• AUD/USD rallied to 0.7223 overnight, sellers emerged and the pair turned lower

• US yields extended gains which helped underpin USD buying

• Drops in gold, silver and copper reinforce the USD buying theme

• AUD/USD hit 0.7200 just ahead of NY's open, it was down -0.24% early NY

• Falling daily RSI, today's drop following Wednesday's doji are concerns for bulls

• Rising monthly RSI, pair's hold above the 10- & 21-DMAs gives bulls some comfort

• US August PPI & weekly jobless claims are data risks in NY's morning
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

FX option markets have been focused on USD/JPY 150.00 since the initial drop from the mid 159's last week, but price action in this derivative suggests the biggest and most volatile moves may now be over and any deeper declines toward 150.00 will be harder fought.

Implied volatility is the market's gauge of actual/realised volatility risks, so it's been no surprise to see it surge higher across the 1- to 12-month expiry term structure beside the FX spot price drop. The benchmark 1-month expiry actually exceeded the late July intervention-led high at 10.65, spiking from 7.15 to an eventual 11.6 peak - a very significant increase. However, since USD/JPY's consolidation in the last 24 hours, 1-month expiry implied volatility has dropped back to 10.0, with other expiry dates easing beside it as longs book profits and others take advantage of the high premiums to benefit from short volatility strategies.

USD/JPY risk reversal options saw their JPY call over put (downside over upside) strike premiums ramped significantly higher as spot fell and downside options were sought - the benchmark 1-month expiry 25 delta contract from an already elevated 1.75 to 2.75 vol premium - but it's since dropped back to 2.15.

The demand for 150.00 JPY call strikes throughout the recent moves has rewarded holders from the lower spot and higher implied volatility as their value increased dramatically, but profits are now being booked there and demand has eased off. It's also worth noting the demand for JPY call reverse-knock-out (RKO) options - they remain sought due to being significantly cheaper than regular JPY call vanilla options, but the attached triggers are below 150.00, to suggest this level is a likely near-term floor.

Attention now turns to Friday's US CPI data, where FX options are demanding an elevated volatility risk premium given its potential to shape next week's Fed decision—itself already flagged as a heightened risk event by elevated implied vol pricing. The Bank of Japan's own policy announcement follows close behind on September 18, with markets largely expecting a 25-bp hike; the bigger uncertainty lies in the press conference, where clues on the pace and extent of further hikes could still move the pair. That layered event risk—CPI, Fed, then BOJ within days of each other—is keeping demand firm for options expiring just beyond each date. USD/JPY, in short, isn't out of the woods yet.
USD/JPY FXO implied volatility


USD/JPY 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

(Adds link to todays large expiries on line 4)

• EUR/USD FX option implied volatility sits close to recent lows - benchmark 1-month expiry 5.0

• Risk reversal contracts lack directional risk premium - 1-month skew neutral, easing from prior downside

• Trade flows show little conviction for EUR/USD to trade far in either direction

• More big FX option strike expiries and related hedging still helping to contain FX price action

• However, there is plenty of short term volatility risk premium in prices - flagging near term event risks

• Overnight options jumped since including Friday's US CPI, having almost ignored today's ECB and US PPI

• 1-week expiry implied volatility has risen sharply now that it captures the September 16 Fed decision

• Price action suggests the Fed could the much needed catalyst for any EUR/USD movement
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Yen trading near seven-month highs

• USD/JPY has seen 153.29-74 range, on Thursday, EBS data shows

• There was some Japanese importer demand at Thursday's Gotobi Tokyo fix, exporter sales also

• A weekly close by USD/JPY below a broken 154.78 Fibo would be a bearish sign

• 154.78 Fibo, a 38.2% retrace of the 139.89 to 163.99 (April to July) EBS rise

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

Daily Chart


Weekly Chart


Correlation Chart

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

• AUD/USD has traded a 14.9 pip range thus far Thursday; 0.72081-0.7223

• 0.72081 is also the low since Wednesday's four-month high of 0.7238

• US PPI data due at 1230 GMT; 0.4% MM, 5.3% YY. Core f/c 0.3% MM, 4.6% YY

• Hotter prints could spur hawkish shift in Fed expectations, inflate USD

• Reuters poll: 28 out of 93 economists expect Fed hike on Sept 16

• JPMorgan expects RBA to raise rates on Sept 29, as does Goldman Sachs

AUDUSD

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

• ECB seen raising key rate to 2.50%

• Expected to signal readiness to tighten further

• Oil's rise in lead up to meeting heightens risk hawkish outlook

• Futures imply a further 25bps hike very likely this year (Oct/Dec)

• EUR/USD which reached 1.1654 Weds trades 1.1630-41 on Thursday

• EUR/USD is yet to close above the 200-DMA at 1.1634

•
EURUSD

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

• Cable has traded a 12.5 pip range thus far Thursday; 1.35465-1.3559

• Those parameters are within Wednesday's 1.3531-1.35665 range

• 1.35665 is highest level since August 28 (when USD rose on hawkish Warsh)

• US PPI data due at 1230 GMT; 0.4% MM, 5.3% YY f/c. Core f/c 0.3% MM, 4.6% YY

• CPI data follows on Friday - which could tilt Fed rate scales, impact USD

• Reuters poll: 65 out of 93 economists expect Fed hold next week; 28 expect hike

GBPUSD

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

• GBP/USD edges higher as traders brace for key U.S. and UK economic data

• U.S. PPI Thu, CPI Fri pivotal for September 16 Fed rate decision

• UK has busy Fri too; July GDP, industrial & manufacturing output, trade due

• July employment, Aug inflation next week; BoE rate decision Sep 17

• Rising oil prices, escalating Iran-U.S. conflict likely to cap upside

• Resistance at 1.3575, 1.3600; support 1.3520, 1.3500, 1.3470-75

• Wednesday range 1.3531-1.3566, Asia 1.3546-1.3559
GBP:

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

Sept 10 (Reuters) - USD/JPY may be set for a "new normal" 150-155 trading range, notwithstanding impending U.S. economic data, including the producer and consumer price indices due Thursday and Friday, and next week's policy announcements from the U.S. Federal Open Market Committee and Bank of Japan.

The Reuters poll forecasts 5.3% year-on-year rise in PPI against 4.7% in July and an unchanged CPI reading at 3.4% with core prices up 2.4% against 2.5% in July. USD/JPY is trading on a 153 handle ahead of these releases, and any volatility stemming from the data could be contained to two-yen or at most three-yen moves on either side of current levels.

Fed expectations will likely be swayed by these U.S. data releases. Currently, most economists polled expect the Fed to hold rates steady this year but a rising number see room for a possible hike .

For the BOJ, a 25 basis-point policy rate hike to 1.25% on September 18 has been discounted . Though some suggest the BOJ could hike by 50 bps, the most likely outcome appears to be another 25 bps hike in December. Totan Research/ICAP shows a 98% probability of a hike this month and 61% in December.

Recent flows suggest Japanese exporters will be good sellers on any USD/JPY rallies, effectively capping the upside alongside longer-term net yen shorts, including foreign holders of Japanese stocks with dynamic currency hedges. Most exporters are assuming 155+ in budgets for the fiscal year ending in March, and they will be keen to average out forward sales above this level.

In options, 150 JPY calls/USD puts have been in good demand, and there are reports of interest in reverse knock-outs and of exporter barriers at 150.00 .

Related comments , , .
USD/JPY:

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

• AUD/USD flat Thur in Asia, trading subdued ahead pivotal U.S. inflation data

• U.S. Aug PPI due Thur (poll +0.4% m/m), CPI Fri (poll +0.4% m/m, +3.4% y/y)

• Futures pricing implies 60% chance FOMC hikes FFR 25 bps on Sep 16

• U.S. & Iran undertake biggest shipping attacks since start of the war

• Brent crude +0.1% to $101.33 a barrel, highest levels since May 22

• AUD target 0.72825 50-month high, break above raises topside potential

• Range Asia 0.7213-23 support 0.7122 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA

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

• USD/JPY consolidating recent losses above Tuesday's 152.89 low

• Key US Aug econ data awaited including PPI tonight, YY 5.3% eyed, 4.7% prev

• US CPI due Friday, YY 3.4% eyed, unchanged from July, core 2.4%, 2.5% prev

• USD/JPY 153.32-60 EBS so far, holding below 153.78-154.59 hourly Ichi cloud

• Descending 100-HMA just above the cloud at 154.63

• Higher-than-eyed US PPI could see cloud resistance challenged

• Fed expectations figure large too with many eyeing possible hike this year

• Option expiries today 152.00/15 $511 mln, 153.00 $1.5 bln, 153.50 $535 mln

• Also up top between 154.00-05, at 154.50 total $1.3 bln

• JGB-US Treasury rate differentials on wide side, in 2s @256, 10s @191 bps

• Related comments , , ,

• And , also , on yen carries

• US markets , , ,

• Fed/BOJ polls , , poll on PM Takaichi

• On Middle East , for more click on [FXBUZ]

USD/JPY daily:


USD/JPY hourly:

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

• Shares of gold miner St Barbara rise as much as 20.6% to A$0.880, highest level since March 3

• Shares post biggest intraday pct gain since Jan 21

• Co agrees to sell remaining interest in New Simberi Gold Project to Lingbao Gold

• Consideration includes A$410 million ($296.06 million) in cash

• YTD, SBM shares up 47.4%

($1 = 1.3848 Australian dollars)

(Reporting by Nichiket Sunil in Bengaluru)

• AUD/USD flat late Wed after hitting 0.7238 4-month high in London

• U.S.-Iran engaged in largest shipping attacks since war began

• Brent crude +3.8% to $101.67 a barrel, gold +1.1%, copper +0.7%

• U.S. Treasury bond buyback announcement underwhelms, UST yields higher

• Focus on U.S. inflation data: Aug PPI due Thur, CPI Fri (poll +0.4% m/m)

• AUD target remains 0.72825 50-month high, rally will accelerate above

• Overnight range 0.7210-38 support 0.7122 0.6920, resistance 0.72825 0.7661
AUD Daily 21/55/100-DMA

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

JP Morgan Research discusses the latest batch of data on Japanese flows and FX positions.

"The closely monitored monthly data revealed net foreign equity purchases of ¥0.6trn (JPMe: -¥1.7trn) and net foreign bond purchases of ¥2.3trn (JPMe: + ¥0.9trn) by "Trust Accounts," which reflect pension funds' activities. Both figures point to continued net accumulation of foreign assets contrary to prevailing market speculation which expects a shift towards domestic assets from foreign assets," JPM notes.

"Retail investors turned JPY short following the sharp JPY move last week.  Retail investors net purchased ¥1.3trn of foreign equities in August, the largest net purchase since January, underscoring sustained appetite for foreign assets despite a concurrent rise in retail JGB demand," JPM adds.

• Shares of gold miners gain, tracking rise in bullion prices [GOL/]

• Spot gold up 1.3% at $4,414.61 per ounce as the U.S. dollar remained under pressure, while investors awaited key inflation data this week that would provide clues to the Federal Reserve's monetary policy amid an oil price rally

• Top miners Newmont , Barrick Gold up 2.4% and 1.4%, respectively

• U.S.-listed shares of South African miners Gold Fields

rise marginally, Harmony Gold jump 3.2%, AngloGold Ashanti gain 1.4% and Sibanye Stillwater

adds 1.8%

• Canadian miners Agnico Eagle Mines rise 1.3% and Kinross Gold add ~1%

(Reporting by Pooja Menon in Bengaluru)

• GBP$ holds slight gain in NY 1fternoon, +0.14% at 1.3559; NorAm range 1.3567-1.3536

• Dollar index traded either side of flat, bid after UST buyback announcement faded

• Risk mixed, USTs, equities under pressure; precious metals, copper higher

• Early GBP rise after Bessent warned of betting against yen, said I am the house now

• Despite recent rise GBP bulls may run out of gas on fiscal, monetary concerns

• GBP$ res 1.3567 Wednesday high, 1.3600 psychological lvl, 1.3650 upper 30-d Bolli

• Supt 1.3533/31 lwr 30-DMA/Wed low, 1.3400 big-figure supt, 1.3451 the 200-DMA

GBP Chart:

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

(Adds headline)

• NY opened near 1.1630 after EUR/USD traded downward in Europe's morning

• The pair rallied early and struck an 8-session high of 1.1654 on USD selling

• Rallies in gold, silver and USD/CNH's drop to 6.7033 contributed to the pair's rally

• Sellers emerged though after the US Treasury announced its buyback program

• USD, yields rallied & stocks, gold, silver moved downward

• EUR/USD fell to 1.1620, buyers emerged and the pair neared 1.1640 late in the day

• A halt in USD buying and lifts in gold, silver and stocks helped buoy EUR/USD

• EUR/USD traded near the 200-DMA and +0.12% in NY's afternoon

• Techs lean bullish; RSIs are rising & a monthly bull hammer is in place

• US August PPI report is a key data risk for Thursday
eurusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Danske Research discusses USD outlook going into next week's September FOMC meeting.

The Fed remaining on hold next week would mark a short-term upside risk to our bearish EUR/USD view, but the exact vote split will matter a lot for the market reaction. If Warsh again votes for a hold despite his hawkish remarks at Jackson Hole, markets could reconsider their confidence in his communication. The outcome would likely mirror the repricing seen after the July meeting, with higher long-end inflation expectations driving curve steepening and broadly weaker USD FX.

However, if he votes for a hike, and simply fails to get the committee majority on board, we would expect markets to maintain pricing for hikes in the later meetings. At the end of the day, we think the macro case for tightening policy at a later stage is still very much alive. In the latter scenario, we would consider any temporary USD sell-off as a good opportunity to re-enter USD longs," Danske addas.

(Corrects typo in line 5)

• NY opened near 0.7215 after AUD/USD hit a 4-month high of 0.7238 overnight

• The pair rallied early with help from gold, silver gains & broad-based USD selling

• US yields , USD then rallied sharply after the US Treasury buyback news

• Stocks added to losses while gold, silver moved downward, AUD/USD hit 0.7210

• The USD then weakened while stocks moved up & gold, silver, copper rallied

• AUD/USD sat near 0.7220 late, it traded up +0.06% in NY's afternoon

• Daily & monthly RSIs indicate upward momentum but a daily doji formed

• US August PPI is a key data risk for Thursday
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Morgan Stanley Research previews the US August CPI report due on Friday

"We expect core CPI to rise 0.23% m/m (2.4% y/y), broadly in line with July's 0.22% increase, as core goods inflation moderates following the one-off price increases in Apple electronics. Overall, we believe tariff-related inflation is nearing its end, and therefore expect further normalization in goods prices," MS notes.

"On the services side, we forecast a modest pickup despite softer airfares, largely reflecting a rebound in categories that were unusually weak in July.In particular, we expect stronger readings in hotel prices and household operations, two components that tend to be especially volatile. We expect headline CPI at 0.41%m/m (3.4%y/y), pushed by gasoline prices," MS adds.

Sterling's sloth-like rise from its early-September low near 1.3475 toward today's 1.3566 high has come as fiscal concerns ebb on softening long-end yields, and broad USD selling against other major currencies — but the recovery looks fragile and may leave the pound trailing as other major central banks shift to more hawkish tacks.

This recent ascent can largely be attributed to the unwinding of long USD positions, driven by a persistent global inflation narrative that has bolstered hawkish expectations for central banks across developed markets. However, this macro shift poses a risk of sidelining sterling in comparison to its peers.

Despite sterling being one of the higher yielding currencies, the pivot to a tighter monetary policy by the Fed, ECB, BoC, and even the traditionally cautious BoJ could see the pound lagging, as the Bank of England (BoE) maintains a relatively static policy stance.

While UK inflation remains stubbornly high, with July's headline figure rising to 2.9% from 2.6% in June, the BoE's cautious approach to tackling inflation may disadvantage sterling against other G7 currencies.

Additionally, growth concerns stemming from high borrowing costs are choking off investment and consumption, contributing to increased fiscal anxiety. UK long-end yields have surged to multi-decade highs, raising questions about Prime Minister Andy Burnham's fiscal strategies ahead of the upcoming UK Autumn Budget in October.

As the central bank meeting cycle unfolds, with a fully priced ECB hike and 60-80% odds for rate increases from the Fed, BoJ, and RBA, sterling faces a 12% chance for a BoE hike, according to LSEG's IRPR. While a BoE hike is anticipated by year-end, the recent GBP/USD gains may face headwinds as other central banks potentially act sooner.
Sterling Chart:

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

MUFG Research discusses the latest comments from US Treasury Secretary Scott Bessent

"The yen has continued to strengthen overnight resulting in USD/JPY falling back towards the 153.00-level. The stronger yen has been encouraged by bullish comments from US Treasury Secretary Scott Bessent overnight who stated that “I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do...and you can bet against me if you want”. He pushed back against his critics who have criticized the decision to intervene alongside Japan to support the yen by stating “whenever people say, ‘Oh, well, Treasury Secretary is taking a risk’, - well, it’s my dream, I have asymmetric information”.," MUFG notes.

"The comments will reinforce expectations that the Japan has agreed to change domestic policies to provide more support for the yen and back up support from joint intervention. It already appears increasingly likely the BoJ will speed up the pace of rate hikes this month which is helping the yen to rebound without the need for further intervention," MUFG adds.

Goldman Sachs highlights the key levels in USD/JPY going into this week's August PPI (Thurs) and CPI (Fri) reports.

" Levels: Into CPI/PPI expect USDJPY to hold into the 152-153 area as clients take profit and some CTA positioning cleaned up. Expect spot to stall into 155.20 and 158.50 to be major resistance," GS notes.

On a break of 152.00, target 148.00," GS adds.

• AUD/USD rallied to 0.7238 overnight as USD fell & gold, silver rallied

• Sellers emerged after the 4-month high traded and the pair turned lower

• USD rallied on US yield gains & oil breaking $100 per barrel

• Drop in equities & pull backs in gold, silver added weight on AUD/USD

• 0.7212 traded ahead of NY's open, the pair was down -0.01% in early NY

• Daily techs warn bulls; RSI diverged on the high, inverted hammer candle formed

• Rising monthly RSI, 15-mo Bolli bands & monthly bull hammer a bullish signals
audusd

(Christopher Romano is a Reuters market analyst. The views expressed are his own)