US dollar stronger on US-Iran concern
The US dollar strengthened after President Donald Trump said he was “not satisfied” with ongoing negotiations with Iran.
The remarks lifted safe-haven demand, helping the greenback gain broadly.
The USD saw moderate gains in Europe, with EUR/USD down slightly and GBP/USD down 0.1%.
The USD was stronger in Asia, with USD/JPY up 0.2% as it neared the “intervention zone” at 160.00. USD/SGD was flat, while USD/CNH bucked the trend and rose 0.1%.
AUD/USD fell 0.4%, weighed down by yesterday’s cooler-than-expected inflation data.
NZD/USD jumped 1.1% after yesterday’s RBNZ decision.
Kiwi surges as RBNZ warns on inflation
The New Zealand dollar strengthened, with its biggest gains against the AUD, after the Reserve Bank of New Zealand surprised markets with a more hawkish tone.
AUD/NZD recorded its biggest one-day fall since 2020, dropping 1.5%.
The RBNZ said it remains vigilant on inflation, with New Zealand bond yields moving decisively in its favour. Financial markets now see an 82% chance of a rate hike in July (source: Bloomberg).
Today, the focus shifts to the government budget, but release will likely have little impact on FX markets.
RBA hikes less likely after lower CPI
Australia’s softer-than-expected CPI reading has weakened the case for further monetary tightening, prompting markets to scale back expectations for additional Reserve Bank of Australia rate hikes.
The April headline CPI came in at 4.2% versus 4.6% in March. The closely watched trimmed mean was 3.4%, up from 3.3%.
Australian financial markets now see no chance of a hike at the RBA’s next meeting on 16 June, with a 49% probability of a hike in August (source: Bloomberg).
The Aussie fell on the news. AUD/USD remains in a short-term downtrend, with the pair below the 8- and 21-day moving averages, although still above the key 200-day MA. Initial downside targets are 0.7085, with topside resistance at 0.7185.
Kiwi surges after RBNZ
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 29 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.
