Weekly FX Report: 19th August 2025

Overview:

The US dollar fell to a three-week low last week as weak consumer sentiment and hotter-than-expected inflation data weighed on the currency. Concerns over potential political influence on the Federal Reserve added to the pressure, benefiting other major currencies. Sterling and the South African Rand posted impressive gains, while the Euro also strengthened. In contrast, the Japanese Yen and Indian Rupee remained under pressure due to uncertain growth outlooks. This week, the market's attention will turn to inflation data from the UK and Japan, along with the minutes from the latest FOMC meeting.

Region-wise key insights:

US Dollar

• Performance: The US dollar index weakened by 0.35%, closing at 97.8 on Friday.

• Key Drivers: Weaker-than-expected consumer sentiment and concerns over Fed independence pushed the dollar lower. Hotter producer price inflation, however, slightly tempered expectations for aggressive rate cuts.

• What to Watch: The Federal Reserve’s Jackson Hole symposium this week will be critical in shaping the tone for the September policy meeting.

Asia-Pacific

• Chinese Renminbi (CNY): Traded flat at 7.18 against the USD. Underwhelming industrial output and retail sales data highlighted growing challenges for the Chinese economy.

• Japanese Yen (JPY): Strengthened by 0.3% to 147.1 against the USD, supported by better-than-expected Q2 GDP growth, though the Bank of Japan remains cautious.

• Australian Dollar (AUD): Depreciated slightly by 0.1% to 0.650 against the USD, with markets now pricing in an additional 50 bps in RBA rate cuts by November.

South Asia and Africa

• Indian Rupee (INR): Traded flat at 87.48 against the USD but remained under pressure from new US tariffs and a dovish RBI outlook.

• Nigerian Naira (NGN): Remained stable at 1529 to the USD, as the annual inflation rate decelerated to its lowest level since January 2023.

• South African Rand (ZAR): Appreciated by 0.5% to 17.58 against the USD, benefiting from a weaker dollar and higher gold prices.

Europe

• Sterling (GBP): Gained 0.85% against the dollar, finishing at 1.354. The pound was boosted by stronger-than-expected Q2 GDP growth, which has lowered the chances of further Bank of England rate cuts.

• Euro (EUR): Traded 0.5% stronger against the dollar to finish at 1.170, primarily benefiting from broad dollar weakness.

Cryptocurrency

• Markets were volatile, with Bitcoin hitting an all-time high before retreating. Hotter than expected US inflation data weighed on sentiment as it reduced the likelihood of imminent interest rate cuts.

Key economic dates to keep an eye out for:

• Tuesday, Aug 19th: Canada Inflation Rate

• Wednesday, Aug 20th: UK Inflation Rate, US FOMC Minutes

• Thursday, Aug 21st: Eurozone, UK & US PMI Data

• Friday, Aug 22nd: Japan Inflation Rate, UK Retail Sales

Why it matters for UAE businesses?

These FX swings, driven by unexpected data and sudden policy shifts, directly impact UAE businesses managing international payments, FX exposure, and global suppliers. Whether it’s managing inward remittances, paying vendors abroad, or locking in better rates, this volatility can erode margins overnight.

At Hubpay, we help UAE businesses stay one step ahead with smarter treasury, hedging, and cross-border FX payment solutions.

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