Aussie higher as government spending in focus
Global markets shook off worries about the US–Iran conflict and instead stayed mainly focused on the potential growth and earnings benefits from the AI rally, helping US shares to gain while Asian stocks outperformed.
FX markets recovered from the initial sell-off seen in early Monday trading, with the Aussie and kiwi outperforming as both currencies moved back to recent highs.
The euro was steady, while the British pound fell as Prime Minister Keir Starmer faced increasing pressure to resign.
Looking ahead, the Australian dollar will be in focus, with tonight’s federal budget likely to be closely watched for signs of further government spending. Some observers have blamed the Australian government for adding to the inflationary environment that has seen the Reserve Bank of Australia raise rates three times this year.
Bessent’s Asia tour: FX takes centre stage
Scott Bessent is heading east. The Treasury Secretary confirmed via X that Japan and South Korea are on his itinerary before he lands in Beijing for the Trump–Xi summit, and currency is shaping up to be the defining theme at every stop.
Tuesday brings Tokyo, where Bessent meets with Prime Minister Sanae Takaichi and Finance Minister Satsuki Katayama. He then moves on to Seoul on Wednesday for talks with Finance Minister Koo Yun-cheol and senior officials, with Chinese Vice Premier He Lifeng also in the room. The conversation is likely to stretch beyond FX into Iran and the race to secure critical minerals and rare earths.
On USD/JPY, watch for both sides to revisit last September’s joint commitment, which drew a clear line by reserving any market action for moments of extreme volatility only.
Meanwhile, USD/SGD is quietly doing something worth noting. The pair has fallen to levels not seen in over two months, hovering just 0.8% above the 1.2586 trough last reached on 28 January. The 21-day EMA at 1.2735 and the 50-day EMA at 1.2754 are the next levels that matter on the way up.
USD/SGD is near the low end of its one-month trading range, and USD buyers may look to take advantage.
USD/CNH tumbles to a three-year low
China’s inflation data surprised on both fronts. April CPI climbed 1.2% year on year, beating the 0.9% forecast and edging up from 1.0% the month before.
The bigger surprise was PPI, which jumped 2.8% year on year, blowing past the 1.8% consensus and accelerating sharply from March’s 0.5%. Rising oil prices had only just coaxed factory-gate prices back into positive territory for the first time in more than three years.
The message from the data is hard to ignore: China’s reflation story is gathering real momentum.
USD/CNH slid to its weakest level in more than three years and is now barely 0.01% above the 6.7913 low last printed on 11 May. For the pair to stage any recovery, it first needs to reclaim the 21-day EMA at 6.8272 and, beyond that, the 50-day EMA at 6.8559.
Aussie stronger ahead of budget
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 11 – 15 May
Have a question? [email protected]
*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.
