Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
US Treasuries rebound as economic data softens, USD mixed
Downward revisions to Q1 personal consumption in GDP figures and the highest continuing claims print since 2021 contributed to a downward trend in economic surprises.
The USD strengthened against Latam FX (except BRL) but relatively tepid against other major currencies. JPY softened back to 160.80, while EUR ended slightly above 1.07 by NY close.
The first US presidential debate is scheduled for Friday at 9am SGT equivalent, with potential headlines expected throughout the Asian Friday morning session.
New Zealand observes a local holiday.
Key events:
- First US presidential debate
- New Zealand local holiday
Dominant USD looks to PCE
The US dollar is on track for its third weekly win with strong gains across Asia the main driver of the greenback’s performance.
This week, most notably, we’ve seen the USD/JPY climb to the highest level since 1986 as the pair pushed above the key 160.00 level.
In other markets, the USD/CNH hit eight-month highs while USD/SGD reached two-month highs.
Tonight, the US personal consumption and expenditure measure (PCE), the Federal Reserve’s preferred measure of inflation, is due.
Headline annual PCE is expected to drop from 2.7% in April to 2.6% in May. The core measure is forecast to fall from 2.8% in April to 2.6% in May. The USD index is nearing eight-month highs above 106.00 but for now momentum indicators are like RSI are not showing any signs of becoming overbought – the USD’s uptrend remains in place and further USD strength is possible.
Sterling outperforms on positive growth upgrades
This is perhaps the UK’s most positive business poll. All of the main activity balances increased in May, and the anticipated prices balance hit a new high of 61. The activity balances of this survey do not justify any repayment, as business surveys have generally been better.
Although it is the second highest performing currency in the G10, the UK has seen the most growth upgrades this year.
USD Asia hits top end of the range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 24 – 29 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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