On Thursday, September 10, 2026, currency markets traded cautiously ahead of the release of the US Producer Price Index (PPI) data for August, which is expected to show headline inflation accelerating to 5.3% year-over-year (YoY) from 4.7% in July, and core PPI rising to 4.6% YoY from 4.2% [1][2][3][4]. The USD/CAD pair consolidated around 1.3810, with technical resistance at 1.3818 and 1.3854, and support at 1.3701 and 1.3551, reflecting a mildly bearish tone as the Relative Strength Index (RSI) hovered at 41.7, below the neutral 50 line [1]. GBP/USD strengthened to near 1.3555, supported by a weaker US Dollar and technical demand above the 100-day moving average, with resistance at 1.3565 and 1.3655, and support at 1.3472 and 1.3445 [3].
The Euro edged up against the US Dollar, trading near 1.1650, but remained capped below Wednesday’s highs. The move was attributed to risk-off sentiment amid high oil prices and surging global yields, as well as anticipation of the European Central Bank’s (ECB) monetary policy meeting later in the day [2][4]. The ECB is widely expected to hike its deposit rate by 25 basis points to 2.5% from 2.25%, with President Lagarde expected to retain full optionality on future moves and provide no firm guidance, which analysts believe should limit the market reaction [2][4]. Germany’s final Harmonised Index of Consumer Prices (HICP) confirmed a 0.2% increase in August and a 2.9% YoY gain, with marginal impact on the Euro [2].
US Treasury Department announced a $6 billion long-end bond buyback operation, tripling the normal buyback amount, which led to a modest rise in longer US Treasury yields and contributed to USD weakness. Some investors had hoped for a larger buyback, but the announcement applies only to today's operation and does not set the size for future ones [3][4]. The Greenback failed to draw support from its traditional safe-haven status, weighed down by disappointment over the Treasury's bond buyback program, USD/JPY carry trade unwinding, and concerns about US government debt [2].
Analysts at Brown Brothers Harriman noted that even if a September Fed hike becomes a 'done deal,' they doubt the USD will make new cyclical highs, as tightening by other major central banks, including the ECB, limits policy divergence [2]. Danske Bank expects the ECB to raise rates in line with consensus and market pricing, with Lagarde likely to retain full optionality over future rate paths [4]. Scotiabank strategists cautioned that fiscal risk remains elevated for the UK as markets await the UK budget in late October, and that upcoming trade and industrial production figures on Friday will provide the next meaningful read on the UK macro backdrop [3].
Looking ahead, investors are also focused on the US Consumer Price Index (CPI) data for August, due on Friday, which will be analysed to confirm market expectations of a Federal Reserve rate hike next week. The CME FedWatch tool currently shows a 61.2% probability of a Fed rate hike at the upcoming policy meeting [1][2].
CONCLUSION
Currency markets are trading cautiously as investors await key US PPI and CPI data, with expectations of rising inflation and a potential Fed rate hike. The ECB is poised to raise rates, while US Treasury actions and global fiscal concerns are shaping FX sentiment. Market volatility is likely to remain elevated as central bank decisions and economic data releases drive investor positioning.