
Fed Interest Rate Forecast: Jobs and CPI to Drive US Dollar and EUR/USD
September Fed rate hike odds have increased after Warsh's speech, with upcoming jobs and inflation data set to guide the US dollar and EUR/USD.
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September Fed rate hike odds have increased after Warsh's speech, with upcoming jobs and inflation data set to guide the US dollar and EUR/USD.

Canada's 3.3% Q2 rebound supports the Loonie, but Scotiabank sees USD/CAD wrestling with 1.39 as the broader Dollar regains momentum. The US Dollar to Canadian Dollar (USD/CAD) exchange rate ended Friday around 1.3903, extending its late-August rebound despite another strong batch of Canadian economic data.

The Euro-Dollar has dropped to 1.158 after Warsh revived Fed hike bets, but Rabobank still sees choppy trade giving way to 1.18 into spring. The Euro to Dollar (EUR/USD) exchange rate ended Friday at 1.1582 after Kevin Warsh's Jackson Hole speech triggered the Dollar's strongest daily advance in more than two months.

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The price of Gold's 3% Warsh-driven selloff has put Crédit Agricole's $5,000 year-end forecast to a tougher test, but the bank's debasement thesis remains intact. The Gold price in US Dollars (XAU/USD) ended Friday around $4,457 after Fed Chair Kevin Warsh's Jackson Hole speech triggered the sharpest setback of the recent.

The Silver price has fallen back to $66 after Warsh revived Fed hike bets, but UBS still sees XAG/USD reaching $80 by September 2027. The Silver price in US Dollars (XAG/USD) closed Friday at $66.42 after a 3.98% daily fall, giving back part of an August rally which had taken the metal above $71.

The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027. The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.

Goldman now expects an RBA hike to 4.60% in November after a broad July inflation surprise, adding fresh rate support to the Australian Dollar. The Australian Dollar to US Dollar (AUD/USD) exchange rate ended Friday at 0.7163, still 1.7% higher in August despite losing 0.45% after Warsh's Jackson Hole speech.

The price of Gold, silver and Bitcoin all fell after Warsh pushed September Fed hike odds towards 60%, abruptly challenging August's debasement trade. One speech managed to hit three of August's hottest trades at once.

USD/CAD has snapped a four-week losing streak, rebounding more than 1% from the August low after the recent decline stalled just above the yearly open. The broader yearly uptrend remains viable, but buyers still need to clear key resistance to strengthen the case that a more durable low is in place.

Silver dropped 4% after Fed Chair Warsh revived September hike risk, driving yields and the dollar higher as industrial demand also weakened.

USD/JPY was given a much-needed jolt last Friday, with Fed Chair Kevin Warsh doing enough to restore some of the Fed's inflation-fighting credibility. That resulted in a sharp increase in pricing for a Fed rate hike this year, pushing USD/JPY to levels not seen since the latter parts of July.

Gold price loses its 200-day average and tests key support, with the 20-day MA near $4,410 pivotal to keeping the $4,780 recovery target alive.

USD/JPY is heading into the weekly close above the 160.00 handle and this begs the question as to whether we'll see a response from either the BoJ and/or the US Treasury Department next week.

United States CFTC Gold NC Net Positions up to $243.3K from previous $222.2K