Market Highlight 28.08.2026

The key inflation gauge in Japan accelerated for a third consecutive month, strengthening the case for the Bank of Japan (BOJ) to raise interest rates again at its upcoming September meeting. Specifically, the Tokyo Consumer Price Index rose by 1,8% YoY in August, following a 1,7% increase in July. The main drivers of inflation were higher prices for durable goods related to education and recreation, as well as medical treatment fees. Services prices - an important gauge of the persistence of inflation - increased by 1,4% from the same period in 2025. The result shows that prices continued to rise even as Prime Minister Sanae Takaichi implemented measures to reduce households’ cost of living, pushing the market-implied probability of a BOJ rate hike in September to above 80%. In addition, the continued weakness of the JPY - despite coordinated U.S-Japan intervention in July - means that inflation risks remain elevated.

The USD traded steadily on Thursday following a series of U.S economic data releases, while attention shifted to Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium. The USD has recovered by 0,35% this week, compared with a 0,83% decline last week, after Treasury Secretary Scott Bessent said that the U.S Treasury Department would double the size of its long-term Treasury buyback operations. FED Chair K. Warsh is scheduled to speak at the Central Bankers’ meeting tonight, with markets closely watching for signals on the monetary policy outlook and how the Federal Reserve may respond to the U.S Treasury Department’s recent actions.

Interbank USD/VND traded around 26.100 early yesterday before edging lower by around VND 20 to 26.080. The upward trend is expected to potentially resume after the 2/9 public holiday.

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