USD at six-week lows post-BoJ intervention
The US dollar remains near six-week lows, with last week’s Bank of Japan intervention the main driver of the recent greenback weakness.
The US dollar was also pressured by improving risk sentiment on hopes for a US-Iran deal that would cause oil to weaken and investors to be less focused on safe havens such as the US dollar.
In Asia, the greenback was led lower by USD/JPY, with the pair still down more than 4.0% from last week’s highs.
USD/SGD remains similarly pressured, with the pair trading around 1.2800 and at two-month lows.
USD/CNH fell back below 6.7500 after USD/JPY broke below three-year lows last week.
Aussie dollar powers ahead as services rebound
Australia’s services sector picked up pace in July, with the S&P Global Services PMI rising to 53.6 from 50.5 and extending growth for a second month. New orders increased for the first time in five months, helping drive stronger business activity, hiring and a rise in outstanding work, despite softer demand from overseas.
Growth was led by real estate & business services and information & communication, while transport & storage continued to lag. Business confidence climbed to its highest level since before the Middle East conflict began. However, rising costs remain a challenge, with both input prices and charges to customers increasing at a faster pace.
AUD/USD remains about 3% below its 6 May high of 0.7278. Initial support is at the 50-day EMA of 0.7008, followed by the 21-day EMA of 0.6996. Resistance is located at 0.7100. Elsewhere, AUD/GBP has reached a one-week high, while AUD/CNH is trading at a one-month high, highlighting the Australian dollar’s resilience.
Kiwi rate outlook stays firm despite softer jobs data
New Zealand’s unemployment rate rose to 5.6% in Q2, its highest level in the current cycle, pointing to a cooling labour market and more spare capacity.
However, the data likely reflects the delayed effects of earlier economic weakness. Wage growth remains contained, yet inflation has not eased sufficiently towards the Reserve Bank of New Zealand’s 2% target midpoint. With inflation still above the desired level, the RBNZ is expected to prioritise price stability. We continue to anticipate a 25bp Official Cash Rate increase in September, followed by another 25bp hike, taking the rate to 3.0% by the end of 2026, most likely in December.
NZD/USD is closing in on the key 0.5900 level. Initial support is seen at the 100-day EMA of 0.5820, followed by the 50-day EMA of 0.5808.
USD remains in the doldrums
Table: seven-day rolling currency trends and trading ranges
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.
