The euro slipped in European trading on Friday against a basket of global currencies, moving into negative territory versus the US dollar ahead of key inflation data from Germany and Spain, which are expected to provide new signals on the path of European interest rates for the remainder of the year.

Over the course of August, however, the single currency remains on track to post a monthly gain, supported by expectations of at least two US rate cuts before year-end, alongside renewed concerns about the stability of the Federal Reserve.

Price Overview

• EUR/USD fell 0.25% to $1.1656, from an opening level of $1.1683, after hitting an intraday high at the same level.

• The euro had closed Thursday up 0.4% against the dollar, marking its second gain in the past three sessions, recovering from a two-week low of $1.1574.

European Interest Rates

• Five sources told Reuters that the European Central Bank is likely to keep rates unchanged next month, though discussions of further cuts could resume in the fall if the eurozone economy weakens.

• ECB President Christine Lagarde said at Jackson Hole last Saturday that the tightening policies adopted in 2022 and 2023 did not lead to a recession or sharp rise in unemployment as had historically been the case.

• Money market pricing currently implies less than a 30% chance of a 25-basis-point ECB rate cut in September.

• Investors are awaiting today’s German and Spanish inflation releases for August, ahead of the full eurozone inflation report due early next week.

Monthly Performance

As August trading draws to a close, the euro is up 2.1% against the US dollar, set for its seventh monthly gain in the past eight months.

The monthly advance has been driven by expectations of a US rate cut in September, particularly after cautious remarks from Fed Chair Jerome Powell at the Jackson Hole symposium.

Safe-haven flows have also provided support amid growing concerns over Fed independence, following President Donald Trump’s unprecedented move to dismiss Governor Lisa Cook, a step seen as undermining confidence in the central bank and US assets.

Outlook for the Euro

At Economies.com, we expect that if German and Spanish inflation prints come in hotter than anticipated, market odds of a September ECB rate cut will fall, which could lift the euro once again against a basket of global currencies.

The Japanese yen edged lower in Asian trading on Friday against a basket of global currencies, moving into negative territory versus the US dollar after weak data showed a slowdown in Tokyo’s core inflation for August, reducing the likelihood of a rate hike by the Bank of Japan next month.

Over the course of August, however, the yen remains on track to post a monthly gain, supported by rising expectations of at least two US rate cuts before the end of the year, alongside renewed concerns about the stability of the Federal Reserve.

Price Overview

• USD/JPY rose by more than 0.1% to ¥147.11, from an opening level of ¥146.93, after hitting an intraday low of ¥146.76.

• The yen had closed Thursday up 0.3% against the dollar, marking its second gain in the past three sessions, buoyed by lower US 10-year Treasury yields.

Tokyo Core Inflation

Data released Friday showed Tokyo’s core consumer price index rose 2.5% in August, the slowest pace since March, in line with market forecasts. This compares with a 2.9% increase in July.

The slowdown in prices reduces inflationary pressure on policymakers at the Bank of Japan, diminishing the chances of further interest rate hikes this year.

Japanese Interest Rates

• Following the inflation data, market pricing for a 25-basis-point rate hike by the BOJ in September fell from 45% to below 40%.

• BOJ board member Nakagawa warned of risks stemming from trade policy and said he is awaiting the upcoming Tankan survey for guidance on the path of monetary normalization.

Monthly Performance

As August trading nears its close, the yen is up about 2.4% against the US dollar, poised to record its first monthly gain in four months.

The advance has been driven by rising expectations of a Federal Reserve rate cut in September, particularly after cautious remarks from Fed Chair Jerome Powell at the Jackson Hole symposium.

Safe-haven demand has also supported the Japanese currency amid growing concerns over Fed independence, following President Donald Trump’s unprecedented move to dismiss Governor Lisa Cook, a step widely seen as undermining confidence in the central bank and US assets.

Gold prices rose on Thursday after the release of US economic data that pushed the dollar lower against most major currencies.

According to government figures, US GDP grew at an annualized rate of 3.3% in the second quarter of 2025, compared with a contraction of 0.5% in the first quarter.

GDP was revised higher by 0.3 percentage points compared with the initial reading, driven by stronger investment while government spending weakened.

Separate data showed initial jobless claims fell by 5,000 to 229,000 in the week ending August 23, versus expectations for a decline to 230,000.

Meanwhile, the dollar index fell 0.4% to 97.8 by 19:29 GMT, after hitting a high of 98.2 and a low of 97.7.

In trading, spot gold rose 0.8% to 3,477.3 dollars an ounce at 19:29 GMT.

Lithium-ion batteries power much of the modern world, with their importance in daily life steadily increasing to the point where they now provide energy for nearly 70% of all rechargeable devices. From electric vehicles to smartphones and utility-scale energy storage, lithium-ion batteries have become the backbone of countless industries.

Yet despite their dominance, the industry faces serious supply chain challenges that make lithium a less-than-ideal foundation for the future. Lithium extraction is often environmentally destructive, while global supply chains are deeply tied to geopolitical flashpoints. China controls a significant portion of the world’s lithium supply, leaving markets exposed to shocks and Beijing’s political will. This dominance is especially evident in electric vehicle batteries, the result of a decade-long Chinese strategy to outpace global competitors.

EE Times reported: “China has carefully engineered a strategic rise in the global EV battery market over more than a decade, resulting in a dominance that now poses a massive challenge to Western manufacturers.” The publication added that this influence acts as a “moat” shielding China’s battery industry from international competition.

Given these drawbacks, EV makers are ramping up research into alternative battery technologies. A wide range of options are in development, including lead-acid, nickel-cadmium, nickel-metal hydride, sodium-nickel chloride, lithium-metal polymer, sodium-ion, lithium-sulfur, and solid-state batteries.

Among these, solid-state batteries are seen as the strongest contender. They use a solid electrolyte between the cathode and anode. While they do not completely eliminate lithium, they could reduce dependence on graphite—another strategic mineral largely controlled by China. Solid-state technology is also viewed as safer, offering higher energy density and faster charging than conventional lithium-ion batteries.

Though still in development, automakers have begun real-world testing. Mercedes and BMW are trialing solid-state batteries on public roads, though mass commercialization is still years away. Subaru is preparing vehicle tests of its own, while already deploying smaller versions of the technology to power factory robots.

Some experts, however, argue the hype may be overblown. Rivian CEO R.J. Scaringe said on the “Plugged-In Podcast”: “I think there’s a lot of noise about solid-state batteries being commercially ready, and it’s probably overstated.”

Sodium-ion batteries are another promising candidate. Sodium is a thousand times more abundant than lithium. James Quinn, CEO of UK-based Faradion, explained: “It’s available worldwide, which means it’s cheaper to source and far less water-intensive to extract.” He noted that producing one ton of lithium requires 682 times more water than one ton of sodium. Bloomberg projects sodium-ion batteries could displace as much as 272,000 tons of lithium demand by 2035.

Even so, lithium is unlikely to disappear. Thanks to its high energy density and strong performance in cold weather, the metal remains vital for high-performance applications. As EV World put it: “The future won’t belong to lithium or sodium alone—but to both, strategically deployed across sectors. The result will be a more diverse and resilient battery economy.”