Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie turns sharply from recent key levels
The Australian dollar hit new year-to-date highs versus the US dollar overnight before turning lower ahead of today’s all-important Australian inflation data.
The March-quarter inflation number, due at 11.30am AEST, will be key ahead of the Reserve Bank of Australia’s next meeting on 20 May.
Financial markets are looking for Australian headline annual inflation to fall from 2.4% to 2.2% while the closely-watched trimmed mean number is forecast to fall from 3.2% to 2.8% (source: Bloomberg).
With a 25bps rate cut to 3.85% now fully priced in, a lower number today could open up the possibility of a 50bps cut and cause the AUD to fall.
The AUD/USD ended the session down 0.7%.
In other markets, the US dollar was mostly higher, with NZD/USD down 0.7% although the USD/SGD bucked the trend and remained steady near one-year lows.
China reaffirms no trade talks are underway with the US
Bloomberg reports that Guo Jiakun, the spokesperson for China’s foreign ministry, reaffirmed the government’s stance that China is not involved in trade negotiations with the United States.
The spokesman for the ministry stated during Monday’s daily briefing that there haven’t been any phone conversations with the US lately, which appears to be a clear refutation of US President Trump’s claim that China’s Xi Jinping had called him.
While the USD was stronger in most markets overnight, the USD/CNH extended recent losses.
USD/CNY has retreated by 1% from the recent all-time high of 7.3511.
Similarly, USD/CNH is now down almost 3.0% from the recent all-time highs 7.4290.
Next key support for USD/CNH is its 200-day EMA of 7.2536 – a key level of opportunity for USD buyers.
ECB De Guindos sees modest growth in Q1 as EUR gains
According to Luis de Guindos, Vice President of the European Central Bank, new data points to modest growth for the Eurozone in the first quarter of 2025.
He stated that inflation is anticipated to stay close to the ECB’s 2% objective when he presented the ECB’s 2024 annual report to the European Parliament’s Committee on Economic and Monetary Affairs.
“The central bank is not pre-committing to a particular rate path and will continue to follow a data-dependent and meeting-by-meeting approach to setting the appropriate monetary policy stance, especially given current uncertainty,” he said.
Chart shows falling oil prices bode well for EUR/USD. That said, the key support handle for EUR/USD is at 21-day EMA 1.1241.
For EUR/SGD, it rests on 21-day EMA of 1.4835, after correcting from recent short-term highs of 1.5113.
Aussie down as CPI looms
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 April – 3 May
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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.
