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News
Friday, August 15, 2025
What’s happening: The US dollar moved higher on Thursday following the release of data on producer prices.
What happened: Data released on Thursday showed that US producer prices rose higher than projected in July.
The latest data followed the release of a higher-than-expected rise in consumer prices on Tuesday.
Why it matters: Although the flowthrough of tariff costs has been limited so far, there are wide concerns about the US facing high inflation rates as the year progresses.
US producer prices surged 0.9% in July, picking up significantly from the previous month’s flat reading. The figure also came in much higher than market estimates of 0.2%. The latest rise in producer prices was the steepest since June 2022, with cost of services up 1.1%, driven by a 3.8% rise in margins for machinery and equipment wholesaling. Annual core producer inflation also accelerated to 3.7% in July, from 2.6% in the previous month.
The latest CPI (consumer price inflation) data released on the previous day showed that core inflation had risen to 0.3% in July, surpassing June’s 0.2% rise. This was the largest gain in six months. Annual core prices rose 3.1% in July, up from 2.9% in the previous month.
Expectations of inflation accelerating as the year progresses dampened speculations of outsized interest rate cuts by the Federal Reserve, which supported the US dollar.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to reach 98.25 on Thursday. The EUR/USD forex pair fell around 0.4% to 1.1649, while the GBP/USD slipped around 0.3% to 1.3530.
The USD/JPY recorded losses earlier in the session after US Treasury Secretary Scott Bessent suggested the Bank of Japan to hike interest rates. The forex pair recovered in the latter part of Thursday’s session.
What to watch: Investors will continue monitoring tariff-related announcements from the Trump administration.
Data on import prices (1630 UAE Time), retail sales (1630 UAE Time) and consumer sentiment (1800 UAE Time) will remain in focus. Retail sales in the US, which rose 0.6% in June, are expected to climb by 0.5% in July, while US import prices are expected to remain flat, following a 0.1% rise in June. Analysts expect the University of Michigan’s consumer sentiment index to improve to 62 in August, from 61.7 in the previous month.
Markets will also watch the annual Jackson Hole central banking symposium, scheduled for next week, which is expected to provide further insights into the Fed’s future monetary policy moves.
Context: Japan’s Nikkei rose on Friday, as investors responding to a better-than-expected GDP report.
Details: Data released on Friday showed that Japan’s economy grew by 1.0% on an annualised basis during the second quarter, accelerating from the previous quarter’s 0.6% expansion. The figure also topped market estimates of 0.4%. This signalled the fifth consecutive quarter of annualised growth in Japan’s economy.
Japan’s GDP also expanded 0.3% in the second quarter, beating market estimates of 0.1% growth. The upside was led mainly by net exports, despite headwinds from higher tariffs announced by the US.
Top gainers in Japan’s equity markets on Friday, included Mitsubishi UFJ, Lasertec and Sumitomo Mitsui.
Japan’s Nikkei 225 gained 0.76% to trade at 42,974.69 on Friday, while the TOPIX index climbed 0.75% to 3,080.77.
What to watch: Investors await the release of data on Japan’s Tertiary Industry Index on Monday. The index had climbed 0.6% in May and is expected to rise by 0.3% in June. Data on balance of trade, S&P Global composite PMI and inflation date, due later next week, will also remain in focus.
Markets will also monitor tariff-related announcements by Donald Trump and talks between the US and Russia.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.13%, 0.79%, 0.84% and 0.55%, respectively.
US President Donald Trump and Russian President Vladimir Putin will meet for the first time in six years today to discuss a ceasefire deal with Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
China’s industrial production jumped by 5.7% year-over-year in July, slowing from the 6.8% gain in the previous month. The latest reading coming in short of market expectations of 5.9% exerting pressure on the CNY/USD forex pair.
India’s total passenger vehicle sales rose by 1.5% year-over-year to a four-month high of 301,251 units in July, following a 6.3% decline in the previous month, which sent the INR/USD pair higher in forex trading this morning.
Peru’s Central Reserve Bank held its benchmark interest rate at 4.50% at its latest meeting, lending support to the PEN/USD forex pair.
New Zealand’s annual food inflation climbed to 5% in July, from 4.6% in the previous month. This being the highest inflation rates since November 2023 sent the NZD/USD pair lower in forex trading this morning.
India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Canada’s manufacturing sales (1630 UAE Time), new motor vehicle sales (1630 UAE Time) and wholesale sales (1630 UAE Time), as well as US export prices (1630 UAE Time), NY Empire State manufacturing index (1630 UAE Time), capacity utilization (1715 UAE Time), industrial production (1715 UAE Time), manufacturing production (1715 UAE Time), business inventories (1800 UAE Time), Michigan inflation expectations (1800 UAE Time), Michigan consumer expectations (1800 UAE Time), Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time).
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