Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Chinese yuan lower ahead of PBoC
Global markets were mostly quiet overnight ahead of key central bank decisions from China, Switzerland and UK.
The AUD/USD was the best performer, boosted by this week’s Reserve Bank of Australia decision that indicated the central bank continues to consider further rate hikes. The AUD/USD gained 0.3%.
The Chinese yuan continued to weaken ahead of today’s Loan Prime Rate decision. The USD/CNH climbed to the highest close since 14 November.
Later, the Swiss National Bank and Bank of England meet. Both central banks are expected to hold rates steady.
Euro remains pressured by political nerves
The EUR/USD inched higher overnight but broadly the euro remains weaker.
While in the short-term, the euro is being impacted by political worries, euro area consumer confidence has been steadily increasing since all-time lows reached in September 2022.
The Sentix survey increased in June, driven by an improvement in the current conditions component, which we think could spillover onto the flash consumer confidence figure for June. Consequently, we forecast June consumer confidence to rise by 0.8pts to -13.5.
That said, EUR/USD will likely stay subdued, not just due to election nerves, but also because of the growing yield deficit relative to the US.
MYR buoyed by BNM push
In Malaysia, we expect the goods trade surplus to widen to MYR9.9bn in May from MYR7.7bn in April, as export growth likely remained positive in May.
This implies export growth picked up sharply, reflecting increased exports to major trading partners, particularly China, as well as the turnaround in the tech cycle.
Strong import growth also likely persisted, in line with stronger domestic demand and the manufacturing PMI edging up to above 50 in May.
MYR outperformed in the past month as BNM continues engagements with government linked companies to convert their export proceeds, but we remain watchful if this results in a fundamental change in exporter conversion behavior.
Aussie back near highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 22 June
All times AEST
*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.
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