USD rebounds as Iran fighting resumes
The US dollar, as measured by the USD index, rebounded from two‑month lows overnight after fighting involving Iran resumed.
US President Donald Trump ordered the US Navy to escort ships through the Strait of Hormuz commencing Monday. Iran retaliated with drone strikes that hit the UAE oil terminal at Fujairah.
Yesterday’s moves marked the heaviest fighting since the ceasefire was called last month.
US shares weakened, with the Dow Jones down 1.1%. In FX, the USD and other safe havens gained. USD/SGD and USD/CNY both climbed.
Markets see 75% chance of RBA hike
In Australia, all focus is on today’s Reserve Bank of Australia meeting. Interest rate expectations edged higher, with markets now assigning roughly a 75% chance of an RBA hike.
Persistent inflation pressures and resilient domestic demand continue to test the central bank’s patience, keeping today’s decision firmly live.
The Aussie slipped lower overnight in line with broader market moves. AUD/USD fell 0.5% from four‑year highs.
NZD/USD was also lower, with the pair down 0.4%. The RBA decision is due at 2.30pm AEST
Global growth hangs on despite tensions; EUR, GBP gain
Globally, growth remains under pressure but far from derailed. Recent activity indicators point to slower momentum rather than an abrupt downturn, suggesting the world economy is bending rather than breaking.
Overnight, European final PMIs were revised higher, with Italian and Spanish surveys the strongest.
The euro and GBP mostly gained on the day, although both fell against the US dollar.
Even with elevated geopolitical tensions and restrictive financial conditions, demand has proved surprisingly resilient, giving markets reason to believe the global expansion still has some runway.
USD rebounds
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 4 – 9 May
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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.
