Uncertainty around US next move drives volatility
Global markets rebounded overnight: US equities moved higher, the greenback softened, and AUD and NZD led FX gains after President Donald Trump said the Iran war was in its “final stages”.
AUD/USD rose 0.6% and NZD/USD gained 0.5%. The USD weakened in Asia, with USD/JPY down 0.1%, USD/CNH off 0.2% and USD/SGD lower by 0.3%.
Earlier, however, Trump warned the US could strike Iran within days if a deal remains elusive, saying he pulled back from action by just an hour on Tuesday. He maintained Tehran is seeking an agreement, with reports Iran submitted a peace proposal via Pakistan ahead of his decision to stand down.
Iranian officials pushed back. The head of parliament’s national security committee said Trump recognises any strike would trigger a forceful response.
VP Vance struck a more measured tone, noting negotiations have advanced, though Iran’s position remains unclear. We see any ceasefire as fragile, with geopolitical risk still elevated.
USD eases, but markets right to price a longer hold — or hikes
Global bond yields have pushed higher in recent days, driven by firmer energy prices and a repricing of hike risk further out the curve.
Anna Paulson, president of the Philly Fed, said it is healthy for markets to price both an extended pause and the potential for additional tightening, signalling the door to hikes remains open.
Paulson also noted most of the recent rise in long-end yields reflects higher real rates rather than unanchored inflation expectations. Her baseline is to hold policy steady, with any easing conditional on sustained disinflation. She characterised policy as mildly restrictive — enough to contain inflation without derailing the labour market.
Asia FX splits into DM and EM
Asia FX is diverging into two blocs. Geopolitical risk is supporting the Singapore dollar, while high-beta currencies such as IDR and INR remain under pressure, highlighting widening dispersion in regional fundamentals.
USD/JPY is holding above 158.50, around 1% below its 30 April high of 160.72. The 21-day EMA near 158.31 is initial support, followed by the 50-day at 158.20. A break below 158.00 would be the next key downside signal.
USD/SGD is trading about 1.8% above the 1.2586 low seen on 28 January. The 100-day MA at 1.2781 and the 50-day at 1.2760 mark near-term support.
Aussie, kiwi recover
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 23 May
Have a question? [email protected]
*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.
