Market Highlight 08.09.2026

The European economy recovered faster than expected in Q2 despite rising energy prices caused by the war between the U.S and Iran. However, this resilience could be tested in the final quarters of the year if the conflict continues to disrupt traffic through the Strait of Hormuz. The European Union’s statistical agency said on Monday that Gross Domestic Product (GDP) across the 21 euro-area member countries increased by 0,6% in Q2 from the first 3 months of 2026, following stagnation in Q1. Growth was driven by exports and consumer spending. However, economists warned that higher electricity costs could weigh on household spending as colder weather returns, while the growth in overseas sales may prove temporary due to the wars in Ukraine and the Middle East.

On a year-over-year basis, the euro-area economy expanded by 2,6%, outperforming the U.S, which grew by only 1,5%, as well as China, Japan, and India. Following the recent data, HSBC raised its forecast for the region’s economic growth this year to 0,8% from 0,3%, which it had projected when the war in Iran began. The stronger growth outlook has implications for the European Central Bank (ECB), which will meet on Wednesday and Thursday and is expected to raise its policy rate to 2,5% from 2,25%, after delivering an earlier rate hike in June, its first since September 2023.

The JPY strengthened to a seven-month high of around 154 per USD at the beginning of this week amid expectations that the Bank of Japan will raise interest rates in September. Domestically, interbank USD/VND continued to decline to 26.020 by the end of yesterday’s session, its lowest level since late February this year. The SBV raised the effective daily ceiling by a further VND 6 to 26.891.

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