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This preview of weekly data examines USOIL and XAUUSD, with economic data expected later this week as the primary market drivers of the near-term outlook.

Highlights of the week: RBA meeting minutes, US inflation, British GDP, US PPITuesdayRBA meeting minutes at 12:30 AM GMT. These are published 2 weeks after the interest rate decision. They give full detail of the discussions and the different views, and record the votes of the members of the committee. This could spark some volatility in the Australian dollar and the instruments traded against it.

WednesdayChinese inflation rate at 01:30 AM GMT. The market is expecting this figure to tick upwards by 0.2%, reaching 1% for September.

US Inflation rate at 12:30 PM GMT, where the consensus is for an increase of around 0.3%, reaching 3.7% for September. If this is broadly accurate, then it might not influence a change in the stance of the Federal Reserve at their next meeting, where the probability for now is that they will keep the rates stable. On the other hand, if there is any significant surprise change in the actual figure, then it will affect the dollar in the short term.

TuesdayBritish GDP growth at 06:00 AM GMT. The market consensus is that the figure will decrease from 0.4% to -0.1% month over month.  This might not have a major effect on the quid since it is for the month of August; however, it would provide some hints on the overall economic performance of the British economy.

US Producers Price Index (PPI) at 12:30 PM GMT. Market participants are expecting the figure to come out at 0.5% over 0.4% of the previous reading. If this is confirmed, then it could potentially hint at higher inflation figures in the coming months since higher producers' costs usually roll down to consumers, pushing inflation figures to the upside.

Fed chair Kevin Warsh speech on Thursday at the IMF’s annual meeting in Bangkok. It's a particularly interesting point in time because this is ahead of its two-day meeting ending on October 28 and could help markets have "less uncertainty" about the outcome of the meeting.

USOil, daily

Oil prices fell as traders weighed rising Middle East tensions against resilient crude flows. Despite attacks on Saudi Arabia and another tanker in the Strait of Hormuz, exports from the Persian Gulf have recovered to around 17.5 million barrels a day, or 98% of pre-war levels, limiting the impact on supply. Markets are also assessing a potential Russia-Ukraine energy ceasefire and Russia’s decision to resume some diesel exports, although the additional volumes are relatively small. Meanwhile, the IEA is calling for faster releases of diesel reserves as global fuel markets remain tight.

From a technical perspective, crude oil is showing sideways-to-bullish momentum, trading around $90 after finding support near the 50% Fibonacci level at $88. Price is holding above the rising 50-day moving average, while the 100-day moving average remains well below at around $83.5, supporting the broader bullish structure. The key resistance is at $91, followed by the 23.6% Fibonacci level around $95. A sustained break above $91 could open the way toward $95, while a move below $88 would weaken the setup and expose the 61.8% level at $85.

Gold-Dollar, daily

Gold traded below $4,200 as investors weighed lower oil prices against persistent inflation risks and awaited key US economic data for clues on the Fed’s rate path. Falling Treasury yields and continued buying by gold ETFs and China’s central bank provided some support. However, gold remains under pressure from elevated bond yields and expectations of further monetary tightening. The metal has fallen about 20% since the US-Iran war began, while ongoing energy disruptions in the Middle East continue to create inflationary pressure. Fed Chair Kevin Warsh’s upcoming comments and US inflation data could provide further direction for gold.

From a technical point of view, gold rebounded from the support of $4,130 and is currently on route to test the resistance of $4,250, which is the next major resistance area consisting of the 61.8% daily Fibonacci retracement level and also the 100-day simple moving average. The Stochastic oscillator is in neutral levels hinting that there is potential for the price to move in either direction in the short term. The moving averages are validating the overall bullish trend despite the bearish trend which is in place since late August. The Bollinger Bands are also quite expanded, showing that there is sufficient volatility in the market to support any sharp moves; however, we might need a new catalyst in the market to see any sharp moves anytime soon.

The Pound-Canadian Dollar could stay supported if UK services remain resilient, while weaker Canadian jobs data may weigh on the Loonie. The Pound Canadian Dollar (GBP/CAD) exchange rate saw big swings last week, with Sterling hitting a five-week high against the ‘Loonie’ amid UK interest rate hike bets and stronger GDP growth.

At the time of writing, GBP/CAD was trading at CA$1.8878, up over 0.7% on the week.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.887449 (+0.04%)

Euro to Canadian Dollar (EUR/CAD): 1.605032 (+0.09%)

Dollar to Canadian Dollar (USD/CAD): 1.42531 (+0.02%)

DAILY RECAP:

The Pound (GBP) made a positive start to the week, as remarks from Bank of England (BoE) Deputy Governor Dave Ramsden fuelled expectations that the central bank could raise interest rates in November.

A lack of fresh UK data saw Sterling lose momentum on Tuesday, but the currency regained ground midweek after revised figures revealed stronger-than-expected UK economic growth. GDP expanded by 0.5% in the second quarter, reinforcing market bets on a November rate increase.

However, the Pound’s upward momentum faltered on Thursday after the UK’s final manufacturing PMI was revised slightly lower. Despite the downgrade, the index continued to signal an improvement in manufacturing activity.

Sterling ended the week on a firmer footing, drawing support from Burnham’s remarks on strengthening the UK’s ties with Europe and the possibility of rejoining the EU.

The Canadian Dollar (CAD) edged lower at the start of the week as concerns about the ongoing US-Canada trade war offset support from a surge in global oil prices.

The commodity-linked currency then recovered on Tuesday, shrugging off softer oil prices as a rebound in Canadian GDP in August helped lift sentiment.

However, CAD struggled to build on these gains midweek as oil prices remained below $100 per barrel.

The Canadian Dollar rebounded sharply on Thursday after touching multi-week lows, with a fresh jump in oil prices boosting demand for the crude-linked currency.

Nevertheless, CAD ended the week on the defensive as Brent crude fell back below $100 per barrel.

Near-Term GBP/CAD Forecast: Rising Canadian Unemployment to Dent the ‘Loonie’? Looking ahead, the UK’s final services PMI on Monday is the only British data release on the calendar this week. If the figures confirm a slowdown in the crucial sector, the Pound could come under pressure.

Canada’s services PMI is also out on Monday, although its impact may be limited. Markets expect activity to have improved slightly but remained in contraction territory last month.

Friday’s Canadian jobs data is the key release for the week. A forecast rise in unemployment in September could weigh on CAD.

Meanwhile, oil price dynamics will likely continue to drive the currency. Further turbulence could trigger big swings in the Canadian Dollar.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

GBP/USD: Can Stronger UK Growth Offset the Dollar’s Advantage?
GBP/USD is rising modestly on Wednesday but remains close to its three-month low, having fallen more than 2% across September.

Today’s move higher comes after stronger-than-expected UK GDP data, as U.S. dollar bulls pause for breath.

Data from the Office for National Statistics showed that UK Q2 GDP was upgraded to 0.5% in the three months to June, better than the 0.4% growth seen in the first estimate. This follows growth of 0.6% in Q1.

The data confirms that the UK was the fastest-growing G7 economy in the first half of the year, as consumers continued to spend even as the Middle East conflict lifted oil prices and added to inflationary pressures.

The numbers come as a boost for the Labour Party as it holds its annual conference in Liverpool.

Despite solid GDP growth in Q1 and Q2, the outlook for the second half of the year is darkening, with pressures expected to build on businesses and households. Growth is expected to slow to 0.2% in Q3 and Q4 amid a fresh spike in living costs.

U.S. Yields and Fed Expectations Keep the Dollar in Focus

Meanwhile, the U.S. dollar is pulling back from the two-month high reached yesterday as Treasury yields retreat.

U.S. Treasury yields have pulled back from multi-year highs as oil prices fall to a three-week low, following dovish remarks from New York Fed President John Williams, who warned that the central bank did not need to rush its next move.

U.S. data was also weaker than expected, with Conference Board consumer confidence falling to its lowest level since May 2014, while job openings declined more than expected to 7.09 million.

October Fed rate hike expectations have pulled back from 70% to 40%. However, traders are still pricing in more than a 90% probability that the Fed will raise borrowing costs by the end of the year, which could limit any pullback in the U.S. dollar.

U.S. Inflation and Payrolls Could Decide the Next Move

Attention will now turn to U.S. core PCE, the Fed’s preferred gauge of inflation, which is expected to rise 0.3% month-on-month, up from 0.2%.

The data will be accompanied by final U.S. Q2 GDP data, along with more speeches from Federal Reserve officials. U.S. non-farm payrolls will be released on Friday.

Strong data and hawkish Fed officials could see October rate hike expectations rebound, lifting the U.S. dollar and pulling GBP/USD lower.

The key question for GBP/USD is whether stronger UK growth can offset the widening U.S.-UK yield and policy differential.

If U.S. inflation remains sticky and payrolls are stronger than expected, markets could price out the recent pullback in October rate hike expectations. Higher Treasury yields would then support the dollar and put renewed pressure on GBP/USD.

Conversely, weaker U.S. data combined with continued oil price declines could ease inflation concerns and reduce expectations of further Fed tightening. Lower Treasury yields would weaken the dollar and give GBP/USD more room to recover.

GBP/USD forecast - technical analysis

GBP/USD has broken below its rising channel as well as its 50- and 200-day EMAs before finding support around 1.3200. The pair has since recovered slightly and is consolidating around 1.3250, while the RSI has moved out of oversold territory.

The 50 EMA is also close to crossing below the 200 EMA, which would form a bearish death cross.

Sellers will look to break below the 1.3200 support zone to extend the decline towards 1.3100, followed by the psychological 1.3000 level.

On the upside, initial resistance is seen at 1.3275, this week’s high. A break above this level would expose 1.3350, the July 27 swing low, followed by horizontal resistance around 1.3500.

A sustained move above the 50- and 200-day EMAs would put buyers on a firmer footing and bring 1.3500 into focus.

Oil: Supply Recovery Challenges the Geopolitical Premium
Oil prices are drifting modestly higher as President Trump denies that he would be willing to ease sanctions on Iran. Still, gains are muted amid optimism surrounding a recovery in crude supply from the Middle East, which helped pull prices to a three-week low in the previous session.

While Brent is trading above $90 a barrel, the December contract is around $96. Meanwhile, WTI is hovering around $89.

Brent is on track to gain 14% in September, its largest monthly increase since July, while WTI is on track for a more modest 4% rise.

The spread between the two benchmarks is at its widest in four months as markets weigh plans in the U.S. to restrict diesel exports, which could create an oversupply in the U.S. market and lead refiners to produce less crude.

Meanwhile, the picture in the Middle East remains uncertain as Qatar continues its shuttle diplomacy between Tehran and Washington, hoping for a breakthrough.

Although Trump has said he is unwilling to give Iran sanctions relief unless there are concrete steps from Tehran on its nuclear programme, limiting the chances of a diplomatic solution, the impact on oil prices may be limited if crude supply continues to flow.

Crude exports from Middle Eastern producers rebounded in September to 16.32 million barrels per day, the highest since the Iran war began in February. Regional exports are now just 11% below pre-war levels.

That is a remarkable recovery for a region still in conflict. With oil flowing, concerns over supply have eased, putting pressure on prices.

Oil forecast technical analysis

Oil trades in an ascending channel dating back to early July. The price recently ran into resistance at $106.75 before rebounding lower and is currently testing the lower band of the rising channel and the 50 EMA around $89. The RSI is below 50.

Should sellers break below the $89 support zone and the 38.2% Fibonacci retracement of the $55 low to $120 high, sellers could gain traction towards the 200 EMA at $82.50 and the 61.8% Fibonacci retracement at $80. Below here, attention will turn towards $75, the August low.

Should the $89 level hold, buyers will need to rise above $95. The 38.2% Fibonacci retracement above here would bring $100, the psychological level, into focus, followed by $105, the 23.6% Fibonacci retracement.

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Summary:

GBP/INR climbed above 127 on Monday, September 28, with one British pound worth around ₹127.19 during the session. The British pound strengthened as markets increased bets on a Bank of England rate hike, while the Indian rupee weakened as Brent crude rose above $107 per barrel. GBP/INR now faces competing central-bank expectations, with markets pricing tighter policy from both the Bank of England and Reserve Bank of India as inflation risks rise. The GBP/INR exchange rate moved back above ₹127 on Monday, September 28, as renewed strength in the British pound combined with fresh pressure on the Indian rupee. GBP/INR traded around ₹127.19 during Monday’s session, rising from an early low near ₹126.70 and reaching approximately ₹127.40 before giving back some of its gains.

The move comes as both currencies respond to the latest surge in global oil prices, but for very different reasons. In Britain, expensive energy is increasing expectations that the Bank of England may need to raise interest rates again. For India, higher crude prices are weighing on the rupee because of the country’s heavy dependence on imported energy.

Why Is GBP/INR Rising Today? The latest GBP to INR move reflects strength in sterling alongside renewed weakness in the Indian rupee. Reuters reported Monday that the pound rebounded from multi-month lows against both the US dollar and euro as investors increased bets on tighter monetary policy from the Bank of England.

Governor Andrew Bailey and Deputy Governor Dave Ramsden have highlighted growing inflation risks associated with high energy prices. Markets are now pricing around an 85% probability of a Bank of England rate hike in November.

That shift has provided support for sterling after a difficult September. The pound is still heading for a roughly 2% monthly decline against the US dollar, showing how dramatically higher oil prices and changing global rate expectations have reshaped currency markets this month.

Indian Rupee Falls as Brent Crude Climbs Above $107 The other side of the GBP/INR exchange rate is an increasingly vulnerable Indian rupee. The rupee weakened to 95.9825 per US dollar on Monday, its lowest level in more than a week. Reuters reported that intervention from state-run banks, most likely acting for the Reserve Bank of India, helped prevent a larger decline.

Oil is central to the rupee’s weakness.

Brent crude jumped about 2.5% above $107 per barrel after US President Donald Trump rejected an Iranian proposal aimed at resolving the conflict and reopening the Strait of Hormuz. India imports nearly 90% of its crude requirements, leaving the economy particularly exposed to sustained increases in global energy prices.

Higher crude prices can increase India’s import bill, worsen inflation pressures and increase demand for US dollars from importers. All three factors can weigh on the rupee.

RBI Intervention Keeps INR Near 96 Against the Dollar The Indian rupee outlook could have been weaker without support from the Reserve Bank of India. Reuters reported that traders saw signs of RBI intervention again on Monday as USD/INR approached the important 96 level. Bank of America analysts said they believe the RBI is prepared to use additional foreign-exchange reserves to limit rupee weakness beyond 96 per dollar.

India’s foreign-exchange reserves fell by around $15 billion in the week ending September 18, with intervention to support the rupee likely contributing to the decline. The RBI is also dealing with the inflationary consequences of high oil prices and excess domestic liquidity. Expectations for an RBI rate hike in October have consequently increased, potentially providing some support for INR if those expectations strengthen further.

GBP/INR Forecast: Can the Pound Rise Above ₹128? The near-term GBP/INR forecast is increasingly tied to the monetary-policy outlook in both countries. GBP/INR has recovered above ₹127, but the pair remains below levels seen earlier in September. Reference-rate data show the pair has traded between roughly ₹126.95 and ₹129.57 over the past 30 days.

For GBP/INR, ₹127.50 is the first area to watch if sterling extends Monday’s recovery. Beyond that, ₹128 could return to focus. On the downside, a move back below ₹127 would put the ₹126.50-₹126.70 region in focus.

The larger question is which central bank turns more hawkish. Further increases in UK rate-hike expectations could support the pound, while stronger RBI intervention or growing expectations of an Indian rate increase could limit GBP/INR gains.

Oil prices will remain important for both sides of the pair.

Is GBP to INR going to increase?

GBP/INR has risen back above ₹127, but its next move is likely to depend on Bank of England and RBI interest-rate expectations, oil prices and the performance of the US dollar. Sterling could receive support if expectations for a November BoE rate hike continue to strengthen.

Why is the Indian rupee falling?

The Indian rupee is under pressure primarily from high crude oil prices, a strong US dollar and elevated global bond yields. India imports nearly 90% of its crude requirements, making sustained oil-price increases particularly important for INR.

How many Indian rupees is one British pound?

On September 28, £1 was worth approximately ₹127.19 during the session. Exchange rates change continuously, and bank or money-transfer rates may differ from market rates.

Oil recovers above $90 amid a lack of progress in US-Iran diplomacy
Oil prices are holding onto yesterday's gains, having rebounded back above $90 a barrel and broken a five-day losing streak on Thursday. Oil had fallen 17% from cycle highs, but bears lacked the strength to hold the price below $90.

The recovery in oil was driven by a mix of geopolitical developments, including ongoing indirect talks between the U.S. and Iran on the sidelines of the United Nations General Assembly, as well as nerves over reports that the Trump administration could be preparing a 90-day ban on U.S. diesel exports to force domestic energy prices lower.

However, diplomatic talks between the U.S. and Iran have so far shown no concrete sign of progress, keeping oil prices supported. The two sides remain divided over how to bring an end to the war. While both sides agree that diplomacy should continue, Iran's president said that Tehran would never surrender to U.S. pressure.

Iran has also insisted that the Strait of Hormuz will not be reopened until its conditions are met.

Data yesterday showed U.S. crude inventories rose by 3 million barrels to 426.4 million barrels last week, defying expectations of a 641,000-barrel draw.

Attention will remain firmly focused on the Middle East, with any sense of progress towards a diplomatic solution likely to bring oil prices lower. However, in the absence of this, oil prices may continue to grind higher.

Oil forecast – technical analysis

WTI holds a constructive near-term bullish bias as the price remains above the 50 and 200 EMAs. The RSI is neutral after pulling back from overbought territory, suggesting consolidation rather than a decisive reversal.

On the upside, initial resistance is seen at $95, the 38.2% Fibonacci retracement of the move from the $55 low to the $120 high. A break above here brings $100 into focus, ahead of $105 and the September high. A rise above $105 would be needed to create a higher high and extend the bullish move.

On the downside, immediate support is seen at the 50 EMA, which is currently holding around $89, and below here at $88, the 50% Fibonacci retracement. Should sellers take out these supports, it exposes the 200 EMA around $82, followed by the 61.8% Fibonacci retracement at $80.

USD/JPY rises to 158 on widening Fed-BoJ policy outlook
USD/JPY has risen above 158, its highest level in three weeks and sharply higher from the 152 level seen earlier this month, driven by strong gains in the U.S. dollar and a widening Fed-BoJ rate differential.

Expectations for another Fed interest rate hike have jumped sharply as traders focus on persistent inflation and exceptionally strong U.S. economic activity. PMI data yesterday showed the S&P Composite PMI climbing to 58.4 in September, up from 56 in August, marking the fastest output growth rate in more than five years. This points to an economy that continues to build strong momentum.

Immediately following the data, expectations surrounding an October Fed rate hike jumped to 73% from 50% previously. U.S. yields also rose sharply, with the 10-year yield reaching a fresh 19-year high, improving the dollar's carry advantage over the yen.

Attention will now turn to more Fed speakers, U.S. jobless claims and housing starts, with the market looking for U.S. data to validate the repricing. Strong data and hawkish commentary could keep Treasury yields elevated and support the dollar, while softer data could unwind some of the move.

On the other side of the equation, the Bank of Japan raised rates by 25 basis points to 1.25% in September, its highest level in 31 years, but the decision was split by a 7-2 vote.

The BoJ offered limited guidance regarding the timing of future rate increases, failing to convince the market that it was serious about tightening monetary policy aggressively.

Japanese officials will remain alert to renewed yen weakness. With USD/JPY approaching 160, the risk of intervention could increase.

USD/JPY forecast – technical analysis

USD/JPY has extended its recovery from the 152.40 low, rising above the 200 EMA to 158.50 and testing the 50 EMA and falling trendline resistance. Buyers, supported by an RSI above 50, will look to extend gains above this area and bring attention back towards the 160 resistance zone.

On the downside, immediate support is at the 200 EMA around 157.70 and 157.20 horizontal support. A break below here opens the door towards the August low, before attention turns back towards 153, the September low.

Sellers would need to break below this level to create a lower low and extend the bearish move towards 152, the 2026 low.

Despite mounting geopolitical risks, crude oil prices have declined more than 10% from their monthly highs. Combined with overbought momentum readings on the DXY and dollar pairs, this increases the risk of a near-term reversal.

The DXY is also testing the lower boundary of its previous 2026 uptrend from below, creating a critical technical juncture.

The drawdown in crude may reflect market expectations of near-term resolutions, alongside increased Saudi Gulf exports following the disruption to the East-West pipeline. Related article: Crude Oil Weekly Outlook: Saudi–Houthi Escalation vs Key Resistance

This setup challenges hawkish Fed expectations for the October meeting, particularly if crude prices continue to decline below recent lows near $90 for WTI and $96 for Brent.

For USD/JPY, the divergence in central-bank guidance remains important. Hawkish Fed expectations, with rate-hike odds above 50% for October, contrast with expectations that the Bank of Japan may hold rates at its next meeting. This divergence continues to support the dollar against the yen unless broad-based dollar weakness emerges alongside a reversal in rate-hike expectations.

DXY Daily Time Frame — Log Scale

Source: TradingView

On the daily time frame, the DXY’s bullish rebound from the 98.50 support level—the 50% retracement of the 2026 advance—is currently retesting the 2026 uptrend from below near 100.50. However, daily momentum is becoming overbought, similar to readings observed near previous yearly highs.

A breakout above 100.50 would place the DXY back within the 2026 uptrend, targeting 101.00 and 101.80 before confirming new yearly highs. Such a move could extend pressure on precious metals and FX pairs facing a stronger dollar.

On the downside, a reversal below 100.00 would expose support at 99.30 and 98.50 once again, before confirming a potential return toward the yearly lows.

DXY Monthly Time Frame — Log Scale

Source: TradingView

Although a drawdown toward the yearly lows may appear significant, it would remain consistent with the boundaries of the uptrend established since 2008. The 95.00 area therefore represents a critical long-term level between a potential bearish structural shift in the dollar and bullish continuation.

This perspective also aligns the DXY with the midpoint of the declining channel established since 2022. A clean monthly close above 101.80 could open the door toward the channel’s upper boundary near 107.00.

USD/JPY Weekly Time Frame — Log Scale

Source: TradingView

From a weekly perspective, USD/JPY’s breakdown below the April 2025–July 2026 uptrend channel puts the latest decline into context. The pair is now approaching the lower boundary of the broader uptrend established since 2023.

This reinforces the short-term downside risk while maintaining a longer-term bullish outlook. That outlook would weaken if USD/JPY closes below 152.00 and 149.00, corresponding approximately to the 61.8% and 78.6% retracement levels of the 2025–2026 advance.

On the upside, sustained closes above the Fibonacci extension levels at 154.80 and 158.40 would expose resistance at 161.30. This would place the pair back within the year-long uptrend and potentially open the way toward yearly highs near 164.00, raising the possibility of decade highs and renewed pressure on the Bank of Japan and the yen.

Dollar resistance levels, alongside declining crude prices, remain key to establishing the final-quarter outlook as the U.S. midterm elections approach and geopolitical signals remain mixed.

A renewed rise in crude and Treasury yields above their September highs, combined with renewed dollar strength, would be required to confirm a re-escalation in geopolitical risk and a broader risk-off sentiment toward year-end.

Written by Razan Hilal, CMT

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Pound-Canadian Dollar could remain sensitive to UK PMIs and oil prices, with stronger crude likely to support the Loonie while weak UK borrowing may weigh on Sterling. The Pound Canadian Dollar (GBP/CAD) exchange rate faced notable volatility last week as oil price movements and the Bank of England’s (BoE) interest rate decision impacted the pairing.

At the time of writing, GBP/CAD was trading at CA$1.8728, down marginally on the week.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.873175 (+0.24%)

Euro to Canadian Dollar (EUR/CAD): 1.606218 (+0.04%)

Dollar to Canadian Dollar (USD/CAD): 1.39845 (-0.05%)

DAILY RECAP:

The Pound (GBP) traded unevenly on Monday, with markets awaiting a busy run of UK data and the Bank of England’s upcoming policy announcement.

Sterling remained volatile on Tuesday after the latest labour market figures showed unemployment unexpectedly holding steady, rather than climbing as anticipated. However, the data continued to highlight signs of weakness across the UK jobs market.

The Pound came under pressure on Wednesday as the latest inflation figures failed to provide much encouragement. Annual headline inflation accelerated from 2.9% to 3.1% in August, while core inflation remained unchanged at 2.6%. Both figures were in line with expectations.

Sterling extended its losses on Thursday after the BoE opted to keep interest rates unchanged. The decline was tempered by the central bank announcing a slower pace of bond sales, helping to push UK borrowing costs lower.

The Pound regained some ground on Friday after UK retail sales outperformed expectations. Sales increased by 0.5% in August, following a 0.2% fall in July, while markets had been expecting another 0.5% decline.

The Canadian Dollar (CAD) initially strengthened on Monday as a jump in oil prices boosted the crude-linked currency, although softer Canadian inflation figures later put pressure on the ‘Loonie’.

Oil prices continued to provide support on Tuesday, helping the commodity-sensitive currency maintain some of its strength. However, the ‘Loonie’ surrendered its early gains in the afternoon as crude prices became more volatile.

Direction was less clear for the Canadian Dollar on Wednesday, with fluctuating oil prices limiting momentum. Nevertheless, the ‘Loonie’ recovered some earlier losses later in the session, also rising against the weaker Pound.

CAD was subdued on Thursday as easing concerns over oil supplies prompted Brent crude to retreat to around $102 a barrel. Despite this, the ‘Loonie’ climbed to a one-week high against the Pound before trimming some of its gains.

The Canadian Dollar then slipped modestly on Friday as falling oil prices reduced demand for the commodity-linked currency.

Near-Term GBP/CAD Forecast: Higher Oil Prices to Underpin CAD? Looking forward, the Pound may face headwinds on Tuesday as the latest UK borrowing figures come into focus. A significant increase in borrowing through August could revive concerns about the state of the UK’s finances ahead of the Autumn Budget.

Attention will then turn to the UK’s preliminary September PMIs on Wednesday. Signs of another month of resilient economic activity, particularly within the crucial services sector, could provide Sterling with some support.

For the Canadian Dollar, Canada’s latest retail sales figures on Thursday could influence the ‘Loonie’. Confirmation of a slump in July could dent CAD, although a forecast recovery in August may support the currency.

Meanwhile, oil price dynamics could continue to drive CAD volatility. If escalating tensions in the Middle East ultimately push crude higher, the Canadian Dollar may climb.

The Pound-Canadian Dollar could stay supported if UK inflation keeps BoE hike expectations alive, although firmer oil prices may help the Loonie recover. The Pound Canadian Dollar (GBP/CAD) exchange rate wavered last week amid rising oil prices and US-Canada trade tensions, before upbeat UK GDP supported Sterling.

At the time of writing, GBP/CAD was trading at CA$1.8764, up over 0.3% on the week and having struck a nine-day high.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.875735 (-0.04%)

Euro to Canadian Dollar (EUR/CAD): 1.608386 (-0.03%)

Dollar to Canadian Dollar (USD/CAD): 1.38685 (-0.02%)

DAILY RECAP:

The Pound (GBP) was steady at the start of the week following as John Healey delivered his first major address as Chancellor of the Exchequer.

In his speech he outlined plans to support economic growth while reassuring markets that he would take a responsible approach to the public finances, with the comments offering modest support to GBP.

Sterling then struggled to establish a clear direction as a lack of major UK data left the currency trading largely sideways.

The Pound found firmer footing on Friday after the latest UK GDP figures showed the economy expanded by 0.3% in July, beating forecasts. The stronger-than-expected reading provided a boost to GBP and helped Sterling end the week on a positive note.

The Canadian Dollar (CAD) had a strong start to the week as escalating tensions in the Middle East saw oil prices surge, thereby boosting demand for the crude-linked ‘Loonie’.

CAD then relinquished some gains later in the week as the US-Canada trade war intensified, with Canada’s tariffs taking effect on Tuesday and US President Donald Trump retaliating by banning some Canadian goods.

Oil prices continued to rise, however, helping the Canadian Dollar stay supported.

Crude then eased back on Friday, leaving the ‘Loonie’ vulnerable to losses against the Pound.

Near-Term GBP/CAD Forecast: BoE Announcement Takes Centre Stage Looking ahead, the UK’s latest labour market figures will kick off a busy week for the Pound. Unemployment is expected to have risen in the three months to July, which could weigh on Sterling if accompanied by softer wage growth.

Wednesday’s consumer price index could offer some support, with both headline and core inflation forecast to have increased in August. Headline inflation is expected to have climbed from 2.9% to 3.1%.

The focus will then turn to the Bank of England (BoE). With interest rates expected to remain unchanged, GBP will look to the bank’s forward guidance for direction. A cautious tone could pressure the Pound, while a more hawkish outlook may support it. The week’s employment and inflation figures could help shape the BoE’s message.

Finally, UK retail sales are forecast to contract in August, potentially adding further pressure to GBP on Friday.

For the ‘Loonie’, the key data release is Canada’s August CPI on Monday afternoon. If inflation held steady last month, CAD could be subdued.

Elsewhere, oil price dynamics will likely continue to drive movement. Could a deepening crisis in the Middle East see crude climb higher, thereby boosting CAD?

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Summary:

USD/CAD rose toward 1.3870 on Friday, extending its advance for a third consecutive session as the Canadian Dollar weakened alongside falling oil prices. US CPI inflation held at 3.4% year over year in August, while monthly core CPI rose a stronger-than-expected 0.3%. WTI crude oil fell more than 4% below $100, adding pressure on the oil-sensitive Canadian Dollar. USD/CAD rose toward 1.3870 on Friday after briefly reaching 1.3882 following the release of the latest US Consumer Price Index (CPI) report. The currency pair is heading for a third consecutive session of gains as falling oil prices weigh on the Canadian Dollar (CAD), while the US Dollar struggled to hold its initial post-CPI advance.

US headline inflation remained at 3.4% year over year in August, matching market expectations and unchanged from July. On a monthly basis, the Consumer Price Index increased 0.4%, accelerating from the previous 0.1% increase. The underlying inflation figures were slightly firmer. Core CPI rose 0.3% month over month, above the 0.2% forecast, although annual core inflation eased to 2.4% from 2.5%.

US Dollar Struggles to Hold Gains After CPI The US Dollar initially strengthened after the CPI report as markets reacted to the stronger-than-expected monthly core inflation reading. However, the move quickly lost momentum.

Annual headline inflation remained unchanged at 3.4%, while annual core inflation continued to moderate. That reduced the case for a significantly more hawkish repricing of Federal Reserve interest-rate expectations.

For USD/CAD, the result left the US Dollar providing only part of Friday’s upside. Weakness in the Canadian Dollar has become the more important driver of the pair.

Why Is the Canadian Dollar Falling Today? The Canadian Dollar is falling today as crude oil prices retreat sharply, weakening one of the currency’s traditional sources of support. West Texas Intermediate (WTI) crude fell more than 4% to around $95.90 per barrel, dropping back below the closely watched $100 level after recently reaching a four-month high.

The decline in oil has weighed heavily on the Canadian Dollar, given Canada’s position as a major crude exporter. That relationship has helped USD/CAD continue higher even as the US Dollar surrendered part of its immediate post-CPI gains.

Oil Price Falls Below $100, Weighing on Canadian Dollar Oil has become a particularly important catalyst for the USD/CAD exchange rate following the sharp volatility in energy markets. WTI crude fell approximately 4.6% on Friday after encountering strong selling pressure above $100.

Lower oil prices can weigh on Canada’s trade outlook and reduce demand for the Canadian Dollar, making sharp movements in crude particularly relevant for USD/CAD. The latest oil selloff therefore leaves the Loonie under pressure despite the relatively limited reaction of the broader US Dollar to the inflation report.

US CPI Keeps Fed Rate Outlook in Focus Friday’s US CPI report provided a mixed inflation signal ahead of the Federal Reserve’s September policy meeting. Headline CPI increased 0.4% month over month and remained at 3.4% annually. Meanwhile, the stronger 0.3% monthly core reading suggests underlying inflation pressures have not disappeared.

However, annual core inflation slowing to 2.4% prevents the report from delivering an entirely hawkish signal. The data follows Thursday’s stronger producer inflation figures and last week’s resilient US employment report, leaving the Fed interest-rate outlook a key driver for the US Dollar heading into next week’s decision.

USD/CAD Forecast: Oil Weakness Keeps 1.3900 in Focus The near-term USD/CAD forecast remains supported around 1.3870, primarily as falling oil prices continue to pressure the Canadian Dollar. The pair reached 1.3882 following the CPI release, putting the 1.3900 area within reach if Canadian Dollar weakness continues.

However, the US Dollar’s inability to hold its initial CPI-driven gains could limit the upside. A recovery in crude oil could also provide some relief for the Loonie.

For now, oil prices and shifting Fed rate expectations remain the main catalysts for USD/CAD, with the pair maintaining its recent upward momentum near 1.3870.

Why is USD/CAD rising today?

USD/CAD is rising as the Canadian Dollar weakens alongside falling oil prices. The pair also briefly benefited from a stronger US Dollar following the August CPI report.

Why is the Canadian Dollar falling today?

The Canadian Dollar is under pressure after WTI crude oil fell more than 4% and dropped below $100 per barrel. Canada is a major oil exporter, making the Loonie sensitive to large movements in crude prices.

How does US CPI affect USD/CAD?

Higher-than-expected US inflation can support the US Dollar if it increases expectations for tighter Federal Reserve policy. However, USD/CAD is also heavily influenced by Canadian economic conditions and oil prices.

Gold (XAU/USD) edges lower on Thursday after failing to find acceptance above $4,400, with Oil prices nearing the key $100 level and global yields rallying ahead of a string of monetary policy decisions from most of the world’s major central banks.

A weak US Dollar, on the other hand, is keeping the precious metal within the last 10 days’ trading range, while analysts at TD Securities see scope for further Gold appreciation, with the “precious metal landscape still broadly supported by the renewed Dollar-debasement theme, elevated central bank buying and renewed ETF accumulation.”

In this context, the TH Securities expert argues that even if the Fed adopts a more hawkish stance, it is likely to “only postpone the timing of the next leg higher rather than catalyze material downside” for gold and the broader precious metals complex.

Technical Analysis: Hovering above key support around $4,300

The technical picture, however, shows XAU/USD consolidating recent losses just under the 200-day simple moving average (SMA) at $4,538.25, leaving the near-term tone capped, with momentum indicators in the daily chart showing a neutral-to-bearish trend. The Relative Strength Index (14) hovers around the 50 midline, and the Moving Average Convergence Divergence (MACD) remains below zero in line with a depressed histogram.

Upside attempts remain capped below Tuesday's and Wednesday's highs near $4,440, ahead of last week's highs around $4,500 and the mentioned 200-day SMA, now at $4,538.

Bearish attempts, on the contrary, are expected to be tested at the intraweek lows in the mid-$4,300s, which, so far, are closing the path towards the area between $4,311 and $4,282, the August 14 and September 2 lows, respectively, which is the neckline of a bearish Head & Shoulders (H&S) pattern.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

The Pound-Canadian Dollar x-rate could remain under pressure if UK GDP stalls, while oil above $100 may keep the Loonie supported. The Pound to Canadian Dollar (GBP/CAD) exchange rate was subdued on Wednesday amid a fresh rise in global oil prices.

At the time of writing, the GBP/CAD exchange rate was trading at CA$1.8658. Little changed from the start of Wednesday’s session.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.86754 (+0.09%)

Euro to Canadian Dollar (EUR/CAD): 1.60427 (+0.14%)

Dollar to Canadian Dollar (USD/CAD): 1.3767 (-0.08%)

DAILY RECAP:

The Canadian Dollar (CAD) edged higher on Wednesday, with the commodity-linked currency benefiting from a further rise in global oil prices as tensions in the Middle East escalated.

Brent crude – the global benchmark for oil prices - pushed above $100 a barrel on Wednesday for the first time since July.

The latest jump in oil prices followed US strikes on five Iranian oil tankers, sinking one of the ships, in retaliation against reported attempts by Iranian forces to attack a US warship.

However, the upside potential of the ‘Loonie’ remained limited on Wednesday amid ongoing concerns about Canada’s trade war with the US and its impact on the Canadian economy.

Canadian Prime Minister Mark Carney warned on Tuesday, as Canadian counter-tariffs against the US came into effect, that the pivot away from its largest trading partner ‘will come at a cost’.

The Pound (GBP) struggled to attract support on Wednesday as rising energy prices stoked UK inflation concerns.

UK gas prices have climbed to their highest level in around three and a half years as the conflict in the Middle East drags on.

While growing inflationary pressures increase the odds of the Bank of England (BoE) delivering an interest rate by the end of the year, GBP investors remain concerned that a fresh cost-of-living crisis could suppress consumer spending and choke off growth in the coming months.

Near-Term GBP/CAD Forecast: Stalling UK GDP to Weigh on Sterling? Turning to the second half of the week, the next notable catalyst of movement for the Pound to Canadian Dollar (CAD/USD) exchange rate will be the publication of the UK’s latest GDP figures.

Friday’s data is forecast to show month-on-month UK economic growth flatlined in July, with the weak start to the third quarter likely to expose Sterling to fresh losses at the end of the week.

In the meantime, movement in the Canadian Dollar is likely to remain closely tied to oil price dynamics, with the ‘Loonie’ likely to continue to catch bids if crude prices continue to push higher.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

The New Zealand Dollar extends losses against the US Dollar (USD) on Tuesday, weighed by the risk-off mood amid escalating tensions in the Middle East and rising Oil prices. The NZD/USD extends its reversal from the 0.5900 area on Friday, reaching session lows at 0.5836, below the key 200-day Simple Moving Average (SMA) which lies at the 0.5850 area.

Market sentiment remains subdued as tensions between the US and Iran escalate further, pushing back hopes of a negotiated end to the conflict. Tehran threatened to strike US Gas and Oil interests in Gulf countries if Iran is attacked again, following another round of hostilities over the weekend.

Meanwhile, traffic through the Strait of Hormuz, which carried about 20% of global Oil supply before the war, remains limited to a trickle, which is pushing prices higher. Brent Oil is trading above $97.00 per barrel on Tuesday's European session, accumulating a nearly 9% appreciation so far in September, and 38% above July lows. These prices increase the exposure of New Zealand’s economy to another Energy shock.

Earlier on the day, data from China revealed that the trade surplus increased in August, although imports missed expectations, which suggests that the country's domestic demand remains weak. The data failed to provide any noticeable support to the China-proxy NZD.

Technical Analysis: Approaching the trendline of a bearish H&S

NZD/USD trades at 0.5843, holding a bearish near-term tone as it slips just below the 200-day simple moving average (SMA) at 0.5854 and draws closer to the neckline of a bearish Head & Shoulders (H&S) pattern, between 0.5800 and 0.5820. Momentum indicators show a growing bearish trend, as the Relative Strength Index (RSI) eases toward the low-40s and the Moving Average Convergence Divergence (MACD) line sits below zero with a negative histogram.

A break of the 0.5800 level would confirm an H&S pattern, adding pressure towards the late July lows, near 0.5765 and the July 13 low, at 0.5745. The H&S's measured target is below the June 26 low at 0.5626.

On the topside, Bulls should break Friday's high at the 0.5900 area to ease bearish pressure and shift the focus toward the late August highs at the 0.5990 area.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

New Zealand Dollar Price Today The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHFUSD0.09%0.11%-0.14%-0.09%0.13%0.63%0.25%EUR-0.09%0.01%-0.23%-0.17%0.02%0.55%0.16%GBP-0.11%-0.01%-0.25%-0.19%0.00%0.54%0.15%JPY0.14%0.23%0.25%0.07%0.28%0.80%0.42%CAD0.09%0.17%0.19%-0.07%0.21%0.73%0.35%AUD-0.13%-0.02%-0.01%-0.28%-0.21%0.53%0.14%NZD-0.63%-0.55%-0.54%-0.80%-0.73%-0.53%-0.38%CHF-0.25%-0.16%-0.15%-0.42%-0.35%-0.14%0.38% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).

US CPI – GoldAll eyes are on Friday's US CPI report, which will dictate the Federal Reserve’s September 16 rate decision. While August’s 162,000 payroll rebound raised the chances of a rate hike to 59%, central bank leaders stress that inflation data will decide the outcome. A higher-than-expected inflation figure would lock in a quarter-point increase and boost the US dollar, while a cooler reading could keep interest rates on hold and weaken the greenback.

Meanwhile, gold fell toward 4,400 as higher bond yields and rate-hike expectations weighed on non-yielding metals, leaving gold prices equally dependent on the incoming CPI data. A sell-off beneath the 50-day simple moving average (SMA) at 4,350 and, more importantly, below the 4,310 strong support would increase speculation of further decreases toward 4,200.  

ECB rate decision – EUR/USDMarkets broadly expect the European Central Bank to raise borrowing costs by a quarter-point to 2.5% this Thursday as rising energy expenses push inflation beyond 3%. While investors anticipate another potential move by December, economists expect this to be the final increase to avoid damaging economic growth, especially with wage expansion slowing and broader inflation remaining muted. The euro's reaction will depend heavily on Christine Lagarde’s press conference, any signal of a December hike could lift EURUSD, whereas a focus on economic risks could push the single currency lower.

Currently, EUR/USD is fluctuating within the 20- and 200-day SMA, slightly above the 1.1600 handle. A successful climb beyond it would endorse another bullish wave, heading toward the 1.1710 barrier. On the other hand, a slide below the 50-day SMA may switch the short-term outlook to negative.

Escalating US-Iran conflict drives oil higher – WTI Crude OilRising Middle East conflict drove crude oil past 92.00 level today, extending last week’s momentum as reciprocal strikes between American and Iranian forces sparked fears of enduring regional supply bottlenecks. US naval forces targeted Iranian oil tankers following missile launches directed at warships, prompting Tehran to declare restricted shipping routes near the critical Strait of Hormuz waterway. In response, OPEC+ chose to halt its monthly output increases by keeping October production levels unchanged, even as prolonged transit hazards forced the cartel to lower its current-year global demand growth forecast to 580,000 barrels daily.

WTI crude oil is ticking marginally higher above the 92.00 region with the next strong resistance coming from the 94.60 barrier. A step up could open the way for a touch of the 99.00 psychological mark, raising the likelihood of a bullish outlook. Alternatively, only a drop below the 200-day SMA at 80.40 could endorse the bearish outlook.

Pound-Canadian Dollar could extend its decline if UK GDP disappoints, while higher oil prices may provide further support for the Loonie. The Pound to Canadian Dollar (GBP/CAD) exchange rate retreated last week as fears that a rise in borrowing costs could pose a risk to the UK's upcoming Autumn budget.

At the time of writing, the GBP/CAD exchange rate traded at CA$1.8718. Down around 0.5% from the start of last week’s session.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.87 (-0.02%)

Euro to Canadian Dollar (EUR/CAD): 1.605723 (-0.08%)

Dollar to Canadian Dollar (USD/CAD): 1.38328 (-0.03%)

DAILY RECAP:

Pound (GBP) struggled to make headway last week, with Sterling bearing the brunt of the turbulence sweeping through global bond markets.

UK gilts were among the hardest hit, with the 10-year gilt yield breaking above 5.25% and striking a 19-year high, while yields on 30-year gilts climbed to their highest levels since 1998.

Although the sharp rise in yields formed part of a broader sell-off in government bonds, concerns that higher borrowing costs could eat further into the limited fiscal headroom available to Chancellor John Healey ahead of his first Autumn Budget, meant there was a disproportionate impact on Sterling.

The Canadian dollar (CAD) got off to an underwhelming start last week, with CAD demand being undermined by lingering concerns about a potential US-Canada trade war.

However, the 'Loonie' then received a shot in the arm in mid-week trade following the Bank of Canada's (BoC) latest interest rate decision.

While the BoC kept interest rates on hold as forecast, its guidance warned of upside risks to inflation, which investors interpreted as a hawkish nod to a potential need to tighten monetary policy in the future.

The end of the week then saw the publication of Canada's latest jobs report, with the 'loonie' coming under pressure, following a shock contraction in employment growth last month.

Near-Term GBP/CAD Forecast: Slowdown in UK GDP to Weigh on Sterling? Looking ahead to this week's session, the Pound to Canadian Dollar (GBP/CAD) exchange rate may extend its losses as markets digest the UK's latest GDP figures.

Economists expect month-on-month economic growth to have slowed in July, with a soft reading potentially likely to drag on Sterling if it is seen as weakening the odds of a Bank of England (BoE) rate hike later in the year.

Meanwhile, in the absence of any notable domestic data, movement in the 'loonie' may be tied to oil price dynamics, with further uncertainty in the Middle East potentially propelling the commodity and CAD exchange rates higher.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Why Brent’s break above $97 is failing to lift Dollar, and why Japan, not oil, is setting today’s currency direction What’s happening: USD/JPY broke decisively through 157.99 to around 156, bringing the 155 area back into range, as Yen’s rally gathers fresh momentum from speculation that Japan’s roughly $2 trillion GPIF could raise its domestic bond allocation, on top of an already-hawkish BoJ repricing. At the same time, Brent climbed to an intraday high around $97.62, its strongest level in six weeks, as the US-Iran conflict shows signs of extending well beyond 2026.

Why it matters: Brent above $97 and a conflict that could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of the FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.

Yen Takes Over as GPIF Speculation Adds to BoJ Repricing Yen extended its powerful rally on Thursday, sending USD/JPY decisively through 157.99 to around 156 and putting the 155 area back within reach. Latest leg appears to have received fresh fuel from speculation surrounding Japan’s roughly $2 trillion Government Pension Investment Fund. GPIF held an unusual management committee meeting on August 21, its first August meeting since 2019, and revisited discussion around its basic portfolio only five months after a March assessment concluded that a review was unnecessary.

Market interest centers on whether GPIF could eventually raise its strategic allocation to domestic assets, particularly government bonds. Domestic bonds currently carry a 25% target allocation, alongside 25% each for domestic equities, foreign bonds and foreign equities. The timing is significant because Japan’s 10-year government bond yield has climbed roughly one percentage point since March and briefly reached 3.015% this week, highest since 1996. Higher domestic yields are already changing relative attractiveness of Japanese assets, with Japanese investors reducing overseas bond exposure this year. A larger GPIF domestic allocation would reinforce that repatriation theme and potentially relieve some upward pressure on JGB yields.

That speculation is adding to a much broader Yen-positive repricing already underway. BoJ officials have become increasingly explicit about further tightening, with markets now focused not only on a possible September hike but on a faster cycle over coming year. Japan’s top currency diplomat Atsushi Mimura added another layer of caution Thursday, saying he was “neither satisfied nor reassured” by recent Yen developments and that authorities remained on “a state of heightened alert.” He declined to confirm whether officials had conducted a rate check. Traders nevertheless continue to attribute Yen strength primarily to BoJ tightening expectations rather than fresh intervention.

The 155 level is critical. USD/JPY is approaching the same territory reached after July’s record intervention campaign, which cost Japan roughly $96.5bn and included rare US participation. The 155.22 area marks July’s post-intervention low, while 155.01 provides nearby technical support. This time, however, pair is approaching those levels organically rather than through any confirmed official Yen buying.

Why the 155 Level Matters Japan’s 10-year JGB yield: briefly reached 3.015% this week, highest since 1996. July’s record intervention: cost roughly $96.5bn, included rare US participation. 155.22: July’s post-intervention low. 155.01: nearby technical support. Mimura: “neither satisfied nor reassured,” authorities on “a state of heightened alert.” July’s Intervention-Driven Move vs. Today’s Organic Approach to 155 July’s Intervention Today How USD/JPY reached this territory Record intervention, cost roughly $96.5bn, included rare US participation Approaching organically, no confirmed official Yen buying Key levels 155.22 (post-intervention low), 155.01 (support) Same levels now back within reach Attributed driver Direct official Yen buying BoJ tightening expectations and GPIF speculation Dollar Weakens Even as Oil Sends a Normally Bullish Signal Yen’s surge has become dominant force in FX, with Dollar lower against all major counterparts despite a backdrop that would normally be considerably more supportive. In Dollar index specifically, Yen’s sizeable weighting means its appreciation directly pulls index lower. More broadly, modest easing in Treasury yields has allowed Dollar weakness to spread across EUR, GBP and CHF as traders focus on Japanese policy repricing rather than extending this week’s US rates trade.

That creates today’s most counterintuitive cross-asset signal. Brent has broken above $97 to fresh six-week highs as US-Iran conflict intensifies, yet Dollar is falling. Earlier this week, higher oil transmitted relatively cleanly through inflation fears into higher Treasury yields and firmer expectations for Fed tightening. That channel has not disappeared, but it is being overshadowed in FX by Yen’s much larger independent move and the pause in US yields.

Wednesday’s softer ADP report, with private payrolls rising only 38K, contributed to that pause in further hawkish repricing, but it is not the principal driver of Thursday’s Dollar move. Initial jobless claims subsequently matched expectations at 206K, offering little additional direction. Markets still attach substantial probability to September Fed hike, leaving Friday’s NFP as decisive test. For now, more revealing question is not simply why Dollar is weaker, but why Brent above $97 has failed to make Dollar stronger. Answer lies in Japan: Yen and BoJ repricing have become larger currency-market forces today.

Oil Story Shifts From Escalation to Duration Brent meanwhile climbed to an intraday high around $97.62, extending this week’s rally and reaching its strongest level in six weeks. But narrative is beginning to shift. Earlier phases of renewed fighting were dominated by immediate questions over each US strike, Iranian retaliation and potential disruption to Strait of Hormuz. Markets are now considering a more difficult possibility: conflict and impaired regional energy flows could persist into 2027. Recent market commentary has explicitly moved toward that longer time horizon, with Capital Economics expecting restoration of Middle East energy flows to be delayed until early next year and forecasting Brent around $100 by end-2026.

That matters more for inflation than another isolated military exchange. A conflict measured in additional months rather than days would prolong pressure on shipping, inventories and refined-product markets, increasing chances that energy inflation becomes persistent enough to influence central-bank decisions. Iranian retaliation has also widened geographically, while US officials continue to signal that military pressure could intensify again even as Washington tries to limit escalation ahead of November elections. Reuters reported that administration officials see possibility of more intense attacks after midterms, underscoring absence of a clear near-term exit from a war now in its seventh month.

The closing contradiction is therefore striking. Brent above $97 and rising concern that US-Iran conflict could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.

Related Coverage Yen & Precious Metals Deep Dives Read why Silver’s rebound from 63.27 still depends on holding 62.54-62.92 to keep its five-wave recovery from 54.77 alive ahead of Friday’s NFP: Silver’s Correction Has Reached Its Line in the Sand — What Happens Next?. See why Friday’s NFP creates an asymmetric setup for USD/JPY, with weak data opening a clearer path toward 155 than strong data does above 160: USD/JPY Tumbles Under the Shadow of Intervention, Faces Asymmetric NFP Test. US Data Deep Dive Read why jobless claims matching expectations at 206K still leaves Friday’s NFP as the clearer labor-market signal: US Initial Jobless Claims Rise from 204K to 206K. Global Inflation Deep Dives See why Eurozone PPI’s swing to +1.6% m/m was driven largely by a 5.6% jump in energy prices, with annual producer inflation accelerating to 5.8%: Eurozone PPI Surges 1.6% M/M as Energy Drives Renewed Producer Inflation (full Eurostat release). Read why Swiss CPI’s jump to 0.8% was driven mostly by energy and imported prices, with core inflation holding at 0.4%: Swiss CPI Jumps to 0.8%, but Energy Drives Much of Inflation Surprise. Global PMI Round-Up See why UK services hitting a four-month high still came with employment falling for a 23rd straight month: UK PMI Services Hits Four-Month High as Cost Pressures Reaccelerate. Read why Eurozone’s composite PMI holding at an eight-month high alongside stalled disinflation is strengthening the case for ECB tightening: Eurozone PMI Composite Holds Firm as Sticky Prices Strengthen ECB Tightening Case. See why Japan’s record composite selling-price inflation is adding to the case for another BoJ hike even as growth accelerates: Japan PMI Growth Accelerates as Record Selling Prices Strengthen BoJ Hike Case. Read why Australian services confidence hit a six-month high even as fuel and wage costs kept input inflation elevated: Australia PMI Services Holds Firm at 53.2 as Confidence Rises but Costs Stay High. See why China’s services and composite PMI gains reflect stronger domestic demand and sustained hiring: China RatingDog PMIs Strengthen as Services and Employment Gain Momentum. Frequently Asked Questions Q: Why is Dollar falling even though oil just broke above $97? A: Because Yen’s much larger, independent move is overwhelming the usual oil-to-Dollar transmission channel. Higher oil normally supports Dollar through inflation fears feeding into higher Treasury yields and firmer Fed tightening expectations, and that channel hasn’t disappeared. But Yen’s sizeable weighting in the Dollar index, combined with a pause in US yields, means Japanese policy repricing is currently the bigger force in FX. The real question today isn’t why Dollar is weaker, it’s why Brent above $97 hasn’t made it stronger, and the answer is Japan.

Q: What is GPIF and why does speculation about it matter for Yen? A: GPIF is Japan’s roughly $2 trillion Government Pension Investment Fund. It held an unusual management committee meeting on August 21, its first August meeting since 2019, revisiting its basic portfolio just five months after concluding in March that no review was needed. Markets are watching whether GPIF could raise its 25% target allocation to domestic bonds. A larger domestic allocation would reinforce the repatriation trend already underway as Japanese investors reduce overseas bond exposure, adding further support to Yen and potentially easing some upward pressure on JGB yields.

Q: How is this approach to 155 different from July’s intervention? A: July’s move to the 155 area came from a record, roughly $96.5bn intervention that included rare US participation. This time, USD/JPY is approaching the same 155.22 and 155.01 levels organically, with no confirmed official Yen buying. Traders are attributing the move to BoJ tightening expectations and GPIF speculation rather than direct intervention, even though currency diplomat Mimura says authorities remain on “a state of heightened alert.”

Key Takeaways USD/JPY broke through 157.99 to around 156: Bringing the 155 area back into range for the first time since July’s intervention. GPIF speculation is adding fresh fuel to Yen’s rally: Markets are watching whether Japan’s roughly $2 trillion pension fund raises its 25% domestic bond allocation after an unusual August 21 committee meeting. Japan’s 10-year JGB yield briefly hit 3.015% this week: The highest since 1996, up roughly one percentage point since March. Currency diplomat Mimura kept intervention rhetoric alive: Saying he’s “neither satisfied nor reassured,” though traders still attribute Yen strength to BoJ tightening expectations, not intervention. Brent climbed to a six-week high around $97.62: As the oil narrative shifts from immediate escalation questions to concern the conflict could extend into 2027. Reuters reported officials see possible intensified attacks after the US midterms: Underscoring no clear near-term exit from a conflict now in its seventh month. Dollar is broadly weaker despite a combination that would normally support it: Brent above $97 and extended conflict risk usually mean higher inflation and rates support for Dollar, but Japan has taken control of the FX narrative instead. Unlike July, today’s approach to 155 is organic: No confirmed official Yen buying, unlike July’s roughly $96.5bn intervention with rare US participation. What to Watch Next Friday’s US nonfarm payrolls report is the decisive near-term test for Dollar, following a softer ADP print and in-line jobless claims. Watch whether USD/JPY breaks below 155, further signals on GPIF’s portfolio review, and whether Brent extends toward $100 as Capital Economics and others push their Middle East normalization timelines further into 2027.

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AUD/USD

Sell AUD/USD. Higher odds of both RBA and Fed hikes push the market toward tighter USD policy and less room for AUD to rally; strong Aussie data is already “priced,” while the article flags elevated inflation and renewed oil/energy pressure that can keep both central banks hawkish. Technicals also point to a bearish reversal (rising wedge convergence, PPO bearish crossover, RSI rolling over). Target 0.700 support.

Key Risk: A sharp risk-off move that weakens the USD (or a surprise dovish Fed/RBA shift) that drives AUD/USD back above 0.7207.

Brent-linked AUD

Sell AUD exposure via AUD/JPY (or AUD futures). The news ties the hawkish rate repricing to higher oil after US-Iran activity; that supports global growth but also keeps inflation sticky, which tends to keep JPY relatively supported versus high-beta AUD when rates are uncertain. With AUD/USD set up to break lower, AUD/JPY should follow on the same rate-and-risk repricing.

Key Risk: Oil spikes further and triggers a broad commodity/risk rally that lifts AUD/JPY despite the wedge/oscillator bearish setup.

The Australian dollar held firm today, September 3rd, as investors adjusted their RBA and Federal Reserve expectations for the year. The AUD/USD pair was trading at 0.7165, a few points below the August high of 0.7207. 

Traders are bracing for interest rate hikes from the Federal Reserve and the Reserve Bank of Australia (RBA) happening as soon as this month.

Polymarket gives the odds of RBA’s rate hike happening in September rose to 67%. These odds jumped after the US and Iran resumed their kinetic activity, which led to higher oil prices. 

Australia has also published strong macro numbers this week. An S&P Global report showed that the services PMI came in at 53.2 in August, higher than the expected 52.9. A PMI reading of 50 and above is usually a sign that a sector is growing. The composite PMI came in at 52.7, also higher than the expected 52.50.

Another report released on Wednesday showed that the Australian economy expanded by 2.1% in the second quarter, higher than the expected 1.8%. It grew by 0.4% in Q2 after growing by 0.3% in Q1 on a QoQ basis. 

This growth happened even as the Reserve Bank of Australia (RBA) became the most hawkish central banks this year. It has already delivered three rate hikes this year, with officials leaving the door open for more hikes.

A key concern is that Australia’s inflation has remained at an elevated level in the past few months. This trend will likely continue now that the US and Iran have restarted their kinetic activity, leading to higher energy prices. Brent, the global benchmark, rose to $95.68, while the West Texas Intermediate (WTI) rose to $91.

The same situation is happening in the US, where odds that the Fed will hike rates this month have jumped to 55% on Polymarket. These odds soared after Kevin Warsh delivered a highly hawkish statement at the Jackson Hole Symposium.

In it, he hinted that the bank was concerned about the state of inflation, which has remained above the 2% target in the past five years.

Focus now shifts to the upcoming US nonfarm payrolls (NFP) report that will provide color on the labor market. Economists expect the data to show that the economy created over 80k jobs in August this year.

AUDUSD chart | Source: TradingView

The daily chart shows that the AUD/USD pair may be on the verge of a bearish reversal in the coming days. For one, it has formed a rising wedge pattern whose two lines are about to converge. 

Also, the two lines of the Percentage Price Oscillator (PPO) have made a bearish crossover, while the Relative Strength Index is pointing downwards.

Therefore, the most likely scenario is where the AUD/USD pair falls, potentially to the key support of 0.700.

Preview: Westpac sees RBNZ hiking OCR to 2.75% tomorrow, data dependent from thereMOF official: Katayama, Bessent talks covered FX intervention, fiscal policyJapan finmin Katayama and Bessent affirm need for orderly yen movesChina private PMI beats forecast, longest upturn in five years. AUD support.China data: RatingDog Manufacturing PMI (August 2026) 51.5 vs. expected 50.9, prior 50.9TD Securities sees gold risk to 4200 near term, 5350 target by 2027UBS says 3 reasons the Venezuela oil deal wont move prices much, Hormuz still keyJapan manufacturing PMI hits 54.9 as new orders surge most since 2018New report shows scale of China's state-backed equity market support, State capital and buybacksPBOC sets USD/ CNY central rate at 6.7809 (vs. estimate at 6.7170)Oil Shock Pushes Yields Higher as Bitcoin Resists and Gold WeakensGoldman CEO flags Middle East, tariffs as headwinds to solid US growthDark transits and tanker relays: Oil producers workarounds to keep oil moving past HormuzBessent met Ueda, Katayama at G20, pushed for BOJ hikes, NHK reportsInflation? You want inflation? UK shop prices rise at fastest pace since 2024Tanker struck by three projectiles exiting Strait of Hormuz, UKMTO warnsMonday catch up in preparation for Asia open: Oil surges on Iran strikes, hawkish Warsh lifts dollar, yields, hike oddsUS Army Secretary Driscoll resigns after months of friction with HegsethExplainer: China's four PMIs, why they don't always agree, and how to trade themICYMI: Bessent lists reasons Fed could skip a September hike despite Warsh remarksinvestingLive Americas FX news wrap 31 Aug: The USD moves lower. USD corrects after Warsh's hawkish speech at Jackson HoleUS broader indices close lower on the day. Nasdaq 100 closes marginally higherSummary:

Oil remains underpinned after Monday's gains, with President Trump vowing to hit Iran hard in response to its retaliation, and reports of a Saudi VLCC halted after being struck by projectiles in the Strait of Hormuz.US Army Secretary Dan Driscoll has resigned after months of tension with Defense Secretary Pete Hegseth, according to the Wall Street Journal.Gold is little changed below USD 4,450/oz following a quiet prior session and amid recent upside in yields.China's RatingDog Manufacturing PMI rose to a two-month high of 51.5 in August from 50.9 in July, with new orders and exports accelerating, a ninth straight month of expansion and a positive signal for AUD as a China proxy.Japan's S&P Global Manufacturing PMI rose to 54.9 in August from 54.5 in July, an eighth straight month of improvement, with new orders growing at their fastest pace in over eight and a half years on AI and semiconductor demand, though this missed the 55.1 forecast.South Korea's S&P Global Manufacturing PMI eased to 52.3 in August from 53.1 previously.Australia's net exports contributed 0.1 percentage points to Q2 GDP, following separate data showing underlying government demand and inventories contributed 0.33 percentage points to Q2 growth.Treasury Secretary Bessent said he believes Japan will act to strengthen the yen and that markets are pricing in a BOJ hike, after meeting BOJ Governor Ueda and Japan's Finance Minister Katayama at the G20; USDJPY stood near 159.75, close to the 160 level associated with intervention risk.Katayama separately confirmed with Bessent that orderly yen and FX rates are crucial for global financial stability and that joint intervention remains significant, while declining to comment on current yen levels.The US dollar held slightly higher against most major currencies.A new report showed the scale of China's state-backed equity market support, with SASAC and Chengtong raising A-share holdings by more than 60 billion yuan in 2026, part of a wider buyback push covering 1,051 listed companies with proposed buybacks exceeding 220 billion yuan, according to the China Association for Public Companies.The Nikkei 225 traded off earlier lows and briefly turned positive, with headwinds from higher yields. The KOSPI declined mildly amid light newsflow and indecisive performance among tech heavyweights. The Hang Seng fell around 1% while the Shanghai Composite rose 0.2%, with mainland shares cushioned by the stronger than expected China PMI data. Middle East news flow was relatively light through the session, though oil prices remained underpinned after Monday's gains, when a US strike on Iranian rocket launchers and a subsequent Iranian retaliation drove crude higher. President Trump has vowed to respond forcefully to Iran's retaliation, and further support came from reports that a Saudi VLCC was halted after being struck by projectiles in the Strait of Hormuz, extending the pattern of tanker incidents in the waterway.

Separately, US Army Secretary Dan Driscoll has resigned following months of tension with Defense Secretary Pete Hegseth, according to the Wall Street Journal.

Gold was little changed below the USD 4,450 an ounce level, following an uneventful prior session and alongside the recent upside in bond yields.

It was a busier day for economic data, with the focus on China's private sector manufacturing survey. The RatingDog China General Manufacturing PMI rose to a two-month high of 51.5 in August from 50.9 in July, with new orders and export growth both accelerating. The reading marked a ninth consecutive month of expansion and was seen as a positive signal for the Australian dollar given its role as a China proxy currency.

In Japan, the S&P Global Manufacturing PMI rose to 54.9 in August from 54.5 in July, an eighth consecutive month of improvement, with new orders expanding at their fastest pace in more than eight and a half years on strong AI and semiconductor related demand, though the reading fell short of the 55.1 forecast. South Korea's equivalent survey eased to 52.3 in August from 53.1 previously.

In Australia, net exports contributed 0.1 percentage points to second quarter GDP, following data released a day earlier showing underlying government demand and inventories contributed a further 0.33 percentage points to growth over the same period.

On the currency side, Treasury Secretary Scott Bessent said he believes Japan will act to strengthen the yen and that markets are pricing in a Bank of Japan rate hike, following meetings with BOJ Governor Kazuo Ueda and Japan's Finance Minister Satsuki Katayama at the G20 in Asheville. USDJPY stood near 159.75, close to the 160 level that has previously been associated with a heightened risk of intervention. Katayama separately confirmed with Bessent that orderly yen and broader FX rates are crucial for the stability of global financial markets, and that the two sides share an understanding on the significance of joint intervention, while declining to comment on whether she considers current yen levels to be in order. The US dollar held slightly higher against most major currencies through the session.

A new report also highlighted the scale of state-backed support flowing into Chinese equities, with the State-owned Assets Supervision and Administration Commission and China Chengtong Holdings Group having raised their combined A-share holdings by more than 60 billion yuan so far in 2026. That figure sits within a broader buyback push covering 1,051 listed companies with proposed buybacks exceeding 220 billion yuan, according to a report from the China Association for Public Companies.

Regional equity markets were mixed. The Nikkei 225 traded off its earlier lows and briefly turned positive, despite headwinds from higher yields. The KOSPI declined mildly amid light news flow and indecisive performance among the index's tech heavyweights. In Hong Kong and mainland China, the Hang Seng fell around 1% while the Shanghai Composite rose 0.2%, with mainland shares cushioned by the stronger than expected Chinese manufacturing PMI data released earlier in the session.

Summary:

The USD/INR will trade as an interplay between the US Treasury's bond buyback program and the geopolitical scenarios. Current Setup and Live Chart With the US Dollar entering the week with negative sentiment, USD/INR’s upside may be capped or limited. This is because the rupee has significant exposure to the current geopolitical environment in the Middle East. This factor poses a substantial upside risk for the rupee.

USD/INR is mildly bearish at the moment. But significant oil-related upside risk means the pair’s direction could be driven more by the rupee’s response to oil prices than by the USD’s response to the local fiscal environment.

Last week brought news of the US Treasury’s intention to double its bond buyback program. Under this arrangement, the US Treasury will double the maximum limit of its 10–30-year liquidity-support buybacks from $2 billion to $4 billion per operation, with commencement set for 9 September 2026. The announcement caused a drop in US long-term yields and weakened the dollar’s yield advantage. But any geopolitical escalation puts the rupee on the back foot, meaning the pair could resume the upside even if the greenback is broadly weak.

USD/INR Forecasts: Key Scenarios This Week The scenarios that will determine the USD/INR forecasts are straightforward:

US Dollar ↓ + oil stable → USD/INR ↓ (mildly bearish) Dollar ↓ + oil ↑ sharply → USD/INR could still rise. Dollar ↑ + oil ↑ → strongly bullish for USD/INR. There are asymmetric risks to the USD/INR pair. In other words, any fresh escalation of the US-Iran conflict, particularly regarding the Strait of Hormuz, will quickly override any weakness from the US Treasury buyback intervention.

Macro Drivers for the USD/INR right now 1) The Treasury Buyback Program

The US Treasury’s long-end buybacks are set to increase to at least $4 billion per operation and will cover 10–30-year securities. This has reduced the USD’s yield advantage.

Although this move aims to improve liquidity and reduce pressure on the long end of the U.S. Treasury curve, it could reduce the appeal of USD-denominated assets. This impact is already being felt across several emerging market FX pairs.

2) Oil prices

Elevated oil prices remain the rupee’s biggest threat. India is the world’s third-largest economy, and elevated oil prices hurt the rupee. India’s structural dependence on imported crude means higher prices risk importing inflation into India and keeping import bills high. The accompanying deterioration in the trade balance puts pressure on the local currency. Indeed, persistently high oil prices could weaken the rupee enough to offset any losses the USD suffers from Treasury intervention.

3) Geopolitical risk

The conflict around Iran and the Strait of Hormuz creates three channels of pressure. The first is from higher crude prices, which raise import costs. The second is from higher freight and insurance costs incurred from using longer alternative oil shipping routes. The third is the exit of portfolio funds from emerging markets due to risk aversion. India’s current growth provides some buffer, but it does not reduce the risk premium that hits the rupee amid geopolitical escalation. risk

4) The RBI as a Manager of Rupee Volatility

The Reserve Bank of India (RBI) typically steps in to manage excessive rupee volatility. One way it does this is by deploying some of its external reserves to defend the rupee and prevent a disorderly, outsized depreciation.

USD/INR Price Catalysts 1) Brent crude direction: For the rupee, this is the most important variable right now. Lower Brent crude prices reduce India’s import bill and favor a USD/INR downside. A sharp rise in Brent crude raises import costs and supports the pair. As prices approach $100, this factor becomes more important.

2) US Treasury Yields: The bond buyback program is basically an intervention that determines the yields on long-term US borrowing costs. They were introduced to stabilize the bond market at the long end. If US Treasury yields decline as a result, the US Dollar also declines, and this supports the rupee. Ultimately, this is meant to cap the upside in the USD/INR. The reverse is also the case. If the program fails to curtail the rise in bond yields, we would see the USD regaining lost ground. Rising oil prices are bullish for the USD/INR.

3) Foreign portfolio flows: A decline in US bond yields and a weaker dollar improve the appeal of emerging-market FX such as the rupee. It would favor an influx of foreign portfolio funds into the Indian market. These funds need to convert into the local currency to participate in the Indian market; this is bullish for the rupee. Conversely, a global risk-off episode (such as a geopolitical escalation) could send these portfolio funds fleeing to safety and out of the Indian markets. This is a rupee-negative scenario.

USD/INR Technical Outlook The ascending trendline support is under threat, as the daily candle has violated it. We need to see the 95.24 support level (30 March high) break down for a push lower toward the 94.04 support and the 61.8% Fibonacci retracement of the 8 April – 20 May upswing. Below this level, additional support is seen at 93.25.

Fig 1: USD/INR daily chart showing key price levels (snapshot: 25 August 2026) Conversely, recovery above the trendline maintains its integrity. The bulls would need to force a bounce from there to aim for the 96.99 resistance as the next upside target. However, there is a potential for a pitstop at the most recent high seen on 24 July at 96.67. Only if this point is surpassed can we see a reclaim of 96.99.

The Pound-Canadian Dollar rate could remain under pressure if Canadian GDP rebounds strongly and lifts Bank of Canada rate hike expectations. The Pound to Canadian Dollar (GBP/CAD) exchange rate ticked lower last week as a fresh rise in oil prices bolstered the 'Loonie'.

At the time of writing, the GBP/CAD exchange rate traded at CA$1.8754. Down around 0.2% from the start of last week’s session.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.878441 (-0.10%)

Euro to Canadian Dollar (EUR/CAD): 1.607534 (-0.20%)

Dollar to Canadian Dollar (USD/CAD): 1.3767 (-0.11%)

DAILY RECAP:

The Canadian dollar (CAD) edged higher last week with the commodity-linked currency drawing support from a renewed surge in oil prices.

Brent crude rose to around $94 a barrel last week as the 60-day memorandum of understanding between Washington and Tehran expired without a final peace deal or an agreed extension, reinforcing concerns that the disruption to energy supplies could persist.

In terms of domestic data, the Canadian Dollar was seemingly unfazed by a stronger-than-expected inflation print and sizable contraction in Canadian retail sales.

The Pound (GBP) put in a mixed performance last week, with the currency fluctuating against most of its rivals amid a flurry of high-impact UK economic data.

A mixed batch of releases left investors struggling to gauge the next move from the Bank of England (BoE). Weaker employment figures followed by an unexpected acceleration in inflation weighed on Sterling during the first half of the week, as the conflicting signals complicated the outlook for interest rates.

The Pound then attempted to regain ground, only for the recovery to falter after a sharp decline in UK retail sales and a shock rise in UK government borrowing last month.

Near-Term GBP/CAD Forecast: Rebound in Canadian GDP to Boost the 'Loonie'? Looking to the week ahead, the primary catalyst of movement for the Pound to Canadian Dollar (GBP/CAD) exchange rate is likely to be the publication of Canada's latest GDP data.

Consensus estimates predict Canadian GDP will have rebounded strongly in the second quarter, lifting the country out of the technical recession it slipped into in the first quarter of the year.

This in turn could improve the odds of the Bank of Canada (BoC) delivering an interest rate hike later in the year, boosting the appeal of the 'Loonie'.

Meanwhile, a relatively quiet UK economic calendar should leave Sterling largely dependent on wider risk appetite and developments across global markets.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

TL;DR: Canada is facing 50% US tariffs after trade talks collapsed, yet USD/CAD’s muted reaction — with oil, bonds, and the Dollar all failing to confirm a Canada-specific stress trade — suggests markets see this as a narrower, contained shock rather than an economy-wide one.

Why Isn’t the Canadian Dollar Falling Harder? Canada entered the week with two apparently bearish developments already in place. US trade talks had collapsed, new 50% tariffs were in force, and oil was retreating from recent highs. Yet USD/CAD’s response has been restrained rather than disorderly. The pair recovered from 1.3730, but has so far failed to produce the kind of upside acceleration that headline severity might suggest. That muted reaction is important: the FX market appears to be distinguishing an unusually aggressive trade action from an immediate economy-wide shock.

Part of the explanation is scope. The 50% tariff rate is eye-catching, but duties apply to roughly C$28bn, or about US$20bn, of Canadian exports — not the entire Canada-US trade relationship. Timing also matters. US measures took effect Saturday, so Monday’s session is digesting an outcome known since late Friday rather than reacting to a fresh intraday surprise. Canada’s promised dollar-for-dollar retaliation isn’t scheduled to begin until September 8, leaving roughly two weeks before the full two-way tariff confrontation reaches the real economy.

How a Near-Deal Collapsed The breakdown was nevertheless abrupt. US President Donald Trump temporarily postponed implementation last week as negotiations appeared close, and Canada’s trade minister Dominic LeBlanc held lengthy talks with USTR Jamieson Greer as both sides continued trying to bridge differences. Talks then failed late Friday, allowing 50% duties to take effect shortly after midnight Saturday.

Canadian Prime Minister Mark Carney subsequently called the tariffs a “miscalculation” and said the US side had introduced last-minute changes Canada considered unfair and uneconomic. Washington has framed the dispute differently, focusing in part on Canada’s refusal to remove retaliatory restrictions imposed during earlier tariff rounds, including provincial bans on sales of some US alcohol.

The accounts aren’t necessarily mutually exclusive: what Ottawa describes as a late change could be the same demand Washington viewed as an unresolved condition. Neither side has released the full draft agreement, leaving the exact final sticking point uncertain and giving Canada’s opposition another opening to press Carney for disclosure. The escalation is also notable because Trump used Section 338 of the Tariff Act of 1930, an extraordinary provision that had not previously been used by a US president to impose tariffs.

Oil and Bonds Aren’t Confirming a Canada Stress Trade Oil adds another nominally bearish input for CAD, but the current decline is weaker as a signal than the headline suggests. Crude retreated after two consecutive weekly gains as traders took profits ahead of Treasury Secretary Scott Bessent’s expected Iran sanctions announcement today. That’s different from an oil selloff driven by collapsing demand expectations or a fresh deterioration in global growth. For a commodity-sensitive currency such as CAD, that distinction matters.

Canadian rates are also not showing a parallel stress signal. Canada’s 10-year yield has stayed firm rather than reflecting a clear growth or capital-flight repricing. More importantly, the USD itself isn’t providing the reinforcing half of the trade. The DXY is flat to slightly softer, while the broader Dollar downtrend over the past month is still intact. USD/CAD tends to move most aggressively when Canada-specific weakness is paired with broad Dollar strength — that combination is missing so far.

ActionForex’s Technical View on USD/CAD Technically, a temporary low should be in place at 1.3730, and some consolidation above that level is likely first. But upside should be limited by 1.3927, the 38.2% retracement of the decline from 1.4247 to 1.3730. That level now carries added macro significance: a firm break would suggest Canada-specific trade risk is becoming strong enough to overpower the broader bearish Dollar structure, opening a stronger recovery toward 1.4002 support turned resistance.

For now, the larger outlook is unchanged. The rebound from 1.3480 appears to have completed as a three-wave corrective move at 1.4247. A break below 1.3730 would resume the decline toward 1.3480.

If USD/CAD can’t clear 1.3927 despite 50% tariff headlines and weaker oil, the market’s message would be difficult to ignore: the immediate Canada risk premium is still contained, while the Dollar side of the pair continues to exert greater influence. September 8, when Canada’s retaliation is scheduled to begin, is the next obvious test of whether that judgment holds.

Key Takeaways USD/CAD’s recovery from 1.3730 has stayed restrained despite 50% tariffs, signaling markets see this as a contained shock rather than an economy-wide one. The tariffs apply to roughly C$28bn of exports, not Canada’s entire trade relationship, and Canada’s retaliation doesn’t begin until September 8, delaying the full economic impact. Trump invoked Section 338 of the Tariff Act of 1930, a provision no US president had used before, underscoring how unusual this escalation is even with its narrower economic scope. Oil’s decline reflects profit-taking ahead of an Iran sanctions announcement, not a demand-driven selloff, while Canadian yields and the Dollar aren’t confirming a Canada-specific stress trade. 1.3927 is the key resistance test; failure to clear it despite the tariff headlines would confirm the Canada risk premium remains contained, while a break would open a run toward 1.4002.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

Hey everyone, I hope you're doing well. In this article, I want to discuss crude oil and USDCAD.

As you know, crude oil is still in a very nice recovery mode. In fact, we can see that crude oil has room for further strength here since it completed an ABC pullback at around $74.50, and it looks like more upside is in the cards, at least towards $95, maybe even the $100 area.

crude oilSo while energy is trading to the upside, we know that the Canadian dollar could do pretty well, and this is even more important for the bearish trend on USDCAD, especially if we consider the recent strong leg down in the dollar across the board.

When looking at USDCAD, we therefore anticipate more weakness. In fact, looking at the subdivisions, it seems like we are still in the middle of this bearish impulsive cycle, so there could be opportunities on the short side after a fourth-wave rebound. Looking at some key levels, maybe wave three is coming to an end down here at the 161.8% extension, but resistance on a rebound is at 1.3840–1.3911, which could be quite an interesting and attractive area to look for potential opportunities on the short side while the market trades below the important 1.4000 round figure.

USDCADGet Full Access To Our Premium Elliott Wave Analysis For 14 Days. Click here.

The US Dollar (USD) resumes its broader bearish trend with the Canadian Dollar (CAD) drawing support from higher Oil prices and a deal with the US to pause 50% tariffs on Canadian exports. The USD/CAD pair returns to levels below 1.3880, following rejection at the 1.3900 area, with bears eyeing the support zone at 1.3850.

US and Canada reached a last-minute deal earlier on Wednesday to delay imposing new tariffs on a wide range of Canadian goods for three days, as negotiations towards a trade agreement advance.

Beyond that, Oil prices, Canada’s main export, keep growing as the US-Iran peace process remains stalled and markets brace for an extended closure of the Strait of Hormuz. Brent Oil appreciated beyond 6% over the last three days, returning to the $90.00 area, which hints at higher trade revenues for Canada.

Technical Analysis: Support at the 200-day SMA is on focus

USD/CAD trades at 1.3876, retaining a mildly bearish near-term bias with momentum indicators in the daily chart deeply into bearish territory. The daily Relative Strength Index (RSI) hovers near 32, just above oversold levels, and the Moving Average Convergence Divergence (MACD) is well below zero, highlighting solid downside pressure.

Dips have been supported at the confluence of the 200-day Simple Moving Average (SMA) and the bottom of the descending channel, in the 1.3850 area, but the rejection at 1.3900 confirmed that bears are in charge. Further down, the next target would be the late May lows in the 1.3770 area.

On the topside, the 1.3900 level should be broken to ease bearish pressure and clear the path towards a previous support area and the channel top, near the 1.4000 level.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Canadian Dollar Price Today The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.16%-0.13%-0.27%-0.17%0.24%0.11%-0.15%EUR0.16%0.01%-0.11%0.03%0.38%0.24%0.02%GBP0.13%-0.01%-0.11%-0.01%0.39%0.24%-0.02%JPY0.27%0.11%0.11%0.11%0.49%0.35%0.10%CAD0.17%-0.03%0.00%-0.11%0.38%0.24%-0.01%AUD-0.24%-0.38%-0.39%-0.49%-0.38%-0.13%-0.37%NZD-0.11%-0.24%-0.24%-0.35%-0.24%0.13%-0.24%CHF0.15%-0.02%0.02%-0.10%0.00%0.37%0.24% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

TL;DR: Brent’s break above $90 is doing double duty for CAD/JPY — strengthening Canada’s terms of trade while pushing global bond yields higher and deepening Yen funding pressure — and this time Canada’s own data are contributing too, unlike June’s Yen-only rally.

CAD/JPY Has Found a Rare Double Tailwind Brent’s break above $90 is doing more than lifting Canadian Dollar. It is also pushing global inflation expectations and bond yields higher, adding pressure to Yen. For CAD/JPY, that creates an unusually clean setup: same US-Iran shock strengthens one side of cross while weakening other.

June 17 ceasefire framework formally expired on August 17 without renewal, leaving no clear diplomatic settlement in sight. Higher oil improves Canada’s terms of trade and supports petro-currency, while renewed energy and freight inflation keeps global yields elevated. For Yen, still one of market’s principal funding currencies, wider yield differentials reinforce carry pressure. Instead of two separate narratives, CAD strength and JPY weakness are being driven by same underlying shock.

This Time Canada Is Contributing Too That is important because CAD/JPY has rallied on Yen weakness before. Late-June advance eventually stalled because Canadian Dollar itself offered limited independent support. Current move starts from a stronger domestic backdrop.

May GDP rose 0.3% m/m, beating 0.2% forecast and expanding across 13 of 20 sectors. July labor data then surprised decisively, with employment jumping 75K against 15K expected and unemployment dropping to a two-year low of 6.4%. July CPI followed with headline inflation accelerating from 2.8% to 3.0% y/y, above 2.9% consensus, while Trimmed and Median CPI firmed to 1.9% and 2.0% respectively.

Gasoline was a substantial part of headline inflation surge, rising 25.7% y/y, and part of that effect is linked to tax treatment that rolls off in September. That argues against treating CPI as proof that BoC has already returned to a tightening path. But combined with stronger growth and employment, data have at least reopened hike discussion after it had largely disappeared. For CAD, that is enough to distinguish current rally from June’s mostly Yen-driven move.

Oil Shock Is Also Hurting Yen Through Bonds Global bond market supplies second leg. US 30-year yield has climbed to around 5.31%, highest in 19 years, while 10-year is near 4.74%. Germany’s 10-year Bund has reached about 3.22%, highest since 2011, and Canada’s 10-year recently touched 3.75%, a 26-month high.

Current rise in yields carries a stagflationary flavor rather than a straightforward growth signal. Hormuz disruptions and higher energy and freight costs are lifting inflation concerns and encouraging investors to price restrictive rates for longer. That is exactly environment in which Yen’s yield disadvantage becomes harder to ignore.

BoJ normalization may eventually narrow that gap, but global yields are moving higher in meantime. Until Japanese rates catch up more substantially, higher overseas yields continue to reinforce Yen-funded carry trades. Brent above $90 therefore creates a double effect for CAD/JPY: stronger Canadian terms of trade and greater funding pressure on Yen.

Brent Consolidation Will Tell Us Whether CAD Strength Is Real Best test of this rally may come when oil stops rising.

If Brent consolidates around $90–91 and CAD/JPY continues holding or extending gains, that would be strong evidence that Canadian Dollar’s domestic improvement is doing meaningful work. GDP, employment and CPI would then be providing enough support for CAD to carry rally even without another daily oil breakout.

If CAD/JPY instead stalls immediately whenever crude stops climbing, move would look more like June again: predominantly Yen weakness with limited independent CAD follow-through.

That gives current trade a falsifiable fundamental test. A durable move toward 120 should increasingly survive without requiring Brent to make new highs every session.

Japan Can Still Interrupt the Trade Main risk does not currently come from Canada. It comes from Japan.

USD/JPY is moving back toward 160 intervention-sensitive zone, reviving possibility of verbal or direct action from Japanese authorities. September 18 BoJ meeting also approaches with substantial probability of another rate increase already priced.

Either development could hit CAD/JPY even if oil remains high. Actual intervention would likely trigger broad Yen buying across crosses, while a BoJ hike would challenge carry mechanism more fundamentally.

That makes 120 a plausible target, but not a low-volatility one. Stronger oil and global yields are pushing Yen in exactly direction that increases likelihood of Japanese response.

ActionForex’s Technical View on CAD/JPY: Break of 117.50 Would Put 120.86 on Map Technical structure supports bullish case. CAD/JPY has decisively reclaimed 55-day EMA around 114.52, adding to argument that correction from 117.50 ended at 110.82 in a three-wave structure. That low held around 111.28, 38.2% retracement of larger rise from 101.24 to 117.50, preserving medium-term uptrend.

Near-term bias stays higher while 113.86 holds. 116.45 is first resistance and a firm break would strengthen case that rebound has enough momentum to retest 117.50. Decisive break of 117.50 would be more important, signaling likely resumption of broader uptrend and opening 120 psychological level, followed by 120.86, 61.8% projection of 101.24 to 117.50 from 110.82.

Break below 113.86 would postpone that bullish scenario and suggest correction from 117.50 is extending. But while oil stays elevated, Canadian data remain firm and global yields keep Yen under pressure, CAD/JPY has a stronger foundation than during June’s failed advance. This time, both sides of cross are helping.

Key Takeaways Brent’s break above $90 is strengthening CAD/JPY from both sides: improving Canada’s terms of trade while pushing global yields higher and pressuring the Yen’s carry-funding role. Unlike June’s Yen-only rally, Canada’s own data are now contributing, with a 75K jobs beat, firmer May GDP, and CPI reopening the BoC hike discussion. Global bond yields are rising with a stagflationary character, with the US 30-year at a 19-year high and German and Canadian yields at multi-year highs. Brent stabilizing around $90-91 is a falsifiable test: continued CAD/JPY strength without new oil highs would confirm the domestic Canadian story is real. 117.50 is the key resistance for a run toward 120 and then 120.86, but USD/JPY nearing the 159.6-160.6 intervention zone and the September 18 BoJ meeting remain the main risks to that path.

ActionForex

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Indian rupee intervention returns as USD/INR hovers near all-time highUKMTO report a vessel hit by a projectile while sailing out of the Strait of Hormuz.Analysts say that a surprise China LPR cut cannot be ruled out this weekBHP CEO plays down Canada uranium talk, stays focused on four pillarsWestpac says dollar's structural headwinds outweigh recent resilience, see EUR/USD and GBP/USD higherING says heavy tone in Treasuries has further to run as truce lapsesICYMI: ETF flows return to gold as Saxo flags 289-tonne central bank demandAustralian consumer sentiment rises 6% to 88.9 but stays deep in pessimismPBOC sets USD/ CNY reference rate for today at 6.7905 (vs. estimate at 6.7452)Goldman calls September Fed hike very unlikely as inflation easesChina unveils nine-department plan to boost county-level consumptionPBOC seen shifting to overnight reverse repos as core liquidity toolICYMI: Wells Fargo cuts 2026 gold target to $4,900-5,100, still bullish overallGold nears $4,500 resistance as central bank buying meets fading Fed hike betsJoint US-Japan intervention loses grip as USD/JPY climbs back above 159Morgan Stanley targets EUR/AUD at 1.53, backs Aussie dollar carry tradeUBS stays constructive on equities as Fed hike case weakens on soft dataJackson Hole hype outruns Warsh playbook of saying as little as possibleOil up, a packed 24 hours. Iran shifts to fully offensive posture as Trump threatens to bomb Oman over Hormuz.US stock indices closed lower on the day. Declines are led by the S&P/DowinvestingLive Americas FX news wrap 17 AugSummary:

UKMTO reported a vessel was struck while transiting the Strait of Hormuz, sustaining engine room damage and a crew casualty; further detail on the attack, including attribution and the extent of casualties, remains unconfirmedThe US diesel crack, the premium of diesel futures over WTI, hit a record $102.20 a barrel, with agricultural and shipping demand adding to strain from Iran and Ukraine-linked supply disruptionsThe 10-year JGB yield rose to around 2.945%, its highest level since September 1996; the 5-year yield was also reported up, to 2.18% and its highest ever.Foreign holdings of US Treasuries fell to $9.299 trillion in June, led by declines from Japan, the UK and ChinaThe RBI is seen selling US dollars to support the rupee as USD/INR trades near record highsAsian equities were mixed, with Japan's Nikkei and Topix under pressure and Chinese mainland indices reported lower into the midday break; South Korea's KOSPI move needs confirmation given conflicting reports on directionOil markets found renewed support Monday after UKMTO reported a vessel was struck while transiting the Strait of Hormuz, sustaining damage to its engine room and a crew casualty. The incident adds to an already fragile picture in the strait following the lapse of the 60-day US-Iran memorandum of understanding, with the market continuing to price a lack of near-term de-escalation.

The US diesel crack, the premium of diesel futures over West Texas Intermediate crude, hit a record $102.20 a barrel, as global supply disruptions tied to the wars in Iran and Ukraine collided with peak agricultural consumption season. Refining margins at that level typically flow through to broader costs over time, with agriculture and shipping both reliant on diesel-powered equipment and heating oil demand set to add further pressure heading into winter. Higher refining costs are expected to filter through to consumers and businesses via transport and logistics costs in the coming weeks and months.

Elevated bond yields remained a global theme beyond the US. Japan's 10-year government bond yield rose to around 2.95%, its highest level since September 1996, while the 5-year yield was also reported higher on the session, extending a recent run of multi-decade highs across the JGB curve. In the US, data released after regular trading hours showed foreign holdings of Treasuries fell to $9.299 trillion in June, led by declines from Japan, the UK and China. The data series is volatile month to month, but the latest reading adds to the case, at the margin, for continued upward pressure on yields.

Major currencies traded relatively steadily. NZD was heqavy, with wekaer China data yesterday cited. The Reserve Bank of India is seen selling US dollars to support the rupee, with USD/INR trading near record highs, extending a pattern of periodic intervention through 2026 amid persistent foreign equity outflows, elevated oil prices, and ongoing US tariff friction tied to India's Russian oil purchases.

Asian equities were mixed. Japan's Nikkei and Topix indices slid, while South Korea's KOSPI showed early strength before a later pullback. Chinese mainland benchmarks were reported lower into the midday break, with the Shanghai Composite, Shenzhen Component and ChiNext all pointing to a weaker session.

Commodity markets have been unusually active over the past week, but the reasons behind the moves differ considerably from one market to another.

Copper is being driven largely by physical tightness and the movement of inventories into the United States. Gold has responded to weaker US labour-market data and changing expectations for Federal Reserve policy. Platinum continues to reflect a combination of precious-metal flows and a structurally tight physical market, while crude oil remains dominated by geopolitical risk and disruption around the Strait of Hormuz.

For traders, the important point is that these markets cannot be analysed through one common macro lens. Each commodity is responding to a different mix of supply, demand, monetary policy and geopolitical risk.

Copper: Tight supply is more important than strong growthCopper has remained exceptionally firm, trading around $6.65 per pound in the US and close to $14,400 per tonne on the London Metal Exchange.

COMEX copper reached a record closing price of $6.703 per pound on 5 August, but the strength in the market is not simply a story of accelerating global growth.

The more important development is the tightening physical market outside the United States.

More than 200,000 tonnes of copper arrived in the US during July, the largest monthly inflow in at least 12 years. US-based COMEX and LME warehouses have consequently accumulated more than 740,000 tonnes of copper.

By late July, CME warehouses alone held around 58% of visible global exchange inventories.

The reason is largely related to expectations surrounding possible US tariffs on refined copper. Traders have had an incentive to move metal into the United States before any change in tariff policy, effectively pulling available copper away from other parts of the world.

That geographical shift matters.

LME copper inventories fell from around 238,350 tonnes on 4 August to approximately 214,550 tonnes by 11 August. That is a fall of close to 10% in just one week.

The futures curve is also reinforcing the same message.

LME cash copper has been trading around $208 per tonne above the three-month contract. This is known as backwardation and is normally associated with tight immediate supply. Buyers are willing to pay more for copper today than for copper delivered several months from now.

Chinese exchange inventories have also fallen sharply from their March highs, although the demand picture in China is not entirely bullish. Manufacturing activity remains relatively soft, meaning the current copper strength is not being driven by a straightforward boom in Chinese industrial growth.

There are also continuing supply risks.

The Democratic Republic of Congo has introduced restrictions on exports of some copper concentrates, while production problems at major operations such as Grasberg remain part of the broader supply story.

Meanwhile, long-term demand remains supportive.

Electricity grids, electric vehicles, renewable energy infrastructure and the rapid expansion of AI data centres all require significant amounts of copper.

The overall picture is therefore unusual: global growth signals remain mixed, yet the physical copper market is tight.

For traders, that makes inventory levels, exchange spreads and the location of physical metal particularly important.

Gold: Weak US employment changes the rate storyGold has also had a strong week, but for very different reasons.

Spot gold is trading around $4,390 per ounce, compared with roughly $4,086 on 4 August. That represents a gain of more than 7% in just over a week.

The main catalyst has been a change in expectations for US monetary policy.

July's US employment report was significantly weaker than expected. Nonfarm payrolls were forecast to increase by around 80,000, but instead fell by 23,000.

May and June payroll figures were also revised down by a combined 103,000 jobs.

The unemployment rate remained relatively low at 4.1%, but the broader message from the report was that employment growth is losing momentum.

Markets responded by reducing expectations for another Federal Reserve rate increase.

Immediately after the jobs report, the probability of a September rate increase fell from around 57% to approximately 44%.

That matters enormously for gold.

Gold produces no yield, so when markets expect lower interest rates and lower bond yields, the opportunity cost of holding gold falls. A weaker US dollar can provide an additional tailwind because gold becomes cheaper for buyers using other currencies.

Geopolitical uncertainty has added another layer of support.

The continuing situation around Iran and the Strait of Hormuz has maintained demand for safe-haven assets, although the relationship is not entirely straightforward.

Higher geopolitical risk can support gold directly, but if the same risk drives oil prices significantly higher, it can also increase inflation expectations. If higher inflation forces the Federal Reserve to remain restrictive, Treasury yields could rise and create a headwind for gold.

Central-bank demand remains another important part of the picture.

China added around 20 tonnes of gold to its official reserves during July, while global gold-backed ETFs attracted roughly $3 billion of net inflows during the month. ETF holdings increased by approximately 23 tonnes.

This means investment demand is improving at the same time that central banks remain active buyers.

The next major psychological level is around $4,500 per ounce.

The broader gold story, however, remains centred on the Federal Reserve.

If US data continues to weaken without a corresponding acceleration in inflation, the environment remains supportive for gold. If inflation stays high enough to force further tightening, the market could become more vulnerable.

Platinum: A precious metal with an industrial supply problemPlatinum has been another strong performer, trading around $1,760 to $1,770 per ounce after gaining 7.1% in a single session on 4 August.

Platinum is more complicated than gold because it sits between the precious-metals and industrial-metals markets.

It can benefit from lower interest-rate expectations and a weaker dollar, but it is also heavily influenced by automotive demand, industrial activity and physical supply.

The physical market remains structurally tight.

Current forecasts suggest platinum demand of around 7.674 million ounces in 2026 against supply of approximately 7.377 million ounces.

That leaves an expected deficit of roughly 297,000 ounces.

If realised, this would mark the fourth consecutive annual platinum deficit.

Above-ground inventories are forecast to fall to around 1.747 million ounces by the end of the year, equivalent to less than three months of global demand.

That leaves the market relatively exposed to further supply disruption.

South Africa remains central to the platinum story, producing roughly 70% of global mine supply. This geographical concentration means any operational, labour or power-related disruption can have an outsized impact on the market.

Automotive demand remains one of platinum's most important demand sources.

Around 2.959 million ounces of demand is expected to come from the automotive sector this year. Hybrid vehicle production is forecast to rise by roughly 12%, which is important because hybrids still require catalytic converters.

Battery electric vehicles remain a longer-term risk because they do not use conventional exhaust systems and therefore do not require traditional autocatalysts.

Industrial demand is another supportive factor, with consumption forecast to increase by around 9%.

Jewellery is the weaker part of the picture. Global platinum jewellery demand is expected to decline by around 12%, with Chinese demand particularly soft.

Longer term, hydrogen technologies and potential AI-related PGM applications could create additional demand, although these areas should still be viewed as developing themes rather than dominant current drivers.

For now, the most important point is that platinum combines improving macro conditions with a physical market that remains in deficit.

That makes it very different from gold, where monetary policy dominates the discussion.

Crude Oil: Hormuz is driving the marketCrude oil is currently the most headline-sensitive of the major commodity markets.

WTI is trading around $84 per barrel, while Brent is close to $90.

The central issue is Iran and the Strait of Hormuz.

Roughly one-fifth of global petroleum flows normally pass through the Strait, making it one of the most strategically important shipping routes in the world.

WTI fell to around $75.77 on 4 August when markets became more optimistic that progress towards a US-Iran agreement could reduce regional tensions and restore more normal shipping conditions.

That optimism faded quickly.

As doubts over an agreement increased, oil recovered above $80 and WTI subsequently traded as high as approximately $84.60.

The physical disruption is significant.

Around 5.5 million barrels per day of Middle Eastern oil production was estimated to have been offline on average during July. That is more than 5% of global oil consumption.

Around 600,000 barrels per day of regional production could also remain offline through 2027, according to current projections.

This is why oil has been reacting so aggressively to every development surrounding Iran and Hormuz.

The market is not simply pricing political uncertainty. It is pricing whether crude can physically reach global consumers.

The US inventory picture provides an important bearish counterweight.

The latest official EIA data showed commercial crude inventories increasing by around 2.5 million barrels to approximately 407 million barrels.

Cushing inventories also rose by around 2.4 million barrels.

More recent preliminary API data indicated an even larger build of around 9.1 million barrels, although that figure should be treated as preliminary until confirmed by official government data.

Refined products tell a different story.

US distillate inventories are around 107.2 million barrels, close to a 30-year seasonal low. Tight diesel availability and refinery disruptions have therefore helped keep refined-product markets firm even while headline crude inventories have increased.

OPEC+ is another bearish consideration.

The group has agreed to an additional production adjustment of around 188,000 barrels per day from September.

In normal conditions, extra OPEC+ supply would place downward pressure on crude prices.

The problem today is that additional production does not fully resolve a logistics crisis. Producing more oil is of limited benefit if shipping routes remain heavily disrupted.

That is why geopolitical risk continues to outweigh some of the more conventional bearish supply signals.

The longer-term risk is demand destruction.

If oil prices remain elevated for long enough, higher fuel costs can weaken consumer demand, increase business costs and eventually slow economic activity. At that point, the same price increase caused by a supply shortage can begin to reduce demand.

Four commodities, four different storiesThe recent moves across commodities demonstrate why traders need to understand the underlying transmission mechanism rather than simply watching whether prices are rising or falling.

Copper is being driven by tightening physical availability, falling non-US inventories and structural demand from electrification and technology.

Gold is being driven by weaker US employment, changing Federal Reserve expectations, the dollar, central-bank buying and geopolitical risk.

Platinum is being supported by repeated market deficits, limited inventories and resilient industrial and automotive demand.

Crude oil is dominated by physical Middle Eastern supply disruption and the Strait of Hormuz, with rising US inventories and additional OPEC+ production acting as the main bearish counterweights.

The common lesson is that commodity markets rarely move for one reason alone.

The strongest trading opportunities often emerge when several drivers begin to point in the same direction. Equally, the greatest risks often appear when price momentum looks strong but the underlying fundamentals start to diverge.

For traders, the task is therefore not simply to ask whether a commodity is bullish or bearish.

The more useful question is:

What is driving the move, and is that driver getting stronger or weaker?