AUD/USD at six-week highs
US sharemarkets have recovered quickly this week. The tech-focused Nasdaq is up 4.8% in the first two trading days, and the positive move has helped risk-sensitive currencies such as the Australian dollar.
Tech-focused stocks around the world underperformed in July, with the Nasdaq down more than 10% from recent highs, but this week has seen a recovery.
AUD/USD gained 0.7% overnight and recorded its highest close since 17 June.
Meanwhile, the kiwi underperformed after a weak employment result this morning, with the unemployment rate rising from 5.4% in the March quarter to 5.6% in the June quarter.
The divergence between the Aussie and the kiwi has seen AUD/NZD rebound from the five-month lows reached earlier this week.
USD/SGD at lows as oil uncertainty lingers
Oil prices remained under pressure after US President Donald Trump struck a more conciliatory tone. Even so, the outlook remains uncertain.
Trump said negotiations are continuing while reiterating that the US will not tolerate any disruption to shipping through the Strait of Hormuz and remains committed to Iran’s full denuclearisation. Iran, however, denied that direct talks with the US are taking place, stating that any communication is being channelled through Oman.
Looking at APAC FX, USD/SGD remains roughly 2% above its 28 January low of 1.2586. Initial resistance is located at the 100-day EMA of 1.2850, followed by the 50-day EMA at 1.2874. On the downside, the key psychological support level remains 1.2750. USD buyers may look to take advantage of any pullbacks.
China signals room for more stimulus
China could have scope to reduce both banks’ reserve requirement ratio (RRR) and interest rates later this year, according to a Securities Daily report citing market experts.
Recent signals from the PBoC’s policy meeting suggest authorities are prepared to introduce further measures to support growth and strengthen economic activity. Analysts believe there is greater scope for RRR cuts than interest rate reductions, as pressure on banks’ profit margins may limit any loan prime rate cut to just 5-10 basis points.
USD/CNH continues to trade near a three-year low. A move above the 21-day EMA at 6.7696 could open the door to the 50-day EMA at 6.7832. On the downside, key psychological support is seen at 6.7500
Aussie trades back to highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 3 – 7 August
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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.
