Greenback bounces back
The US dollar surged on Monday, reversing Friday’s rally that followed hints of a possible rate cut from Federal Reserve chair Jerome Powell.
Markets had celebrated Powell’s comments, pushing the Dow Jones to a record high. But enthusiasm cooled as investors questioned whether a September cut would lead to more easing later in the year.
The dollar index climbed 0.8%, recovering from one-month lows. The euro fell 0.9% against the dollar, while the British pound dropped 0.5%.
The Australian dollar held up better, slipping just 0.1% ahead of the Reserve Bank of Australia’s meeting minutes due at 11:30am AEST.
In Asia, the dollar rose 0.6% against the yen and 0.3% against the Singapore dollar, but slipped 0.2% against the Chinese yuan.
Kiwi steady as retail surprise eases slowdown fears
New Zealand’s retail sales rose 0.5% in the second quarter, beating forecasts and suggesting the economy may be more resilient than expected.
The result contrasts with the Reserve Bank of New Zealand’s prediction of a 0.3% GDP decline, suggesting consumer spending is holding up.
Prime Minister Christopher Luxon said he urged the central bank to consider stronger stimulus, arguing the recovery remains sluggish.
Despite the upbeat data, the New Zealand dollar remains under pressure. It’s facing resistance at 0.5912 and 0.5929, while still trading about 7% above its April low of 0.5486.
Yen supported as Ueda highlights wage surge
Bank of Japan Governor Kazuo Ueda struck an optimistic tone at the Jackson Hole symposium, saying wage growth is spreading from large firms to smaller businesses.
He credited the shift to a tightening labor market, which he believes will continue to push wages higher, unless a major demand shock interrupts the trend.
After years of stagnant pay, Japan is now grappling with a severe worker shortage. Ueda said this shift is reshaping the economy and changing how wages, prices, and jobs interact.
In currency markets, the dollar is drifting toward key support at 147.00 yen. A break below could open the door to 146.00, while resistance is seen near 147.56.
USD lifted from one-month lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 31 August
All times 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 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.
