Dollar eases as Iran talks lift sentiment
Optimism over US-Iran talks has raised hopes the Strait of Hormuz could reopen.
Treasuries closed 4-6bp cheaper Friday, led by the long end as oil firmed 1%; 30s at 5.28% is a fresh 19-year high. Fed speakers leaned hawkish, with one dissent against the hold and others arguing for incremental restraint. We expect the oil gap to unwind part of that move.
Data ran firm — Q2 Employment Cost Index 0.9% against 0.8% expected, Chicago PMI 57.6, Michigan sentiment 55.2 — while inflation expectations held at 4.2% and 3.3%. Equities rallied anyway, S&P 500 +0.7% and Nasdaq +1%, masking a record single-day market cap loss in large-cap tech.
Gilts gave back Thursday’s gains to close 6.5bp weaker. A senior BoE official warned energy swings could keep inflation elevated into 2027 while pushing back on the idea the committee is drifting toward a hike. GBP stays a rates story into the 28 October budget.
The NSW holiday shuts swaps with futures open, so expect thin AUD liquidity. NZ house prices hit a three-year low.
Korean July exports fell 3.0% m/m but semiconductors rose 5.5%, capping KRW downside. Malaysia’s ruling coalition lost Negeri Sembilan, adding noise to MYR.
In FX, AUD/USD down 0.1%, while NZD/USD was flat.
In Asia, USD/SGD and USD/CNH were little changed.
Fed weighs fewer rate meetings
Federal Reserve Chair Kevin Warsh is reportedly considering reducing the number of the Fed’s policy meetings, according to the New York Times. Sources familiar with the discussions said Warsh raised the idea during last week’s meeting and suggested a decision on any changes could be made before the September gathering, although any implementation would likely come later. The Fed declined to comment on the report.
In regional currencies, USD/SGD remains about 2% above its 28 January low of 1.2586. Initial resistance stands at the 100-day EMA of 1.2850, followed by the 50-day EMA of 1.2876. On the downside, key psychological support is seen at 1.2750.
US labour market takes centre stage
Nonfarm payrolls close the week on Friday, with consensus at 90k after June’s 57k. Unemployment is seen ticking up to 4.3% and average hourly earnings to 3.6% year-on-year. ADP on Wednesday, expected at 75k, and JOLTS openings give us the early read.
ISM manufacturing lands Tuesday at 54.0 expected, services Thursday at 54.3. We are watching prices paid, last printed at 73.0, for the cleanest read on cost pressure.
RatingDog manufacturing PMI opens Monday at 51.7 expected, with services following Wednesday at 54.0 expected. Friday brings July trade, where exports and imports both ran hot last month, alongside foreign reserves.
New Zealand second-quarter employment on Wednesday is the standout for NZD/USD, with unemployment last at 5.3%. Japan labour cash earnings the same day keep BOJ normalisation in play, and Australian trade follows Thursday.
USD index below 100 level
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: 3 – 7 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.
