Steady Dollar and Two Asian Central Banks Hike Interest Rates
August 27, 2026
Dollar changes this Thursday have been unremarkable.
Nvdia earnings last quarter exceeded optimistic expectations. The tech-intensive Nasdaq is 1.2% higher mid-morning EDT. More general jitters about AI, the Middle East war, and U.S. trade policies are associated with little change in other major U.S. stock market barometers. Pac Rimequities were mixed today, with the Korean Kospi up 1.5% but lower closings in Indonesia, India, Australia and New Zealand. Japan’s Nikkei stayed pretty flat, and European stock markets are underperforming, led by a 1.8% drop in the Paris CAC so far.
Ten-year sovereign debt yields have risen two basis points in the U.S. and Germany and a basis point in France, Italy and Spain. Australia experienced a six-basis point increase.
The prices of Bitcoin and WTI oil are up 0.9% and 0.5%, while gold costs 0.2% less.
Central bank interest rates were hiked by 25 basis points today in South Korea and the Philippines to 3.0% and 5.0%, respectively. In South Korea’s case, this was the second such tightening in a row from a 2.5% base maintained from May 2025 until the monthly review this past July. Despite slightly lower inflation in Korea this month, a statement from the Bank of Korea explains,
Inflation is expected to remain above the target level for a considerable time as the pass-through of elevated cost pressures persists and as demand-side pressures also gradually increase with improving income conditions. Consequently, consumer price inflation is forecast at 2.7% for this year and 2.3% for next year. it is important to prevent inflationary pressures from becoming widespread through preemptive action, and it is also necessary to continue paying attention to financial stability risks.
At the Central Bank of the Philippines, today’s action was the third 25-basis point rate hike since April. Filipino inflation is targeted withing a two-percentage point range centered on 3.0% but is currently will above that at 6.2%. That bank’s statement of explanation notes
Oil prices remain volatile. The possible impact of severe El Niño conditions on agricultural prices pose further upside risks to inflation. Potential wage adjustments also warrant close monitoring, including their implications for broader price setting and second-round effects. These underlying price risks require preemptive monetary action. With today’s policy action, average headline inflation is still seen to breach the 4.0-percent tolerance ceiling in 2026 and 2027.
In spite of a tariff-centric trade policy, The U.S. goods deficit soared to a 16-month high of $118.8 billion in July from $101.4 billion in June and as little as $61.4 billion last October.
Other U.S. data reported today include a 3-week low in new jobless insurance claims of just 203k last week, a 4-week low in the week of August 15 in outstanding jobless insurance claims, and an unchanged reading in the Kansas City Fed’s monthly manufacturing index. The annual economic policy symposium at Jackson Hole, Wyoming hosted by the KC Fed begins today, with all eyed focused on Chairman Warsh’s keynote address tomorrow.
Canada, a major target of U.S. trade protection, experienced is largest current account surplus in 82 quarters during 2Q 2026. It was C$ 8.8 billion versus a deficit of C$ 8.3 billion in the prior quarter and a shortfall of C$ 21.8 billion in the second quarter of 2025.
German consumer confidence remained in sub-zero territory this month but, at -26.6, was the least negative reading in a half year.
French producer price inflation climbed to a 4-month high in July of 3.4%, having been as low as 0.1% in March and -8.2% in March of 2024.
Icelandic consumer price inflation of 5.6% this month constitutes a 2-year high.
South African producer price inflation receded to 5.7% in July from a 37-month high of 7.8% scored in May.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bangko Sentral Ng Pilipinas, Bank of Korea, Canadian current account, U.S. merchandise trade defiict
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