Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD continues to weaken amid soft US data
The USD index (DXY) fell 1.0% on Friday to 99.87, its lowest level since 2022, following softer-than-expected US PPI data and dovish Fed commentary.
Risk-on sentiment in global markets buoyed high-beta currencies, while expectations of policy stability weighed on the greenback.
The Aussie rallied 1.1% to finish at 0.629 on Friday’s close, as commodity-linked currencies benefitted from broad USD weakness and a rebound in oil prices (+2.3%).
However, gains remain capped by concerns over soft Chinese growth and subdued domestic fundamentals.
AUD/USD, in a clear downtrend, has spent 84% year-to-date below the 0.63 handle threshold.
The Kiwi outperformed, rising 1.5% to 0.583, driven by dovish RBNZ rate expectations ahead of New Zealand’s Q1 CPI release on April 17 (8.45am AEST). Broader USD weakness also supported the pair.
NZD/USD, also in a clear downtrend, has spent 78% year-to-date below 0.57 handle threshold.
Aussie and Kiwi sellers may look to take advantage of recent strength in both pairs.
Fed ‘absolutely’ ready to stabilise market, says Collins
The Fed “would absolutely be prepared” to stabilise financial markets in the event that they were turbulent, according to Boston Fed President Susan Collins.
“Markets are continuing to function well” at the moment, she continued, and “we’re not seeing liquidity concerns overall”
Looking at APAC FX, the Singapore dollar appreciated 0.9% to 1.319 on Friday close ahead of the MAS monetary policy announcement on April 14.
A neutral or tightening bias is widely anticipated, with the SGD further supported by regional economic stability and rising short-term rates.
USD/SGD is now only 0.4% above its 5-month low.
Inflation and central bank policy dominate focus
The upcoming week features key inflation readings from major economies. In the UK, CPI data for March will be released on Wednesday, with the prior YoY figure recorded at 2.8%. The Eurozone will also release finalized inflation data for March on the same day, with headline CPI consensus expectations at 2.2% YoY and MoM at 0.6%. In Canada, March’s CPI data is due Tuesday, with the prior YoY figure at 2.6% and MoM at 1.1%. These releases will provide insights into inflation trends and their potential impact on monetary policy.
China’s GDP for Q1 2025 will take center stage this week, with the prior YoY growth rate recorded at 5.4%. Accompanying this report are March’s industrial production and retail sales figures, scheduled for release on Wednesday. Industrial production YoY was previously recorded at 5.6%, while retail sales YoY stood at 4.2%. In the US, retail sales data for March will be released on Wednesday, with the prior MoM figure at 0.2%. Additionally, the Empire Manufacturing Index (April) and industrial production data (March) will provide further insights into US economic activity.
The Bank of Canada is scheduled to announce its interest rate decision on Wednesday, with the current policy rate at 2.75%. On Thursday, the European Central Bank will deliver its rate decisions, with the deposit facility rate previously at 2.50% and the main refinancing rate at 2.65%. These decisions will be closely monitored for their implications on EUR and CAD currency pairs.
Key labor market updates are expected from the UK and Australia. On Tuesday, the UK will release its February unemployment rate, previously recorded at 4.4%, and March jobless claims change, which was last reported at 44.2k. Australia will release its March employment report on Thursday, with the prior unemployment rate at 4.1% and employment change showing a decline of 52.8k.
Antipodeans near the top end of trading range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 14 – 18 April
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
