Forex - Currency Hedger

Currency Hedger August 13, 2026 No Comments

AUD/USD Price Struggles to extend rally above 0.7100

AUD/USD falls further to near 0.7050 as the Australian Dollar faces selling pressure.
Financial markets seem unconvinced by the RBA’s hawkish remarks.
The US Dollar gains even as traders have trimmed hawkish Fed bets.

The Australian Dollar (AUD) trades 0.17% lower at around 0.7050 against the US Dollar (USD) during the early European trading session on Thursday. The Aussie pair extends Wednesday’s correction, which started after revisiting the two-month high near 0.7090, as financial markets remain unconvinced by the Reserve Bank of Australia’s (RBA) hawkish tone.

On Tuesday, the RBA left its Official Cash Rate (OCR) unchanged at 4.35%, as expected, and explicitly said that the central bank won’t hesitate to raise interest rates further, citing upside inflation risks.

Contrary to the RBA’s hawkish remarks, financial markets believe that the RBA’s appetite to tighten monetary conditions appears very weak.

Analysts at Standard Chartered note that, at the press conference, Governor Bullock “talked up the uncertainty around the RBA’s central forecasts and did not rule out the need for more policy tightening in the immediate future if upside inflation risks materialise.”

Despite this hawkish nuance, Standard Chartered emphasises that “our base case remains no more RBA rate hikes in the foreseeable future.” The bank cautions, however, that “the risk to our view is skewed towards a hike in Q4 if demand does not slow sufficiently or if energy prices revisit recent highs, exacerbating both capacity and price pressures.”

Ultimately, “easing labour-market conditions, if sustained, should help contain underlying wage and price pressures in the economy,” supporting their view that further tightening is not the central scenario even as the RBA keeps its options open,” Standard Chartered added.

Meanwhile, an upbeat US Dollar, despite traders paring back hawkish Federal Reserve (Fed) bets for the September meeting, is also hurting the Aussie pair.

AUD/USD Technical Analysis

AUD/USD trades lower at around 0.7050, but is holding a constructive bullish bias as it remains within an upward parallel channel. The pair is trading above the 20-day exponential moving average (EMA) at 0.7024, which suggests underlying demand, while the channel top near 0.7077 caps the immediate topside.

The Relative Strength Index (RSI) at 56.69 stays in positive territory, hinting that bullish momentum is intact though not overstretched.

On the downside, initial support is located at the 20-day EMA at 0.7024, ahead of the lower boundary of the rising channel around 0.6951, with a deeper structural floor toward 0.6866. On the topside, a sustained break above the channel resistance at 0.7077 would open the way for further gains within the broader ascending structure. Above 0.7077, major hurdles are the round-level resistance at 0.7100, followed by the June 5 high at 0.7144.

Currency Hedger August 13, 2026 No Comments

British Pound attracts bids against Japanese Yen after strong UK Q2 GDP data

The British Pound gains slightly against the Japanese Yen due to stronger-than-expected UK Q2 GDP data.
UK GDP growth remained steady at 0.6% in the second quarter this year.
Investors seek fresh cues regarding more US-Japan intervention to support the Yen.

The British Pound (GBP) attracts slight bids against the Japanese Yen (JPY) during the European trading session on Wednesday, following the release of the preliminary United Kingdom (UK) Q2 Gross Domestic Product (GDP) data.

The Office for National Statistics (ONS) has reported that the economy expanded at a steady pace of 0.6%, faster than estimates of 0.4%. On an annualized basis, the GDP growth also remained higher at 1.2% than the 1.1% estimates and the previous reading of 0.9%. In June, GDP growth was 0.3%, while it was expected to remain flat again.

Meanwhile, monthly Manufacturing and Industrial Production data also remained stronger than expectations. Manufacturing Production rose by 0.5%, while it was expected to decline by 0.2%. Industrial Production grew 0.2%, faster than 0.1% estimates.

Going forward, the British currency will be influenced by market expectations for the Bank of England’s (BoE) monetary policy outlook.

On the Tokyo front, the Japanese Yen trades broadly sideways as investors seek fresh cues from Japan’s Ministry of Finance (MoF) on whether there will be more United States (US)-Japan joint intervention to support the currency.

The US-Japan jointly intervened on the last day of July to counter “excessive volatility and disorderly movements in the Japanese yen in recent months”, Japan MoF reported.

Currency Hedger August 13, 2026 No Comments

Offshore Yuan Slips on Soft PBOC Fixing

The offshore yuan weakened to around 6.74 per dollar on Thursday, reversing gains from the previous session as a weaker-than-expected daily fixing by the People’s Bank of China weighed on the currency. The central bank set the midpoint rate at 6.7888 per dollar, 418 pips weaker than a Reuters estimate. While seasonal factors as September approaches could support the yuan, the extent of any gains will likely depend on the PBOC’s fixing strategy. The yuan’s decline was partly cushioned by a softer US dollar after inflation data reduced expectations of an imminent Federal Reserve rate hike. Meanwhile, the PBOC reiterated its commitment to rolling out targeted policy support while avoiding broad-based easing in its quarterly monetary policy report. Separately, the PBOC conducted no seven-day reverse repos for a third consecutive day on Thursday, while announcing plans to inject up to CNY 600 billion per day through overnight reverse repos on August 14 and August 17–19.

Currency Hedger August 12, 2026 No Comments

Why is the Japanese Yen stuck near 159.25 after the first joint US-Japan intervention since 2011?

The Japanese Yen (JPY) continues to navigate complex market dynamics, consolidating near the 159.25 level against the US Dollar (USD) following a sharp upward push. While technical momentum keeps short-term upside risks alive for the currency pair, the fundamental backdrop has been reshaped by rare, coordinated foreign exchange intervention between Japanese authorities and the United States. As valuation gaps narrow from extreme lows, market participants are weighing technical range boundaries against the structural impact of joint official action.

Institutional Analysis: UOB vs. DBS Group Research

To compare how leading institutions view the outlook for the Yen, we highlight the core takeaways from UOB and DBS Group Research:

Near-Term Technical Picture: UOB expects USD/JPY to consolidate in an intraday range of 158.95 to 159.60, with deeply overbought conditions limiting immediate upside beyond 159.60.
Multi-Week Trading Band: UOB maintains an upside-tilted bias over a 1–3 week horizon within a broader 157.00 to 160.20 range, noting that medium-term strength remains intact as long as spot holds above its 21-day EMA.
Official Sector Action: DBS Group Research highlights the significance of Japan’s second FX market intervention of the year, emphasizing that rare joint participation by the US adds massive credibility and reduces volatility risks in the US Treasury market.
Regional Currency Impact: DBS Group Research notes that limiting JPY weakness helps alleviate unwanted selling pressure on other undervalued Asian currencies, specifically the South Korean Won (KRW) and Chinese Renminbi (RMB).

Technical overbought conditions anchor USD/JPY in elevated range

According to Quek Ser Leang and Lee Sue Ann at UOB, Monday’s sharp USD rally has transitioned into a quiet consolidation phase near 159.25. While short-term technical indicators reflect strong underlying momentum, deeply overbought conditions make a decisive breakout above major resistance unlikely in the immediate term. Over a wider multi-week period, the pair is expected to remain contained within higher boundaries, anchored by key moving average support.

“While the bias for USD is tilted to the upside, any advance is likely part of a higher range of 157.00/160.20.”

Coordinated US-Japan intervention narrows Yen undervaluation and stabilizes regional FX

Taking a broader policy perspective, Chang Wei Liang at DBS Group Research stresses that the Yen’s historical undervaluation has begun to narrow following joint FX intervention by US and Japanese authorities. The involvement of the US Treasury — a rare occurrence last witnessed 15 years ago in 2011 — greatly enhances the credibility of official actions while mitigating the need for massive unilateral Treasury sales by Japan. Furthermore, by stemming excessive Yen weakness, policymakers are effectively insulating broader Asian FX markets from spillover depreciation.

“Co-ordinated FX intervention between the US and Japan is rare, with the last joint intervention occurring 15 years ago to weaken an excessively over-valued JPY in the aftermath of the 2011 Tohoku earthquake… Indeed, both the KRW and RMB are quite undervalued according to our DEER model, and so interventions to limit JPY weakness also help alleviate unwanted selling pressure on regional currencies.”

Banks expect elevated range-trading backed by strong intervention credibility

Based on the assessments from both institutions, the banks project an environment where USD/JPY remains technically supported at high levels but subject to firm official capping. UOB anticipates that short-term price action will remain bound between 157.00 and 160.20, with overbought momentum limiting aggressive gains past 159.60. Concurrently, DBS Group Research maintains that the unprecedented backdrop of joint US-Japan intervention provides a credible structural floor for the Yen, helping to stabilize both the domestic currency and broader regional Asian FX over the coming weeks.

Currency Hedger August 12, 2026 No Comments

USD/JPY Nearing 160

The Japanese currency has weakened by 1% against the dollar this week. It has been two weeks since the record intervention by the Japanese Ministry of Finance and the US Department of the Treasury. Following a decline to near 155, the USDJPY pair is beginning to recover, approaching the psychological barrier at 160. Figure 1: USDJPY (01.02.2026 – 12.08.2026)

Source: xStation, 12.08.2026

What stands behind the decline?

Fundamentals continue to put pressure on the Japanese currency. The key remains, of course, the carry trade issue, i.e., trading on interest rate differentials. Figure 2: Performance of Selected Currencies against the USD (09.08.2026 – 12.08.2026)

Source: xStation, 12.08.2026 As long as the divergence between the projected interest rate levels in the United States and Japan remains significant, even an intervention amounting to nearly 90 billion dollars may prove insufficient to permanently reverse the trend. Investors expect firm action from the Bank of Japan, though an opportunity for this will not arise until 18 September. The decision to raise interest rates then may constitute a significant declaration for the market, leading to an increase in bets on further hikes in subsequent months. Currently, such a move is priced in at approximately 75%.

Figure 3: Market-implied Probability of a Hike at the September BoJ Meeting (2025-2026)

Source: XTB Research, 12.08.2026 In the meantime, market attention will shift to the United States. Today at 1:30 PM, we await the publication of the July inflation data. What can we expect?

The headline inflation indicator is expected to be 3.4% y/y (a decline from 3.5%).
The core indicator is expected to fall to its lowest level since March 2021 (to 2.5%).
Ceny energii najprawdopodobniej spadną, głównie za sprawą spadku cen benzyny.
Energy prices are likely to fall, mainly due to the decline in petrol prices.
Core services inflation is expected to rebound to 0.2% m/m, driven by rising rental costs.

If the reading shows a stronger-than-expected decline, markets may continue their dovish repricing regarding the Fed’s interest rate path. It is worth noting that after the latest committee meeting and the exceptionally weak NFP data, the market-implied probability of a September hike has fallen to approximately 50%.

Figure 4: Fed Market-Implied Interest Rate Path [Number of Hikes] (2025-2026)

Source: XTB Research, 12.08.2026 In the context of the yen, attention is also drawn to developments in the Strait of Hormuz – Japan is almost entirely dependent on imports for its energy needs, and nearly 90% of its crude oil normally comes from the Middle East. Figure 5: Structure of Japan’s Crude Oil Imports (2024)

Source: OEC, 12.08.2026 In recent days, we have observed a rebound in oil prices. One must pay over 89 dollars for a barrel of Brent. Yesterday, key energy commodities continued to rise, despite optimistic declarations from the Pakistani Ministry of Foreign Affairs. Figure 6: OIL (18.12.2025 – 12.08.2026)

Source: xStation, 12.08.2026 Overnight, Donald Trump stated in media comments that the USA has “total control” over the Strait of Hormuz. The Iranian side, in turn, has set tough conditions for reopening the route, demanding the lifting of US sanctions, an end to the naval blockade, and the payment of reparations for war damages by the USA. Ship traffic in the Strait of Hormuz has fallen to its lowest level in a week (approx. 10 ships per day).

Currency Hedger August 12, 2026 No Comments

British Pound holds steady above 1.3500 vs USD as traders eye US CPI ahead of UK GDP

GBP/USD struggles to gain any meaningful traction ahead of the key US-UK macro releases.
The US CPI is due later this Wednesday, followed by the UK GDP and US PPI on Thursday.
Geopolitical risks and Fed-hike bets underpin the USD, capping the upside for spot prices.

The GBP/USD pair extends its sideways consolidation around the 1.3500 psychological mark through the first half of the European session on Wednesday. Traders opt to wait on the sidelines ahead of important macro data from the US and the UK.

The crucial US Consumer Price Index (CPI) report is due later today, followed by the preliminary Q2 GDP figures from the UK and the US Producer Price Index (PPI) on Thursday. In the meantime, hawkish US Federal Reserve (Fed) expectations might continue to underpin the US Dollar (USD) and cap GBP/USD.

Strategists at Deutsche Bank highlight how finely poised Fed expectations remain ahead of the latest US inflation releases, noting that “futures this morning are pointing to a 51% chance of a September hike.” They add that the current balance of risks could shift quickly, as “if we do get an upside or downside surprise today, that could help shift the balance one way or the other,” underscoring how sensitive Dollar pricing is to incoming data at this stage of the policy cycle.

According to the CME Group’s FedWatch Tool, traders are currently pricing in over a 75% chance that the US central bank will raise borrowing costs by the year-end amid inflation risks stemming from volatile oil prices. Furthermore, the US-Iran standoff over the Strait of Hormuz lends additional support to the safe-haven buck.

An advisor to Iran’s Supreme Leader Mojtaba Khamenei said on Tuesday that the Strait of Hormuz will not be opened until the US meets Tehran’s demands. Moreover, Iran-backed Houthis in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, targeting Saudi ships, leading to increased war-risk premiums.

The aforementioned fundamental backdrop favors USD bulls and warrants caution before positioning for an extension of the GBP/USD pair’s recent move up witnessed over the past two weeks or so. However, the recent breakout through the 1.3500 mark suggests that the path of least resistance for spot prices remains to the upside.

Currency Hedger August 12, 2026 No Comments

Swiss Franc weakens against US Dollar with US Inflation in focus

The Swiss Franc trades lower against the US Dollar at around 0.8125 ahead of the US CPI data for July.
Financial markets expect US inflation to have grown at a moderate pace.
The US CPI data is expected to have a significant impact on the Fed’s interest rate outlook.

The Swiss Franc (CHF) is down against its major currency peers during the European trading session on Wednesday. As of writing, USD/CHF trades 0.17% higher at around 0.8125. The Swiss Franc pair trades higher as the US Dollar edges up ahead of the United States (US) Consumer Price Index (CPI) data, which is scheduled to be published at 12:30 GMT.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 99.88.

Investors will closely track the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

US CPI in focus as softer core print could weigh on the Dollar

Analysts at ING note that consensus is “looking for a reasonably subdued set of numbers: 0.1% month-on-month for headline and 0.2% for core.” Such a profile would see the year-on-year rates “drop to 3.4% and 2.5% respectively – inching closer to the Fed’s 2% inflation target.” ING highlights that “lower gasoline prices, broadening signs of rental deflation and soft wages” are expected to drive the softer readings.

Given that “the market looks to be expecting a softer price story today,” ING argues that investors would “probably need to see a 0.1% month-on-month read on core inflation – which some think is possible” to materially shift the policy narrative. In their view, “a soft number should drag market pricing of a September Fed rate hike away from a 50% probability in favour of no change,” while “a bullish steepening of the yield curve should see the Dollar soften – particularly against the procyclical currencies.”

This week, investors will also focus on the US Producer Price Index (PPI) data for July, which will be released on Thursday.

USD/CHF Technical Analysis

In the daily chart, USD/CHF trades at 0.8127. The pair holds a mildly bullish near-term bias as it advances above the 20-day exponential moving average (EMA) at 0.8104, keeping price supported after recovering from last week’s dip.

The Relative Strength Index (14) at 54.29 stays in neutral-to-positive territory, suggesting steady upside pressure rather than an overextended move.

On the downside, initial support is located at the 20-day EMA at 0.8104, where buyers have recently defended the pullback, and a break below this floor would hint at a deeper corrective phase. With no nearby technical resistances flagged by the current dataset, the pair appears free to probe higher levels, leaving momentum and broader market cues to guide whether the bullish tone can extend further.

Currency Hedger August 12, 2026 No Comments

Indian Rupee drops with India-US CPI data in focus

The Indian Rupee declines further against the US Dollar due to rising oil prices.
Traffic through the Hormuz has declined significantly.
Investors keenly await the India-US CPI data for July.

The Indian Rupee (INR) extends its decline against the US Dollar (USD) on Wednesday as the former continues to face pressure due to surging oil prices.

At press time, USD/INR trades slightly higher to near 95.45. The MCX Crude Oil contract expiring on August 19 trades 0.6% higher to near Rs. 8,000.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

Restricted energy supply continues to boost oil prices

A prolonged oil supply disruption due to the closure of the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, amid tensions between the United States (US) and Iran continues to boost oil prices.

According to data from Kpler, shipping traffic through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, was recorded at just six vessels on August 10, down from a recent 10-day average of about 11. This remains a massive decline from pre-war levels of 130 to 140 ships daily, Reuters reports.

Meanwhile, mediators from Pakistan have expressed optimism regarding progress in negotiations between the US and Iran. Pakistan’s Defence Minister, Khawaja Asif told reporters that “things are shaping up again in favor of a peace arrangement or a deal, according to Bloomberg.

India-US CPI data awaited

In Wednesday’s session, major triggers for the USD/INR pair will be the Consumer Price Index (CPI) data for July of both India and the US.

India’s retail CPI data is scheduled to be released at 04:00 PM (10:30 GMT). Economists at DBS Group Research note that key “inflation numbers are due in the second week of August,” with “headline inflation in July… largely steady at 4.4% YoY vs June.” They point out that high-frequency indicators for food staples “point to a rise in pulses, sugar, milk and edible oils, while vegetables have stabilized,” adding that “a catch-up in rainfall in July has helped boost sowing activity.”

DBS also highlights that “adjustments in domestic retail fuel products (non-subsidized LPG was up 10% YoY in July) are also likely to reflect in the utilities and fuel segments.” Even so, the bank expects underlying price pressures to remain contained, with “core readings… benign at sub-4% in July, helped also by moderation in precious metals in the period.”

The major highlight will be the US inflation data, which is expected to have a significant influence on the Federal Reserve’s (Fed) monetary policy outlook. In the July policy meeting, remarks from Fed Chairman Kevin Warsh clearly showed that officials are heavily concerned regarding inflationary pressures remaining well above the central bank’s 2% target for a long period.

US inflation seen firming but not reaccelerating in July

Brown Brothers Harriman’s Elias Haddad expects the upcoming US July CPI report to show inflation “firm modestly but stop short of signaling a renewed acceleration in inflation.” He notes that “headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June,” while “core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June.” Haddad argues that such a profile would underscore a gradual disinflation trend rather than a renewed pickup in price pressures.

Technical Analysis: USD/INR recovers to near 95.40

USD/INR is inching closer to the 20-day exponential moving average (EMA) at 95.52, which is above the price, hinting at a shift in the near-term bias from bearish to neutral.

The Relative Strength Index (14) around 48 hints at soft, range-bound momentum rather than aggressive selling pressure.

On the topside, immediate resistance is located at the 20-day EMA near 95.52, which would need to be decisively reclaimed to ease the current downside bias and open the way for a further recovery move toward 96.00. Looking down, key support zones are the August 5 low at 94.83 and the June low at 94.15.