Aussie lifted by buoyant markets
Global optimism remained buoyant overnight with US shares reaching new records on hopes for further Federal Reserve rate cuts.
In FX markets, the US dollar fell further while the AUD/USD neared nine-month highs.
The USD index fell to the lowest level since 28 July overnight after this week’s US inflation report appeared to give the green light to the Federal Reserve to cut interest rates.
Financial markets have now priced in a 106% probability of a rate cut for when the Fed next meets on 18 September (APAC time). All eyes are now looking to Fed chair Jerome Powell’s major speech at the Jackson Hole Symposium on 22 August.
The AUD/USD gained 0.3% with the market just 1.2% away from the nine-month highs. Key resistance is seen at 0.6600.
The NZD/USD climbed 0.4% with the pair only 2.0% away from nine-month highs.
USD/SGD slips, EUR/SGD climbs on Fed cut talk
Scott Bessent is pushing for a bigger rate cut. In a Fox Business interview just hours after the latest inflation report, the US Treasury Secretary said the Fed should consider a 50bp cut in September. The market, however, is pricing in 25bps rate cut in September.
He argued that despite rising tariffs, goods inflation is cooling faster than services, and now’s the time to act.
Bessent also said he hopes Stephen Miran will be confirmed as Fed Governor in time for the September 16–17 policy meeting. Miran still needs Senate approval to lead the White House Council of Economic Advisers.
The softer-than-expected core CPI print has sparked a rally in US stocks and sent short-term Treasury yields lower.
USD/SGD hit a three-week low. USD/SGD has broken key support and is hovering just 1.0% above its decade low of 1.2698. The next support level is 1.2746, where dollar buyers may step in.
EUR/SGD is climbing, now at two-week highs and just 1.0% below its recent peak of 1.5113. Watch for support at the 21-day EMA of 1.4944.
HKMA tightens grip as USD/HKD hits peg ceiling
The Hong Kong Monetary Authority isn’t letting up. After ten rounds of intervention over the past week, it drained another HKD7.1 billion from the system. Once FX settles, that brings the total down to HKD56.7 billion.
The aggregate balance is now just HKD12.8 billion above where it stood in early May.
A chart of Hong Kong’s inflation shows price pressures are likely to stay muted through 2025. Mainland tourists are returning, but they’re spending less than they did before Covid 2020.
USD/HKD is trading at 7.8500, near the top of its peg range.
Key support sits at the 50-day EMA of 7.8429.
AUD turns positive, nears highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 11 – 16 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.
