FX markets steady after no deal on Ukraine
Global markets were mainly unmoved on Monday after the closely-watched Trump-Putin summit was unable to reach a Ukraine peace deal over the weekend.
Now, the focus shifts to the upcoming Jackson Hole Symposium, with markets increasingly hoping for a rate cut from the US Federal Reserve when it meets next month.
Despite a rise in the July inflation report released last week, financial markets have increasingly priced in a rate cut for the next week, with an 85% chance seen by markets according to Bloomberg data.
In FX markets, the Aussie started the week near recent lows, with the AUD/USD near one-week lows.
The USD/SGD was down 0.1% on Friday with the pair near three-week lows.
The USD/CNH was higher with the pair up 0.2% on Friday.
Kiwi stumbles despite strong manufacturing rebound
New Zealand’s manufacturing sector is growing again. The BusinessNZ Manufacturing PMI rose to 52.8 in July, up from a revised 49.2 in June—its first expansion in three months.
All five major sub-indices improved, led by new orders at 54.2 (the highest since March 2022) and production at 53.6 (the strongest since August 2022). Negative sentiment among respondents also eased, dropping from 65.5% to 58.6%.
The Reserve Bank of New Zealand’s policy decision on Wednesday is the key event to watch.
NZD/USD started the week of August 11 on a strong note but later slipped as the US dollar surged following hotter-than-expected US PPI data. The pair is now trading at its lowest level in over a week.
On the technical front, NZD/USD faces resistance at the 21-day EMA of 0.5952 and the 50-day EMA of 0.5963. Key support sits at 0.5857.
The kiwi has been weaker in other markets with the AUD/NZD at the highest level since April.
RBNZ in focus
The coming week’s FX landscape will be shaped by a heavy slate of central bank and inflation events. The Reserve Bank of New Zealand’s policy decision on Wednesday is the marquee event, with consensus expecting a 25bp cut to 3.00%. Any surprise here could spark volatility in NZD and ripple through Asian FX markets.
Meanwhile, inflation data will be front and center, with the UK, Eurozone, Japan, and Canada all releasing July CPI figures. These readings will be closely watched for confirmation of cooling price pressures and their implications for monetary policy paths.
Growth indicators are scattered throughout the week, offering a pulse check on major economies. In the US, July housing starts (Tuesday), MBA mortgage applications (Wednesday), and a run of Thursday data—including initial jobless claims and the Philadelphia Fed index—will provide insight into the health of the world’s largest economy. Japan’s tertiary industry index (Monday) and core machine orders (Wednesday) will be monitored for signs of domestic momentum, while Singapore’s non-oil exports (Monday) are expected to show a year-on-year contraction after last month’s sharp rise.
Thursday brings a raft of preliminary August PMIs across France, Germany, the Eurozone, the UK, and the US. These timely indicators will be key for assessing whether growth headwinds are intensifying or stabilizing as summer draws to a close.
UK July retail sales (Friday) will test the resilience of household demand after modest gains in June, while Canada’s June retail sales (Friday) follow a weak prior print. New Zealand’s July trade balance (Thursday) will also be in focus after last month’s NZD 142m surplus, providing a read on export trends amid shifting global demand.
The release of the July FOMC meeting minutes on Thursday will be scrutinized for any fresh clues on the Fed’s policy outlook, especially as markets continue to debate the timing and scale of potential rate cuts later this year.
Aussie slips to one-week lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 22 August
All times AEST
Have a question? [email protected]
