Market Highlight 21.08.2026

Japan’s consumer price inflation accelerated for the second consecutive month, giving the Bank of Japan further reason to raise interest rates as early as September, with the market currently pricing in around an 80% probability. Specifically, CPI rose by 1,8% YoY in July, up from 1,6% in June. The increase was partly driven by higher energy costs (+0,6%) and the weakness of the JPY, despite Government measures aimed at mitigating the impact of rising energy prices. Processed food prices increased by 3%, while services prices rose by 1,2%. Meanwhile, rice prices fell by nearly 12% after surging by more than 90% last year.

The USD edged higher on Thursday after falling by nearly 0,9% the previous day as the market assessed whether the U.S Treasury Department’s efforts to contain long-term Treasury yields would prove successful. U.S Treasury Secretary Scott Bessent said last night that he could further increase the volume of Treasury buybacks, while arguing that current yields do not reflect underlying fundamentals. The USD is currently under pressure from concerns over the sustainability of U.S fiscal policy and the credibility of the Federal Reserve’s monetary policy management. Economists are now focusing on FED Chair Kevin Warsh’s upcoming speech at the Jackson Hole central banking symposium later this month for signals on how he plans to address persistently elevated inflation. The market is currently pricing in around a 35% probability of a FED rate hike in September, rising to nearly 70% by December.

Interbank USD/VND corrected lower by around VND 70 yesterday to 26.100 at the end of the day. Selling pressure was influenced by the USD’s weakening trend in global markets, although domestic USD demand continued to rebound rapidly.

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