US pauses strikes
The Australian dollar led gains in early Monday trading after the US paused military strikes against Iran over the weekend.
Crude oil tumbled. Both WTI crude and Brent crude were down 5.0% in early Monday trading.
The Aussie led gains, with AUD/USD up 0.2% as the market again neared the key 0.7000 level.
The kiwi was also higher, with NZD/USD up 0.1%.
In Asia, the US dollar was lower, with USD/JPY, USD/SGD and USD/CNH all down 0.1%.
Yen extends losses despite Japan inflation rise.
Japan’s inflation picked up in June, reinforcing expectations that the Bank of Japan could continue raising interest rates. Headline CPI rose 1.7% y/y, in line with forecasts and up from 1.5% previously. Core CPI, which excludes fresh food, increased 1.6% y/y from 1.4%, also meeting expectations.
Meanwhile, core-core CPI, which excludes fresh food and energy, rose 1.7%, slightly below forecasts of 1.8%. While underlying price pressures eased marginally, the broader rise in inflation signals that price growth remains resilient and supports the case for further policy tightening by the BoJ.
USD/JPY climbed to 163.99 on July 23, its highest level since 1986. The pair remains close to this peak, highlighting continued upward momentum. Initial support is located at the 21-day EMA of 162.41, followed by the 50-day EMA at 161.29 and the 100-day EMA at 159.88.
On the upside, resistance stands at 163.99, with the 165.00 psychological level serving as the next key barrier. A break above 165.00 could strengthen the positive outlook, while a move below the 21-day EMA may signal a deeper pullback.
Fed in focus as central banks dominate a busy week
The Fed headlines on Thursday morning, with the target range expected to be held at 3.50–3.75%. The Bank of England follows on Thursday evening, with rates last at 3.80%, while the BoJ closes the week on Friday, with consensus expecting rates to remain steady at 1.00%. Three decisions within 36 hours leave ample scope for repricing across the US dollar, sterling and yen.
Australia’s Q2 CPI on Wednesday is the regional highlight, with headline CPI last at 1.4% q/q and trimmed mean inflation at 3.5% y/y, a print that will shape RBA expectations. US PCE lands on Thursday evening, with headline inflation seen easing to 3.6% from 4.1% and core inflation to 3.3%. German and eurozone flash CPI figures on Thursday and Friday round out the picture.
Eurozone Q2 GDP on Thursday follows a contraction of 0.2%, with Germany’s preliminary reading released an hour earlier. US Q2 GDP the same evening is forecast to grow at an annualised pace of 2.3%.
Friday’s China manufacturing PMI is expected at 49.9, slipping back into contraction from 50.3, while the non-manufacturing PMI is forecast at 50.0.
USD drops as Iran strikes paused
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 27 – 31 July
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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.
