US bond yields drive sell-off
The sharp rise in global bond yields, led by the US, continues to unsettle investors, with US equities leading losses overnight.
The benchmark US 10-year yield climbed from 4.58% to 4.67% — the highest level since early 2025. The move reflects growing concern about inflation and the risk the Federal Reserve may need to raise interest rates further.
US equities ended lower, with the S&P 500 down 0.7% and the Nasdaq off 0.8%.
AUD/USD extended recent losses, falling 0.9% overnight, while NZD/USD declined 0.7%.
USD/SGD and USD/CNH both rose 0.3%.
Inflation fears lock in an Aussie rate hike
Minutes from the RBA’s May meeting show that rising inflation expectations and a worsening outlook drove the board to lift rates by 25bp to 4.35%, rather than hold steady.
The decision increased confidence that underlying inflation will return to 2.5%, while allowing the board to monitor the economic fallout from the Iran war. However, members acknowledged that the hike will do little to influence near-term inflation. Borrowing conditions are expected to tighten modestly.
One member dissented, warning that a prolonged Iran war could weigh more heavily on demand. The board also discussed a potential framework to deploy additional policy tools if needed.
AUD/USD was the worst-performing G10 currency overnight.
Near-term support sits at the 50-day EMA at 0.7113, with the 100-day EMA near 0.7008 as the next level if selling pressure builds. On the upside, 0.7278 remains key resistance.
AUD remains broadly weak across crosses, with AUD/EUR at a 2-week low, AUD/GBP at a 1-week low, and AUD/CNH at a 1-month low.
NZD/USD feels the squeeze
New Zealand plans to cut around 8,700 public service jobs — nearly 14% of the workforce — and merge several government departments, targeting NZD 2.4bn in savings over four years.
Finance Minister Nicola Willis said the move will help fund new initiatives ahead of next week’s budget, as weak growth pressures revenue and the government looks to rein in spending before November’s election.
For investors, the plan signals tighter fiscal conditions, although execution risks around large-scale job cuts and agency mergers remain.
NZD/USD was the second worst-performing G10 currency overnight.
The pair now sits at the bottom of its ascending price channel.
On the upside, the next key test is the 21-day EMA at 0.5894. On the downside, initial support sits at 0.5800.
US dollar dominates
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.
