Forex News
United Overseas Bank’s Quek Ser Leang and Lee Sue Ann note USD/SGD has stalled after a six-day advance, with the pair easing to 1.2950 before closing near 1.2970. In the near term, they expect range trading between 1.2950 and 1.2980, while warning that a break below 1.2925 would signal the recent 1.2991 high may cap current Dollar strength against the Singapore Dollar.
USD/SGD upside momentum cools
"24-HOUR VIEW: Two days ago, USD rose more than we expected to 1.2991 and then eased. Yesterday, when USD was at 1.2975, we highlighted that USD “appears to be unwinding from overbought conditions, and any decline is likely to be contained within a 1.2955/1.2990 range.” USD subsequently eased to 1.2950 before recovering to close largely unchanged at 1.2970 (-0.08%). The recovery lacks momentum, and the current price movements are likely part of a range-trading phase. Today, we expect USD to trade between 1.2950 and 1.2980."
"1-3 WEEKS VIEW: We have held a positive USD since last week. We reiterated our view two days (24 Jun, spot at 1.2965), highlighting that USD “remains positive, and the next technical target is 1.3000.” After rising for six straight days, USD closed slightly lower yesterday at 1.2970 (-0.08%). Upward momentum has eased somewhat, and USD needs to build on its gain soon, or a breach of 1.2925 (no change in ‘strong support’ level) would indicate that the 1.2991 high seen two days ago is the extent of the current USD strength."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/JPY is parked near generational highs, back in the territory that has historically triggered Japanese intervention.
- June's BoJ hike narrowed the rate gap on paper but failed to lift the Yen.
- Next week's Tankan and US payrolls set up the next test of Tokyo's resolve.
USD/JPY ended the week pressing the 162.00 handle, a whisker beneath its multi-decade high, and the more revealing detail is what it took to drag the Yen up there: a Bank of Japan (BoJ) rate hike that was billed as the turning point. The June move to 1.00% was the policy Yen bulls had demanded for two years, and the currency enjoyed it for barely a session before sliding back toward the zone that keeps Japan's Ministry of Finance (MoF) on intervention watch.
The hike the carry trade swallowed whole
The arithmetic is what makes the move so deflating for the Yen. Even after the hike, the BoJ sits at 1.00% against a Federal Reserve (Fed) policy rate of 3.75%, and the June Federal Open Market Committee (FOMC) meeting did Tokyo no favours: the easing bias was scrapped and the updated projections pencilled a 2026 median near 3.80%, hawkish enough to keep the carry trade comfortably in profit.
A 275 basis point gap still pays handsomely to be short the Yen, and one 25 basis point move does not close it. The genuinely awkward part for the BoJ is the timing: it tightened on June 16, one day before a Fed that hardened its own guidance, leaving the differential that actually drives the pair barely changed. The long-awaited hike arrived and was overwhelmed inside two sessions.
Running out of windows, not reserves
With the rate gap refusing to close on its own, the Ministry of Finance is left holding the only circuit breaker that works, and even that is rationed. International Monetary Fund (IMF) convention treats a free-floating currency as one intervened in no more than three times over six months, each round capped at three business days, and Tokyo burned through most of that allowance defending the pair earlier this spring. That leaves only a window or two before November.
Reserves are not the constraint; Japan holds well over $1 trillion and could, in theory, keep firing for a long while. The classification is the constraint, and it explains Tokyo's conspicuous silence during the climb back above 160.00. The defended line crept from there to 157.00 as each level gave way; the pair now sits above all of them, and officials have husbanded their last rounds rather than spend them into a grind the market keeps buying.
Next week hands Tokyo the trigger
The calendar does the rest of the talking next week, and it is front-loaded with the Yen's own data before the US takes over. Japan's Tankan survey of large manufacturers lands late Tuesday (23:50 GMT), with the headline reading seen slipping to 16 from 17, a soft print that would underline how little room the BoJ has to keep tightening and how wide the gap is likely to stay.
From midweek the US dominates, with private payrolls and a factory gauge on Wednesday and a scheduled appearance by the Fed Chair. The marquee release is Nonfarm Payrolls, pulled forward to Thursday (12:30 GMT) ahead of the US Independence Day holiday, with consensus near 114K against 172K previously and the wage figures the rate market watches even more closely. A firm read reinforces the Fed's hawkish hold, lifts the Dollar, and pushes USD/JPY deeper into intervention range, daring Tokyo to spend one of its last windows; a soft read is the only organic relief the Yen has left.
Levels to watch
Upside: Bulls are pressing the 162.00 handle, with the multi-decade peak sitting just beneath it; a clean break opens 162.50 and then 163.00, though every step higher shortens the odds that verbal warnings turn into actual Yen-buying.
Downside: Initial support sits around 160.00, a psychological line reinforced by the 50-day Exponential Moving Average (EMA) sitting close by, with 158.50 beneath it and the 200-day EMA near 156.50 marking the deeper retracement; only an intervention shock or a soft US payrolls print is likely to reach those levels.
Bias: Higher with an asymmetric tail, favouring trend-following longs on dips toward 160.00 while the pair holds above the 50-day EMA, with the Stochastic Relative Strength Index (Stoch RSI) near 76 confirming momentum is firm without yet being stretched. The qualifier is position size rather than direction, because a single intervention round can flush 300 to 500 pips out of the pair in minutes from up here, so conviction above 162.00 belongs in smaller size, not a change of view.
USD/JPY daily chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Geoff Yu at BNY notes that Taiwan’s strong equity performance in 2026 has coincided with net institutional outflows, mainly from U.S. pensions and hedge funds, while APAC and EMEA investors provide support. TWD FX activity remains subdued and tied to rebalancing rather than directional demand, with Taiwan’s currency still screening as fundamentally undervalued.
TAIEX strength, muted TWD flows
"Taiwan looks different, with TWD activity tied more to periodic rebalancing than to outright directional equity demand. Both currencies still screen as fundamentally undervalued, which helps explain why investor interest has held up even without meaningful FX appreciation."
"Taiwan: Taiwanese equities saw $1.73bn of net institutional outflows year to date. Again, the Americas were the main sellers, with $4.33bn of net sales. U.S. pension funds and hedge funds led the move, making up almost 75% of total selling from the region."
"Taiwan looked more like rotation than exit. The market also saw heavy semiconductor selling (-$5.59bn), but that was offset by buying in Technology Hardware (+$3.74bn), Capital Goods (+$232mn) and Banks (+$132mn). The message: investors were not exiting Taiwan wholesale."
"By investor type in Taiwan: The mix was different. Pension funds (-$3.12bn) and hedge funds (-$1.78bn) were the main sellers, while government and agency accounts bought $906mn. Taiwan selling was less mutual-fund driven and more concentrated in pensions and hedge funds than South Korea."
"Taiwan remains much quieter. TWD activity is still subdued. Spot volumes, which track equity purchases more directly, are below the rolling one-year average."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
DBS Group Research forecasts Vietnam’s real GDP to grow 7.8% year-on-year in Q2 2026, matching Q1’s pace, supported by strong electronics manufacturing, AI-driven tech demand, FDI and resilient retail spending. Headline inflation is expected to moderate to 5.0% in June as transport costs ease with lower energy prices, allowing the central bank to keep its refinancing rate steady to support growth.
Robust growth with moderating CPI
"We expect Vietnam’s real GDP to expand by 7.8% yoy in 2Q26, remaining firm compared with 7.8% yoy in 1Q26."
"Growth momentum remained robust in 2Q26, underpinned by strong electronics manufacturing activity and shipments, which benefitted from the global technology upcycle driven by artificial intelligence tailwinds, supportive foreign direct investments, and resilient retail spending, despite challenges from the Middle East conflict and high base effects."
"We anticipate headline inflation to ease to 5.0% yoy in June 2026 from 5.6% yoy in May."
"This moderation primarily reflected receding transport inflation due to the unwinding of global and domestic energy price pressures, amid a de-escalation of Middle East tensions following a US-Iran interim peace deal, while other components such as food and housing remained sticky."
"The central bank’s refinancing rate remained steady in 2Q26, and policymakers have room to maintain this path to support high growth objectives, given easing energy prices and a stable currency, notwithstanding hawkish US Fed expectations."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Canadian Dollar trims intraday gains as geopolitical risks and Fed rate-hike expectations support the US Dollar.
- USD/CAD trades near April 2025 levels and remains set for a fourth consecutive weekly advance.
- Lower Oil prices cap gains in the commodity-linked Canadian Dollar as WTI falls to its lowest level since early March.
The Canadian Dollar (CAD) trims part of its intraday gains on Friday as uncertainty surrounding a final US-Iran peace agreement and expectations of a hawkish Federal Reserve (Fed) help the US Dollar (USD) recover some of its losses after coming under pressure from Thursday's broadly in-line US Personal Consumption Expenditures (PCE) report.
At the time of writing, USD/CAD trades around 1.1491, near levels last seen in April 2025. The pair remains on track for a fourth straight weekly advance.
US President Donald Trump said on Truth Social that Iran had launched "at least four one-way attack drones" at ships transiting the Strait of Hormuz, calling the incident "a foolish violation of our ceasefire agreement."
The United States and Iran reached a 60-day Memorandum of Understanding (MoU) earlier this month, but the latest round of talks showed that differences remain over inspections of Iran's nuclear program and the future management of the Strait of Hormuz.
On the monetary policy front, the latest US PCE data showed that core inflation remained relatively contained, suggesting that the Fed may remain patient on rate hikes. Still, the acceleration in headline inflation supports the view that the Fed could raise interest rates later this year.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.35 after hitting a more than one-year high near 101.80 earlier this week.
Traders are currently pricing in a 60% chance of a September Fed rate hike, down from 70% a week ago, according to the CME FedWatch Tool.
Minneapolis Fed President Neel Kashkari said on Friday, "I have one rate hike penciled in for 2026," adding, "I see rates on hold in 2027." Kashkari also said, "I am concerned about inflation, especially in services."
Meanwhile, lower Oil prices as shipping through the Strait of Hormuz gradually improves are capping gains in the commodity-linked Loonie, given Canada's status as a major crude exporter. West Texas Intermediate (WTI) crude trades around $69.20, its lowest level since early March and down roughly 9.5% this week.
Attention now turns to next week's economic calendar, including Canada's April Gross Domestic Product (GDP) report, the US Nonfarm Payrolls (NFP) report, and speeches from Federal Reserve Chair Kevin Warsh and Bank of Canada Governor Tiff Macklem.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
HSBC strategists warn that the Philippines is flirting with stagflation, as slowing Gross Domestic Product (GDP) growth coincides with the highest inflation in ASEAN. Weak public spending and cautious households are dragging demand, while the labour market softens. They expect growth to stay below potential in 2026–2027 but sees scope for a relatively quick market recovery once the energy shock fades.
Growth slows while inflation accelerates
"Stagflation appears to be emerging in the Philippines. For one, growth continues to sour. In 1Q26, growth came in at 2.8% y-o-y, stumbling to its slowest pace since 2009, excluding the COVID-19 pandemic."
"The culprits of the slowdown remain the same: public capital disbursements continue to fall at a significant rate while the uncertainty around public spending has led to households and businesses pulling back on their expenditures. Savings are up, and investment is down."
"Unfortunately, this slowdown in demand has already spilled over to the labour market. The unemployment rate in the Philippines has risen above 5%. And soon, households and small businesses may need to dip into the savings they have recently accumulated."
"This is because prices continue to rise amid slow growth. Currently at 6.8% y-o-y, headline inflation in the Philippines is the highest in the ASEAN region."
"Once the energy shock normalises, financial markets in the Philippines are likely to recover quickly. This is because the fiscal response has remained prudent, as officials opted for targeted welfare measures."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Commerzbank’s Thailand section notes May exports rose 10.6% year-on-year, below consensus and sharply slower than April’s 23.1%, with agriculture shipments weak but electronics still resilient. The government forecasts exports to grow 8% in 2026 as front-loading fades. In FX, USD/THB fell 0.2% to 33.35 on strong bond and equity inflows, though THB remains one of Asia’s weakest currencies.
Baht supported by portfolio flows
"Exports surprised to the downside, rising 10.6% yoy (Bloomberg consensus: 12.7%) vs 23.1% in April, the weakest in three months. The slowdown was driven by weaker agriculture shipments. It was offset by resilient electronics exports."
"Manufacturing exports remained firm, rising 14.4% yoy vs 27.5% in April, supported by AI-related demand. Electronics exports rose 32.5% vs 64.6% previously, marking an eighteenth consecutive month of double-digit growth."
"Agriculture exports contracted 3.1% yoy vs +17.9% in April, reflecting rising regional competition and tighter import restrictions from Indonesia which was imposed in late April. Fuel exports rose 24.2% vs 12.0% in April on elevated crude prices."
"Imports rose slightly below expectations, increasing 35.1% yoy (Bloomberg consensus: 36.3%) vs 45.0% in April. The May trade deficit narrowed to USD5.7bn (Bloomberg consensus: USD5.5bn) vs USD10bn."
"Thai government bond yields fell across the curve, led by the long end. The 2Y yield fell 1bps to 1.12% and the 10Y yield fell 4bp to 2.03%. The SET index gained 0.7% yesterday. THB remains the third-weakest performing Asian currency this year. Year-to-date, THB is down 5.5% vs the USD compared to the average for Asian currencies ex-Japan of -3.2%."
"In FX, USD/THB fell 0.2% to 33.35 yesterday, the first decline in seven sessions. This was driven by firm portfolio inflows as foreign investors recorded net purchase of USD42.9bn in bonds and USD19.8bn in equities."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Lloyd Chan at MUFG notes the Malaysian Ringgit outperformed, rising 0.4% versus the US Dollar (USD) after Bank Negara Malaysia (BNM) reintroduced a 2024-style FX support measure to encourage repatriation and conversion of offshore earnings. While USD/MYR has retraced from around 4.15, Chan sees gains as less sustainable than in 2024, given expectations of further Fed tightening and ongoing external pressure.
BNM support meets challenging backdrop
"More broadly, the combination of strong US data and delayed Fed easing continues to underpin the dollar through favourable rate differentials. Most Asian currencies still face relatively lower, and in some cases widening, yield differentials versus the US, limiting scope for sustained appreciation. Capital flow dynamics under a high-for-longer US rate environment could be a key factor shaping Asia FX performance."
"Against this backdrop, the Malaysian ringgit stands out yesterday, strengthening by 0.4% against the US dollar. This was likely supported by Bank Negara Malaysia’s reintroduction of a 2024-style FX support measure encouraging the repatriation and conversion of offshore earnings by government-linked corporates."
"USD/MYR has retraced from around 4.15 level, possibly indicating early traction from the policy move. However, the sustainability of gains is likely to be more contained compared to the 2024 episode, given the different macro backdrop."
"Unlike earlier periods when markets were pricing Fed easing, current conditions are characterized by expectations of further rate tightening, which could continue to exert external pressure on the currency. As such, while policy support should help stabilize the ringgit in the near term, the scope for sharp appreciation appears limited."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- DJIA is the only major US index pacing for a weekly gain, holding up while technology shares slumped.
- The advance reflects defensive rotation into healthcare, staples and utilities, not broad risk appetite.
- A hawkish turn in rate expectations and a fraying Iran ceasefire are the downside risks the index is currently ignoring.
The Dow Jones Industrial Average (DJIA) is closing the week as the last major US index standing, having rallied more than 1% to settle just below 52,000, with the record high near 52,300 still in view. That reads as strength until you ask where the buying is coming from. The bid is not conviction; it is a flight out of a brutal technology selloff into anything defensive, and the Dow is simply where the money chose to hide.
A rally made of what investors are running from
The sector breakdown gives the defensive game away: healthcare did the heavy lifting, with the major drug makers up between roughly 2% and 6%, while consumer staples, financials and utilities all closed higher. That is the textbook signature of investors buying safety rather than chasing growth, and the Dow's heavier weighting toward old-economy names is precisely why it outran the rest of the board.
On the other side of the ledger, information technology dropped close to 1% after a report that OpenAI may push its market debut into next year, reviving doubts about how durable the sector's vast infrastructure spending really is. The damage was uglier abroad, where SoftBank, a key backer of that buildout, plunged more than 12% and Asian chip names were routed. Light on megacap semiconductors and stuffed with defensives, the DJIA stepped around the wreckage.
A policymaker swaps the cut for a hike
The irony is that this defensive bid is forming just as the monetary backdrop turns more hostile. A voting member of the Federal Open Market Committee (FOMC) said this week that he had scrapped his earlier call for a rate cut this year and now pencils in a hike instead, blaming inflation that runs broader than energy alone. That is a sharp hawkish turn barely a week after the Federal Reserve (Fed) held its policy rate in the 3.50% to 3.75% range in a unanimous vote, with the updated projections nudging the year-end median higher and quietly shelving the prior easing bias.
The data is starting to back the hawks: the Fed's preferred inflation gauge, the Personal Consumption Expenditures Price Index (PCE), ticked up again in May, while supply-side pressure from energy and the Strait of Hormuz keeps feeding the persistence story. Rate futures have answered by pricing out cuts altogether and handing a roughly one-in-four chance to a hike at the July meeting. The lone offset came from the day's University of Michigan survey, where the expectations gauge beat forecasts and five-year inflation expectations cooled to 3.3%, enough to blunt the hawkish edge and keep stocks bid.
A ceasefire the tape would rather not notice
Layered on top is a geopolitical wildcard the market is treating as background noise. President Trump used a Friday post on Truth Social to accuse Iran of breaking the ceasefire, claiming it fired at least four one-way attack drones at vessels crossing the Strait of Hormuz, with one striking a cargo ship before US forces downed the rest. For a channel that moves close to a fifth of the world's seaborne energy, that is no footnote.
The Dow can shrug it off for the same reason the rotation works: while the threat stays penned into energy and shipping, defensive sectors arguably benefit from the inflation it implies. The danger is the day this stops being a sector rotation and turns into broad de-risking, the kind where even safe-haven equities get sold because cash becomes the only haven left.
Levels to watch
Resistance: The immediate ceiling is the round 52,000 level the index is pressing against, with the record high around 52,300 the line bulls must clear to keep the uptrend intact. A daily close above it opens fresh ground with little overhead to fight.
Support: The first cushion is the 50-period Exponential Moving Average (EMA) near 50,400, which has shadowed the rally off the April low and sits just above the round 50,000 mark. A daily close beneath it puts the rotation thesis in doubt; the deeper line is the 200-period EMA around 48,300, in play only if the defensive bid gives way to genuine selling.
Bias: The lean is higher while the structure holds, but with one hand on the exit. The path of least resistance points to the record around 52,300 while the index holds the 50 EMA around 50,400, and with the Stochastic Relative Strength Index (Stoch RSI) mid-range rather than stretched, there is room for the grind. The call flips on a daily close back below 50,400, a signal that the safe-haven bid has run dry and the technology-led selling has gone broad, opening 50,000 and then the 200-period EMA close to 48,300. Rent this trend on momentum; do not marry it.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
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