Waiting for More Clues
August 25, 2026
The dollar has lost ground in August but has not significantly broken out of the narrow corridor traveled so far during 2026. At 100.5 on July 28, it was 0.3% shy of its 52-week peak, and at 98.56 last Friday, it was only 1.2% above a low touched six months ago. Today has been another day of marking time. In overnight action, the dollar firmed a mere 0.1% against the yen and loonie, held steady relative to the euro, Swissy and sterling and dipped 0.1% versus the Australian and New Zealand currencies.
Bigger overnight changes in sovereign debt yields included declines of five basis points in the U.K., France and Italy and of four bps in Spain and the United States. Ten-year Japanese and Australian yields ticked a basis point higher, by contrast.
Bitcoin’s price, which had sunk during the first half of 2026 to a midyear reading of $58,783, continues to rebound, touching an overnight high of $81,222 and sporting a net uptick currently of 0.4% on the day. Yesterday’s heralded details of new economic sanctions against Iran were not as harsh as feared, and Pakistani mediators have reportedly stepped up efforts to get peace talks between the U.S. and Iran on a more constructive footing. Showing the benefit of the doubt in spite of the trickle of traffic going through the Strait of Hormuz today, the price of West Texas Intermediate crude oil is 3% lower on the day at $82.49 per barrel. The price of silver has fallen 1%, but gold is essentially steady.
Half an hour prior to the opening bell, futures in the four major U.S. equity indices were each higher by between 0.4% and 0.8%. Aside from a 0.4% decline in Indonesia, share prices in the Pacific Rim had closed primarily higher, and European stock exchanges are currently up, too, led by the German DAX.
Two pieces of encouraging German economic news were reported today:
- Real GDP growth last quarter was revised 0.1 percentage point higher to 0.3% on quarter and 1.0% on year. GDP had risen only 0.2% in 2025 following declines in both 2023 and 2024.
- The IFO Institute’s August German business climate index of 88.8 exceeded analyst expectations, was 2.1 points higher than in July and the best reading since 88.9 a year earlier. The subindex for current conditions was at a 28-month high, and future expectations improved to a 6-month high versus a 51-month low just four months earlier. Broken down by sector, manufacturing and trade were at 39- and 13-month highs, while services and construction rose to 6- and 5-month highs. In assessing the findings, IFO officials perceived lessening uncertainty and remarked that Germany’s recovery had persisted in spite of another rise in the price of energy.
French consumer confidence held steady this month at July’s 4-month high. At 86, however, the index was well below the year’s best score of 92 in February before the Iran war started and even further from the 100 level that divides optimism from pessimism.
Japan’s August indices of leading and coincident economic indicators were each revised upward from their preliminary indications. The leading index reached a 59-month high, while the coincident measure was its most elevated in just over seven years.
A four-month low in South Korean consumer confidence this month may have reflected unease after President Trump’s complaint about the annual tradition of a defensive military exercise that South Korean and U.S. forces have been doing for decades.
Spanish producer price inflation leaped 2.2 percentage points higher to a 2-month high of 9.2% in July, not far from May’s 39-month peak of 10.5% and far above the -6.9% reading last February.
Brazilian consumer confidence sank ot a 13-month low in August.
In central banking news this Tuesday, minutes from this month’s Reserve Bank of Australia Board meeting revealed that although a majority voted to keep the Official Cash Rate unchanged at 4.35%, a minority expressed qualms that inflation might not return to target within the expected time window and that a more restrictive stance might be necessary.
Officials at the National Bank of Kyrgyzstan left their policy rate at 12.0%, which is its highest since April 2024. Their economy has been experiencing double-digit rates of growth and inflation, creating a continuing need for a tight monetary stance.
As was expected, officials at the National Bank of Hungary cut the central bank base rate by another 25 basis points. This is the fourth such reduction so far in 2026. At 5.5%, the base rate is down from 6.5% prevailing from September 2025 until this past February and a peak of 13.0% maintained from September 2022 until an initial cut in October 2024. Consumer price inflation of 1.2% in July was a half percentage point lower than in June and at its lowest level in just short of a decade. Inflation peaked early in 2023 at 25.8%.
The two most widely followed indices of U.S. house price inflation gave conflicting signals in Juen. The FHFA index flat-lined on month and ticked 0.1 percentage point lower to a 2.3% year-on-year pace. The Case-Shiller index rose 0.4% on month and climbed to a 2.1% year-on-year increase from 1.6% in May.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: French consumer confidence, German GDP and business climate index, Magyar Nemzeti Bank, National Bank of Kyrgyzstan
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