The 'Warsh effect' and geopolitical tension strengthen the dollar ahead of US employment data.

Royalty-free stock photograph created by Alexander Grey on Unsplash.

Foreign Exchange Market

Fintech firm Ebury analyzes a key week for the dollar, strengthened by Fed Chairman Warsh's hawkish rhetoric and the conflict in the Middle East. Markets are awaiting US jobs data that could pave the way for an interest rate hike in September.

---

The currency market faces a decisive week, marked by the strengthening of the US dollar after the hardline speech (hawkish) of the president of the Reserva Federal, Warsh, at the symposium of Jackson HoleThis factor is compounded by the resumption of hostilities between Estados Unidos e Irán, which has returned to crude oil Brent above $90 per barrel. In this context, attention is focused on the non-farm payroll data of EE.UU. which will be published this Friday, an indicator that could be decisive for the next decision of the Fed about interest rates.

According to the analysis of EburyThe global fintech company specializing in international payments and foreign exchange said, "The greenback retains much of the gains made after the hawkish message from Warsh en Jackson Hole last Friday and markets are now awaiting the non-farm payroll data to be released this Friday in Estados UnidosIf job creation expectations are confirmed, we could see a further consolidation of expectations for an interest rate hike. Reserva Federal in September."

USD: The Fed is one step away from tightening its monetary policy.

Doubts about the decision that will be made Reserva Federal at their September meeting they have increased, but the speech of their president, Warsh, it was unequivocal: If inflationary pressures do not ease, the Fed must actSince then, the market's implied probability of an interest rate hike has climbed to 60%. The key data point that could tip the scales is Friday's non-farm payrolls report. The expectation is for 50.000 new jobs to be created in August, a figure that, if confirmed, would strengthen the case for monetary tightening and could give the dollar an additional boost.

EUR: The ECB is determined to act to preserve its credibility

In the eurozone, the market has already fully priced in an interest rate hike by the Banco Central Europeo (BCE) at its next meeting in September. Factors such as natural gas futures at record highs, the renewed conflict in Oriente Medio And the resilience of the eurozone economy leaves no room for surprises. Analysts from Ebury They indicate that this measure is preventative and strategic. "As long-term inflation expectations remain anchored and we have not yet observed second-round effects, we believe that this second increase, like the first, is aimed at..." preserve the credibility of the institution "This is to prevent an inflationary spread to non-volatile components," they explain. However, they clarify that "this does not mean, in any way, that the economy is overheating and that the level of growth requires restrictive monetary conditions." This week's inflation data will be crucial in confirming this decision.

Key foreign exchange market data as of August 31, 2026. Source: Ebury Analysis.

Key Indicator	Value / Expectation	Impact on the Market
Brent crude oil price	Above $90/barrel	Global inflationary pressure, weakness for import currencies (JPY).
Non-farm payrolls EE.UU. (August)	Expectation: +50.000 jobs	This would confirm the strength of the labor market and support an interest rate hike. Fed.
Probability of rising interest rates (Fed)	60 %	Strengthening of the dollar (USD).
Intervention of the Banco de Japón (JPY)	96.000 million	Effects limited by the strength of the dollar and the price of energy.

Analysis of other key currencies: GBP, JPY and CNY

La pound sterling (GBP) has shown relative stability in a week of little economic activity in the Reino UnidoHowever, the outlook points to an economic slowdown, a weakening labor market, and renewed concerns about fiscal sustainability, which diminishes the possibility that the Banco de Inglaterra raise interest rates in the current cycle. Meanwhile, Japanese yen (JPY) It is suffering enormously. Despite a $96.000 billion currency intervention by Japanese authorities, the currency has lost almost all of its gains. The strength of the dollar and the rise in Brent crude are a drag on an energy-importing economy. The only short-term hope lies in the meeting of Banco de Japón September 18, where a rate hike is expected, possibly as a condition imposed by Washington for joint intervention.

Finally, the Chinese yuan (CNY) It maintains a surprising upward trend despite weak domestic economic activity. August PMI data, while slightly better than expected, still point to a contraction in the manufacturing and services sectors. On the geopolitical front, the threat of sanctions from the US administration against countries that provide economic support to Irán It adds a layer of trade uncertainty to the region.

Frequently Asked Questions (FAQ)

Why has the US dollar strengthened this week?

The dollar has been boosted mainly by two factors: the hardline rhetoric (hawkish) of the president of the Reserva Federal, Warsh, which anticipates a possible rise in interest rates, and the increase in risk aversion due to renewed geopolitical tensions between Estados Unidos e Irán.

What factor is decisive for the Federal Reserve's next decision?

The key data point will be the non-farm payroll figures to be released this Friday. Strong job creation, in line with expectations of 50.000 new positions, would bolster the case for the Fed raise interest rates at its September meeting.

Why is the European Central Bank planning to raise interest rates if the economy isn't overheating?

According to the analysis of Ebury, the measure of BCE It is not a response to overheating, but rather a preventive action to preserve the credibility of the institution and prevent inflation from spreading to non-volatile components of the economy, in a context of high energy prices and economic resilience.