TradingKey - The Federal Reserve released the minutes of its July meeting on August 19, Eastern Time. At the meeting held on July 28–29, the FOMC decided to maintain the target range for the federal f

United States 20-Year Bond Auction: 5.204% vs 5.163%

Geoff Yu writes that Bank Indonesia (BI) kept its benchmark rate at 5.75% for a second month in Acting Governor Destry Damayanti’s first decision.

The US 10-year Treasury yield declines sharply on Wednesday, trading at 4.651% at the time of writing after reaching an intraday high of 4.712%.

Societe Generale’s Sam Cartwright notes United Kingdom (UK) headline inflation rose to 2.9% year-on-year in July, driven mainly by higher household energy bills.

Commerzbank analysts note that the Bank of Thailand (BoT) is expected to keep its policy rate at 1.0%, seeing it as sufficiently accommodative. USD/THB has consolidated in a 32.90–33.30 range, with rising global commodity prices and foreign outflows posing downside risks for the Baht.

Sam Cartwright at Societe Generale argues recent easing in United Kingdom (UK) services inflation and labour market loosening support the Bank of England’s wait-and-see stance. The baseline view is Bank Rate stays at 3.75% through 2026 to restrain underlying inflation.

Chris Turner at ING explains that Korea’s earlier massive portfolio outflows and a weaker Korean Won (KRW) pushed USD/KRW to 1560 in June, despite a large current account surplus.

The United States (US) Federal Reserve (Fed) will release the Minutes of the July Federal Open Market Committee (FOMC) meeting on Wednesday.

Commerzbank’s Charlie Lay, Dr. Henry Hao and Moses Lim note that China’s July data showed weaker Industrial Production and Retail Sales, underscoring fading momentum at the start of Q3.

UOB economist Enrico Tanuwidjaja notes that Bank Indonesia (BI) kept the BI Rate at 5.75% in August, prioritizing Rupiah and macro-financial stability over growth.

The United States (US) Department of the Treasury (US Treasury) announced on Wednesday that it will double the size of some of its buyback operations aimed at supporting liquidity in the longer-dated Treasury securities market.

Societe Generale’s Sam Cartwright argues that a new UK Prime Minister has not altered the constrained fiscal backdrop, limiting ambitions on housebuilding, social care, investment and defence.

HSBC strategists review July data and the latest China Politburo guidance. Retail sales and Fixed Asset Investment softened, while Industrial Production and exports were supported by AI-related and green technology demand.

National Bank of Canada’s (NBC) Angelo Katsoras argues that Canada’s push to diversify exports away from the United States (US) toward the European Union (EU) faces growing obstacles as EU industrial policy turns more protectionist.

Commerzbank’s Antje Praefcke says markets will scrutinize the latest Fed minutes for clues on how close policymakers remain to another rate hike after weaker US labour and inflation data reduced expectations for a hike by year-end.

Societe Generale analysts Galvin Chia and Kunal Kundu note that Bank Indonesia kept the BI rate at 5.75%, with deposit and lending facility rates unchanged, reinforcing Rupiah stability and inflation control.

ING’s Chris Turner, citing UK economist James Smith, notes that July United Kingdom (UK) Consumer Price Index (CPI) had limited impact on EUR/GBP, with benign food inflation and only a modest uptick in the Bank of England’s core services measure to 3.8%.

Deutsche Bank’s Chief United Kingdom (UK) Economist Sanjay Raja notes that UK inflation data for July broadly matched expectations, with headline Consumer Price Index (CPI) rising and core CPI steady.

Standard Chartered strategists have revised its Bank of Japan (BoJ) rate outlook, bringing forward its expected 25bps hike from October to September and raising its terminal rate forecast to 1.75% from 1.50% previously.

West Texas Intermediate (WTI) oil price moves sideways after three days of gains, trading around $84.50 per barrel during the European hours on Wednesday.

Danske Research Team notes that EUR/USD has extended its rebound towards 1.1600 as European yields remain elevated while US Treasury yields stabilize after the recent spike.

Deutsche Bank strategists note that global equities endured another difficult session as rising yields and higher Oil reinforced a stagflationary backdrop. US indices, led by chip stocks and the NASDAQ, extended declines, while the STOXX Europe 600 posted its fifth consecutive drop.

Here is what you need to know on Wednesday, August 19:

USD/IDR depreciates after registering modest gains in the previous day, trading around 17,870 during the European hours on Wednesday. The pair holds losses as the Indonesian Rupiah (IDR) remains stronger following the release of the interest rate decision by the Bank Indonesia (BI).

European Central Bank (ECB) official and Finnish Central Bank Governor Olli Rehn said during the European trading session on Wednesday that it is essential to keep inflation expectations anchored.

OCBC’s Sim Moh Siong and Christopher Wong note that Indonesian Rupiah (IDR) weakness is driven by higher Oil prices and elevated global yields, even as domestic sentiment improves after President Prabowo’s speeches and the BI governor nomination.

Danske Research Team reports a marked drop in global equities, with the S&P 500 and Stoxx 600 down 0.7% on Tuesday. After a period of value-versus-growth rotation, flows shifted toward defensive sectors such as consumer staples and health care, funded by cyclicals.

MUFG’s Lloyd Chan notes that the Korean Won (KRW) and Taiwan Dollar (TWD) are leading Asia FX gains as softer US yields and a resilient technology cycle support sentiment.

UOB strategists highlight Bank Indonesia’s (BI) policy meeting, with consensus expecting no change but its macro team forecasting a 25 bps hike to 6.00%. They see risks around the Indian Rupee (IDR), divided views on Federal Reserve (Fed) policy and rising global inflation.