Volatility builds as Middle East risk meets inflation docket
Risk sentiment whipsawed as Middle East tensions escalated following US “self‑defence” strikes on Iran after the downing of a US Apache helicopter in the Strait of Hormuz, with markets now watching for whether the response triggers further escalation or remains contained.
The US has signalled it must respond to the attack, while Iran warns foreign forces near its territory remain at constant risk and its forces sit on full alert.
US indices sold off hard — the NDX fell as much as 4% before recovering to around 1%, a move dominated by large-cap tech and mirroring Friday’s concentrated selloff. The “non-AI” S&P stays green; a flip would raise broader concerns. Next test: US CPI.
USD gave back gains, DXY hitting 100.08 before easing; USD/JPY held firmly above 160.
Treasury yields drifted lower despite fresh risk — front-end 2s and 5s fell 3bp, the 10y eased to 4.52%.
WTI and Brent dipped below $90 intraday before retracing on retaliation rhetoric, leaving oil relatively contained despite the escalation. Gold and silver sank, with gold failing again to reclaim its 200-day moving average, reaffirming four months of thin momentum.
Overnight, AUD/USD was down 0.2% and NZD/USD was up 0.1%, while USD/SGD down 0.1% and USD/CNH was flat.
AUD/USD slips as confidence crack
Australia’s consumer sentiment slid further into gloom in June. Westpac’s index dropped 2.9% from the prior month to 80.6, one of the weakest readings in the 50 years it has been tracked. Households flagged growing financial strain after the government’s latest budget, with stubbornly high living costs, climbing borrowing costs and energy shocks all biting. A separate business survey told a similar story: confidence stayed shaky, edging up only slightly to -14 in May from a revised -23.
AUD/USD trades below its 100-day EMA at 0.7039. Next key resistance will be 50-day EMA of 0.7114, followed by 21-day EMA of 0.7120.
Meanwhile, AUD/CNH is at a two-month low.
China export surge lifts outlook
China’s May trade figures came in stronger than expected, a welcome turn after a softer April. Exports jumped 19.4% on the year, sailing past the 15% the market looked for and the prior 14.1% — a sign that overseas demand held up even with Middle East tensions simmering. AI hardware did much of the heavy lifting: computer and parts shipments abroad surged 66% on the year, the fastest since 2010 and up from 47%. Integrated circuit exports leapt 111%, the most since 2013. Shipments to the US climbed almost 36%, the strongest run since 2021.
Imports also took off, rising 27.4% on the year against the 26% expected and 25.3% before, which points to firmer activity at home and a push to rebuild stockpiles. Companies stocked up on foreign chips and gear, and South Korea’s semiconductor shipments into China more than tripled on the year in May. The trade surplus duly widened to $105.43bn from $84.82bn.
USD/CNH trades roughly 0.3% above its recent low of 6.7581 (2 June). The pair needs to clear the 21-day EMA at 6.7876 to gather upward steam. From there, a climb would open up the 50-day EMA at 6.8140, then the 100-day EMA at 6.8625.
Aussie down on weaker sentiment
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 8 – 12 June
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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.
