Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
FX markets mixed on geopolitical fears
Global markets managed to shake-off the uncertainty surrounding the collapse of the French government overnight while political worries in South Korea look likely to see President Yoon Suk Yeol face impeachment proceedings.
Both the euro and Korean won remained broadly near recent lows.
Equity markets, however continued to surge, with the US’s S&P 500 and Nasdaq both reaching new all-time highs, while France’s CAC 40 gained 0.7%.
In FX, market sentiment was more mixed, with the Aussie and kiwi both sharply lower after Australia’s September-quarter GDP missed forecasts.
In Asia, the USD/SGD fell 0.1% while the USD/CNH turned sharply lower from one-year highs.
Aussie hits key support after GDP miss
The Australian dollar tumbled yesterday after Australian GDP was reported lower than anticipated yesterday.
Australia’s Q3 GDP rose 0.3% on a quarterly basis, and 0.2% on a quarterly basis. Public investment and government expenditure provided some support in the lower-than-expected print.
The local money market now fully prices in April 2025 rate cut – previously the market was looking for a cut in May.
The AUD/USD now sees key support at 0.6400.
A break of this level sets up a move to the next key support levels at 0.6250 and 0.6170.
USD/CNH falls from one-year highs
China has stepped up its response to US export restrictions in the last day by introducing some of its own.
According to the Ministry of Commerce, in order to protect national security and interests, it has chosen to tighten export regulations on certain dual-use goods—materials that may be used for both military and non-military purposes—to the United States.
In the short term, the USD/CNH has started to correct from one-year highs, and faces strong resistance at 7.3146.
Over the medium term, the rice action for USD/CNH remains positive, with key support level at 7.2059.
CNY weaker across Asia
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 2 – 7 December
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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.
