Good morning traders from a partly sunny and already warm Amsterdam, where it is around 24°C near IntelliTrade HQ and temperatures should reach 25°C to 26°C around lunchtime. The coffee is still here, although something colder may make more sense later. I looked at the overnight reaction, and the part I would not ignore is the bond market. The Fed kept rates unchanged, but longer-dated yields pushed higher anyway.
Overall Market Sentiment:
The mood is mixed with a defensive edge.
The Federal Reserve kept its policy rate unchanged, but the decision did not calm markets. Three policymakers preferred an increase, the chair gave very little guidance on what happens next, and the 30-year Treasury yield moved to its highest area in almost two decades.
That is the real story for me this morning. The Fed did nothing, but financial conditions still tightened through the bond market.
Oil is back above $90 after fresh Middle East escalation, Asian equities remain unstable and the dollar has recovered from its initial post-Fed decline. The mistake here would be calling last night’s decision dovish simply because rates stayed where they were. The bond market clearly heard something more uncomfortable.
Geopolitics:
Fresh U.S. strikes on Iran have ended the brief pause in hostilities, while broader regional involvement has increased concern around energy infrastructure and shipping routes. Brent has moved back into the $91 to $92 area after Wednesday’s sharp rise.
Physical supply is still moving through some important routes, which is stopping crude from making an even more aggressive move. But the situation remains fragile. Oil is no longer just reacting to expected demand or inventories. It is reacting to each military and diplomatic headline.
That matters because the Fed has just chosen patience while the energy risk is rebuilding. Markets now have to decide whether higher bond yields are doing enough of the inflation work without another immediate policy change.
Macro Calendar:
Today
- Bank of England decision, 13:00 Amsterdam time: Bank Rate is expected to remain at 3.75%. The vote split, updated forecasts and inflation language matter more than the unchanged decision markets expect. Sterling needs clarity on whether the bank is more worried about imported energy pressure or weak domestic demand.
- Euro-area growth and German inflation: Germany’s economy grew 0.2% during the second quarter, slightly better than expected, although household demand and investment remained soft. The wider euro-area figures and German inflation data will show whether Europe is dealing with slow growth, renewed inflation pressure, or both at once.
- U.S. GDP and PCE inflation, 14:30 Amsterdam time: Second-quarter growth is expected to remain reasonably resilient, helped by consumer spending and AI-related business investment. The inflation details are even more important because they arrive less than 24 hours after a divided Fed chose to wait.
- U.S. technology earnings: Amazon and Apple report after the U.S. session. Microsoft reassured markets that its AI spending can still generate cash, while Meta’s sharp decline in free cash flow showed exactly what can go wrong when investment rises faster than near-term returns.
The rest of this week
- Friday, Bank of Japan decision: The BOJ faces a weak yen, expensive imported energy and growing pressure to explain how quickly it can normalise policy. The Outlook Report and comments on the exchange rate should matter more than the expected decision itself.
- Friday, euro-area inflation: The release will test whether the ECB can remain patient after holding rates last week. Sticky underlying inflation would keep the policy debate alive, but higher inflation caused mainly by energy would be a much less comfortable euro story.
- Friday, China PMIs and Canadian GDP: China’s surveys will matter for AUD, NZD and the global manufacturing outlook. Canadian growth will show whether CAD can build a domestic foundation rather than depending on volatile oil prices.
Currency Outlooks:
🔺 USD - The Fed waited, but the bond market stayed firm
The dollar index is holding around 100.9 after recovering from its initial decline following the Fed decision. EUR/USD is near 1.1450, GBP/USD is around 1.3350 and USD/JPY remains close to 163.5.
The Fed kept its policy range at 3.50% to 3.75%, but three members wanted higher rates. That division matters. It tells us the committee is not debating whether inflation is finished. It is debating how urgently it needs to react.
The cleaner read for me is that the dollar still has support, even though the Fed did not deliver the firmer action some traders expected. Longer-dated yields are high, geopolitical risk has returned and the U.S. economy continues to look more resilient than several major alternatives.
The mistake here would be assuming the lack of clear forward guidance is negative for USD. It creates uncertainty, yes, but it also forces markets to keep a premium around every inflation and growth release.
Dollar risks lean toward strength while oil and Treasury yields stay elevated. That tilt weakens if today’s PCE data cools clearly and the bond curve begins flattening through lower longer-dated yields.
⚖️ EUR - Better German growth helps, but not enough on its own
EUR/USD is trading around 1.1450 after holding up reasonably well through the Fed decision. Germany’s 0.2% quarterly expansion gives the euro a small domestic positive, especially after months of weak industrial signals.
I would not overcomplicate this. One modest growth number does not fix Europe’s energy exposure or its weak household demand.
The euro’s outlook stays balanced because the dollar’s yield advantage remains powerful, but the ECB still has its own inflation problem. Today’s wider growth figures and German inflation data need to show that Europe can avoid stagflation rather than simply confirming higher prices with limited activity.
🔻 GBP - The BoE has to explain what patience actually means
GBP/USD is near 1.3350 ahead of today’s Bank of England decision. An unchanged rate is expected, so the pound’s reaction should depend heavily on the vote and the updated forecasts.
The bank has a difficult message to deliver. UK wage and inflation pressure has cooled, but oil and geopolitical risk threaten to lift headline inflation again. At the same time, domestic growth remains fragile enough that tighter policy carries a genuine economic cost.
The cleaner read for me is that GBP needs a balanced BoE, not an aggressive one. Sterling benefits if policymakers remain alert to inflation while avoiding a deeper downgrade to growth.
The mistake here would be assuming more inflation concern is automatically good for the pound. If the inflation comes mainly from imported energy while households are already under pressure, the currency response can become much less straightforward.
Risks lean toward weakness if the vote is clearly in favour of patience and the forecasts show softer demand. The bias improves if several policymakers continue arguing that inflation risks require a firmer stance.
⚖️ CAD - Oil is helping again, but Friday’s growth data matters more
CAD is receiving renewed support from Brent above $90, especially after Wednesday’s sharp rise. Higher energy prices improve Canada’s export income and provide some protection against broader USD strength.
But CAD has not been trading like a simple oil currency. Trade uncertainty, slower domestic activity and the U.S. yield advantage remain important.
Friday’s GDP report needs to show that the Canadian economy is holding up beyond the energy sector. Risks remain mixed until then.
🔺 CHF - Defensive demand is rebuilding
The franc is finding support as Middle East tensions return and global equities remain unstable. It also benefits from Switzerland’s lower direct exposure to the current technology investment cycle.
CHF’s strength is cleaner against cyclical currencies than against USD because the dollar still offers a much stronger yield. Risks lean toward relative strength while geopolitical stress and equity volatility stay elevated.
🔻 JPY - The BOJ is running out of easy explanations
USD/JPY remains around 163.5, close to levels that keep intervention risk extremely high. The Fed’s unchanged decision gave the yen only limited relief because longer-dated U.S. yields continued rising.
That tells us the yield gap remains the central issue.
Tomorrow’s BOJ communication needs to do more than repeat concern about currency volatility. Markets want to know whether policymakers are becoming more willing to respond to imported inflation and the pressure created by a very weak exchange rate.
The problem is that Japan’s inflation mix is not especially healthy. Higher energy costs lift prices, but they also weaken household purchasing power. That makes aggressive policy normalisation difficult.
JPY risks still lean toward weakness on the macro picture. That view can change quickly if the BOJ sounds more urgent or officials become more active around the exchange rate.
⚖️ AUD - Softer inflation removed some policy support
AUD/USD is holding close to 0.6950 after Australia’s underlying inflation figures came in softer than expected. That reduced the case for another immediate RBA move.
Lower domestic rate pressure is a headwind, while unstable Asian technology shares are limiting the benefit from a relatively steady risk mood elsewhere. The outlook remains mixed.
AUD needs either firmer China data on Friday or a clear decline in U.S. yields to rebuild momentum.
⚖️ NZD - Holding up, but still driven by external conditions
NZD/USD is trading around 0.5810 and has remained slightly more resilient than AUD. New Zealand’s recent inflation data still give the currency some domestic policy support.
Even so, this is mainly an external week for NZD. U.S. yields, technology sentiment and Friday’s China PMIs are doing more of the work than local developments.
Risks remain balanced while the domestic rate story offsets part of the pressure from a firm dollar.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,040 to $4,050, easing after briefly rising as much as 2% during Wednesday’s session. Higher U.S. real yields and a steady dollar are outweighing part of the support from renewed geopolitical tension. Watch whether today’s PCE inflation figures push Treasury yields further upward or finally provide some relief. [USD] [REAL YIELDS] [INFLATION]
- 🥈 Silver: XAG/USD is trading around $57.40 to $57.60, slipping slightly and continuing to show more sensitivity to growth concerns than gold. The dollar and yields remain headwinds, while instability in Asian technology shares is weighing on the industrial-demand side. Watch whether Friday’s China PMIs confirm slower manufacturing momentum. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $91 to $92 per barrel, after rising roughly 7% to 8% on Wednesday as the Middle East conflict escalated again. Fresh U.S. strikes, wider regional involvement and disrupted loadings from another export route are supporting prices, while continued tanker movement through some chokepoints is limiting the move. Watch actual shipping flows rather than reacting only to military headlines. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: Asian equities remain unsettled, with the regional index outside Japan down roughly 0.6%, Japan’s Nikkei slightly firmer and South Korea’s KOSPI still heading for a weekly decline near 15%. Fed uncertainty, higher bond yields and doubts about the returns from massive AI spending remain the main pressure points. Watch whether Apple and Amazon provide enough confidence to broaden the stabilisation beyond Microsoft. [TECHNOLOGY] [YIELDS] [EARNINGS]
- ₿ Crypto: Bitcoin is trading around $64,000, gaining modestly despite the rise in longer-dated Treasury yields. Crypto is benefiting from selective risk appetite, but the liquidity environment remains constrained by a firm dollar and elevated real yields. Watch whether Bitcoin holds its relative resilience if today’s U.S. data strengthens expectations for a September Fed move. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is the gap between what the Fed did and what the bond market did.
The Fed waited. The 30-year yield still moved above 5.2%.
That matters because the market is effectively tightening conditions without a change in the policy rate. Mortgage costs, corporate financing and government borrowing all respond to those longer-dated yields. The Fed can remain patient, but the economy does not get to ignore the bond market.
This is also why today’s U.S. data matters so much. Strong GDP combined with sticky PCE inflation would make the Fed’s cautious language easier to understand. Softer growth and cooler inflation would raise a harder question about why longer-dated yields are still this high.
The mistake here would be focusing only on whether September brings another policy move. The cleaner read is happening now through the yield curve.
For FX, that keeps USD supported without creating a completely clean dollar rally. The euro is holding because Europe’s own policy debate is not finished. The pound has its own central-bank test today. The yen remains the most exposed currency because Japan cannot easily match the rise in global yields.
I would not overcomplicate this. The Fed has passed the decision to the data and the bond market. Today’s GDP and inflation figures tell us whether that was a comfortable choice or a risky one.
My actual view is that dollar risks still lean toward strength while the 30-year yield stays near 5.2%, oil remains above $90 and the Fed refuses to rule out future tightening.
That view weakens if PCE inflation cools, longer-dated yields retreat and the Bank of England gives sterling a credible policy advantage. Until then, the dollar has cooled from its highs, but it is not broken.
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This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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