Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Trade FX lower despite deal
The US dollar weakened across markets after lower-than-expected US inflation data, but positive news on the US-China trade deal failed to lift equity markets or the Australian dollar.
The annual US inflation rate for May was 2.4%, in line with forecasts, while the core inflation rate came in at 2.8%, below the expected 2.9%. Both monthly readings also missed forecasts, causing the US dollar to drop.
The bigger news came from US-China trade talks, with President Trump announcing on social media: “Our deal with China is done, subject to final approval with President Xi and me.” Commerce Secretary Howard Lutnick expects final details to be completed in the coming days, although the agreement is unlikely to be made public.
Despite the announcement, trade-sensitive markets didn’t benefit. US stocks fell, with the S&P 50 down 0.3% and the Nasdaq losing 0.5%.
In currency markets, trade-exposed currencies like the Australian and New Zealand dollars fell. The AUD/USD dropped 0.3%, reversing after testing resistance above 0.6500, while NZD/USD fell 0.4%. Meanwhile, USD/CNH and USD/CAD both edged up 0.1% as the Chinese yuan and Canadian dollar eased.
The US dollar weakened elsewhere, with USD/SGD down 0.2%, nearing its lowest level since October 2014. EUR/USD and GBP/USD gained, with the euro the best overnight, while USD/JPY declined.
USD/SGD at decade lows as Bessent gains momentum in Fed Chair race
US Treasury Secretary Scott Bessent is emerging as a top contender to replace Jerome Powell as Federal Reserve Chair, according to Bloomberg.
With Powell’s term ending in May 2026, President Trump has pledged to name a successor well in advance. However, Bloomberg reports that interviews for the role have yet to begin, keeping markets uncertain.
Bessent’s potential nomination is already affecting the US dollar, as traders anticipate his approach to monetary policy.
In Asia-Pacific markets, the US dollar’s continued weakness has pushed USD/SGD toward decade lows, where buyers may soon step in.
At the time of writing, USD/SGD is hovering at 1.2864, with key resistance at the 21-day EMA of 1.2911, followed by the 50-day EMA of 1.3025—levels that could shape the pair’s next move.
RBNZ Governor Orr’s resignation raises concerns for NZD
Newly released documents reveal that former Reserve Bank of New Zealand Governor Adrian Orr resigned in March due to government funding cuts, contradicting earlier speculation that his departure stemmed from a dispute over bank capital rules.
Orr abruptly stepped down on 5 March, cutting short his second five-year term with three years remaining.
From a technical perspective, NZD/USD is hovering above the key psychological support level of 0.6000. The next critical support levels are at the 21-day EMA of 0.5987, followed by the 50-day EMA of 0.5923.
Euro surges in Asia
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 9 – 14 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.
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