Greenback gains as “economic D-Day” announced
The US dollar gained as US shares fell after US Treasury Secretary Scott Bessent announced an “unprecedented” move to cut off Iran from the global financial system.
Bessent said any country doing business with Iran would also face sanctions as he announced an “economic D-Day” on the Middle Eastern state.
The USD index gained 0.2% in its best day for two weeks.
The AUD/USD turned from two-month highs, reversing near 0.7200 as it fell 0.3%.
NZD/USD also fell 0.3%.
The Canadian dollar was the hardest hit as a breakdown in trade talks weighed on the currency. USD/CAD gained 0.6%. AUD/CAD neared five-year highs as the CAD weakened across other major markets.
Fed keeps focus on rates
Earlier, the US Treasury’s moves last week to calm bond markets, which had pushed the USD to three-month lows, saw Minneapolis Fed President Neel Kashkari play down concerns over the recent rise in US Treasury yields, noting that market conditions remain orderly, with ample liquidity and steady trading activity.
As a result, he said the Fed can continue relying on the federal funds rate as its primary tool to bring inflation back to target. While Kashkari acknowledged that inflation could take longer than expected to ease, he did not indicate support for a rate increase at the September meeting.
Treasury market intervention weighed on the US dollar as investors reassessed fiscal risks and the potential implications of further government actions, prompting flows into alternative assets such as gold.
USD/SGD climbed overnight but is still only 1% away from its 28 January low of 1.2586. Initial resistance stands at the 21-day EMA of 1.2789, followed by the 50-day EMA at 1.2827. On the downside, 1.2650 remains key support. USD/CNH was flat.
NZD stays firm despite softer retail data
New Zealand’s Labour Party has pledged to reinstate the Reserve Bank of New Zealand’s dual mandate if elected on 7 November, adding maximum sustainable employment alongside inflation control.
Labour leader Chris Hipkins said the move would help ensure economic growth translates into higher incomes and better outcomes for households. For investors, the RBNZ’s view on inflation pressures is likely to remain more important than any change in its mandate.
Separately, New Zealand’s retail volumes fell 0.5% q/q in Q2, missing expectations for a 0.2% increase. However, annual growth remained healthy at 3.2%. Retail sales values rose 0.9% q/q and 6.6% y/y to cycle highs, while core retail sales increased 5.2% y/y.
NZD/USD support is at the 21-day EMA of 0.5887, followed by the 50-day EMA of 0.5848. Resistance is located at 0.6000. Meanwhile, NZD/EUR has climbed to a one-month high.
Greenback in comeback
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 24 – 29 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.
