The Mexican peso strengthened past 18.4 per US dollar, the strongest level since July 2024 as the US dollar weakened and Mexico’s macro fundamentals held up, increasing the appeal of peso-denominated assets. The dollar hit its weakest level since late July as markets awaited the Federal Reserve’s policy decision and priced in a 25 basis point cut with a small chance of a 50 basis point move after data showed a cooling labour market. At the same time Banco de México has kept policy tight and signalled careful calibration even as inflation moderates. Higher real interest differentials relative to peers, sustained demand for carry in forward markets, and Mexico’s close trade links with the United States have all supported demand for local paper, limiting capital outflows.

Mexican Peso Strengthened to Over 1-Year High

The British pound climbed past $1.360, close to a 10-week high, as markets await a busy week of central bank decisions and UK data. The Bank of England is expected to hold its policy rate at 4% on Thursday and slow the pace of its £100 billion annual bond unwind. UK inflation for August, due Wednesday, is seen at 3.8% year-on-year, matching July’s 18-month high. The jobs report and retail sales will follow later in the week. Markets currently see a one-in-three chance of a BoE cut by December. Meanwhile, the Federal Reserve is expected to cut rates by 25 bps on Wednesday, with traders pricing in at least two further reductions by end-2025.

Sterling Rises Toward 10-Week High Ahead BoE Meeting

The Turkish lira steadied around record lows of 41.2 per USD in mid-September after a court postponed until October 24 a ruling on the leadership of the main opposition Republican People’s Party. The case, centered on alleged irregularities in the party’s 2023 congress and the removal of its elected leadership, had initially been scheduled for September 15. The delay provided some momentary relief to investors concerned about political instability, with banking stocks—among the hardest hit—leading the recovery. Separately, hundreds of CHP members, including Istanbul Mayor Ekrem Imamoglu, President Erdogan’s chief political rival, remain in detention pending trial in a wide-ranging investigation into alleged corruption and terrorism links. On the monetary front, the Central Bank of Turkey cut its benchmark one-week repo rate by 250 bps in September to 40.5%, slightly below expectations of 41%. Annual inflation eased to 32.95% in August while GDP expanded 4.8% yoy in Q2 2025.

Turkish Lira Steadies

The dollar index slipped to 97.3 on Monday, its weakest level since late July, as traders awaited the Federal Reserve’s policy decision. Markets have fully priced in a 25 bps cut to the fed funds rate on Wednesday, while leaving a small chance of a larger 50 bps move, after recent data pointed to a sharp cooling in the labor market. Investors will also focus on the Fed’s updated macroeconomic projections—particularly the interest rate path—with expectations that easing will continue through year-end. The vote split will be closely watched, as the FOMC has not been divided three ways since 2019. In addition, traders are monitoring whether Stephen Miran will be confirmed as a Fed governor in time for the meeting. Beyond the US, the Bank of Canada is also expected to deliver rate cuts this week, while the Bank of Japan and the Bank of England are likely to keep policy unchanged. The greenback traded mostly lower against the pound, the euro, and the yen.

Dollar Hits July Lows as Fed Meeting Looms

The South African rand firmed slightly toward 17.3 per USD, hovering near November 2024 highs, supported by strong precious metals prices—particularly gold—and a weakening US dollar. Investor focus centered on the forthcoming domestic inflation data and upcoming policy decisions from the US Federal Reserve and South African Reserve Bank later in the week. Meanwhile, South Africa's inflation expectations continued its downward trend into Q3, after the central bank said it would aim for a lower inflation level. The central bank is widely anticipated to keep the main lending rate unchanged at 7% on September 18, to control price pressures and guide expectations down to the new goal of anchoring inflation at 3%. Inflation has ticked up to 3.5% from 2.7% in March, and economists expect it to settle around 4% by year-end. Some analysts think the bank's stated preference for 3% inflation will also encourage it to maintain its repo rate after cuts in May and July.

South African Rand Hovers at 10-Month Highs

GBPUSD increased to 1.36, the highest since August 2025. Over the past 4 weeks, British Pound US Dollar gained 0.61%, and in the last 12 months, it increased 2.88%.

British Pound Hits 4-week High

The euro was little-changed at $1.17 after Fitch downgraded France’s credit rating to A+ from AA-, its lowest on record. The agency cited political instability and rising debt as newly appointed Prime Minister Sébastien Lecornu begins budget talks. Attention now shifts to a packed week of central bank meetings. The Federal Reserve is expected to cut rates by at least 25 basis points on Wednesday amid concerns over its independence, as officials weigh a cooling labor market against inflationary pressures from tariffs. The Bank of England and the Bank of Japan are widely expected to keep policy unchanged. Meanwhile, the European Central Bank last week signaled that its rate-cutting cycle may be over. President Christine Lagarde said growth risks are now more balanced, suggesting policymakers are shifting toward a steadier stance after months of easing.

Euro Hovers at $1.17 After France’s Credit Downgrade

The yen strengthened to around 147.5 per dollar on Monday, recovering part of last week’s losses as markets turned their focus to the Bank of Japan’s policy meeting. The BOJ is widely expected to leave rates steady at 0.5% as officials weigh domestic headwinds and global risks, including the effects of US tariffs. Traders also await fresh trade data, with both exports and imports projected to stay subdued, as well as inflation figures, where core CPI is forecast to slow to 2.7%, the lowest since November 2024. Externally, the Federal Reserve is anticipated to deliver a 25 basis point rate cut this week, with recent US data signaling softer labor conditions and muted inflation. Meanwhile, trading volumes are likely to remain light as Japanese investors observe a national holiday.

Japanese Yen Firms Ahead of BOJ Meeting

The Australian dollar rose to around $0.66 on Monday, extending gains from the previous week amid a softer greenback ahead of the highly anticipated FOMC policy decision later this week. Markets are currently pricing in a 96% probability of a 25 bps rate cut on Wednesday, with only a slim 4% chance of a larger 50 bps move. On the domestic front, Australia’s economic calendar remains relatively light this week. However, investor focus is shifting toward the upcoming employment report and scheduled speeches from RBA officials, which could offer further insight into the central bank’s policy trajectory. Last week, RBA Governor Michele Bullock highlighted encouraging signs of “a little bit more growth” in the private sector, characterizing this as a positive signal for the broader economy. Her remarks reinforced the RBA’s cautious stance and supported market expectations that the central bank will keep rates on hold at its upcoming policy meeting at the end of the month.

Australian Dollar Rises Amid Softer Greenback

The offshore yuan steadied to around 7.12 per dollar on Monday, halting the previous session's losses, as investors monitored US-China talks and digested weaker-than-expected domestic economic data. US and Chinese officials began discussions in Madrid on Sunday aimed at easing tensions over national security and trade, including a looming deadline for Chinese short video app TikTok to divest and Washington’s push for allies to impose tariffs on Beijing over Russian oil. The talks marked the fourth such meeting in four months across European capitals. Meanwhile, fresh Chinese data underscored a fragile outlook, with retail sales up just 3.4% in August, the slowest in eight months, and industrial output growth easing to 5.2%, its weakest in a year. Fixed-asset investment rose only 0.5% in January–August, well below forecasts, while the jobless rate climbed to a six-month high of 5.3%. Markets now turn to this week’s loan prime rate decision, with expectations pointing to no change.

Offshore Yuan Holds Steady

The South Korean won appreciated to around 1,389 per dollar on Monday, recouping losses from last week as investor concerns over policy risks eased. Monday’s confirmation that the threshold for major shareholders will remain at KRW 5 billion provided greater policy clarity, further easing concerns over potential equity market disruptions and associated capital outflows. Additional support for the won came from ongoing trade discussions between Seoul and Washington. According to government officials, South Korea has proposed establishing an “unlimited” bilateral currency swap arrangement with the US as part of its follow-up negotiations on a tariff framework deal agreed in late July. The proposal is aimed at strengthening financial stability and providing a safeguard against volatility in the won-dollar exchange rate, particularly as Seoul faces the prospect of sizable capital outflows linked to its pledged investment package in the US.

Won Strengthens on Policy Clarity, Swap Talks in Focus

The New Zealand dollar rose to around $0.596 on Monday, recouping losses from the last session and moving back toward a four-week high, supported by a softer US dollar ahead of the widely expected FOMC rate cut later this week. Markets are pricing in a 96% chance of a 25bps reduction on Wednesday and just a 4% probability of a larger half-point move, following recent US data that pointed to a softer labor market and easing inflation pressures. At home, the latest PMI survey showed the services sector weakening further in August, remaining well below its long-term average and extending its contraction streak to 18 months. The downbeat results underscored the sluggish state of the economy and strengthened expectations for additional policy easing by the Reserve Bank, with Governor Christian Hawkesby recently reaffirming guidance for another 50bps cut by year-end, conditional on incoming data. Investors are now focused on Q2 GDP figures, along with the August trade balance.

New Zealand Dollar Rises

The Hong Kong Dollar touched 7.78 against the USD, the highest since May 2025. Over the past 4 weeks, US Dollar Hong Kong Dollar lost 0.57%, and in the last 12 months, it decreased 0.21%.

Hong Kong Dollar Hits 18-week High

The dollar index hovered around 97.6 on Monday, holding close to ten-week lows as investors awaited the Federal Reserve’s closely watched policy meeting this week. Markets are pricing in about a 96% chance of a 25 basis point rate cut on Wednesday and roughly a 4% probability of a larger half-point move. Those bets follow recent US data showing a cooling labor market and subdued inflation. Traders are also monitoring whether Stephen Miran will be sworn in as a Fed governor in time for the meeting, while fresh signals on economic momentum will come from the Empire State Manufacturing Index due later today. Elsewhere, central banks in Canada and China are expected to cut rates this week, while policymakers in Japan and the UK are likely to keep settings unchanged.

Dollar Steady Ahead of Fed Meeting

The Brazilian real strengthened past 5.4 per US dollar in September, the strongest since June 2024, as clearer prospects of Fed easing drove dollar weakness while still-generous domestic interest rates and improving inflation dynamics attracted foreign capital. Externally, a run of softer US labour and price data, including large downward payroll revisions and weaker wholesale/producer inflation, pushed US yields and the dollar lower, removing the main external headwind. Domestically, August’s 5.13% inflation surprised to the downside, signaling decelerating headline inflation and trimming the inflation risk premium. That disinflationary impulse, together with a still-high Selic at 15%, keeps Brazil’s interest-rate differentials attractive. Elsewhere, political headline risk from the Bolsonaro trial remains a potential source of volatility but has so far been outweighed by the global funding pivot and the improving domestic inflation picture.

Brazilian Real Rises to Over 1-Year High

The South African rand traded around 17.35 per USD, near its highest since early November 2024, largely supported by a rally in precious metals, with gold prices hitting new highs. Meanwhile, investor attention shifted toward the upcoming release of domestic consumer price inflation data and next week’s monetary policy decision. South Africa continues to grapple with persistent inflation and a fragile growth outlook, now further pressured by newly imposed US tariffs. The economy expanded by 0.8% quarter-on-quarter in Q2, following a marginal 0.1% increase in Q1, lifting annual growth to 0.6%. However, overall momentum remains sluggish. The recent introduction of a 30% U.S. tariff on South African goods—the highest rate in sub-Saharan Africa—is expected to weigh on economic performance starting in the third quarter.

South African Rand Hovers Around 10-Month High

The Russian ruble surged past 82 per USD on Friday from the five-month low of 85 touched earlier in the session amid a hawkish pivot by the Bank of Russia. The central bank cut its benchmark rate by 100bps to 17%, contrasting from expectations of a 200bps cut despite the downward revision to growth forecasts by the CBR earlier this year. Monetary policymakers stressed that inflation expectations remained elevated and that labor markets remained tight, warranting caution on the cutting cycle. The ruble had been supported this year by capital controls by the Kremlin, which has companies selling 40% of export proceeds, although the Kremlin has stated that firms are selling 70% of their earnings. Still, the currency holds weaker than this year's peak of 76 on growth concerns and softer exports. Oil and fuel export revenues sank in August, according to the IEA, amid softer demand from China and headwinds from India as they face tariffs from the US.

Russian Ruble Surges after Softer Rate Cut

The British pound held near $1.35, little changed from last week’s levels, after fresh data signaled a weak start to the third quarter. GDP stagnated in July as expected, but industrial production unexpectedly fell 0.9%, suggesting that tax hikes and tariffs are weighing on households and businesses. The release comes as Chancellor of the Exchequer Rachel Reeves prepares to announce further tax increases in November to plug a new multibillion-pound budget gap. The Bank of England is set to decide on monetary policy next week, with no changes in interest rates anticipated after its August cut. Attention is shifting to the central bank’s November 6 meeting, which falls just ahead of the budget, with many market participants still expecting another rate reduction.

British Pound Hovers at $1.35

The offshore yuan weakened to around 7.11 per dollar on Friday, as renewed trade concerns weighed on sentiment. Reports indicate that the US has urged G7 nations to impose steep tariffs—ranging from 50% to 100%—on China and India over their continued purchases of Russian oil. The move is part of Washington’s broader push to pressure Moscow into peace talks over the war in Ukraine. Moreover, the Trump administration has encouraged the EU to join the effort, but EU officials remain cautious, citing the risk of retaliation and ongoing trade negotiations with India. The US is also seeking support from non-EU G7 members, including Japan, the UK, and Canada. In a separate development, China criticized Mexico’s plan to impose tariffs of up to 50% on automobiles and other imports from countries without free trade agreements—many of them Chinese—calling the move discriminatory and influenced by external pressure. Despite Friday's loss, the currency is on track for weekly gains.

Offshore Yuan Weakens on Fresh Trade Concerns

The New Zealand dollar hovered around $0.597 on Friday after rising 0.6% overnight to reach a nearly one-month high, supported by broad US dollar weakness. The greenback came under pressure as slightly hotter US consumer inflation data and a surge in jobless claims kept expectations high on Federal Reserve interest rate cuts next week and beyond. At home, however, a dovish policy outlook from the Reserve Bank of New Zealand limited the kiwi’s upside. RBNZ Governor Christian Hawkesby on Thursday reaffirmed the central bank’s projection for its official cash rate to fall by another 50bps by year-end, with the pace of easing to be guided by incoming data—particularly next week’s GDP report. Meanwhile, fresh data showed that New Zealand’s manufacturing sector slipped back into contraction in August, underscoring the fragile state of the economy. For the week, the kiwi is on track to post a gain of more than 1%.

New Zealand Dollar Hovers Near 1-Month High

The yen weakened to around 147.4 per dollar on Friday, giving up the prior session’s gains after the US and Japan issued a joint statement reiterating that exchange rates should remain market-driven and that excessive volatility is undesirable. Japanese Finance Minister Katsunobu Kato said the statement carried weight given the new US tariff order, though he noted there were no discussions with US Treasury Secretary Scott Bessent on specific currency levels. At home, investors continued to gauge the Bank of Japan’s policy outlook against mixed economic signals and political uncertainty. Prime Minister Shigeru Ishiba recently announced his resignation, facing growing pressure after last year’s election defeat and widening divisions within the ruling party. Externally, US inflation data came largely in line with forecasts, reinforcing expectations for deeper Federal Reserve rate cuts.

Japanese Yen Slips After Joint Statement

The Australian dollar dipped to around $0.67 on Friday but hovered near its highest level since early November 2024 and was still on track for its best week since April, supported by improved risk appetite on growing expectations of US rate cuts. US data showed steady inflation in August, while jobless claims signaled labor market weakness. Meanwhile, stronger metal prices, particularly gold and silver, lent support to the commodity-linked currency. Domestically, consumer inflation expectations picked up in September after easing to a recent low in the previous month, signaling firmer demand and renewed inflation concerns. RBA Governor Michele Bullock noted signs of “a little bit more growth” in the private sector, describing it as a positive development for the economy. This reinforced the RBA’s cautious stance and market bets it will hold rates steady later this month. Investors now await labor data due next week for further guidance to monetary policy.

Aussie Dollar Heads for Strong Weekly Gain

The South Korean won appreciated to around 1,388 on Friday, as the greenback eased amid growing bets on Fed rate cuts following the latest US inflation data. With the CPI posting a 0.4% monthly increase and a 2.9% annual gain in August, still above the Fed’s 2% target, investors interpreted the data as moderate enough to keep alive prospects of a policy shift in its September meeting, given labor market weakness. Domestically, President Lee Jae Myung scrapped plans to revise the capital gains tax on stock investments, warning the change threatened market stability. The reversal, which followed backlash from retail investors, eased policy uncertainty and lifted sentiment.

Korean Won Gains on Fed Cut Bets, Policy Shift

The dollar index steadied near 97.6 on Friday but stayed under pressure as the latest inflation print came in line with expectations, giving the Federal Reserve room to ease policy amid a slowing labor market. The August CPI report showed consumer prices rising 0.4% on the month, slightly above forecasts, while the annual rate held at 2.9%, matching expectations. Jobless claims jumped 27K to 263K, the highest since 2021, underscoring a softer jobs backdrop. Traders are pricing in a roughly 93% chance of a 25 basis point cut at the Fed’s September 17 meeting, with odds of a larger half-point move edging higher. In policy developments, the US and Japan issued a joint statement stressing that exchange rates should remain market-driven and excessive volatility is undesirable. Meanwhile, the European Central Bank kept its benchmark rate unchanged at 2% for the second consecutive meeting. The dollar is on course to finish the week slightly lower.

Dollar Pressured by Fed Rate Cut Bets

The Mexican Peso touched 18.47 against the USD, the highest since August 2024. Over the past 4 weeks, US Dollar Mexican Peso lost 0.63%, and in the last 12 months, it decreased 5.44%.

Mexican Peso Hits 13-month High

The Norwegian Krone touched 9.85 against the USD, the highest since January 2023. Over the past 4 weeks, US Dollar Norwegian Krone lost 3.46%, and in the last 12 months, it decreased 7.95%.

Norwegian Krone Hits 31-month High

The Brazilian Real touched 5.37 against the USD, the highest since July 2024. Over the past 4 weeks, US Dollar Brazilian Real lost 0.27%, and in the last 12 months, it decreased 4.46%.

Brazilian Real Hits 14-month High

The Canadian dollar traded around 1.385 per US dollar, hovering near mid-August lows after weaker domestic labour and inflation prints fueled growing market confidence that the Bank of Canada will soon begin easing. In early September, Canada reported a loss of around 65,500 jobs in August, lifting the unemployment rate to 7.1%, its highest since 2016 outside of the pandemic period, with broad weakness across transportation, manufacturing and professional services. Elsewhere, oil has offered some support but has not rallied enough to offset the hit from the labour shock and the repricing of policy. Meanwhile, the USD remained subdued after softer US CPI data and rising jobless claims, which hit a nearly four-year high in early September and reinforced recent downward payroll revisions, have pushed rate futures to price about 75 basis points of Fed cuts this year, implying roughly one reduction at each of the three remaining FOMC meetings starting next week.

Canadian Dollar Hovers at Mid-August Lows

The euro climbed back above $1.17 on Thursday, supported by broad dollar weakness after fresh US inflation and jobless claims data reinforced expectations for Federal Reserve rate cuts this year. Meanwhile, the European Central Bank left interest rates unchanged while releasing updated growth and inflation forecasts. Policymakers struck a balanced tone, weighing steady inflation, a resilient economy, record-low unemployment, and global trade uncertainties. The ECB now expects eurozone GDP to expand by 1.2% in 2025 (up from 0.9% in June), before slowing to 1.0% in 2026. The 2027 growth outlook was left unchanged at 1.3%. Inflation projections were revised slightly higher: 2.1% in 2025 (vs. 2.0% previously), 1.7% in 2026 (vs. 1.6%), and 1.9% in 2027 (vs. 2.0%). Officials emphasized that monetary policy will remain data-dependent, with no pre-commitment to a specific rate path.

Euro Rises Above $1.17 as Dollar Weakens, ECB Holds Rates Steady

The dollar index turned flat to lower at around 97.8 on Thursday after US inflation data came in line with expectations, reinforcing bets on Fed rate cuts to cushion a weakening labor market. Core CPI rose 0.3% in August and 3.1% annually, signaling subdued price pressures and giving the Fed room to ease policy. Money markets now almost fully price in three rate cuts by year-end, starting in September. Chair Jerome Powell hinted at policy flexibility at Jackson Hole, and recent data confirmed labor softness into August. With inflation stable and growth risks mounting, markets see the Fed prioritizing jobs. Meanwhile, the ECB left rates unchanged for a second meeting, citing contained inflation and resilient growth despite US tariff pressures.

DXY Wavers after Inflation Print

The euro eased slightly against the US dollar to below $1.17 after the European Central Bank kept interest rates unchanged and released updated growth forecasts. The move was widely anticipated as policymakers balanced steady inflation, a resilient economy, record-low unemployment, and trade policy uncertainty. The ECB now expects eurozone GDP to expand by 1.2% in 2025, up from June’s 0.9% forecast. Growth projections for 2026 were trimmed to 1.0%, while the 2027 outlook remained steady at 1.3%.

Euro Slips Below $1.17 as ECB Holds Rates

The Turkish lira extended its steady decline to 41.2 per USD in September, hitting a fresh record low. The central bank, acting through state-backed commercial lenders, maintained a strong presence in the foreign exchange market in an effort to keep tight control over the currency. Political tensions added to the pressure after an Istanbul court ruled that cash payments had influenced voting at the Republican People’s Party (CHP) 2023 Istanbul provincial congress, ordering the removal of the leadership elected at that event. A case against the CHP set for September 15th could further escalate risks. Meanwhile, the Central Bank of Turkey delivered a 250bps rate cut in September, lowering the benchmark one-week repo rate to 40.5%, slightly below expectations of 41%. On the economic front, annual inflation eased to 32.95% in August but remained above market forecasts of 32.6%. At the same time, GDP grew 4.8% year-on-year in Q2 2025, the fastest pace since Q1 2024.

Turkish Lira Hovers at Record Lows

The South Korean won traded around 1,388 per dollar on Thursday, showing little change for a second straight session, as the greenback held steady ahead of key US inflation data. A weaker-than-expected reading in producer prices for August added to expectations that the Federal Reserve will lower rates at its September meeting, with markets largely pricing a 25 basis point cut while still considering a larger half-point cut. Domestically, the KOSPI continued to push into record territory, lifted by strong demand for semiconductor shares and renewed foreign buying. Hopes that authorities may adjust capital gains tax rules also contributed to the upbeat sentiment in equities, reinforcing support for the won against a backdrop of firmer risk appetite. Investors now look ahead to US consumer inflation figures later in the day for further clues on the Federal Reserve’s policy path and future moves in the dollar.

South Korean Won Holds Firm on Fed Outlook

The Japanese yen traded around 147.5 per dollar on Thursday, holding steady for a third straight session as investors awaited US consumer inflation data that could strengthen expectations for deeper Federal Reserve rate cuts. US producer prices unexpectedly fell in August, easing concerns over persistent inflation and giving the Fed more scope to lower borrowing costs. In Japan, business sentiment improved in the third quarter, supported by a sharp rebound in exports as firms accelerated shipments to the US ahead of newly imposed 15% blanket tariffs. Separate data showed producer prices rose 2.7% year-on-year in August, quickening from a revised 2.5% gain in July. On the political front, markets continued to weigh the impact of Prime Minister Shigeru Ishiba’s resignation, which followed deepening divisions within the ruling party and mounting pressure after his defeat in last year’s national election.

Japanese Yen Muted Ahead of US CPI

The New Zealand dollar held on to modest gains on Thursday, trading around $0.594 as investors awaited US consumer inflation data later in the day. The report follows a softer-than-expected US producer price figures on Wednesday, which reinforced bets of Federal Reserve interest rate cuts through year-end. Domestically, however, the kiwi’s upside remains limited by rising expectations of further monetary easing from the Reserve Bank of New Zealand. The currency has been under pressure since the central bank lowered its official cash rate last month and signaled scope for more cuts to shore up the sluggish economy. This has prompted markets to almost fully price another 25bps cut to 2.75% in October, with a further move to 2.5% by February.

New Zealand Dollar Clings to Modest Gains

The Australian dollar edged higher to around $0.662 on Thursday, approaching its highest level since early November last year, supported by improved risk appetite amid growing bets on a Fed rate cut. The Federal Reserve appears on track for a September rate cut after US producer prices fell unexpectedly in August, fueling expectations of deeper easing. Investors now await consumer inflation data for further guidance. The commodity-linked Aussie also continued to benefit from higher oil and bullion prices as rising geopolitical risks drove safe-haven demand. On the data front, Australian consumer inflation expectations rose to 4.7% in September from a five-month low of 3.9%, reflecting resilient household demand and stronger private sector growth, though the RBA remains cautious amid domestic and global uncertainties. Looking ahead, a speech from an RBA official later today will be closely watched for further policy cues, as markets broadly priced in a 25bp cut in November.

Australian Dollar Tests Ten-Month Highs

The dollar index hovered around 97.8 on Thursday, holding steady for a second straight session as traders awaited August consumer inflation data that could strengthen bets on a larger 50 basis point Federal Reserve rate cut. On Wednesday, data showed producer prices unexpectedly fell 0.1% in August, following a downwardly revised 0.7% gain in July and defying expectations for a 0.3% increase. The surprise decline eased inflation worries and reinforced confidence that the Fed will press ahead with policy easing. Markets are fully anticipating a 25 basis point cut next week, while assigning an 8% probability to a more aggressive half-point move. Meanwhile, the Trump administration said it will appeal a federal judge’s ruling that temporarily blocked President Trump from firing Fed Governor Lisa Cook. Separately, Stephen Miran, a dovish nominee, advanced in the Senate Banking Committee’s confirmation process to join the Fed.

Dollar Holds Steady Ahead of CPI Report

The Brazilian real strengthened past 5.43 per US dollar, close to the one-year high of 5.39 recorded on August 12th, as a  clearer prospects of imminent US Fed easing removed the primary external headwind while domestic inflation cooled. US wholesale prices unexpectedly fell in August, which together with the large downward payroll revisions pushed global rate expectations sharply lower and reduced demand for dollar assets. At the same time Brazil’s annual inflation eased to 5.13% in August, the softest reading since February, a disinflation surprise that bolsters confidence the inflation path is stabilising and limits the odds of disruptive policy shocks at home. Headline risk from the resumed trial of former president Bolsonaro remains on investors’ radar but has so far been offset by the global funding pivot and steady domestic inflation prints, leaving interest differentials as the dominant stabilising force.

Brazilian Real Strengthens After Inflation

The dollar index slipped to 97.66 before steadying near 97.8 after US wholesale inflation data came in softer than expected, bolstering bets on rate cuts. The producer price index fell 0.1% in August, its first decline in four months, while July’s figure was revised lower. On an annual basis, PPI rose 2.6%. The surprise drop eased concerns about stubborn inflation and reinforced expectations that the Federal Reserve will move ahead with easing policy. Markets have fully priced in a quarter-point cut at next week’s meeting, with traders now anticipating up to three reductions by the end of 2025. Investors are closely watching Thursday’s consumer price data, seen as more influential for Fed officials, particularly with tariffs potentially feeding through to households. Core inflation, excluding food and energy, is expected to show another firm monthly rise, making the CPI release a key test of whether policymakers can balance inflation control with labor market stability.

DXY Steadies after PPI Data

The euro traded around $1.17 as investors looked to Thursday’s European Central Bank meeting and upcoming US inflation figures for guidance on monetary policy. ECB officials are widely expected to leave interest rates unchanged for a second consecutive meeting, as trade uncertainty lingers and eurozone inflation holds steady at target for a third straight month. In the US, inflation is projected to have accelerated to 2.9% in August, up from 2.7% in July and the highest level since January. Softer labor market data last week bolstered expectations of a Federal Reserve rate cut in September, with markets increasingly pricing in the possibility of a larger-than-usual move depending on the inflation outcome. On the political front, French President Emmanuel Macron appointed Sébastien Lecornu as the country’s new prime minister, following the ousting of François Bayrou in a parliamentary confidence vote over budget plans.

Euro Holds Near $1.17 Ahead of ECB Decision and US Inflation Data

The Japanese yen held around 147.3 per dollar on Wednesday after sharp swings earlier in the week, as traders awaited key US inflation reports that could guide the Federal Reserve’s decision next week. Recent downward revisions to US jobs data reinforced expectations for a Fed rate cut, with some investors positioning for a sizable 50 basis point move. In Japan, a private survey showed manufacturer sentiment climbed to its highest level in over three years in September, supported by easing trade uncertainties following a tariff deal with the US. On the political front, markets assessed the fallout from Prime Minister Shigeru Ishiba’s resignation, which followed deepening rifts within the ruling party and mounting pressure after his national election defeat late last year.

Yen Holds Steady Ahead of US Inflation Data

The New Zealand dollar edged up to around $0.593 on Wednesday, having fallen 0.3% overnight as the US dollar firmed ahead of key US inflation reports. Traders are awaiting the release of US PPI and CPI data this week, which could offer more clues on the Federal Reserve's interest rate path. Elsewhere, China's consumer prices fell in August, while producer deflation showed signs of easing, indicating ongoing deflationary pressures in an economy at risk of a slowdown. Given China is New Zealand’s largest export market, such weakness poses headwinds for the kiwi. At home, recent data showed an unexpectedly sharp drop in sales across multiple industries in the second quarter, signaling downside risks for New Zealand’s growth outlook. This added to expectations of further rate cuts from the Reserve Bank of New Zealand.

New Zealand Dollar Rebounds

The South Korean won rose to around 1,388 per dollar on Wednesday, recovering from losses in the previous session as the greenback stayed under pressure following sharp downward revisions to US payroll data. The weaker labor backdrop reinforced expectations for imminent Federal Reserve rate cuts, with traders widely anticipating a policy move next week. However, on the domestic front, gains were limited by ongoing friction in trade negotiations with Washington. Officials warned that Seoul's planned $350 billion US investment package could pose long-term risks to foreign-exchange stability, pledging to safeguard markets through monitoring and potential policy measures. At the same time, working-level talks in Washington ended without progress, underscoring the difficulty of resolving differences over investment rules and currency concerns. Investors also looked ahead to key US inflation figures due later this week that could shape the Fed’s policy outlook and broader dollar trajectory.

South Korean Won Edges Up as Dollar Softens

The offshore yuan held steady for the second consecutive session at around 7.12 per dollar on Wednesday, as investors digested the latest inflation data. Annual consumer prices fell 0.4% in August, following a flat reading in July and worse than market expectations of a 0.2% decline. Meanwhile, producer prices dropped 2.9% yoy in August, easing from a 3.6% fall in the prior month and in line with forecasts. This marked the 35th straight month of producer deflation, but also the smallest contraction since April. The latest figures reflect government efforts to stimulate domestic demand and curb excessive competition and price-cutting in key industrial sectors. Investors are now closely watching key developments as China’s 14th NPC Standing Committee holds its 17th session from today through Friday. On the global front, US President Trump urged the EU to impose 100% tariffs on Chinese and Indian goods to pressure Russia, with Washington signaling readiness to implement similar measures.

Offshore Yuan Steady for Second Session

The Australian dollar edged higher to above $0.659 on Wednesday, approaching its highest level in seven weeks, boosted by higher commodity prices. Gold remained near record highs, driven by safe-haven demand and expectations of Federal Reserve rate cuts. Additionally, oil strengthened amid rising geopolitical tensions in the Middle East, while iron ore gained on robust Chinese demand as steel mills resumed operations after temporary shutdowns. Commodities make up a large share of Australia’s exports, so higher prices boost export revenues and the terms of trade, increasing demand for the AUD. On the policy front, markets see an 86% chance of an RBA cut in November, while rates are expected to be held at September’s meeting. Meanwhile, renewed global trade tensions limited gains for the risk-sensitive Aussie. Reports indicate that US President Trump has urged the EU to impose 100% tariffs on Chinese and Indian goods to pressure Russia, with the US signaling it may mirror such measures.

Australian Dollar Approaches 7-Week High

The dollar index held around 97.8 on Wednesday after firming in the prior session, as investors awaited key inflation reports that could influence the Federal Reserve’s policy stance. The producer price index is due later today, followed by the consumer price index on Thursday. On Tuesday, the Bureau of Labor Statistics said the economy likely created 911,000 fewer jobs in the 12 months through March, or roughly 76,000 fewer jobs per month, pointing to a softer labor market than previously estimated. Combined with last week’s weak August jobs report, the data bolstered expectations for a 25 basis point Fed rate cut next week, while some traders are positioning for a larger 50 basis point move. Overall, markets are pricing in 66 bps of easing this year.

Dollar Steadies Ahead of Inflation Data

The US dollar index rose slightly to 97.5 on Tuesday as markets weighed major revisions to job growth data and the outlook for Federal Reserve policy. The Bureau of Labor Statistics said payrolls for the year through March will likely be revised down by 911,000, or about 76,000 fewer jobs per month, signaling a weaker labor market than previously thought. Though these benchmark adjustments reflect past data, they reinforce recent evidence of slowing job creation, with summer payroll gains averaging just 29,000 per month. The revisions have fueled expectations that the Fed will begin cutting interest rates as soon as next week, with Chair Jerome Powell acknowledging mounting risks to employment. Traders now widely anticipate a September 17 rate cut, marking a shift from tightening to easing policy. Meanwhile, a reported Israeli attack in Qatar revived fears of a wider conflict in the Middle East.

DXY Edges Up Slightly

The Mexican peso strengthened toward 18.6 per USD as the greenback remained subdued, driven by weaker US labor data and lower Treasury yields, diminished external pressure on the currency, while Mexico’s own inflation profile remained contained. Headline inflation modestly slowed to around 3.57% in August and core inflation held steady at 4.23%, reinforcing expectations that Banxico’s cautious easing cycle will continue at a measured pace. The minutes of the August Banxico meeting confirmed that the board approved a 25bp cut to 7.75%, and a majority favored slower reductions ahead with another quarter-point cut possible later in the year. Additionally, Banxico’s recently upgraded growth projections, lifting its 2025 GDP forecast to 0.6% and 2026 to 1.1%, offered some support by signaling resilience in the economy.

Mexican Peso Holds Strong After Inflation

The Swiss franc traded around 0.795 per USD, holding close to its highest since July 23rd, as safe-haven demand remained supported by political instability and fiscal sustainability jitters in other countries such as France and Japan. Also, geopolitical risks persisted. Meanwhile, investors are increasingly confident that the Fed will move ahead with an interest rate cut this month. In Switzerland, SNB President Martin Schlegel tempered speculation about negative interest rates, saying he sees a high bar for further cuts given their negative impact on savers and pension funds.

Swiss Franc Remains Firm

The Chinese Yuan touched 7.12 against the USD, the highest since November 2024. Over the past 4 weeks, US Dollar Chinese Yuan lost 1.08%, and in the last 12 months, it decreased 0.25%.

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