Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD mostly lower, but Aussie and kiwi slip from highs
The US dollar was weaker overnight with the USD index falling to four-month lows ahead of tonight’s all-important US Federal Reserve decision.
The greenback followed US shares lower with key stockmarket indexes down overnight after a two-day rally was brought to an end. US shares remain in a short-term downtrend as investors worry about a slowdown in US data and the impact of tariffs on the US economy.
The US dollar was mostly weaker in Europe and versus safe havens like the Swiss franc and Japanese yen.
The Aussie and kiwi slipped ahead of the Fed decision, however, with both markets reversing after recent strong gains.
Ahead of the Fed, markets will be looking to the Bank of Japan today in Asia trade
All eyes on Fed meeting
The Federal Reserve meeting is scheduled for this Thursday at 5:00am AEDT.
The Fed will probably adopt a cautious stance at its March meeting due to downside risks to growth and trade policy uncertainties.
The median dots should essentially stay the same, indicating two rate reductions this year. The recent slowdown in economic momentum is probably acknowledged in the statement.
We believe the Fed will likely maintain rates at their current level until 2025 due to tariff-driven inflation. Nonetheless, the Fed can afford to be conservative in reversing cut pricing as market mood is tense and there is little excitement around the May meeting.
Looking at USD/SGD, it is now at four-month lows. We expect range bound price action for USD/SGD in the short term.
The next key daily resistance levels are at the 200-day EMA 1.3398 and 50-day 1.3426, where SGD buyers may look to take advantage.
IDR resilience amid regulatory reforms
This Wednesday at 18:30 AEDT, Indonesia will publish its policy rate.
We anticipate that BI will maintain the policy rate at 5.75% due to growing fiscal risks, internal policy worries, and repeated IDR underperformance brought on by increased external uncertainties and more US tariff pronouncements.
These should help contain rupiah weakness and support the case for a continued easing cycle by BI.
USD/IDR is now trailing the key 50-day MA support of 16,2893.41. USD sellers may look to take advantage at key resistance 16738, its highs of April 2020.
Aussie, kiwi slip from recent highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 22 March
All times AEDT
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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.