Greenback lower after USD/JPY sell-off
The US dollar fell overnight after a sharp move lower in USD/JPY, but market observers believe that nerves, rather than intervention, were the driver in FX markets.
USD/JPY traders have been on edge ever since the combined late-July intervention by Japan’s Ministry of Finance and the US Treasury pushed USD/JPY from 164.00 to 155.25 in a stark three-day drop.
However, Bloomberg reports that USD/JPY’s 0.9% overnight fall lacked the size and scale seen in previous interventions. Japanese authorities are not required to disclose market activity, so determining the reasons behind large price moves mostly comes down to deductive reasoning.
The US dollar was weaker across Asia after the USD/JPY move.
USD/CNH fell 0.1% and USD/SGD lost 0.2%.
Aussie growth surprise lifts rate hike expectations
AUD/USD ended 0.4% higher after Australia’s economy grew 2.1% year-on-year in Q2, beating forecasts of 1.8% but slowing from 2.5% in the previous quarter.
Quarterly growth came in at 0.4%, ahead of expectations for 0.3%.
The stronger-than-expected data has strengthened the case for another Reserve Bank of Australia rate hike, with markets now assigning a 67% probability of an increase in September.
Looking forward, initial support is located at the 21-day EMA of 0.7115, followed by the 50-day EMA at 0.7073. On the upside, the next key resistance level is 0.7200.
Elsewhere, AUD/CNH has slipped to a one-week low, while AUD/NZD has climbed to a two-month high.
NZD slides after rate hike outlook softens
The Reserve Bank of New Zealand raised its official cash rate by 25 basis points to 2.75%, matching expectations and marking a second straight increase after July’s move, as inflation remains elevated. The September decision was unanimous.
However, the New Zealand dollar weakened after the central bank trimmed its average cash rate forecast for Q1 2027 to 2.96% from 3.00%, signalling a slightly less aggressive policy outlook.
The market is now pricing in a 95% probability of a rate hike in December 2026.
NZD/USD fell 0.7% and hit a two-week low. Key support is at the psychological 0.5800 level. On the upside, resistance stands at the 100-day EMA of 0.5850, followed by the 50-day EMA at 0.5864 and the 21-day EMA at 0.5898.
Kiwi plunges after RBNZ
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 31 August to 4 September
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
