International Forex News - August 12

CICC: Continue to Overweight Gold

On August 12, a CICC research report stated that two narratives that previously weighed on gold are being invalidated. First, global liquidity has not truly entered a tightening cycle. As U.S. inflation falls and growth slows, economic fundamentals support a shift toward easier monetary policy. Warsh appears hawkish on the surface but is dovish in substance, and Fed reform may open room for future rate cuts. Second, “de-dollarization” has not ended. Warsh’s balance sheet reduction policy objectively helps repair confidence in the U.S. dollar, but it faces multiple constraints from financial markets and politics, making future implementation highly uncertain. Meanwhile, the structural erosion of dollar credibility caused by high debt, high deficits, and policy uncertainty may be difficult to reverse. Global central bank net gold purchases rebounded to 289 tonnes in the second quarter, up 62% year on year and a record high for a second quarter. This reflects deep-rooted concerns among global central banks over the U.S. dollar, while reserve diversification will continue to support gold demand in the medium to long term. As global liquidity becomes more accommodative and upward pressure on real interest rates and the dollar eases, gold may regain dual support from liquidity and monetary system diversification. We believe the gold bull market has not ended, and the window to rebuild overweight positions after the previous correction has opened. We recommend continuing to overweight gold.

Probability of a 25 bp Fed Rate Hike in September Stands at 48%

On August 12, according to CME FedWatch: the probability that the Federal Reserve will keep interest rates unchanged in September is 52.0%, while the probability of a cumulative 25 bp rate hike is 48.0%. By October, the probability that the Fed will keep rates unchanged is 38.7%, the probability of a cumulative 25 bp rate hike is 49.0%, and the probability of a cumulative 50 bp rate hike is 12.2%.

Chip Boom Lifts Japan Manufacturing Confidence to Highest Since March

On August 12, the Reuters Tankan survey showed that Japan’s manufacturing confidence index rose from 13 in July to 18 in August, the highest level since March 2026. During the same period, supported by strong domestic consumption, the non-manufacturing confidence index also rose from 25 to 28. The outlook for the next three months shows that market sentiment is expected to moderate. Semiconductor-related demand was the main driver of the improvement, especially the sharp increases in the chemicals and metal machinery sub-indexes. This indicates that the strong momentum in the semiconductor supply chain is continuing to spread across Japan’s broader industrial base, rather than remaining concentrated among a small number of chipmakers. The manufacturing index reaching its highest level since March suggests that the drag from previous global trade uncertainty on chip-demand-related exporters has largely faded. By contrast, the transport equipment industry index remained at 0, indicating that the auto industry has not yet clearly benefited from the recovery trend.