Forex News

UOB economist Ho Woei Chen assesses China’s latest PMIs, noting a positive outlook for manufacturing supported by strong AI-related export demand and robust industrial profits, while domestic demand and services weaken. The report highlights contained overall price pressures but elevated input costs, and sees limited near-term scope for rate cuts despite room for modest policy easing later in 2026.

Manufacturing resilient as services underperform

"China’s official PMIs indicate that the outlook has stayed positive for the manufacturing sector in Apr with limited spillovers so far from the war in Iran as strong AI-related demand continues to drive robust growth in exports. However, domestic demand softened ahead of the Labour Day holidays. Overall price pressure also appeared to be contained although raw materials and producer prices stayed elevated in the manufacturing sector."

"The CFLP manufacturing PMI stayed in expansion (reading>50) for the second straight month at 50.3 in Apr (Bloomberg est: 50.1, Mar: 50.4). The positive outlook is supported by a strengthening in the private sector RatingDog China manufacturing PMI to 52.2 (Bloomberg est: 51.0, Mar: 50.8) – the fifth straight month of expansion and the highest since Dec 2020."

"The CFLP non-manufacturing PMI contracted at a sharper than expected pace by 0.7pt to 49.4 in Apr (Bloomberg est: 49.8, Mar: 50.1), led by weaker new orders and new export orders while business expectations improved from Mar. Both the services index (49.6 from 50.2 in Mar) and the construction index (48.0 from 49.3 in Mar) slipped. The contraction in the selling price index deepened (48.1 from 49.9 in Mar) in signs of relatively soft demand."

"Overall, China’s industrial sector presented a positive outlook with earlier data showing industrial profits rising 15.5% y/y in 1Q26 (Mar: 15.8%, Jan-Feb: 15.2%), supported by recovering producer prices. However, this was uneven, reflecting improvements in industries such as non-ferrous metals (copper, aluminum, nickel), chemicals and telecoms but profits continued to fall in industries including pharmaceuticals, motor vehicles and general-purpose equipment manufacturing in Mar."

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

Standard Chartered Bank analysts Pietro Righi and Christopher Graham warn that renewed political turmoil in Romania could undermine fiscal consolidation and delay key reforms. The withdrawal of Social Democratic Party (PSD) from the coalition and a no-confidence vote backed by PSD and Alliance for the Union of Romanians (AUR) threaten European Union (EU) funding.

Political crisis threatens fiscal consolidation

"Romania again faces political turmoil that may threaten its ability to enact much-needed fiscal reforms."

"The left-wing Social Democratic Party (PSD) has withdrawn its support for Bolojan’s government by temporarily joining forces with the ultranationalist opposition Alliance for the Union of Romanians (AUR) to put forward a no-confidence vote."

"This move opens the door to a prolonged period of political uncertainty, and could jeopardise the executive branch’s ability to push through the reforms needed to unlock vital EU funding that expires later this year."

"The risk of political paralysis and a strengthening of Eurosceptic forces would be cause for concern for EU cohesion and foreign policy."

"Any signs of fiscal slippage or blocked reforms could lead to delays (or threatened delays) in the release of EU funds, which have been crucial to Romania’s economic development in recent years."

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

OCBC strategists Sim Moh Siong and Christopher Wong highlight that most Asian FX traded softer as Brent’s rise toward USD120/bbl, inflation risks and hawkish Fed repricing weighed on sentiment. The impact has been uneven, with South Korean Won (KRW) and Oil-sensitive Philippine Peso (PHP) and Thai Baht (THB) under more pressure, while Renminbi (RMB) has been relatively resilient. Prolonged US-Iran tensions and higher Oil could further dampen Asian FX momentum.

Uneven pressure tied to Oil and geopolitics

"Most Asian FX traded softer overnight as rise in brent to near USD120/bbl spooked sentiments. Inflation risks, hawkish repricing in Fed and fears of demand destruction are some of the factors that weighed on Asian FX. That said, the hit was uneven."

"High-beta/ growth proxy, KRW came under renewed pressure while oil sensitive PHP, THB continued to trade lower. In contrast, RMB was more resilient in relative terms (even as it traded softer vs USD)."

"The focus remains on oil prices/ supply. And we reiterate the longer the standoff between US and Iran, the tighter the oil market, and oil prices will have to be repriced higher. Ultimately this can weigh on Asian FX momentum."

"Recent geopolitical development saw Trump preparing to extend naval blockade on Hormuz strait until a nuclear deal is reached while CNN earlier reported that Iran will submit revised plan soon."

"As much as tensions are heightened now, geopolitical developments remain fluid. Any signs of de-escalation, alongside oil prices easing should see depreciation pressure on Asian FX ease."

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

Commerzbank analysts describe India’s growth backdrop as solid, with GDP expected around 6.5% in fiscal 2026–2027, supported by domestic demand, GST 2.0 reforms, and investment-friendly budgets. However, they stress downside risks from higher Oil prices, El Niño-related agricultural weakness, and external headwinds, even as fiscal consolidation and diversified energy imports help mitigate vulnerabilities.

Domestic demand offsets external headwinds

"Domestic demand is expected to be the primary driver, aided by firmer private consumption from higher wages and the GST2.0 reform."

"Furthermore, public and private domestic investments should continue to benefit from the supportive 2026-2027 Union Budget and the cumulative effects of the prior monetary easing."

"It [Government] is targeting a slightly lower budget deficit of 4.4% of GDP for the current fiscal year 2026-2027 vs 4.5% for the previous fiscal year."

"Earlier this year, the government projected a current account deficit of 1% of GDP for FY2025-2026"

"but this could climb to 2% given higher oil prices. India imports around 87% of its crude oil consumption and 46% of this comes from the Middle East, compared to over 60% before 2022."

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

• EUR/USD rises as the US Dollar weakens amid possible Japanese FX intervention.
• Technically, EUR/USD holds above the 200-day SMA on the daily chart, keeping a mild bullish bias.
• The pair struggles below the 50% Fibonacci retracement at 1.1747.

The Euro (EUR) edges higher against the US Dollar (USD) on Thursday as the Greenback softens broadly following possible intervention from Tokyo, with authorities seen selling Dollars to support the Japanese Yen (JPY), while the Euro also draws some support from the latest monetary policy decision by the European Central Bank (ECB).

At the time of writing, EUR/USD is trading around 1.1726, up nearly 0.42%. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.16, down about 0.80% on the day.

The European Central Bank left all three key interest rates unchanged, in line with expectations. The bank said the Middle East conflict is pushing energy prices higher, lifting inflation while weighing on growth. Policymakers reiterated that they will closely monitor incoming data and maintain a data-dependent approach, while remaining committed to ensuring inflation stabilizes at the 2% target in the medium term.

Earlier in the day, preliminary data showed that the Harmonized Index of Consumer Prices (HICP) rose 3% YoY in April, accelerating from 2.6% in March and marking the highest level since September 2023, largely driven by energy prices.

ECB President Christine Lagarde said a rate hike was discussed extensively and the decision to hold was unanimous. Markets are pricing in two to three rate hikes this year, though traders remain cautious about whether the central bank can hike aggressively given the Eurozone’s exposure to energy shocks.

Technical Analysis:

In the daily chart, EUR/USD holds above the 200-day Simple Moving Average (SMA) at 1.1676, keeping a mild bullish bias while it consolidates just under the 50.0% Fibonacci retracement at 1.1747 of the move from the January high to the March low. The Relative Strength Index (14) at 54.4 leans slightly positive without signalling overbought conditions, whereas the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, hinting that upside momentum is losing some traction as the broader trend strength, reflected by an Average Directional Index (ADX) near 22.2, remains modest.

On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at 1.1747; a sustained break higher would open the door toward the 38.2% retracement at 1.1826, followed by the 23.6% level at 1.1924. On the downside, initial support is seen at the 200-day SMA at 1.1676, closely backed by the 61.8% Fibonacci level at 1.1667, while deeper losses would expose the 78.6% retracement at 1.1555 ahead of the 100.0% Fibonacci anchor near 1.1411.

(The technical analysis of this story was written with the help of an AI tool.)

(This story was corrected on April 30 at 18:33 GMT to say, in the first paragraph, that the EUR edges higher against the USD on Thursday, not Tuesday.)

• GBP/USD clears trendline resistance, shifting bias toward bullish continuation.
• RSI above 60 confirms strong upside momentum and buyer control.
• Break above 1.3600 exposes 1.3711 and 1.3800 resistance levels.

The GBP/USD pair advances by some 0.78% on Thursday as market participants continue to price in further tightening by the Bank of England (BoE), even though it kept rates steady earlier in the day. At the time of writing, the pair trades at 1.3581 as a technical ‘bullish engulfing’ chart pattern looms.

GBP/USD Price Forecast: Technical outlook

From a technical perspective, GBP/USD is neutral but tilted to the upside as the pair clears a key resistance trendline around 1.3560/65, clearing the way towards 1.3600. Momentum, as depicted by the Relative Strength Index (RSI), jumped sharply past the 60 reading, an indication that bulls are in charge.

If GBP/USD clears the 1.3600 handle and confirms a ‘bullish engulfing’ chart pattern, it opens the door for challenging the February 11 daily high at 1.3711. Once breached, the next area of interest would be the psychological 1.3800 figure.

Conversely, a sudden reversal near the April 29 daily high of 1.3528 opens the door for a drop to 1.3500. A decisive break will expose the confluence of the 100- and 20-day SMAs at 1.3468/67, followed by the April 23 low of 1.3448.

GBP/USD Price Chart – Daily

Standard Chartered strategists discuss how United Kingdom (UK) local elections on 7 May could intensify political pressure on Prime Minister Starmer and potentially trigger a Labour leadership challenge. They note that Labour may suffer heavy council losses and that Starmer could respond with a cabinet reshuffle and closer European Union (EU) ties. Any successor’s fiscal stance would be scrutinized via Gilt yields.

Local elections, Labour risks and Gilts

"Local elections on 7 May covering over 5,000 council seats across England and all seats in the Scottish and Welsh parliaments will prove a key test for Prime Minister Starmer’s government."

"While Labour currently holds around half of all council seats up for election, the party’s declining poll rating means it could face unprecedented losses."

"There could be increased pressure from the cabinet for Starmer to resign and there is a growing risk of a leadership challenge."

"He will likely attempt a political and policy reset following the elections, with a cabinet reshuffle and a reorientation of policy towards closer ties with the EU and boosting growth."

"However, all potential candidates would be aware of the need to offer a fiscally sustainable policy platform, given that Gilt yields would act as a barometer of how financial markets judge each potential successor’s economic credibility."

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

• WTI Oil corrects after three consecutive days of gains while holding above the $100 level.
• Tensions around the Strait of Hormuz continue to fuel global supply concerns.
• US efforts to reopen the maritime route remain limited and uncertain.

West Texas Intermediate (WTI) declines on Thursday, trading around $101.45 at the time of writing, down 3.70% on the day after three consecutive days of gains. Despite this technical pullback, US Crude remains above the psychological $100 level, reflecting a market that is still under strain.

The corrective move comes in a context where geopolitical risks remain elevated. According to the Associated Press, US President Donald Trump is exploring options to end the shutdown of the Strait of Hormuz, a strategic chokepoint for global energy transport. However, the proposed plan does not include lifting the US naval blockade on Iranian ports, focusing instead on coordinating with allies to increase pressure on Iran.

These developments are maintaining a strong risk premium in Oil prices. The Strait of Hormuz is a critical corridor for Middle Eastern Crude exports, and any prolonged disruption continues to raise fears of supply shortages in global markets.

Analysts at Danske Bank note that tensions linked to the Iran conflict continue to support energy prices. The bank highlights that markets remain skeptical about a swift normalization of maritime traffic in the region.

In this environment, elevated energy prices continue to weigh on broader market sentiment, fueling inflationary pressures and influencing dynamics across currency and Equity markets. Even though today’s decline reflects profit-taking, the Oil market balance remains dominated by geopolitical uncertainty and supply disruption risks.

• DJIA jumped roughly 1.5% as a strong Caterpillar print lifted industrial names.
• US Q1 Gross Domestic Product came in below estimates at 2% annualized, while Core PCE held steady at 3.2% YoY.
• Initial Jobless Claims dropped sharply to 189K, well below the 215K consensus.
• Meta and Microsoft weighed on the Nasdaq and S&P 500 on rising AI capex concerns.

The Dow Jones Industrial Average climbed sharply on Thursday, adding about 730 points, or 1.5%, after rallying from an overnight low below 48,500 to a session high just above 49,600. The S&P 500 added roughly 0.5%, while the tech-heavy Nasdaq Composite eked out a 0.2% gain as mega-cap tech weakness capped broader index performance. The split tape underscored a clear divide between old-economy industrials and AI-exposed technology names.

Caterpillar lifts the blue chips

Caterpillar (CAT) shares jumped about 10% after the heavy machinery maker delivered a stronger-than-expected quarterly print and raised its annual revenue outlook. The industrial bellwether's results offered a measure of reassurance about global demand and were the single largest contributor to the Dow's outsized gain. Several other industrial names tracked higher in sympathy, helping the index outpace its peers by a wide margin.

Mega-cap tech weighs on the Nasdaq

Meta (META) tumbled roughly 9% as the company lifted its capital expenditure guidance and posted softer user growth, fanning concerns that AI spending is running ahead of monetization. Microsoft (MSFT) shed about 5% after flagging that capex would reach $190 billion this year, partly driven by elevated memory costs. The two names alone shaved meaningful points off both the Nasdaq and S&P 500, leaving the broader tech complex on the back foot.

GDP misses while inflation holds firm

Q1 Gross Domestic Product (GDP) printed at 2% annualized in the 12:30 GMT release, below the 2.3% consensus though up from 0.5% in Q4 2025. Personal Consumption Expenditures (PCE) Price Index data for March came in line with expectations, with headline PCE at 3.5% YoY and Core PCE at 3.2% YoY, both slightly hotter than the prior month. Initial Jobless Claims surprised to the downside at 189K, well below the 215K consensus and pointing to a still-resilient labor market. The Employment Cost Index (ECI) ticked up to 0.9% in Q1, while Chicago Purchasing Managers Index (PMI) slipped to 49.2 in April, dropping back into contraction.

Oil reverses lower on profit-taking

West Texas Intermediate (WTI) Oil futures fell about 2% to trade above $104 a barrel, while Brent crude shed roughly 3% to trade above $114. The pullback followed a sharp Wednesday rally driven by reports that the White House had instructed officials to prepare for an extended blockade of Iran. Energy traders remain on alert for further escalation in the Strait of Hormuz, though Thursday's session leaned toward profit-taking after the prior day's surge.

Fed aftermath colours rate-cut bets

Markets continued to digest Wednesday's Federal Reserve (Fed) decision to hold rates steady at 3.5% to 3.75%, with the 8-4 vote marking the largest dissent since 1992. With incoming Chair Kevin Warsh in the dovish minority, traders are recalibrating expectations for further cuts later this year.

Dow Jones 5-minute chart

• USD/CAD falls as the US Dollar weakens amid possible Japanese FX intervention.
• US GDP rose 2% QoQ annualized in Q1, according to a preliminary estimate, while Canada’s GDP grew 0.2% MoM in February.
• US-Iran tensions remain elevated, keeping Oil prices supported amid concerns over prolonged supply disruptions.

USD/CAD trades on the back foot on Thursday as renewed weakness in the US Dollar (USD) supports the Canadian Dollar (CAD), while the latest US economic data fails to provide support to the Greenback. At the time of writing, the pair is trading around 1.3612, down nearly 0.53% on the day.

The US Dollar is under pressure amid possible FX intervention by Japanese authorities to curb sustained weakness in the Japanese Yen (JPY). Reuters, citing Nikkei, which quoted a government source, said Japan may have intervened by buying the Yen and selling the US Dollar. However, there has been no official confirmation so far.

The move follows a sharp drop in USD/JPY, which fell more than 2% after testing the 160 level, a threshold where Japan has acted in the past. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.16, down about 0.80% on the day.

On the data front, the US economy expanded at an annualized rate of 2% in the first quarter of 2026, rebounding from 0.5% in the previous quarter but falling short of market expectations of 2.3%, according to a preliminary estimate.

Inflation data showed mixed signals, with the Personal Consumption Expenditure (PCE) price index rising 0.7% MoM in March, accelerating from 0.4% in February and marking the strongest gain since June 2022. Meanwhile, the core PCE index, the Federal Reserve’s (Fed) preferred inflation gauge, increased by 0.3% MoM, easing slightly from 0.4% in February and coming in line with forecasts.

In Canada, Gross Domestic Product (GDP) rose 0.2% MoM in February, matching market expectations and improving from January’s 0.1%. According to the National Bank of Canada’s report, the growth was supported by a rebound in manufacturing output, while overall activity suggests the economy is holding up, with first-quarter GDP tracking around a 1.7% annualized pace despite ongoing headwinds, including US tariffs, uncertainty surrounding the renewal of the CUSMA trade agreement, and geopolitical tensions in the Middle East.

On the geopolitical front, tensions between the United States and Iran remain elevated, with no clear signs of a resolution. US President Donald Trump said the United States will continue its naval blockade of Iran until a nuclear deal is reached with Tehran. He is also reportedly considering a plan to reopen the Strait of Hormuz in coordination with allies to safeguard energy flows while maintaining pressure on Iranian ports.

Looking ahead, traders will closely monitor developments in US-Iran tensions, particularly any progress toward reopening the Strait of Hormuz. The situation continues to keep Oil prices elevated, providing underlying support to the commodity-linked Canadian Dollar.