FX Daily Research
US equities closed higher Thursday, led by Nvidia after strong earnings, robust data-centre revenue and its first-ever long-term guidance forecasting stronger fiscal-2028 growth. The advance was narrow: the equal-weight S&P 500 declined and technology, up roughly 3%, was the only sector to finish positive. The S&P 500 gained 0.72% to 7,731, the Nasdaq 100 rose 1.43% to 29,642, the Dow added 0.20% to 53,574 and the Russell 2000 advanced 0.28% to 3,014; September futures were bid a further 0.6%/1.2%/0.2%/0.3%. Nvidia itself reported adjusted EPS of USD 2.22 versus USD 2.10 expected on revenue of USD 96.2 billion versus USD 92.4 billion consensus, and guided Q3 revenue to USD 105.9-110.2 billion, ahead of the USD 105.2 billion Street estimate. Salesforce, CrowdStrike, Okta and Dollar General also beat; HP's beat was overshadowed by falling PC shipments. European indices were mostly lower (Euro Stoxx 50 -0.73%, FTSE 100 -0.79%, CAC -1.68%) with Germany's DAX the exception (+0.27%).
Regime implication: the NVIDIA beat keeps the AI-capex bull case intact and supports NQ, but narrow breadth and mixed hyperscaler-funding evidence mean the equity signal stays constructive rather than cleanly risk-on.
Hammack (2026 voter, hawkish dissenter) said the time to act had arrived and did not view policy as restrictive; Schmid (2028 voter, hawk) said he would probably have supported a July hike given sticky inflation and the energy shock; Collins (2028, neutral) said the mixed PCE report had not changed her disinflation baseline; Goolsbee (2027, neutral) flagged political pressure on the Fed as concerning. CME FedWatch September hike pricing eased to 8.5bp from 10.0bp even as our supplied Scenario Distribution held Fed Hold at 64.64%, unchanged from Thursday. The effective funds rate held at 3.63% and SOFR eased to 3.64%.
Regime implication: a still-divided FOMC leaves Chair Warsh's Friday Jackson Hole address as the swing factor for the Dollar and yields; Hold-dominant pricing caps a structural USD upgrade either way.
The advance goods-trade deficit widened to USD 118.8 billion, well above the USD 99.0 billion expected and USD 101.4 billion prior, as capital-goods imports surged 11.3% to USD 140.1 billion (+46.9% y/y) on sustained AI-hardware demand while exports fell 2.9%. Oxford Economics called it the widest deficit since Q1 2025 and expects net trade to subtract roughly one percentage point from Q3 GDP. Wholesale inventories rose a strong 1.3% m/m and initial jobless claims fell to 203K from 207K, keeping the labour market read broadly balanced.
Regime implication: AI-driven import strength is now a measurable growth drag even as the labour market holds up, reinforcing a Fed that can point to both a hawkish inflation mix and a softer trade-driven growth mix — another reason Hold pricing is proving sticky.
October WTI and November Brent both gained 1.6% as talk of a near-term resolution cooled. Trump said 24 vessels had passed through Hormuz on Wednesday night and that Iran was struggling to pay its troops; the WSJ reported Washington had told mediators it has no interest in returning to June's MOU terms and is prepared to wait for economic pressure to work. Iran warned it would blacklist vessels, flag states, insurers and classification societies that used its new transit rules, and a senior Iranian security official warned any US seizure of Iranian cargo would trigger proportionate retaliation against US-linked Gulf shipping, energy, insurance and financial interests. A US source told Al Jazeera the Iran-Oman arrangement was irrelevant, no talks were planned, and the Strait was open and cleared of mines — directly contradicting Iran's own account.
Regime implication: this is a genuine hardening versus the prior two sessions' de-escalation tone; the institution stack gathered on 26-27 August still leans bearish Oil on flow continuity, but today's price and rhetoric argue for treating that base case as fragile rather than settled.
Iran's Rezaei said Tehran had agreed a corridor with Oman split between Omani and Iranian waters, that Iran had exported 80 million barrels during the ceasefire, and that Dahiyeh and Beirut remained Iranian red lines. An Iranian lawmaker said Tehran controlled the Strait and would bar vessels from the US, France or Britain. Qatar's PM and FM met Iran's FM in Tehran to discuss a phased reopening framework including a temporary joint shipping corridor and mine-clearing project. Separately, Treasury Secretary Bessent was set to press G20 counterparts to close financial channels supporting Iran and the IRGC, and the US Navy was reported to face budget strain from redirecting funds toward combat operations.
Regime implication: parallel-track diplomacy (Qatar, Oman) alongside hardening rhetoric (blacklisting threats, red-line warnings) is consistent with continued but fragile flows rather than either a clean resolution or an imminent closure; headline risk stays elevated into the weekend.
The Kremlin said it remained open to Ukraine talks even as Russia's Foreign Ministry warned foreign troops obstructing its operations would become legitimate targets and Peskov promised a severe response to Ukrainian strikes on Russian trade infrastructure; the US military was separately reported to face a critical Patriot-missile shortage in Europe linked to the Iran war. On inflation, ECB's Radev said both October and December meetings were live, called 2.5% roughly neutral, and flagged limited evidence growth risks were skewed to the upside, while Crédit Agricole's HICP preview points to the hottest Eurozone print in three years (headline HICP seen rising to 3.44% y/y in August from 2.94%, energy HICP to 15.2%).
Regime implication: a hot HICP preview plus a live October/December ECB debate reinforces the overnight jump in ECB Hike pricing to 92.96%, while Patriot-missile scarcity and Russian escalation rhetoric keep a European tail risk in the background.
Politico reported Washington is considering a further round of semiconductor tariffs that could extend to laptops, consoles and data-centre servers, with Commerce Secretary Lutnick favouring tariff relief tied to US chip-manufacturing investment pledges. Trump escalated Canada rhetoric further (renaming Lake Ontario "Lake America", accusing Canada of unfair practices), while Canada imposed 50% tariffs on US copper wire and wood charcoal and China's Commerce Ministry reserved the right to respond to US overcapacity tariffs. In Asia, Japan's LDP tax-panel head said a JPY 5 trillion consumption-tax cut was feasible, and Kioxia/SanDisk were reported planning a USD 31 billion Japan memory-chip expansion.
Regime implication: widening tariff friction (chips, Canada, China) keeps a trade-policy risk premium in CAD and selectively in tech supply chains, even as Japan's fiscal and memory-capacity news is incrementally supportive for JPY-linked risk sentiment.
Claims fell and wholesale inventories jumped, but the goods-trade deficit blew out on AI-hardware imports (Oxford Economics: ~1pp Q3 GDP drag). Fed Hold pricing held flat at 64.64% into Jackson Hole.
MUFG Bank expects the Fed on hold on 16 September, likely followed by a BoJ hike. ING stays confident in a September hold and a weaker dollar, seeing market Fed pricing as too hawkish. Crédit Agricole CIB confirms its Fed-hold-through-year-end call after soft July jobs and benign inflation data. KBC Bank notes the market-implied hike probability edged up to 40% on the PCE beat, keeping the debate "warm" rather than settled. Westpac Economics records the DXY bounce to 99.1 and higher Treasury yields after the PCE surprise, with Chair Warsh's Friday speech as the decisive test.
Fed 15 September — Hold 64.64% / Hike 35.36%; prior Hold 64.64% / Hike 35.36% (Hold 0.00pp, Hike 0.00pp).
German GfK sentiment beat sharply and private-loan growth accelerated. ECB Hike pricing for September jumped 3.14pp to 92.96% overnight, reinforced by a Crédit Agricole preview pointing to the hottest Eurozone HICP print in three years.
Danske Bank now expects no ECB cuts in 2027, keeping one final 25bp hike to 2.50% and holding it there through next year on resilient growth and contained core inflation. ING says the ECB is "gradually shifting towards a September hike," citing July-minutes members who would not have opposed tightening and Schnabel's hawkish gas-price comments. Crédit Agricole CIB previews August Eurozone headline HICP rising to 3.44% y/y from 2.94%, the highest in three years, with energy HICP surging toward 15.2%. UniCredit Investment Institute notes real Bund yields near a post-2009 high and Italian green shoots in exports, consistent with resilient growth absorbing higher rates.
ECB 9 September — Hike 92.96% / Hold 7.04%; prior Hike 89.82% / Hold 10.18% (Hike +3.14pp, Hold -3.14pp).
No fresh GBP data printed; Sterling met resistance near 1.3600 and traded on residual softness from Thursday's CBI retail miss and the looming October energy price cap. BoE pricing drifted 2.76pp toward Hike.
KBC Bank flagged the CBI distributive-sales balance falling to -48% from -26%, with retailers citing a "poor" season, though the pace of decline is expected to ease into September. Danske Bank notes GBP was the second-worst-performing G10 currency in its FX Positioning Index update, alongside CHF, and has been added to a short list via a GBP/USD short.
BoE 16 September — Hold 79.80% / Hike 20.20%; prior Hold 82.56% / Hike 17.44% (Hold -2.76pp, Hike +2.76pp).
Household spending beat decisively even as capex reversed sharply, confirming the two-speed economy. RBA Hike probability crossed above Hold for the first time this cycle, up 9.32pp to 53.22%, extending Thursday's 24.64pp surge.
ING still leans toward an RBA hold despite the hot CPI print, arguing house-price weakness and softer employment should let the Bank wait for the next quarterly read, but concedes AUD/USD upside toward 0.730 is reinforced by its own dovish Fed call. Westpac Economics attributes the AUD outperformance directly to the upside inflation surprise and records 3Y yields bear-steepening 5bp on the repricing.
RBA 28 September — Hike 53.22% / Hold 46.78%; prior Hold 56.10% / Hike 43.90% (Hike +9.32pp, Hold -9.32pp).
No domestic release; NZD traded on RBNZ pricing, which pushed 2.77pp further into Hike territory to 95.52%, among the most one-sided scenarios in the G10 set.
MUFG Bank notes the RBNZ, ECB and BoJ are all nearly fully priced to hike in an unusual month where every G10 central bank meets in September. Natixis recorded NZD as the weakest G10 currency in Thursday's session, down 0.64% against a firm Dollar — a reminder the hawkish pricing has not yet translated into spot outperformance.
RBNZ 1 September — Hike 95.52% / Hold 4.48%; prior Hike 92.75% / Hold 7.25% (Hike +2.77pp, Hold -2.77pp).
The current account swung to an 8.8B surplus versus -8.3B prior — a genuine positive surprise — but it is dwarfed by the escalating US-Canada tariff standoff (50% duties since 22 August, 1 January auto tariffs) and Trump's continued rhetorical escalation. BoC pricing was unchanged.
ING says CAD "has further to fall," expecting continued underperformance versus AUD and NOK on dovish BoC repricing and a rising tariff risk premium, with a USD/CAD forecast of 1.39 for end-Q3 despite also being structurally bearish USD. Reuters (LSEG) reports PM Carney's domestic support for a tough stance may not survive months of visible economic damage, and that automakers now face a doubled 50% tariff after a near-deal collapsed. Westpac Economics and Natixis both record CAD trading defensively into the tariff headlines.
BoC 1 September — Hold 95.30% / Cut 4.70%; prior Hold 95.29% / Cut 4.71% (Hold +0.01pp, Cut -0.01pp).
Tokyo Core CPI accelerated in line with forecast and unemployment fell further, both consistent with the BoJ's hawkish drift, even as BoJ Hike pricing eased a touch to 65.88%. Himino's Jackson Hole remarks disappointed slightly for lacking an explicit signal, but stayed net hawkish.
MUFG Bank says Himino's repeated line that the BoJ must "pay more attention to upside inflation risks than before" is the closest available guidance to a faster hike pace, and notes hawk Naoki Tamura — not Governor Ueda — is attending Jackson Hole. UniCredit Investment Institute keeps USD/JPY targets of 157 by end-2026 and 152 by end-2027, but warns the July joint BoJ-Fed intervention has proven markedly less effective than the BoJ acting alone in 2024. ING says Tokyo CPI in line with consensus should not derail September hike confidence (21bp priced), though the pair has failed to attract buyers below 158.
BoJ 17 September — Hike 65.88% / Hold 34.12%; prior Hike 66.31% / Hold 33.69% (Hike -0.43pp, Hold +0.43pp).
No domestic release; CHF continues to trade on cross-asset safe-haven and positioning flows rather than local data. SNB pricing stayed pinned near-certain Hold.
Crédit Agricole CIB's G10 positioning model flags CHF as overbought alongside GBP and has entered a long USD/CHF position (target +3%, stop -1.5%), attributing recent CHF strength to hedge-fund and real-money IMM inflows. Danske Bank raised its 1-3 month EUR/CHF forecast to 0.95 on widening rate differentials and a resilient European economy, while keeping a longer-run bearish EUR/CHF (bullish CHF) call at 0.93 in 6-12 months. Standard Chartered Bank attributes recent CHF strength to safe-haven demand and broad USD weakness following the Treasury buyback announcement, targeting USD/CHF at 0.78. MUFG Bank's historical study of debasement-style episodes finds CHF and JPY "tended to underperform" once such signals proved crowded and mean-reverted.
SNB 23 September — Hold 95.07% / Hike 4.93%; prior Hold 95.23% / Hike 4.77% (Hold -0.16pp, Hike +0.16pp).
Spot gold eased modestly as real yields firmed into Jackson Hole, extending Wednesday's pullback from a three-month high. Fed pricing was unchanged.
Standard Chartered Bank stays constructive, targeting USD 4,900/oz, and attributes the break above USD 4,400 to broad USD weakness and US fiscal/bond-market concerns following the Treasury buyback announcement, while flagging near-term profit-taking risk after the rapid rally. MUFG Bank's historical review of prior debasement-narrative episodes found gold "frequently corrected" over the following one to three months even when the USD stayed weak, a caution against chasing the move mechanically. Westpac Economics records gold sliding off its three-month high, down roughly 1.4% ahead of the Jackson Hole symposium as real yields rose.
Fed-linked Scenario Distribution — Fed 15 September — Hold 64.64% / Hike 35.36%; prior Hold 64.64% / Hike 35.36% (Hold 0.00pp, Hike 0.00pp).
WTI and Brent both rose 1.6% overnight as Trump hardened his stance on Iran and the WSJ reported Washington has no interest in reviving June's MOU terms — a live conflict with the multi-day de-escalation tone that shaped the supplied institution notes.
ING says Iran-Oman talks pulled Brent below USD90 but warns a bilateral shipping arrangement cannot normalise flows without US sign-off, with tighter product markets and a possible Russian diesel-export ban extension as upside tails. SEB and Natixis both linked the prior multi-day slide to de-escalation signals and a fourth straight day of losses into Thursday. Crédit Agricole CIB separately notes prices "closed in on their highest level since the beginning of the conflict" during the early-July escalation, illustrating how quickly the tape can reverse on rhetoric alone.
Fed-linked Scenario Distribution — Fed 15 September — Hold 64.64% / Hike 35.36%; prior Hold 64.64% / Hike 35.36% (Hold 0.00pp, Hike 0.00pp).
NVIDIA's revenue and EPS beat were larger than the market had priced, and September futures extended gains across all four indices, but the cash session stayed narrow with only technology finishing positive and the equal-weight index lower.
UniCredit Investment Institute stays underweight Technology, citing nearly USD 160 billion of hyperscaler debt issuance this year, shrinking free cash flow and rising overcapacity risk even as headline AI demand stays strong. Reuters (LSEG) flags growing scrutiny of AI financing structures and the sustainability of the capex boom alongside otherwise constructive earnings-season sentiment. Natixis and SEB both recorded a positive Asian-tech ripple effect (KOSPI +1.9%, Shenzhen +1.4%) after Nvidia's after-hours pop, with Nasdaq and S&P futures each higher pre-open.
Fed-linked Scenario Distribution — Fed 15 September — Hold 64.64% / Hike 35.36%; prior Hold 64.64% / Hike 35.36% (Hold 0.00pp, Hike 0.00pp).
| Market | Section 2 Bias + Short Summary | COT - Leveraged Funds | Retail Sentiment | Final Bias |
|---|---|---|---|---|
| USD | Firm claims and inventories offset by a much wider trade deficit. Research Score: +0 | Leveraged Funds +16.9% vs +11.7% (+5.2pp) COT Score: +1 net long expanded materially. | 68.7% long Retail Score: -1 | Neutral +0 |
| EUR | Hawkish repricing and a three-year-high HICP preview. Research Score: +1 | Leveraged Funds -7.2% vs -7.6% (+0.4pp) COT Score: +0 small net short improved only marginally. | 57.1% short Retail Score: +1 | Bullish +2 |
| GBP | No fresh catalyst; residual softness from Thursday's CBI miss lingers. Research Score: +0 | Leveraged Funds +15.0% vs +15.9% (-0.9pp) COT Score: +1 large net long eased but stayed positive. | 50.7% long / 49.3% short Retail Score: +0 | Bullish +1 |
| AUD | RBA odds flipped to hike-majority on a hot spending beat. Research Score: +1 | Leveraged Funds +18.1% vs +18.2% (-0.1pp) COT Score: +1 large net long essentially stable. | 88.6% short Retail Score: +1 | Strong Bullish +3 |
| NZD | RBNZ conviction extended further to 95.52%. Research Score: +1 | Leveraged Funds -30.1% vs -34.6% (+4.5pp) COT Score: -1 deep net short covered but remained extreme. | 66.6% short Retail Score: +1 | Bullish +1 |
| CAD | Tariff-war escalation outweighs the current-account beat. Research Score: -1 | Leveraged Funds -24.7% vs -25.3% (+0.6pp) COT Score: -1 deep net short stayed extreme. | 63.7% long Retail Score: -1 | Strong Bearish -3 |
| JPY | Inflation and jobs data support policy normalisation. Research Score: +1 | Leveraged Funds -17.8% vs -13.5% (-4.3pp) COT Score: -1 net short deepened. | 72.6% long Retail Score: -1 | Bearish -1 |
| CHF | Improved sentiment offset by a crowded-overbought warning. Research Score: +0 | Leveraged Funds -8.0% vs -10.4% (+2.4pp) COT Score: +0 small net short improved, stayed within range. | 56.6% long Retail Score: -1 | Bearish -1 |
| Market | Section 2 Bias + Short Summary | COT | Retail Sentiment | Final Bias |
|---|---|---|---|---|
| Gold | Institutional targets outweigh the near-term yield headwind. Research Score: +1 | Managed Money +34.9% vs +34.4% (+0.5pp) COT Score: +1 large net long increased. | XAUUSD 60% long Retail Score: -1 | Bullish +1 |
| Oil | De-escalation base case meets harder overnight rhetoric. Research Score: +0 | Managed Money +4.6% vs +4.2% (+0.4pp) COT Score: +0 small position stayed near neutral. | XTIUSD (WTI) 71% long Retail Score: -1 | Bearish -1 |
| NQ | NVIDIA's beat was decisively larger than consensus. Research Score: +1 | Leveraged Funds -20.7% vs -31.5% (+10.8pp) COT Score: +0 deep short covered sharply but stayed negative. | NAS100 56% short Retail Score: +1 | Bullish +2 |
| ES | Broad futures strength on a resilient growth backdrop. Research Score: +1 | Leveraged Funds -13.6% vs -13.2% (-0.4pp) COT Score: -1 net short widened slightly. | SP500 56% short Retail Score: +1 | Bullish +1 |