Forex News

Rabobank strategists assess how the US and Israel’s war against Iran could affect China. They note higher Oil and gas prices and global cost-push inflation, but argues China’s inflation is unlikely to force PBOC tightening. However, Rabobank cuts China’s 2026 Gross Domestic Product (GDP) forecast to 4.5%, with higher inflation and unemployment expected.

War-driven shocks and China’s resilience

"Oil and gas prices have shot up and have remained extremely volatile since the start of the US and Israel’s war against Iran, leading to upside inflation risks globally."

"China has been well prepared for oil supply disruptions and could partially make up for the loss of oil imports from the Middle East via its vast reserves and diversification of its suppliers."

"While much remains uncertain at the moment, we conclude that for now it seems unlikely that China’s inflation will rise to levels that would force the PBOC to act."

"China’s economy will, however, be affected via lower exports to the rest of the world because of global cost push inflation and via lower domestic consumption."

"We lower our GDP forecast to 4.5% for 2026 and see higher inflation and higher unemployment with inflation at 0.7% and unemployment at 5.4% in 2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING’s Chief Economist for Greater China, Lynn Song, notes that Taiwan’s April trade data showed slower export and import growth versus expectations, with the trade surplus easing to USD14.35bn. Semiconductor and machinery exports remained strong, while higher Oil prices started to lift import values. ING still expects robust trade momentum and sees upside risks to its 2026 Gross Domestic Product (GDP) growth forecast of 8.2% YoY.

Exports miss forecasts but momentum holds

"Taiwan's export growth slowed to 39.0% YoY in April, down from 61.8% YoY in March, and falling well short of market forecasts on the month."

"One area where Taiwan is continuing to see positive signs is the export price index, which continued to accelerate for an eighth consecutive month to 18.0% YoY, reaching a multi-year high. As long as the demand for top-end AI chips remains robust, Taiwan's trade prospects remain bright."

"Higher energy prices are likely to feed through to boost Taiwan's imports."

"While the April data was the first miss for Taiwan's trade data in a while, both exports and imports are still growing strongly, and export orders data suggests that this momentum should continue for some time at least. Even so, export growth may moderate later this year, particularly as more challenging base effects come into play, especially in the fourth quarter."

"Still, Taiwan is well positioned to see another strong year of economic growth this year, and after a strong start to the year, we think risks are still balanced to the upside for our current 2026 GDP forecast of 8.2% YoY."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Standard Chartered’s Aldian Taloputra notes Indonesia’s GDP growth accelerated to 5.6% year-on-year in Q1 2026, driven by front-loaded fiscal stimulus, seasonal festival spending and limited pass-through from higher Oil prices. The bank expects growth to ease as these one-off supports fade, keeps its 2026 GDP forecast at 5.2%, and now projects a wider 2026 fiscal deficit of 2.9% of GDP.

Q1 strength seen as unsustainable

"Indonesia’s GDP growth accelerated to 5.6% y/y in Q1 (from 5.4% the previous quarter), the fastest pace since 2022."

"Despite the strong Q1 headline print, growth remains government-driven; private-sector momentum remains modest given cautious business sentiment and subdued formal-sector expansion."

"We maintain our 2026 GDP growth forecast of 5.2%. Fading seasonality, a weakening fiscal impulse and a slow formal-sector job recovery may weigh on growth momentum in the coming quarters, especially amid still-cautious business sentiment."

"Government subsidies intended to bear most of the burden of rising energy costs are consumption-supportive, but may reduce fiscal space for more productive spending and weigh on fiscal credibility."

"We now see a wider 2026 fiscal deficit of 2.9% of GDP versus our prior forecast of 2.7%. We expect the government to keep the deficit below the 3%-of-GDP cap by reallocating spending, optimising revenue collection, and using below-the-line financing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver rallies toward a weekly high as bullish momentum remains intact.
• Break above $82.12 exposes April peak at $83.05.
• Close below 100-day SMA risks pullback toward $77.19 support.

Silver (XAG/USD) price advances more than 2.50% on Friday, set to end the week with gains of over 7% sponsored by US Dollar (USD) weakness and falling Oil prices. At the time of writing, XAG/USD trades at $80.72, after bouncing off daily lows of $78.16.

XAG/USD Price Analysis: Technical outlook

Silver is testing the weekly high reached on Thursday at $82.13, but so far has failed to clear it. Momentum remains bullish, as indicated by the Relative Strength Index (RSI), but they must clear key overhead resistance.

On the upside, the first key resistance is $80.50. Once cleared, the next areas of interest become the $81.00 figure, followed by the May 7 peak at $82.13. If those two areas are hurdled, the next stop would be the April 17 swing high at $83.05.

Downwards, the first support is the 100-day SMA at $80.01. A daily close below the latter opens the door for a pullback towards the 50-day SMA at $77.19, ahead of the 20-day SMA at $76.44.

XAG/USD Price Chart – Daily

Wells Fargo Economics projects Brazil’s April IPCA inflation to rise 0.9% month-over-month and around 4.5% year-over-year, near or above the target band. Energy and food pressures are intensifying, while inflation expectations have risen. The Brazilian Central Bank is still seen cutting rates cautiously in June, but a pause in the easing cycle is becoming more likely.

Energy and food drive inflation risks

"We expect Brazil’s April IPCA to rise a sharp 0.9% month-over-month, pushing headline inflation to around or slightly above the top of the target band at 4.5% year-over-year."

"Energy remains the key near‑term upside risk, with the Middle East conflict lingering and physical supply constraints becoming more binding, driving stronger pass‑through into refined products."

"Food inflation was already firming in March, and higher transport and fertilizer costs should broaden price pressures across food categories in coming months."

"While core inflation remains restrained by restrictive real rates, administrative price smoothing and fiscal offsets, particularly in an election year, are adding upside risks to inflation expectations."

"Against this backdrop, we think the BCB is likely to proceed with a cautious cut at the June meeting, but the outlook beyond that has become increasingly uncertain, with a pause in the easing cycle looking more likely."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

MUFG economists Lin Li, Michael Wan, Lloyd Chan and Khang Sek Lee outline a base case where the reopening of the Strait of Hormuz by end‑May eases pressures on Asian currencies. They see Asia growth softening near term but stabilizing in H2 2026, with inflation contained and most central banks keeping neutral‑accommodative stances. They also sketch an adverse scenario with broad Asia FX depreciation.

Base and adverse scenarios for Asia FX

"A base case, where the Iran war and the Hormuz disruption unwind approaching end of May, is our core case. Asia growth softens slightly in near term but stabilizes into 2H2026 as declining energy prices ease the drag on current account, corporate margins and real income. Inflation will remain largely contained and allows most central banks to maintain their neutral-accommodative stance."

"Iran war has exerted significant pressure on Asia’s net energy‑importing currencies, with PHP, INR, THB and IDR depreciating most against the dollar since late February. However, in our base case, while reopening of the Strait of Hormuz and the associated decline in oil prices would unwind some pressures, we expect a divergent performance across Asian currencies, rather than a unanimous rebound in remaining Q2."

"Under the Adverse Scenario transit the Strait of Hormuz, over time, higher energy costs would worsen the terms of trade, pressure on trade balance, and supply shortages would intensify and weigh on industrial activity and overall economy. A prolonged blockade of the Strait of Hormuz brings the risks of recessions for Asian economies, causing capital outflow, creating pressure for significant pressure. In the Severe scenario, we expect a broad base depreciation among Asian currencies, with some like KRW to depreciate more than 8%, and INR and PHP to depreciate more than 5%, and a relatively mild 3% depreciation for CNY against the dollar."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)