Greenback surged to three-week high post US CPI print
The dollar index surged to its highest level since June 23 (now at 98.58 at the time of writing), following US inflation figures that fell short of justifying an immediate rate cut by the Federal Reserve.
Meanwhile, all major currencies in the G10 are down against the dollar, with the yen trailing most of its counterparts.
US June core CPI cooled for a fifth consecutive month at 0.2%, slightly below consensus of 0.3%. On an annual basis it rose from 2.8% to 2.9%.
President Trump confirmed Indonesia will pay a 19% tariff after securing a trade deal, down from the previous 32% rate imposed after Liberation Day. This represents a positive development for EM Asia, particularly for countries currently negotiating lower rates including the Philippines and Thailand (from 20% and 36% respectively).
Trump hinted that “India is working along the same line as Indonesia” and suggested further deals are forthcoming. He also stated progress is being made with the EU and that he will be refining the UK trade deal.
US equities ended mixed with S&P500 down 0.4% while Nasdaq ended in green 0.18%.
Fed succession fuels confusion, but USD keeps climbing
US Treasury Secretary, Scott Bessent told Bloomberg that President Trump is “not looking to fire Chair Powell.” However, Bessent believes Powell should step down entirely in May not just as chair, but also as Fed governor. He warned that having a former Fed chair lingering in the background could muddy the waters and sow uncertainty.
A formal replacement process is underway, with strong candidates emerging from inside and outside the Fed.
Meanwhile, USD/SGD continues to rally, climbing 1% above its decade-low of 1.2698. USD buyers may look to take advantage, as we’ve alluded to several times.
The next key resistance barrier include 50-day EMA of 1.2881 and 200-day EMA of 1.3151.
Fed takes a breather, yen edges lower
Boston Fed President Susan Collins says the central bank can afford to wait and watch how the data unfolds before making its next move on interest rates. She expects inflation to heat up, while growth and jobs may slow. By year-end, she sees core inflation hovering near 3%.
Looking at USD/JPY, it is now currently showing positive price momentum, having broken 21-day, 50-day and 200-day EMAs. The 200-day of 148.15 now acts as key support, whereas next key psychological resistance to breach at 150.00.
Chart shows high correlation between USD/JPY and the Fed pricing curve.
Antipodeans down as Fed bets wane
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 14 – 19 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.
