Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD remains stuck near lows
The US dollar remained under pressure overnight, with the USD index hovering just 1.1% above fresh three-year lows. Concerns over President Donald Trump’s tariff plans have weighed heavily on sentiment, dragging expectations for the US economy down. So far this year, the benchmark USD index has plunged 8.8%.
The USD’s steepest losses have come against European currencies like the euro and British pound, as well as safe-haven currencies like the Japanese yen and Swiss franc.
All eyes are on tonight’s US inflation data, which could set the tone for the dollar’s next move. Annual headline inflation for May is expected to climb from 2.3% to 2.4%, while core inflation is projected to edge up from 2.8% to 2.9%.
Overnight, the New York Fed reported softer inflation expectations for May, leading to a three-basis-point drop in the US two-year yield overnight. The Fed survey revealed declines across all tenors, with the five-year inflation forecast slipping from 2.7% to 2.6%, the one-year projection falling from 3.6% to 3.2%, and the three-year estimate easing from 3.2% to 3.0%.
Aussie consumer sentiment stays weak; AUD holds near highs
The June Westpac–Melbourne Institute consumer sentiment index ticked up 0.5% to 92.6, driven by cooling inflation and RBA rate cuts.
Despite the slight gain, sentiment remains below 100, signaling that pessimism still outweighs optimism. While attitudes toward big-ticket purchases improved amid easing cost-of-living pressures, concerns over the broader economy, household finances, and employment deepened.
Risk aversion has climbed, even as expectations for variable mortgage rates over the next year fell 6.8% to 84.6—the lowest level in 13 years. From a technical standpoint, AUD/USD sits above its 30-day trading range but remains capped below key resistance at 0.6550. The next support levels for AUD/USD lie at the 21-day EMA of 0.6461 and the 200-day EMA of 0.6417.
USD/HKD at top of the range as trade talks progress
The Hong Kong dollar’s roller-coaster ride has continued with the HKD back at lows as the USD/HKD returned to the top of its trading range.
According to the Wall Street Journal, President Trump has approved measures allowing US trade negotiators to ease restrictions on a broad set of products—including technology—during the London trade talks with China.
US delegates Bessent and Lutnick described the meeting as productive, though negotiations are expected to extend into a third day on Wednesday (UK time).
Looking at APAC FX, USD/HKD has faced significant upward pressure in recent sessions, pushing toward the top of its trading band. Key support levels for USD/HKD are positioned at the 21-day EMA of 7.8295, followed by the 50-day EMA of 7.8063.
USD in focus ahead of CPI data
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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