Rising global bond yields pressure markets
Global markets fell on Friday as higher oil prices, rising inflation and climbing bond yields spooked investors.
The benchmark US 10-year bond yield jumped from 4.35% to 4.59% over the past week after hotter consumer and producer price data in the US raised concerns about further Federal Reserve rate hikes.
The S&P 500 fell 1.2% while the tech-focused Nasdaq dropped 1.5%.
The Aussie and kiwi led losses, with AUD/USD falling 1.0% and NZD/USD declining 1.2%.
In Europe, the British pound remained under pressure amid concerns about a potential leadership challenge to PM Keir Starmer. GBP/USD fell 0.6% while EUR/USD slipped 0.4%.
In Asia, USD/JPY rose 0.2% and USD/SGD gained 0.4%. USD/CNH also advanced 0.4%, ending an eight-day winning streak for the Chinese yuan.
Chinese yuan mostly stronger on Beijing summit reset
The Beijing meeting between President Xi and President Trump struck a more positive tone, although it delivered little in the way of concrete commitments.
Both leaders proposed a new, more stable framework to guide US-China relations. This framework focuses on four key pillars: cooperation, competition management, dispute control and long-term stability. While President Trump pledged to build the strongest US-China relationship ever, China emphasised Taiwan as a core issue and stressed the importance of peace across the Strait.
Leaders described the trade discussions as balanced and constructive, but concrete details remain limited.
In FX markets, the Chinese yuan strengthened, pushing both AUD/CNH and EUR/CNH lower.
AUD/CNH dropped to a one-month low, while EUR/CNH is hovering near a two-month low.
Meanwhile, USD/CNH sits just above its recent low of 6.7816, reached on May 14.
For USD/CNH to build upward momentum, the pair needs to break above the 21-day EMA at 6.8158 before testing the 50-day EMA at 6.8463.
Global PMIs and Fed minutes in focus
This week’s macro calendar brings a heavy slate of tier-one catalysts for global FX markets, headlined by FOMC minutes, flash PMIs and key inflation data across major economies.
The week opens on Monday with Chinese activity data, including retail sales and industrial production. Along with Singapore’s export figures, these releases will help set the early risk tone for the Australian dollar and broader EM FX.
Volatility picks up on Tuesday with Japan’s preliminary Q1 GDP, a key input for yen pricing and expectations around further Bank of Japan tightening. Later in the session, Canada’s CPI report takes centre stage, shaping the Bank of Canada’s near-term outlook.
On Wednesday, the PBoC announces its 1-year and 5-year loan prime rates, likely driving yuan moves. Attention then shifts to Europe, where UK CPI will be closely watched for Bank of England repricing, alongside the Eurozone’s final CPI print testing euro resilience.
Thursday is the key session. US dollar direction will hinge on the FOMC minutes as markets look for guidance on the Fed’s policy path. This coincides with flash May PMIs across Australia, Japan, the Eurozone, the UK and the US, offering timely insight into global growth. Australian employment data will also drive AUD volatility.
The week wraps up on Friday with Japan’s national CPI, capping a busy week for the yen. UK and Canadian retail sales will provide a final burst of volatility for the pound and loonie heading into the weekend.
Aussie, kiwi see sharp reversal
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 23 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.
