Greenback lowest since mid-June
Market volatility has eased significantly over the past three weeks following the pressure seen in late July, when the US tech-focused Nasdaq experienced a 10% correction and South Korea’s Kospi suffered a 43% decline.
Additionally, recent Japanese yen intervention has weighed on the US dollar, helping drive the greenback to its lowest level since mid-June.
The US dollar came under further pressure last week after headline inflation matched expectations, producer prices surprised to the downside, and retail sales unexpectedly contracted in Friday’s release.
The Australian dollar pushed higher despite last week’s Reserve Bank of Australia statement reducing expectations for another rate hike. RBA Governor Michelle Bullock later pushed back against that interpretation, but AUD/USD remains in an uptrend, with resistance this week seen at 0.7125 and 0.7145. The kiwi initially weakened after inflation expectations rebounded but stalled at key resistance near 0.5900. NZD/USD remains in an uptrend, with support at 0.5850 and resistance at 0.5930 and 0.5960.
Yen warning keeps pressure on USD/JPY
Former currency chief Mitsuhiro Furusawa said Japan could step into the yen market again at any time, including in coordination with the US, if USD/JPY returns to levels seen before last month’s intervention.
Furusawa said the yen remains excessively weak and is pushing up import costs for households and businesses. He also called for a Bank of Japan rate hike in September and suggested policymakers could signal a faster path towards 1.5%-1.75%. He added that the government should not hinder the central bank’s tightening efforts or its commitment to fiscal discipline.
USD/JPY has fallen about 3% from its 23 July peak of 163.99. Initial resistance is seen at the 100-day EMA (159.79), followed by the 21-day EMA (160.01). Elsewhere, SGD/JPY and EUR/JPY have climbed to their highest levels in two weeks.
China data, Aussie jobs key this week
Japan’s Q3 GDP opens proceedings on Monday, with consensus looking for 2.0% annualised growth versus a prior 1.8% and 0.5% QoQ. Friday then delivers a triple-header: national CPI alongside flash PMIs. Together, these frame the BoJ’s normalisation debate and set the tone for JPY.
Monday’s activity data dump from China, including retail sales, industrial production and fixed-asset investment, will gauge whether momentum is stabilising. Thursday’s Loan Prime Rate fixings follow, with both the one-year and five-year tenors expected to remain unchanged at 3.0% and 3.5%. Any surprise cut would ripple through the yuan and regional risk sentiment.
Australia’s jobs report on Thursday headlines the domestic calendar, with the unemployment rate, last at 4.4%, shaping RBA expectations. Wednesday’s Wage Price Index and UK CPI, which is expected to firm to 3.0%, round out the inflation picture.
The July FOMC minutes land on Thursday, offering colour on the policy path ahead of Jackson Hole. US flash PMIs and regional surveys, including the Philadelphia Fed survey, complete a busy slate, keeping the dollar sensitive to any hawkish or dovish tilt.
Aussie, kiwi gain as USD falls
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 21 August
All times are in AEST
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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.
