English｜Fed, Forex and Gold Comprehensive Latest News

Release time：2026-08-19 Publisher：GINZO

Ⅰ. Core Trends in Fed Policy and Market Expectations

At the FOMC meeting held on July 29, the Federal Reserve kept the federal funds rate unchanged within the range of 3.50%‑3.75%. This marked the fifth consecutive pause in rate adjustments in 2026. The voting result showed 9 votes in favour of holding rates steady and 3 hawkish dissenting votes calling for an immediate 25‑basis‑point rate hike. It was the first time since 2016 that three hawkish dissenting votes of the same stance had been cast, which clearly reflected widening policy disagreements within the Federal Reserve.

After the meeting, the Fed Chair refrained from traditional forward‑looking guidance and offered no clear hints regarding the future interest‑rate path.

While stressing firm commitment to the 2% inflation target, he acknowledged that rising US Treasury yields had indirectly tightened financial conditions, leaving considerable room for market interpretation.

A string of US economic data released in August has significantly reshaped market expectations for the Fed’s future policies. July non‑farm payrolls posted an unexpected negative reading with a decrease of 23,000 jobs. Data for the prior two months were also revised sharply downwards, sending a clear signal of a cooling labour market. The year‑on‑year CPI for July stood at 3.4%, core CPI fell to 2.5%, and the Producer Price Index (PPI) also showed a downward trend. July retail sales plunged by 0.6% month‑on‑month, accompanied by a decline in consumer sentiment, revealing an economic landscape featuring moderating inflation, a weakening labour market and sluggish consumption.

Driven by these economic prints, according to the CME FedWatch Tool, the probability of a September rate hike tumbled from 75% to the 31‑33% range within two weeks. Mainstream market expectations shifted toward steady rates in September, and market participants have begun speculating about the timing of potential future rate cuts. Nevertheless, several hawkish Fed officials have publicly stated that inflation has not been fully contained and have not ruled out the possibility of further rate increases.

Given the risk that higher oil prices triggered by escalating Middle‑East tensions may reignite inflation, expectations for rate hikes have not completely faded. Intense bull‑bear confrontation persists across the market. Market participants are closely watching the release of the July FOMC meeting minutes. Policymakers’ genuine stances on inflation and interest‑rate trajectories will serve as a vital short‑term catalyst for forex and gold markets. Meanwhile, US federal debt has surpassed $40 trillion. Heavy fiscal pressure acts as a medium‑term macro factor limiting the scope for large‑scale additional Fed rate hikes.

Ⅱ. Foreign Exchange Market Performance (US Dollar and Major Non‑US Currencies)

In early August, the US Dollar Index entered a major corrective phase. Deteriorating employment and inflation data pulled US Treasury yields lower, triggering widespread profit‑taking selling on dollar long positions and pushing the index down from its highs. Recently, rebounding Treasury yields combined with safe‑haven buying stemming from Middle‑East geopolitical risks have halted the dollar’s decline and fuelled a partial recovery. No strong unilateral trend has formed, and sideways movement continues.

Non‑US currencies have displayed divergent performances. The Euro has come under pressure amid sluggish Eurozone economic recovery, and inflation is decelerating more slowly than in the United States. Divergent monetary policies between the US and the Eurozone have kept EUR/USD trading within a range with stiff overhead resistance.

The Japanese Yen is heavily affected by US‑Japan interest‑rate differentials, keeping USD/JPY at elevated levels. Disagreements over further policy tightening persist inside the Bank of Japan, and the upcoming BoJ policy meeting has become a market focal point. Investors remain mindful of potential official intervention should excessive exchange‑rate volatility emerge.

Commodity currencies such as the Australian Dollar and Canadian Dollar are highly sensitive to commodity price swings. The Canadian Dollar correlates with crude‑oil prices; oil rallies driven by Middle‑East risks lend support to the CAD. The Australian Dollar is weighed down by weak domestic economic data. Repeated battles are unfolding around the 0.7080 level with no clear directional signal.

Overall, the foreign‑exchange market is highly susceptible to shifts in Fed‑policy expectations and geopolitical news, resulting in heightened volatility. Economic indicators and official remarks can trigger sharp price swings, and sustained trends are hard to materialise.

Ⅲ. Gold Market Conditions, Capital Flows and Institutional Outlooks

Gold is a non‑interest‑bearing asset. US real Treasury yields and the US Dollar Index are its core pricing drivers. Revisions in Fed‑policy expectations dominate gold’s medium‑term price movements. Starting in early August, gold staged a powerful rally. COMEX gold futures climbed from around $4000 per ounce to a peak of $4436 per ounce, registering a maximum gain of more than 10% within two weeks. Shanghai Gold in China also advanced; spot gold soared to near 965 yuan per gram, lifting retail jewellery gold prices.

Multiple factors underpin this rally. First, soft US employment and inflation data dampened Fed‑hike expectations. Lower real Treasury yields reduced the opportunity cost of holding gold. Second, persistent gold purchases by central banks worldwide, driven by reserve‑asset diversification demand, provide downside support for gold prices. Third, Middle‑East geopolitical risks together with shipping hazards in the Strait of Hormuz have sustained safe‑haven inflows into gold. Fourth, global debt and fiscal uncertainties have enhanced gold’s value as a risk‑hedging instrument.

In terms of capital flows, SPDR Gold Shares, the world’s largest gold ETF, increased its holdings by over 16 tonnes within half a month, signalling recovering allocation demand among institutional investors. That said, as Treasury yields bounced back and fears grew that higher oil prices would revive inflation and force the Fed to maintain a tight stance, gold corrected lower from the $4400 zone. At one point it plunged nearly 2%, intensifying bull‑bear struggles at high price levels.

Financial institutions hold mixed o
utlooks. Some investment banks foresee a US economic slowdown ahead. They argue that gold will gain further upside once a rate‑cut cycle begins and set a target price of $5000 for the first half of next year. On the contrary, other institutions warn of substantial correction risks for gold if inflation rebounds and the Fed reverts to a hawkish stance, pointing out the possibility of a drop toward the $4000 level.

Ⅳ. Key Events to Monitor Going Forward

Release of the July FOMC meeting minutes: Review committee members’ stances on rate hikes and inflation.
US initial jobless claims and PCE inflation data: Track developments in employment and inflation.
Shifts in Middle‑East geopolitics: Oil‑price moves will shape inflation expectations and feed through to the US Dollar and gold.
Speeches by Fed and other global central‑bank officials: Watch hawkish and dovish signals.
September Fed policy meeting: The most critical risk event for global financial markets in Q3.

The market is currently in a very delicate phase. Although US economic indicators are weakening, inflation still runs above target. Geopolitical risks have the power to shake inflation expectations. Swinging Fed‑policy expectations have amplified price swings in forex and gold markets.

News‑driven sharp reversals in short‑term price direction are possible, so traders should stay alert to volatility risks.