USD/JPY plunge drives FX
The US dollar was weaker overnight, especially across Asia, as USD/JPY extended its recent run of losses.
USD/JPY fell below 155.00 on Tuesday morning, the first time the pair has been below this key level since February. Sentiment in the pair has shifted ever since the coordinated intervention from US and Japanese authorities at the end of July.
The USD/JPY fell 1.2%.
The greenback was lower in most other markets. The Aussie and Norwegian krone performed best, helped by higher oil prices.
In Asia, USD/CNH and USD/SGD both fell 0.1%. The Taiwanese dollar was also stronger, with USD/TWD down 0.3%.
AUD gains as geopolitical tensions boost oil
The US has renewed diplomatic efforts to advance peace talks between Ukraine and Russia, with envoys Steve Witkoff and Jared Kushner meeting Ukrainian President Volodymyr Zelenskyy in Kyiv over the weekend. Officials from the UK, Germany and France are also participating, although expectations for a major breakthrough remain subdued.
Elsewhere, tensions involving Iran escalated after the Revolutionary Guard said it targeted three oil tankers and several US-linked vessels in the Strait of Hormuz. The claims followed US military strikes on three Iranian crude carriers, extending a cycle of retaliatory attacks.
The AUD/USD traded above 0.7200, helped by higher oil prices.
For AUD/USD, initial support is seen at the 21-day EMA of 0.7139, followed by the 50-day EMA at 0.7088. Resistance remains at 0.7250. AUD/EUR and AUD/CHF continue to trade at 12-month highs, highlighting the Australian dollar’s relative strength.
Kiwi struggles on Fed rate hike talk
Cleveland Fed President Beth Hammack said it is “time to act” on interest rates, arguing that inflation remains above 3% while the labour market continues to hold near full employment. She noted that businesses across her district are still facing rising costs and difficult pricing decisions.
According to Hammack, both economic data and feedback from businesses suggest monetary policy is no longer restrictive enough. She warned that the longer inflation stays above the Federal Reserve’s 2% target, the more difficult it may become to bring it back under control.
A potential Fed rate hike could weigh on growth-sensitive currencies such as the NZD. Initial support for NZD/USD sits at the 100-day EMA of 0.5852. On the upside, resistance is located at the 21-day EMA of 0.5894, followed by the key 0.5900 level.
Yen pairs tumble in line with USD/JPY losses
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 7 to 12 September
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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.
