The Australian dollar slipped to around $0.643 on Tuesday, giving back gains from the previous session, after the Reserve Bank of Australia cut its key interest rate by 25bps as widely expected, and signaled downside risks to the economy. Policymakers noted that March quarter data confirmed further easing in inflation and pointed to a decline in upside inflation risks. Updated projections indicated that headline inflation is likely to remain near the midpoint of the 2–3% target range for much of the forecast period. The RBA also cited global trade developments as a potential drag on growth, reinforcing the case for additional rate cuts and weighing on the Aussie. Political uncertainty added to the pressure after Australia’s opposition coalition fractured, with the National Party withdrawing its support. Meanwhile, a recent rate cut by the PBoC further dampened sentiment, given the Australian dollar’s role as a liquid proxy for the yuan.

Australian Dollar Slips After RBA Rate Cut

USDHKD increased to a 12-month high of 7.82. Over the past 4 weeks, US Dollar Hong Kong Dollar gained 0.84%, and in the last 12 months, it increased 0.26%.

Hong Kong Dollar Hits 12-month Low

The dollar index stabilized around 100.4 on Tuesday after falling 0.6% in the previous session, triggered by Moody’s downgrade of the US sovereign credit rating due to concerns over rising debt and persistent deficits. Fiscal concerns were further exacerbated after the House Budget Committee approved President Trump's tax-and-spending bill late Sunday, which is projected to add trillions of dollars to the deficit over the next decade. Despite the criticism, the Trump administration argues the tax cuts will spur economic growth, boost revenues, and ultimately help narrow the deficit. Meanwhile, Federal Reserve Bank of Atlanta President Raphael Bostic reiterated on Monday his expectation of one interest rate cut this year amid tariff-induced uncertainty.

Dollar Stabilizes

The New Zealand dollar fell to around $0.592 on Tuesday, paring some gains in the previous session as China’s recent interest rate cut weighed on the Kiwi, often seen as a liquid proxy for the yuan. Adding to the pressure, April’s slowdown in Chinese retail sales pointed to weaker consumer demand, raising concerns over New Zealand’s exports given their close trade ties. Domestically, inflationary pressures re-emerged, with Q1 data showing the sharpest rise in producer output prices in nearly three years. However, a recent PMI report revealed the services sector remains in contraction, underscoring ongoing economic challenges and reinforcing expectations for further rate cuts. Markets continue to price in a 25bps cut by the RBNZ later this month, though many now believe the easing cycle is nearing its end, likely bottoming out at 3%. Meanwhile, attention is turning to Thursday’s government budget, which is expected to reduce baseline spending for 2025.

New Zealand Dollar Declines

The offshore yuan weakened to around 7.22 per dollar on Tuesday, marking its third consecutive session of losses, as investors digested the latest monetary policy decision from the People’s Bank of China. At the May fixing, the PBoC lowered the one-year loan prime rate (LPR) by 10 basis points to 3.0% and the five-year LPR, which serves as a reference for mortgage rates, by the same margin to 3.5%. The move, which was widely anticipated by markets, brought both rates to new record lows and followed a broader round of monetary easing announced earlier this month. The rate cuts come as Beijing ramps up efforts to revive a sluggish economy amid trade tensions that threaten to hamper growth. Adding to the pressure, China accused the US of undermining the preliminary trade deal reached in Geneva tariff talks after Washington issued a warning against using Chinese semiconductors—a move Beijing called “discriminatory” and “market distorting,” fueling concerns of renewed US-China tensions.

Offshore Yuan Slips on PBoC Rate Cut

The South Korean won weakened to around 1,393 per dollar on Tuesday, reversing gains from the previous session as investors cautiously await developments in the US–South Korea tariff talks. A South Korean delegation is scheduled to arrive in Washington on May 20 for a second round of technical talks, with both sides aiming to finalize a comprehensive “package” deal by early July. The US imposed reciprocal tariffs on several trading partners in April, including a 25% levy on South Korean goods, although the measures were suspended for 90 days to allow time for bilateral discussions. Previous meetings took place in Washington and on South Korea’s Jeju Island, where Seoul lobbied for full tariff exemptions. Meanwhile, investors are closely watching the Bank of Korea’s upcoming policy decision next week, following a 25 bps cut in February aimed at supporting the won amid the impending US tariff measures.

SK Won Weakens, US-South Korea Tariff Talks Eyed

The Australian dollar fell to around $0.64 on Tuesday, giving up some of the previous session’s gains, as investors awaited the Reserve Bank of Australia’s policy decision. The central bank is widely expected to cut the official cash rate by 25 basis points to 3.85%. With the move largely priced in, traders are now turning their attention to the RBA’s updated economic forecasts and Governor Bullock’s remarks for guidance on the future path of interest rates. This comes as recent Australian economic data has challenged market expectations for further rate cuts this year. Meanwhile, political uncertainty added to the pressure on the currency, after National Party leader David Littleproud announced the end of the coalition with the Liberals, stating the Nationals will sit independently, as Labor returned with a stronger mandate amid the Opposition’s collapse. Additionally, recent rate cuts by the PBoC have further weighed on the Aussie, given its role as a liquid proxy for the yuan.

Australian Dollar Weakens Ahead of RBA Decision

The Brazilian real strengthened toward 5.6 per USD, nearing its strongest level since October of 5.61 seen May 13th, as the greenback softened following Moody’s May 16 downgrade of US sovereign debt to Aa1, which drove Treasury yields lower and spurred a global search for higher returns. Domestically, Brazil’s external position was bolstered by a March trade surplus of $8.2 billion, well above forecasts, that underscored exporters’ ability to navigate shifting tariff regimes. At the same time, the Central Bank’s GDP preview surprised to the upside with a 0.8% monthly rise in March, lifting first-quarter output growth to 1.3% and affirming the economy’s underlying momentum. On the monetary front, the Selic rate was recently raised to 14.75%, its highest level since 2006, and forward guidance was replaced with a purely data-driven framework, cementing expectations that Brazil’s real interest rates will stay elevated and continue to attract carry-driven capital inflows.

Brazilian Real Strengthens on USD Weakness

The Mexican peso appreciated to 19.40 per USD, nearing the seven-month peak of 19.38 on May 14th, as Moody’s May 16th downgrade of US sovereign debt to Aa1 and mounting bets on imminent Federal Reserve rate cuts eroded the greenback’s appeal. At home, Banxico’s unanimous 50-basis-point cut to 8.50 percent on May 15, in the face of headline and core inflation hovering around 3.9 percent and mere 0.2 percent Q1 GDP growth, has narrowed Mexico’s yield edge, yet the peso’s advance was largely underpinned by external dollar weakness. Meanwhile, lingering US–Mexico trade frictions remain in the background, limiting significant bets towards the Mexican currency.

Mexican Peso Near 7-Month Highs

The Canadian dollar steadied around 1.40 per USD, remaining close to a one-month low of 1.398 seen May 14th, on the back of US dollar softness offsetting dovish expectations for the Bank of Canada. Moody’s May 16th downgrade of America’s sovereign rating to Aa1, coupled with mounting bets that the Federal Reserve will soon begin cutting rates amid cooling US inflation, has eroded the greenback’s allure. Yet the loonie’s upside remains capped by expectations of a dovish turn from the Bank of Canada after lacklustre April job gains and a rise in unemployment to 6.9 percent have fuelled speculation of a June rate cut, tempering investor appetite for Canadian assets. At the same time, renewed hopes for a comprehensive US–Canada trade deal—sparked by talks between Vice President Vance and Prime Minister Carney—have eased bilateral policy risks. Investors now await tomorrow’s Canadian price data, which should prove pivotal in clarifying the BoC’s near-term policy path.

Canadian Dollar Strengthens Amid Weaker USD

The South African rand traded around 18.1 per USD, down slightly from a five-month high of 18 hit on May 15, amid caution ahead of this week's budget speech. Traders braced for Finance Minister Enoch Godongwana’s third budget speech on May 21, in which he is expected to reveal how he intends to close a ZAR 75 billion revenue gap following the withdrawal of a proposed value-added tax hike after disputes with coalition partners. On the same day, a planned meeting between President Ramaphosa and US President Donald Trump will take place in Washington as part of efforts to mend relations between the two countries.

South African Rand Slightly Weaker

The Indian rupee weakened to 85.5 per USD, giving back its gains from broad dollar weakness since the start of the quarter, in addition to dovish bets for the Reserve Bank of India. Optimism that trade flows between the US and China will persist following their tentative agreement drove investors to return to dollar assets. In the meantime, new data showed that consumer inflation in India fell more than expected to a near six-year low in April, strengthening bets that the RBI is due to extend its cutting cycle. The central bank had already delivered back-to-back cuts to its benchmark repo rate after holding it at the over-four-year high of 6.5% for one full year, attempting to halt the slowdown in domestic growth. The RBI also delivered a series of liquidity injections into commercial banks after the its defense of the rupee drained domestic reserves and tightened financing conditions. Lastly, the rebound in energy prices magnified dollar outflows from the Indian economy.

Indian Rupee Weakens Further

The dollar index fell by about 0.7% to 100.1 on Monday, retreating further from the one-month highs reached last week, as growing concerns over the US fiscal outlook triggered a shift away from dollar-denominated assets. On Friday, Moody’s downgraded the US credit rating from Aaa to Aa1, citing rising government debt and a widening budget deficit. Fiscal concerns were further exacerbated by the approval of President Trump’s tax-cut legislation by a key congressional committee on Sunday. The bill includes hundreds of billions of dollars in new tax cuts without corresponding spending offsets. Despite criticism, the Trump administration argues the tax cuts will spur economic growth, boost revenues, and ultimately help narrow the deficit. On the monetary policy front, markets continue to price in two rate cuts by the Fed this year, with reductions anticipated in September and December. The dollar weakened broadly, with the sharpest declines recorded against the euro and the British pound.

Dollar Index Falls to 100.1

The euro edged closer to $1.13, extending its recovery from the one-month low reached on May 12th, supported by broad-based weakness in the US dollar. The decline in the greenback followed Moody’s decision to downgrade the US credit rating by one notch, from Aaa to Aa1, citing mounting concerns over rising government debt and widening fiscal deficits. The downgrade fueled worries about potential economic fallout in the US and weighed on American assets. Meanwhile, the EU and the UK reached a tentative agreement on key areas including defense and security cooperation, fisheries, and youth mobility, ahead of the upcoming EU-UK summit on Monday. According to EU officials, the deal could allow British companies to participate in major EU defense contracts, marking a step forward in post-Brexit relations. On the monetary policy front, the European Central Bank is expected to continue lowering interest rates in June, with the possibility of further easing beyond that point.

Euro Edges Higher

The British pound strengthened past $1.336, its highest level in over a week, as investors turned optimistic ahead of key UK economic data and a major political breakthrough with the EU. Markets are closely watching Thursday’s flash PMI figures, which are expected to show a smaller contraction in manufacturing and a milder decline in services. April inflation is forecast to rise to 3.3%, the highest in 14 months, while core CPI may hit 3.6%. Retail sales are projected to increase by 0.4%, continuing a four-month streak of gains despite fragile consumer sentiment. Supporting the pound further, the UK and EU reached a landmark agreement to reset post-Brexit relations. The deal includes cooperation on energy, defense, and reciprocal fishing rights through 2038. Meanwhile, the US dollar weakened after Moody’s unexpectedly downgraded the US government's credit rating, citing concerns over rising debt.

Sterling Rises to Over 1-Week High

The South Korean won steadied around 1,397 per dollar on Monday amid a weakening US dollar following an unexpected downgrade of the US credit rating. On Friday, Moody's announced it was lowering the US rating from Aaa to Aa1, citing a widening budget deficit and rising interest costs. Meanwhile, investors are closely monitoring developments in US–South Korea trade talks following a swift trade truce between the US and China. In the latest update, South Korea’s Trade Minister Ahn Duk-geun cautioned on Friday that reaching a tariff agreement with the US by the July deadline may be delayed due to ongoing domestic political hurdles. However, he noted that both sides will hold technical consultations this week to advance negotiations, with another ministerial meeting expected in June.

South Korean Won Steady

The offshore yuan was little changed at around 7.21 per dollar, trading within a tight range near two-month lows as investors digested a raft of mixed economic data. April’s retail sales growth slowed and fell short of expectations, underscoring persistent concerns about fragile consumer demand. However, industrial output beat forecasts but slowed from March’s pace, while the unemployment rate edged down, offering a modest sign of labor market stability. Markets also turned cautious as China described recent trade talks with the US as “good” but remained vague on future steps, while Trump hinted at a possible call with President Xi. Meanwhile, the yuan found support from a weak US dollar following a surprise US credit rating downgrade and growing expectations of Fed rate cuts. Investors are now looking ahead to upcoming PBOC decisions on key lending rates, including the one-year and five-year loan prime rates.

Offshore Yuan Remains Subdued

The New Zealand dollar extended its recent gains to around $0.590 on Monday as investors weighed economic data and its implications for monetary policy. PPI rose 2.1% in Q1—the largest increase in nearly three years—signaling renewed inflationary pressures and supporting a more restrictive stance on interest rates. However, a fresh PMI report showed continued contraction in the services sector, adding evidence to the slowing economy. Markets anticipate a 25bps rate cut by the RBNZ later this month, though investors increasingly believe the easing cycle is nearing its end, with rates likely bottoming at 3%. Meanwhile, April’s slowdown in Chinese retail sales highlighted weak consumer demand, posing risks to New Zealand’s exports given the close trade relationship. Traders now await Thursday’s government budget, which is set to reduce baseline 2025 spending to NZ$1.3 billion from a projected NZ$2.4 billion.

New Zealand Dollar Extends Gains

The US dollar index fell to around 100.7 on Monday, following a surprise downgrade of the US government's credit rating. Moody’s Ratings announced late Friday it was stripping the US of its top credit rating, dropping the country to Aa1 from Aaa, citing a widening budget deficit and rising interest costs. Adding to the dollar's weakness, a series of mostly weak economic data released last week have fueled expectations that the Federal Reserve could still cut interest rates twice this year. Meanwhile, US Treasury Secretary Scott Bessent said on Sunday that President Donald Trump would proceed with the tariff rates he threatened last month on trading partners that do not negotiate in "good faith." The greenback weakened against several Asian currencies.

Dollar Weakens on US Downgrade

The Australian dollar edged higher to around $0.64 on Monday, paring losses from recent sessions as investors awaited the Reserve Bank of Australia’s policy decision. The RBA is widely expected to resume its easing cycle by cutting the benchmark interest rate by 25 basis points on Tuesday. However, stronger-than-expected labor market data last week has tempered expectations for further rate cuts. The recent easing of the US-China trade conflict has also reduced the likelihood of a more aggressive policy response from the central bank. As a result, markets now anticipate 75 basis points of cuts by year-end, down from 100 basis points projected just weeks ago. Meanwhile, traders are digesting the latest data from China—Australia’s top trading partner—which offered a mixed picture: industrial production and unemployment figures exceeded expectations, while retail sales and fixed asset investment fell short.

Australian Dollar Pares Losses

The Japanese yen strengthened past 145 per dollar on Monday, marking its fifth consecutive session of gains, as the US dollar weakened following Moody’s credit rating downgrade. On Friday, the agency lowered the US credit rating from Aaa to Aa1, citing a worsening fiscal outlook and “a lack of effective policy action” to address mounting deficits. Domestically, recent data showed that Japan’s economy contracted in the first quarter of 2025, with GDP falling worse than market expectations and marking its first economic contraction in a year. Investors are now turning their attention to the upcoming Japanese trade data amid the looming effects of impending US tariff measures. In a recent development, Prime Minister Shigeru Ishiba reiterated that Japan would not accept any initial deal that excludes provisions on automobiles, urging the US to lift its 25% tariff on Japanese cars.

Japanese Yen Strengthens on Dollar Weakness

The Swiss franc weakened slightly toward 0.84 per US dollar, even as the greenback remained subdued, as growing expectations of further monetary easing by the SNB weighed on the currency. Chairman Martin Schlegel signaled that all options remain open—including negative interest rates—though he acknowledged a preference to avoid that route. Economists and markets expect a 25 basis-point cut to zero at the central bank's next meeting on June 19. Meanwhile, persistent global trade uncertainty adds to the cautious economic backdrop.

Swiss Franc Slightly Weaker

The US dollar index pared early losses to trade flat around 100.8 on Friday, and is on track to end the week with a gain of approximately 0.6%. Investor sentiment was buoyed by hopes of a de-escalation in US-China trade tensions and increasing expectations that the Federal Reserve will cut interest rates. A series of mostly weak economic indicators has reinforced the view that the Fed has room to lower rates at least twice this year. Housing starts and building permits both fell short of forecasts, while export and import prices unexpectedly rose. Earlier in the week, both consumer and producer inflation (CPI and PPI) came in below expectations, and retail sales were softer than anticipated. The dollar is also heading for its fourth straight weekly gain against the euro.

Dollar Cuts Losses

The euro traded around $1.12, rebounding from one-month lows reached on May 12th, when the US and China announced a 90-day truce accompanied by lower tariffs. While the tariff reduction initially sparked optimism that a broader de-escalation of the trade war was imminent, that enthusiasm has since faded, and investors are now awaiting further developments. At the same time, renewed concerns about a potential slowdown in the US economy have weighed on the dollar. On the monetary policy front, the European Central Bank is expected to continue cutting borrowing costs in June and potentially beyond. ECB Governing Council member Martins Kazaks noted that rate cuts may be nearing their end if the baseline inflation forecast — a return to 2% this year — holds true. In April, Eurozone inflation held steady at 2.2%, while core inflation rose to 2.7%. Meanwhile, first-quarter GDP growth was revised down to 0.3%, from an initial estimate of 0.4%.

Euro Trades Around $1.12

The offshore yuan edged higher to around 7.21 per dollar on Friday, supported by a weakening US dollar amid soft economic figures. The data, including an unexpected drop in producer prices and slower growth in retail sales, reinforced expectations that the Federal Reserve may implement additional rate cuts later this year. However, the yuan’s appreciation was partially offset by growing demand for US dollar in China. State-owned banks intervened in the onshore spot market, selling yuan and buying dollars to curb the currency’s appreciation and maintain market stability. This intervention coincided with increased dollar demand from corporates and overseas-listed Chinese firms, many of which are preparing for dividend payouts that require foreign currency. Meanwhile, investors now await key economic data due next week, including retail sales, unemployment rate, and updates to the loan prime rate, which could provide further insight into the health of the world’s second-largest economy.

Offshore Yuan Edges Higher

The New Zealand dollar rose to around $0.588 on Friday, ending a two-day losing streak as the US dollar fell on weak economic data that raised bets on more Federal Reserve rate cuts this year. Latest data showed that US producer prices unexpectedly dropped by the most in five years, while retail sales growth slowed. Domestically, markets are still wagering on a further cut of 25bps by the Reserve Bank of New Zealand later this month amid a weak economy. However, investors suspect the central bank’s easing cycle may be nearing its end, with rates now seen bottoming at 3.0%. Despite Friday’s rebound, the Kiwi is on track for its third consecutive weekly loss after a volatile week in which it saw gains on news of a US-China tariff deal, only to encounter selling pressure at key technical levels.

New Zealand Dollar Rebounds

The Australian dollar stabilized above $0.64 on Friday, following a volatile week, as investors looked ahead to next week’s Reserve Bank of Australia policy decision. The RBA is widely expected to cut the cash rate by 25 basis points to 3.85%, but expectations for deeper easing have softened. Stronger-than-expected labor market data earlier this week helped temper rate cut bets. Official figures showed the Australian economy added 89,000 jobs in April—far surpassing the forecast of 20,000—and pushing total employment to a record high of 14.64 million. As a result, markets now anticipate around 75 basis points of rate cuts by year-end, down from 100 basis points just weeks ago. Meanwhile, the US-China trade agreement helped ease fears of a global economic slowdown, lending further support to the risk-sensitive Aussie.

Australian Dollar Holds Steady Ahead of RBA Decision

The Japanese yen appreciated toward 145 per dollar on Friday, rising for the fourth consecutive session despite weaker-than-expected economic growth figures. Japan’s economy contracted 0.2% quarter-on-quarter in Q1, marking its first decline in a year and coming in worse than forecasts for a 0.1% dip. Earlier this week, the Bank of Japan acknowledged that the economy is likely to moderate due to the effects of US trade policy. However, the central bank maintained its view that rising wages and prices would support a continued path toward policy normalization, helping to underpin the yen. Investors are also watching developments in US-Japan trade negotiations, with Tokyo pushing to finalize a deal by June. Prime Minister Shigeru Ishiba reiterated Japan’s stance that any agreement must include provisions on the auto sector, urging Washington to remove its 25% tariff on Japanese vehicles.

Japanese Yen Strengthens Despite Weak GDP Data

The South Korean won held its recent gains past 1,395 per dollar, after rallying for two consecutive sessions, as investors await progress in ongoing US-Korea tariff talks. On the second day of the APEC trade ministers’ meeting in Jeju Island, South Korean Trade Minister Ahn Duk-geun was set to meet US Trade Representative Jamieson Greer to advance a proposed package deal on tariffs ahead of the July 8 deadline. Greer also met with Trade Minister Cheong In-kyo on Thursday to discuss pending trade issues and US negotiations with other countries. Meanwhile, a third consecutive monthly drop in import prices bolstered expectations of further monetary easing by the Bank of Korea. This aligned with the BOK’s recent minutes showing most board members flagged growing economic headwinds and the need for additional rate cuts. Elsewhere, US data suggest the Federal Reserve may cut rates twice this year, prompting a similar policy outlook in South Korea.

South Korean Won Firms Ahead of US Tariff Talks

The US dollar index eased to around 100.6 on Friday and was poised to end the week little changed, as early gains from the US-China trade truce were offset by softer US economic data. The greenback initially surged over 1% at the start of the week following an agreement between the US and China to significantly lower tariffs for a 90-day period, signaling a possible breakthrough toward a broader trade deal between the world’s two largest economies. However, the rally lost steam as data released during the week signaled softening inflation and disappointing retail sales, raising concerns about slowing consumer activity. These indicators prompted traders to increase bets on additional Federal Reserve rate cuts later this year. The greenback also faced pressure against several Asian currencies, particularly the South Korean won, amid speculation that Washington may be supporting a weaker dollar as a strategic move within ongoing trade negotiations.

Dollar Set to End Week Little Changed

The Mexican peso slipped past 19.50 per USD, down from a seven-month peak of 19.38 on May 14th, as markets absorbed Banxico’s 50 bps cut to 8.50% on May 15th. Confronted with headline and core inflation still hovering near 3.9% and Q1 GDP growth of just 0.2% following a contraction, the Board judged that a modest rate reduction would support the fragile recovery while keeping disinflation on track toward the 3% goal. By flagging further cuts ahead, Banxico has narrowed the gap with the U.S. Federal Reserve, eroding the peso’s yield advantage, spurring capital outflows and, in turn, bolstering the dollar against the peso in the near term.

Mexican Peso Weakens After Banxico

The US dollar index slipped to 100.7, with softer inflation data reinforcing expectations that the Federal Reserve may cut rates later this year. A surprise drop in producer prices, the largest in five years, suggests companies are struggling to pass on higher costs, easing inflationary pressure and boosting the case for policy easing. Retail sales also disappointed, hinting at weaker consumer momentum. Together, these reports led traders to increase bets on two rate cuts by year-end. The greenback weakened notably against several Asian currencies, particularly the South Korean won, amid speculation that Washington is advocating for a weaker dollar as part of ongoing trade negotiations. The Trump administration has argued that the relative strength of the dollar, and the weakness of regional currencies, has disadvantaged US exporters.

DXY Falls after PPI Data

The South African rand appreciated nearly 1% to trade around 18.1 per USD, reaching its highest since March 19, helped by a subdued dollar and as the focus turned to the upcoming Ramaphosa-Trump meeting. The presidency said that South African President Cyril Ramaphosa will meet United States President Donald Trump at the White House on May 21 in an attempt to “reset” ties between the two countries. Meanwhile, the country's economy continued to grapple with unfavorable domestic conditions, particularly due to the return of rotational loadshedding.

South African Rand at Near 2-Month High

The British pound rose to $1.329, after stronger-than-expected GDP data signaled resilience in the UK economy and reduced pressure for aggressive rate cuts. Growth came in above forecasts at 0.7% for the quarter and 1.3% year-on-year, prompting traders to scale back expectations for how much the Bank of England might lower interest rates this year. While a rate cut is still expected, the solid GDP print suggests the economy is not weak enough to justify deeper easing just yet. Beyond domestic data, the pound also got a boost from a softer US dollar, as speculation builds that the US may push for a weaker currency in trade negotiations. That broader dollar weakness lifted most major currencies, including sterling. However, not all UK indicators were upbeat—unemployment ticked higher and wage growth slowed, pointing to uneven momentum. Still, for now, the positive surprise in GDP has given sterling support and reduced immediate concerns about economic stagnation.

Sterling Rises after GDP Data

The Australian dollar climbed to around $0.644 on Thursday, rrecouping some losses from the previous session after stronger-than-expected jobs data bolstered a more hawkish outlook for monetary policy. Official figures showed the Australian economy added 89,000 net new jobs in April, lifting total employment to a record high of 14.64 million—well above the forecast of 20,000. The unemployment rate held steady at 4.1%, in line with expectations. While the Reserve Bank of Australia is still widely expected to cut the cash rate by 25 basis points to 3.85% at its meeting next week, traders have scaled back expectations for further easing. Markets are now pricing in around 76 basis points of total rate cuts by year-end, down from 100 basis points just weeks earlier. Externally, investors remained focused on the evolving US-China trade relationship, with attention turning to the longer-term implications for global growth and trade dynamics.

Australian Dollar Rises on Robust Jobs Report

The Japanese yen appreciated toward 146 per dollar on Thursday, marking its third straight session of gains as persistent global trade uncertainties pressured the dollar while lifting other currencies. The yen also benefited from a broader rally in Asian currencies, fueled by speculation that Washington is advocating for a weaker dollar as part of ongoing trade negotiations. The Trump administration has argued that the relative weakness of Asian currencies gives regional exporters an unfair trade advantage over their US counterparts. Meanwhile, investors are closely monitoring developments in the US-Japan trade talks, with Tokyo aiming to finalize a deal by June. Prime Minister Shigeru Ishiba emphasized that Japan would not agree to an initial deal that omits provisions on automobiles, urging Washington to remove its 25% tariff on Japanese cars.

Japanese Yen Strengthens for 3rd Consecutive Session

The New Zealand dollar stabilized around $0.59 on Thursday, following a 0.6% decline in the previous session, as investors awaited more details on potential trade deals after easing of tensions between the US and China. The two countries on Monday announced a 90-day pause on most of the tariffs imposed on each other's goods since early April — a development particularly significant for New Zealand given China’s status as its top trading partner. On the domestic front, expectations of further interest rate cuts by the Reserve Bank of New Zealand continue to weigh on the currency. Markets widely expect that the central bank will cut its official cash rate by 25bps at its meeting later this month, amid weaker domestic growth prospects. In economic news, food prices in New Zealand increased by 3.7% year-on-year in April, the fastest pace in fifteen months, after a 3.5% rise in March.

New Zealand Dollar Stabilizes

The US dollar index edged lower to around 100.9 on Thursday, remaining under pressure as investors weighed persistent trade-related uncertainties despite a recent easing in tensions. The greenback weakened notably against several Asian currencies, particularly the South Korean won, amid speculation that Washington is advocating for a weaker dollar as part of ongoing trade negotiations. The Trump administration has argued that the relative strength of the dollar—and the weakness of regional currencies—has disadvantaged US exporters. The dollar's recent rally, fueled by optimism over US-China tariff reductions, has also begun to fade as market focus shifts back to the broader economic implications of US trade policy. Looking ahead, investors are eyeing US retail sales and producer inflation data due Thursday for fresh insight into consumer demand and inflation trends.

Dollar Struggles Amid Trade Policy Uncertainty

The South Korean won strengthened around 1,400 per dollar, extending its rally from the previous session, as reports of US-Korea currency discussions and signs that the Trump administration may tolerate a weaker dollar boosted sentiment. The won’s earlier volatility echoed a similar surge in Taiwan’s dollar, partly driven by reports that the US is pushing for a weaker greenback against Asian currencies as part of trade agreements with major exporters across the Pacific. However, analysts cautioned that ongoing trade tensions and domestic uncertainties could limit further gains for the won in the near term. This aligned with the ongoing political uncertainty weighing on sentiment, as presidential candidates traded slanderous attacks in place of substantive policies. Investors now await developments as US Trade Representative Greer meets Seoul’s trade chief during the APEC meeting to follow up on last month’s talks in Washington.

South Korean Won Extends Rally

USDILS decreased to a 26-month low of 3.52. Over the past 4 weeks, US Dollar Israeli New Sheqel lost 4.04%, and in the last 12 months, it decreased 3.26%.

Israeli New Sheqel Hits 26-month High

The Canadian dollar weakened to around 1.40 per USD, retreating from the five-month high of 1.378 reached on May 6th, amid dovish expectations for the Bank of Canada and lingering trade uncertainties. A modest gain of just 7,400 jobs alongside a rise in the unemployment rate to 6.9% in April, reinforced market bets on a possible rate cut as early as June by the BoC, eroding the loonie’s appeal. On the trade front, tensions with the US resurfaced after Canada’s ambassador to Washington stated that the removal of Trump-era steel and aluminum tariffs would be Ottawa’s “starting point” in any future USMCA negotiations—highlighting ongoing bilateral friction. Still, markets found a degree of reassurance in the domestic political landscape, as Prime Minister Carney’s appointment of former Goldman Sachs banker Tim Hodgson as minister of natural resources was broadly welcomed, signaling a renewed effort to capitalize on Canada’s strategic advantages in energy and mining.

Canadian Dollar Eases to 1.4 per USD

The euro climbed back above $1.12, supported by a weaker dollar following an unexpected drop in US inflation and growing investor caution over US-China trade negotiations, despite both countries agreeing to a 90-day tariff truce to work toward a broader deal. However, tariffs remain elevated, with the average US rate on Chinese goods still hovering around 40%, compared to 20% previously. On the monetary policy front, money markets now price the European Central Bank’s deposit facility rate at 1.79% by year-end, up from 1.67% late Friday and below 1.55% in mid-April. At the same time, markets are almost fully pricing in a 95% chance of a rate cut in June, as policymakers aim to bolster growth amid rising US tariffs. ECB policymaker François Villeroy de Galhau stated there was room for another rate cut by summer, while his colleague Joachim Nagel expressed optimism, noting a "good probability" that inflation would converge toward the central bank’s 2% target.

Euro Rises Above $1.12

The Korean won appreciated past 1,400 per USD, gaining nearly 3% against the dollar since the start of May and outperforming the strength in other Asian currencies on speculation that US officials met with Korean counterparts to discuss the engineering of a weaker dollar. The rally was consistent with earlier moves by the Taiwan and Hong Kong dollars, in part due to reports that the US is advocating for a weaker dollar against Asian currencies as part of trade deals with major exporters across the Pacific. The won had already rallied since April after the de-escalation of the trade war between China and the US supported the outlook for key Korean industries and exports. The currency also strengthened earlier as increasing doubts over US exceptionalism triggered aggressive capital inflows into Asian capital markets.

South Korean Won Rallies

The British pound rose above $1.333, the highest in one week, mainly due to broad weakness in the US dollar following news of ongoing currency discussions between the US and South Korea. The dollar fell after it was revealed that both countries agreed to continue talks on foreign exchange practices, dampening demand for the greenback and lifting major global currencies. Domestically, attention turned to comments from Bank of England officials. Deputy Governor Sarah Breeden emphasized the importance of long-term bond market reforms, while Catherine Mann stressed the need for clearer signs of weakening pricing power before supporting more rate cuts. Meanwhile, UK economic data showed the jobless rate rose to 4.5%, the highest since 2021, and wage growth slowed. These developments slightly boosted expectations that the BoE will continue easing, especially after last week’s 25bps rate cut, which saw a split vote.

Sterling Strengthens to 1-Week High

The dollar index fell to 100.3 on Wednesday, retreating further from the one-month highs reached on Monday, as momentum from the rally driven by US-China tariff reductions began to fade. Traders shifted focus back to the broader implications of trade policies on the US economy. Additionally, a softer-than-expected inflation report fueled speculation that the Federal Reserve may still have room to cut interest rates twice this year. The dollar weakened broadly, with the most pronounced declines seen against the yen and the euro. The greenback also fell more than 1.5% against the South Korean won following reports that South Korean and US authorities discussed the won/dollar market on May 5th.

Dollar Extends Decline

The Swiss franc appreciated to around 0.83 per US dollar, rebounding from an over one-month low reached on May 12, as the dollar weakened following softer US inflation data that eased concerns over the inflationary impact of Trump-era tariffs. However, further gains in the franc were capped as its safe-haven appeal diminished amid signs of easing global trade tensions and rising expectations of additional monetary easing by the Swiss National Bank (SNB). Last week, SNB Chairman Martin Schlegel reaffirmed the central bank’s readiness to intervene in currency markets and to lower interest rates—including into negative territory—should inflation remain persistently below target.

Swiss Franc Firms

The offshore yuan weakened to around 7.21 per dollar on Wednesday, snapping a three-session winning streak, as investors adopted a cautious stance while waiting for further developments in US-China trade relations. Earlier this week, President Trump announced that China agreed to eliminate non-tariff barriers on American goods. This statement came after a temporary trade truce was reached over the weekend in Switzerland, under which both countries agreed to suspend most tariffs for 90 days. As part of the agreement, the US reduced tariffs on Chinese imports from 145% to 30%, while China cut its tariffs on US goods from 125% to 10%. However, uncertainty lingers over what will follow once the 90-day window closes, with further negotiations expected in the coming weeks. On the domestic front, recent data showed that China's annual inflation rate fell for the third consecutive month to 0.1% in April, while producer prices dropped 2.7%, marking the sharpest decline in six months.

Offshore Yuan Slips

The Australian dollar climbed above $0.648 on Wednesday, marking its second consecutive session of gains, as the greenback weakened following softer-than-expected US inflation data. The move was further supported by improving sentiment around global trade after the US and China agreed to lower tariffs for a 90-day period, easing fears of prolonged economic strain and helping lift commodity prices. Given Australia’s heavy export reliance on China, particularly in raw materials, the local currency remains highly sensitive to US-China trade dynamics. On the domestic front, data showed Australian wage growth exceeded expectations in the first quarter, while home loan approvals declined, offering a mixed picture of the economic backdrop. Looking ahead, the Reserve Bank of Australia is widely expected to cut interest rates by 25 basis points at its meeting next week, as it continues to support growth amid global uncertainties.

Australian Dollar Gains as Greenback Weakens

The South Korean won steadied above 1,415 per dollar as investors digested the latest labor market data and its implications for monetary policy. The country’s jobless rate fell to 2.7% in April from 2.9% in March, returning to February’s level. While nearly 200,000 jobs were added, manufacturing employment—considered the backbone of the economy—suffered its steepest annual decline in over six years. This aligns with views expressed in the Bank of Korea’s meeting minutes released last week, where most board members noted that economic headwinds are intensifying faster than expected, suggesting a need for further interest rate cuts. Meanwhile, the won found support after the government unveiled 4.6 trillion won in aid for small and medium-sized firms expected to be affected by US tariffs. Additionally, easing trade tensions between the US and China could scale back expectations on the magnitude of rate cuts, as the initial escalation had raised concerns over broader economic fallout.

The New Zealand dollar rose to around $0.594 on Wednesday, building on gains from the previous session, benefiting from a weaker US dollar. The greenback declined after softer-than-expected consumer inflation data strengthened expectations for potential interest rate cuts by the US Federal Reserve. Additionally, the Kiwi gained support on optimism for a de-escalation in US-China trade tensions after both countries agreed to slash steep tariffs on each other’s goods for 90 days. This development is particularly significant for New Zealand, given its strong trade ties with China, its largest trading partner. On the domestic front, markets are pricing in a further 25bps rate cut by the Reserve Bank of New Zealand later this month, with the current official cash rate of 3.5% seen bottoming at 2.8% by year-end.

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Australian Dollar Slips After RBA Rate Cut

Hong Kong Dollar Hits 12-month Low

Dollar Stabilizes

New Zealand Dollar Declines

Offshore Yuan Slips on PBoC Rate Cut

SK Won Weakens, US-South Korea Tariff Talks Eyed

Australian Dollar Weakens Ahead of RBA Decision

Brazilian Real Strengthens on USD Weakness

Mexican Peso Near 7-Month Highs

Canadian Dollar Strengthens Amid Weaker USD

South African Rand Slightly Weaker

Indian Rupee Weakens Further

Dollar Index Falls to 100.1

Euro Edges Higher

Sterling Rises to Over 1-Week High

South Korean Won Steady

Offshore Yuan Remains Subdued

New Zealand Dollar Extends Gains

Dollar Weakens on US Downgrade

Australian Dollar Pares Losses

Japanese Yen Strengthens on Dollar Weakness

Swiss Franc Slightly Weaker

Dollar Cuts Losses

Euro Trades Around $1.12

Offshore Yuan Edges Higher

New Zealand Dollar Rebounds

Australian Dollar Holds Steady Ahead of RBA Decision

Japanese Yen Strengthens Despite Weak GDP Data

South Korean Won Firms Ahead of US Tariff Talks

Dollar Set to End Week Little Changed

Mexican Peso Weakens After Banxico

DXY Falls after PPI Data

South African Rand at Near 2-Month High

Sterling Rises after GDP Data

Australian Dollar Rises on Robust Jobs Report

Japanese Yen Strengthens for 3rd Consecutive Session

New Zealand Dollar Stabilizes

Dollar Struggles Amid Trade Policy Uncertainty

South Korean Won Extends Rally

Israeli New Sheqel Hits 26-month High

Canadian Dollar Eases to 1.4 per USD

Euro Rises Above $1.12

South Korean Won Rallies

Sterling Strengthens to 1-Week High

Dollar Extends Decline

Swiss Franc Firms

Offshore Yuan Slips

Australian Dollar Gains as Greenback Weakens

South Korean Won Steady

Kiwi Dollar Gains on Softer US Dollar