US Dollar: Mixed performance with Fed and trade risks – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret highlight a mixed US Dollar (USD) as markets weigh rising Oil prices, Japanese Yen (JPY) strength, and escalating US trade tensions. They underscore growing political pressure on the Federal Reserve (Fed) to cut rates, even as swaps still price around a 60% chance of a 25 bps hike at the September meeting, with upcoming United States (US) Producer Price Index (PPI) and Consumer Price Index (CPI) data seen as decisive for policy.

Fed path and trade tensions key

"The USD is mixed as markets mull rising oil prices—Brent is nearing $100 following attacks on Saudi oil infrastructure—soft stocks and firmer US yields (as well as a slightly steeper Treasury curve). "

"Trade tensions are also rising, with President Trump on social media over the past few days to take aim at Canada as Ottawa imposes counter-tariffs. The president also appeared to threaten a broader trade war unless the Fed cut interest rates in a post last Friday following the strong jobs data as the administration’s pressure campaign for lower rates appears to be stepping up a gear. VP Vance also suggested the Fed should ease policy last week."

"Economic orthodoxy is keeping the Fed hawks concerned, however, with Cleveland Fed President Hammack squeezing in one last call for tighter policy Friday ahead of the FOMC blackout. This week’s inflation data will be decisive in the run into the September 16th policy decision."

"Warsh said he wants progress towards 2% “with speed” while Waller and Williams both suggested there were signs of disinflation, obviating the need for higher rates right now."

"Signs of progress on inflation need to be clear in this week’s PPI (Thursday) and CPI (Friday) for a Fed to hold. Swaps continue to lean towards the idea of a hike, with OIS pricing in around 60% chance of a 25bps tightening move next week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD remains above 0.7200 after China's trade data

AUD/USD sits above 0.7200 in the Asian session on Tuesday, near its highest level since May 14. The US Dollar stays under pressure as a rallying Japanese Yen outweighs support from hawkish Fed bets and geopolitical tensions. This, along with firming expectations for another RBA rate hike later this month, acts as a tailwind for the Aussie. However, mixed China trade balance data keep the pair restricted.

USD/JPY stabilizes at around 154.00 as markets assess BoJ outlook

USD/JPY fluctuates at around 154.00 in the American session on Tuesday after rebounding from the six-month low it touched below 153.00 earlier in the day. Nevertheless, the upside attempts resemble technical corrections for now as Japan's upbeat wage growth data and Q2 GDP revision cement bets on a BoJ rate hike next week and continue to support the Japanese Yen.

Gold holds around $4,400, but for how long?

Gold (XAU/USD) remains on the back foot during American trading hours on Tuesday, even as the US Dollar (USD) remains on the defensive. Rising Oil prices and expectations of a Federal Reserve (Fed) rate hike weigh on the precious metal. At the time of writing, XAU/USD trades around $4,400 after reaching an intraday high near $4,443.

XRP ticks up as bullish derivatives, EMA support signal breakout

Ripple (XRP) is grinding upward and getting closer to a short-term breakout above $1.40 on Tuesday. This uptick follows the remittance token's defense of support at $1.38, after a short-lived attempt to breach selling pressure at $1.50 last week.

Europe in focus: September 2026

Six major net contributors demanded substantial cuts to the European Commission’s proposed 2028–2034 EU budget. Germany, Denmark, the Netherlands, Austria, Finland and Sweden issued a joint position on 27 August calling for the nearly €2 trillion proposal to be reduced by several hundred billion euros and rejecting additional common EU borrowing.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.