Greenback lower as oil falls
The US dollar was mostly lower overnight as oil tumbled on hopes of a breakthrough deal between the US and Iran.
Brent crude fell 5.5% on news of a potential Pakistan-brokered deal between the US and Iran. US shares gained while bond yields eased.
In FX, the Aussie and kiwi were the best performers, with AUD/USD up 0.2% while NZD/USD gained 0.3%.
Australia CPI could test AUD/USD support
Australia’s July CPI report is due today and could be an important test for the Australian dollar. Consensus expects headline inflation at 3.3% and trimmed mean inflation at 3.5% year-on-year.
We expect trimmed mean inflation to come in slightly below consensus at 3.3%, which could weigh on AUD/USD in the near term. However, a stronger-than-expected trimmed mean reading could reinforce expectations that the RBA may need to keep policy restrictive for longer. Markets are currently assigning a 70% probability of a rate increase at the February 2027 RBA meeting.
For AUD/USD, initial support is at the 21-day EMA of 0.7080, followed by the 50-day EMA at 0.7048. Resistance is at 0.7200.
Sticky US inflation may keep USD/SGD supported
US inflation continues to present a mixed picture. Core CPI moved closer to the Federal Reserve’s 2% target in July, but core PCE inflation remains elevated at 3.29%, marking the widest gap between the two measures since the 1980s. Attention now turns to July PCE data due today, with consensus expecting core PCE inflation to rise 0.2% month-on-month from 0.1% previously. A firmer reading could provide near-term support for the US dollar.
We expect methodological revisions due in September to lower core PCE inflation by as much as 0.4 percentage points, helping narrow the gap. Higher software, financial services and healthcare costs remain key contributors, while tariffs continue to add pressure. Looking further ahead, we expect inflation to ease through 2028, supported by lower tariffs, softer oil prices and wider AI adoption.
USD/SGD is trading about 1% above its 28 January low of 1.2586. Initial resistance stands at the 21-day EMA of 1.2783, followed by the 50-day EMA at 1.2823. On the downside, 1.2650 remains key support.
Aussie at highs ahead of CPI
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 24 – 29 August
All times are in AEST
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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.
