Aussie slumps to two-month lows after Fed decision
In his highly anticipated debut, Federal Chair Kevin Warsh kept rates unchanged at 3.5%–3.75%. But the bigger story was the statement — it was materially shorter than previous releases. That likely reflects Warsh’s long-standing scepticism toward heavy forward guidance. Markets are already bracing for a broader shift in how the Fed communicates.
Despite holding rates steady, policymakers delivered a surprisingly hawkish set of projections. Nine of the 18 participating officials now see at least one rate hike by year-end. Notably, the missing nineteenth submission suggests Warsh may have declined to provide a rate forecast altogether. The split underscores rising concern about persistent inflation pressures.
The committee sharply raised its median inflation forecast for this year from 2.7% to 3.6%. Energy shocks tied to the Iran conflict, along with heavy corporate AI investment, are driving the move. A preliminary US–Iran peace agreement could ease energy costs soon, but for now, a still-firm labour market is forcing the Fed to prioritise price stability.
Markets reacted immediately to the more aggressive tone. Short-term Treasury yields moved higher, the dollar rallied, and equities gave back some gains. Financial markets now fully price in a 25bp hike before December.
The USD’s gains drove losses across markets. AUD/USD fell 0.8% to two-month lows, while NZD/USD dropped 1.1%.
In Asia, USD/JPY gained just 0.1%, capped by resistance above 160.00. USD/SGD rose 0.5% as it neared two-month highs.
Kiwi confidence cracks as costs bite
New Zealand’s consumer mood slumped in Q2. The Westpac–McDermott Miller index fell to 80.4 from 94.7 in Q1, its lowest since 2023 and well below the 100 break-even mark. Higher petrol, electricity, and mortgage costs are squeezing households.
One in three respondents expects to be worse off next year. At the same time, 38% have cut non-essential spending — the weakest reading since 1991. Wellington remains the gloomiest region.
The drop signals softer local demand and complicates the central bank’s path, as it still signals at least two 25bp hikes by year-end.
That keeps pressure on NZD and sectors tied to consumer spending. On a brighter note, easing tensions in the Middle East have pushed oil prices lower. If sustained, this could help confidence and activity recover later.
For NZD/USD, the 21-day EMA at 0.5853 is the first ceiling, with the 50-day EMA at 0.5866 just above. On the downside, 0.5800 remains a key support level.
Yuan holds near multi-year highs as US eases pressure
The US has delayed adding China’s AI startup DeepSeek, memory chipmaker CXMT, and more than 100 other firms to a trade blacklist, according to Reuters. The move signals an effort to avoid escalating tensions with Beijing.
Earlier this year, Anthropic said it uncovered a campaign by DeepSeek and two other Chinese AI labs to extract capabilities from its Claude platform to improve their own models. OpenAI also reportedly warned US lawmakers that DeepSeek was targeting its systems.
Despite the cautious political tone, USD/CNH remains near a more than three-year low. The pair is trading just above its recent trough of 6.7539 (17 June).
For USD/CNH, a break above the 21-day EMA at 6.7772 is needed to build upward momentum. A sustained move higher would open the 50-day EMA at 6.8043, followed by the 100-day EMA at 6.8528.
Greenback jumps after Fed decision
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 15 – 19 June
Have a question? [email protected]
*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.
