Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD slips in Asia, led by USD/JPY
The USD/JPY saw further big losses overnight with the pair down for the fourth-consecutive session.
The USD’s move lower came after a weaker-than-expected producer prices report that followed Tuesday’s softer consumer inflation number.
The USD was weaker across Asia with USD/SGD down 0.4% while USD/CNH fell 0.2%.
On the other hand, the Aussie and kiwi both slipped, with the AUD/USD and NZD/USD both down 0.4%.
Job, wage acceleration make RBA cut less certain
Yesterday’s stronger than expected Australian jobs number saw the April jobs report at 89k new jobs, well above the 21k forecast, with the March number also revised higher, to 36k.
Additionally, Wednesday’s March-quarter wage price index rose 0.9% on the quarter, exceeding expectations of 0.8%, with annual wage growth climbing to 3.4%.
This jobs growth and wage acceleration could influence the RBA’s upcoming rate decision – making a rate cut less certain when the RBA meets on Tuesday.
On the technical front, AUD/USD is now hovering near a flattening 21-day EMA of 0.6399, with increasing downward momentum as seen in a negative reading from the MACD.
UK-US trade deal stirs Chinese concerns
China has expressed concerns that the UK-US trade arrangement could potentially force Chinese businesses out of UK supply chains.
Beijing criticized bilateral trade arrangements that target other countries, placing London in a difficult position between competing economic powers.
USD/CNH has bounced off its key psychological support handle of 7.2000, now hovering near the low end of its 30-day trading range.
USD buyers may look to take advantage now, given our forecast for USD/CNH to trend higher over time.
The 21-day EMA of 7.2439 serves as the next key resistance for the pair.
USD lower in Asia
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 12 – 17 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.
