USD higher despite falling bond yields
Global markets shook off last week’s worries about trade and the weaker US jobs report to rebound strongly with the S&P 500 seeing its best one-day gain since May.
Financial markets were mainly higher as the initial shock around the US jobs miss evolved into hopes for Federal Reserve rate cuts.
Growing expectations for rate cuts, potentially driven by the looming announcement of a new Fed chair according to US president Donald Trump, has seen market interest rates tumble in the US. The US ten-year bond yields fell to 4.19% on Monday, the lowest close since late April.
US shares saw their best day since May with the S&P 500 up 1.5%. The tech-focused Nasdaq gained 2.0%.
In FX markets, the US dollar was mostly higher.
The AUD/USD fell 0.1% while the NZD/USD lost 0.2%.
The USD/SGD dropped 0.2% while USD/CNH eased 0.1%.
Rising tensions might shake currency markets
US President Trump’s push for a ceasefire in Ukraine appears to be falling flat.
Russian President Vladimir Putin said his forces are “advancing on the entire front line,” brushing aside Trump’s warning that US sanctions would follow if peace wasn’t reached by August 8. Putin, reacting to Trump’s frustration, reportedly told the BBC, “All disappointments arise from inflated expectations.”
Expect choppy moves in global currencies through August.
In Asia-Pacific trading, the Australian dollar has recently rebounded after last week’s sell-off, although the currency eased overnight. It now faces resistance at 50-day EMA of 0.6498 and 21-day EMA of 0.6512.
Trump reshuffles Fed and labor posts as USD/SGD cools
US President Donald Trump said Sunday he’ll name replacements for Fed Governor Adriana Kugler and Chief Labor Statistician Erika McEntarfer in the coming days.
Bloomberg reports the picks could shape Trump’s push for lower interest rates. Kugler resigned last week, and McEntarfer was fired just hours after weak job numbers were released.
The dollar index has pulled back from its recent high of 100.257 following a softening in US yields.
In Asia-Pacific trading, USD/SGD has slipped from recent psychological level of 1.3001. Key support levels sit at 50-day EMA of 1.2873 and 21-day EMA of 1.2852.
USD rebounds after Friday sell-off
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 4 – 9 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.
