USD/JPY rebounds on Thursday, recovering most of the previous day’s losses as the US Dollar (USD) stages a modest recovery after falling to a three-month low. At the time of writing, USD/JPY trades around 159.05, up roughly 0.55% on the day.

The minutes of the Bank of Mexico (Banxico) August’s August meeting revealed that the central bank is expected to hold rates steady for some time, despite the resumption of the disinflation process.

NZD/USD advances for the second consecutive day on Thursday, trading around 0.5940 at the time of writing, up 0.12% on the day.

AUD/USD is trading in the 0.7100 neighborhood at the time of writing on Thursday, holding close to multi-week highs after a steady climb off its earlier lows. The pair is marginally weaker on the day as the US Dollar (USD) regains a little ground, but the broader uptrend remains intact.

The Pound Sterling advances on Thursday during the North American session, up 0.25% after US economic data revealed that the labour market remains solid, despite a weaker Nonfarm Payrolls in July. The GBP/USD trades at 1.3639 after reaching a daily low of 1.3594.

USD/CHF regains ground on Thursday as the US Dollar (USD) stabilises following the previous day’s broad weakness, which pushed the pair below the 0.8000 psychological mark and to its lowest level since June 17, weakening the near-term bullish structure.

USD/CAD trims part of its earlier losses on Thursday as the US Dollar (USD) stages a modest recovery following the previous day’s sharp selloff. However, the pair stays on the back foot as higher Oil prices support the commodity-linked Canadian Dollar (CAD).

Scotiabank strategists Shaun Osborne and Eric Theoret note that GBP/USD gains into the mid-1.36s are driven more by US Dollar (USD) weakness than intrinsic British Pound (GBP) strength, though United Kingdom (UK) survey data show improving manufacturing orders and pricing power.

EUR/GBP trades near the 0.8560s zone, having drifted steadily lower from near the 0.8585 area after failing to hold its push higher. The cross is down 0.15% in Thursday's American session with traders squaring up ahead of a data-heavy Friday.

Lloyd Chan at MUFG highlights that the Korean Won has outperformed regional peers, helped by a softer Dollar and a resilient semiconductor and AI investment cycle supporting exports and inflows.

BNY Mellon’s Geoff Yu reports the Swedish Riksbank left its policy rate at 1.75%, judging the stance well balanced amid stronger growth and inflation but a softer labor market. Underlying inflation is near 2% and summer readings beat forecasts.

Scotiabank strategists Shaun Osborne and Eric Theoret report that EUR/USD gains are being driven mainly by broad US Dollar (USD) weakness, with front-end spreads narrowing since late June and supporting Euro (EUR) fundamentals.

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that USD/CAD is under pressure as broad US Dollar (USD) weakness combines with tentative progress on a US-Canada trade deal.

EUR/USD trims part of its earlier gains on Thursday as the US Dollar (USD) stabilises following the previous day’s sharp selloff. At the time of writing, the pair trades around 1.1686 after touching an intraday high of 1.1710, its highest level since May 14.

BNY Mellon’s Geoff Yu highlights comments from RBI Governor Sanjay Malhotra that the central bank’s net-short forward-Dollar position is still very manageable despite large bearish bets to support the Rupee.

AUD/USD declines 0.22% on Thursday and trades around 0.7110 at the time of writing.

Rabobank's Senior FX Strategist Jane Foley discusses USD/JPY in context of fiscal and debt dynamics in Japan and the United States (US).

GBP/JPY edges higher on Thursday, reversing all the losses recorded on the previous day. The move is largely driven by broad Japanese Yen (JPY) weakness rather than any major positive development for the British Pound (GBP), with a sparse economic calendar offering little fresh impetus.

The Japanese Yen (JPY) shows a moderate pullback on Friday, despite the broad-based US Dollar (USD) weakness, following the US Treasury’s plan to double buybacks of long-term Government debt.

Geoff Yu at BNY Mellon highlights that foreign investors are accelerating Japanese Government Bond selling while Japanese investors increase purchases of overseas bonds and equities. This flow mix weakens support for the Japanese Yen and points to further depreciation.

Brown Brothers Harriman’s (BBH) Elias Haddad notes AUD/USD is holding gains on broad US Dollar weakness despite a soft July Australian labor report. The economy unexpectedly lost jobs, with rising unemployment and falling hours worked pointing to weaker labor demand.

The Euro (EUR) extends gains against an ailing US Dollar (USD) on Thursday, as the US Treasury’s plan to boost buybacks of long-term Government Bonds sent the Greenback tumbling across the board.

EUR/GBP trades around 0.8580 on Thursday at the time of writing, showing little change on the day.

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has broken to a three‑month high near 1.1680 as Dollar weakness and strong momentum underpin the pair.

The Euro (EUR) posts a fresh three-month high at around 1.1693 against the US Dollar (USD) during the European trading session on Thursday.

NZD/USD extends its gains for the second successive day, trading around 0.5950 during the European hours on Thursday. The pair appreciates as the New Zealand Dollar (NZD) gains on expectations of another rate hike from the Reserve Bank of New Zealand (RBNZ) in September.

Here is what you need to know on Thursday, August 20:

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann note AUD/USD retested recent highs near 0.7130 but momentum has not strengthened markedly.

The Japanese Yen (JPY) is down against its major currency peers on Thursday, with USD/JPY trading 0.22% higher at around 158.50 during the European trading session. The Japanese currency underperforms as the Trade Deficit widens due to elevated energy prices.

The Australian Dollar (AUD) remains under pressure against its major currency peers during the early European trading session on Thursday. As of writing, the antipodean is down 0.17% to near 0.7110 against the US Dollar (USD).