Xe Morning Update - Your daily market wrap

Monday, September 14, 2026

MONDAY, SEPTEMBER 14

Developments in markets for Friday, 11 September

Snapshot: S&P 500/Nasdaq??, yields??, crude??, gold??, Dollar Index??
AUD/USD??ends the week in the 0.7160's, attempts to halt recent pullback
AUD WoW?: NZD: +0.71% • EUR: -0.29% • USD: -0.44% • GBP: -0.45% • JPY: -2.11%
US CPI mostly in-line with expectations; odds firm for Fed to hike this week
Implied probability of a 25bps point hike jumps from 60% to 85% through the week
Week ahead: Fed and BoJ to hike, BoE on hold; busy UK data week; NZ 2Q GDP

Each morning we bring you up to speed with the latest market news, including the events and themes that are impacting currencies and other related asset classes.

Will the Fed hike in September?

This was the key question posed in last Monday's Xe Morning Update. Following a week of inflation data that largely matched expectations, with both CPI and PPI printing broadly in line with consensus forecasts, markets further priced in a September rate cut. The implied probability of a 25bp reduction rose from around 60% to above 85%, leaving Chair Warsh on track to deliver the first rate cut of his tenure

The week's headline event, the US CPI report for August saw most components matching expectations with the notable exception being the month on month read for core, ticking higher from July's +0.2% to +0.3%, yielding a steady annualised rate at 2.4%. Whilst the trend for core inflation is encouraging, printing at 2.9%, 2.6%, 2.5% and 2.4% over the past four months, headline inflation has remained steady at 3.4% and risks heading higher in the months ahead as crude oil prices ascend back beyond US$100/barrel.

The initial reaction to the data was hawkish - U.S. treasury yields and the dollar leapt higher whilst equity markets and commodities came under pressure. Oscillating either side of 0.7170 in the few hours leading up to the CPI release, the Australian dollar spiked lower, through 0.7170, before the knee-jerk reaction faded quickly.

New York afternoon trade proved uneventful - markets tracking sideways into the week's close. Ending the week just south of 0.7110, the Aussie retains its upside bias, despite the pullback from Wednesday's swing exceeding one percent. For AUD bulls to retain the upper hand a 0.7120/50 support zone must hold through this week.

US equity markets as at time of morning update release and may not represent session closing prices

Looking ahead, the FOMC meeting takes center stage, with the two-day gathering concluding early Thursday morning. Markets are fully priced for a move to a 3.75%-4.00% target range. The key question is whether policymakers view this as a one-off adjustment or the beginning of a broader tightening cycle. Given Chair Warsh's reluctance to provide explicit forward guidance, investors may receive little clarity on the future policy path, leaving markets to interpret the outcome through the statement, projections, and press conference.

The other major central bank event for the week is the Bank of Japan meeting, also widely expected to hike, raising the policy rate to 1.25% - a level not seen in more than three decades. Like the Fed, the critical question is what happens next. Rates markets project an additional hike over one of the next two meetings, taking the year end policy rate to 1.50%.

The yen was the standout performer across the G10 for a second consecutive week, with USD/JPY falling more than 4% amid heightened intervention concerns and growing confidence that the Bank of Japan will deliver a rate hike this week. Since peaking just below the 115.00 mark on 28 August, AUD/JPY has declined more than 4%, pressured by the RBA's reluctance to action addtional tightening and the strengthening yen backdrop. Entering the new week, the cross remains under pressure, with a break below 109.00 potentially exposing fresh 8-month lows.

The Bank of England also meets, an on-hold decision the likely outcome, maintaining a 3.75% bank rate.

On the data front, it's a stacked week for UK data releases via the employment report, retail sales and CPI. Other data points to note, include China activity data, US retail sales and the regional headliner - 2Q GDP, the NZ economy projected to grow at an annualised 2.3%.

The tone of the FOMC meeting, alongside moves in Treasury yields and oil prices, will be key drivers this week. A hawkish outcome and a sustained push in crude above US$100/barrel would likely add to downside pressure on the Australian dollar.

Have a great week!

Stuart Talman

stuart.talman@xe.com

Xe Corporate

Any questions or if you require account support call 1800 006 592

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