US Treasury’s recent attempts to curb the rise of long- dated UST yields. These efforts included an FX intervention in support of the JPY – which among other things was meant to keep Japanese policy rates low and Japanese investors invested in USTs. We also got signals that the US Treasury would buy long-dated bonds with: (1) the proceeds from sales of short-dated US paper (‘Operation Treasury twist’); or (2) the funds from its account at the Fed (TGA)," CACIB notes.

"We remain long XAU/USD as a trade idea and continue to forecast gold to appreciate to USD5000 by the end of year & extend its gains in 2027," CACIB adds.

• GBP/USD meets headwind around 1.3600 after lift from 1.3571

• 1.3571 was London morning low, and the lowest level since August 19

• More offers may be parked circa 1.3619 (August 21 low)

• 1.3618 was low before hotter than expected U.S. PCE data Wednesday

• Support points below 1.3571 include 1.3548 and 1.3525

• Fed Chair Warsh to speak at Jackson Hole on Friday, at 1400 GMT

GBPUSD


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