Forex News

BNY’s Bob Savage underscores renewed stress in parts of EM Asia, with Indonesia’s Rupiah weakening beyond 18,000 and Korean Won pressured despite a strong current account surplus. Indonesian officials push back against “Sell Indonesia” narratives, while Bank of Korea data show robust goods exports and outbound equity flows, even as KOSPI underperforms and USD strength hits EM FX.

Rupiah and Won face headwinds

"Indonesia’s Finance Minister Purbaya Yudhi Sadewa pushed back against growing market pessimism and reports of a “Sell Indonesia” trade, arguing that capital inflows into government bonds and central bank securities show investors remain confident in the economy."

"Speaking at a budget briefing, he said debt markets continued to attract foreign funds during Q2 through early June, while equity outflows had not been large enough to erase net positive flows overall."

"His comments came as Indonesian assets remained under pressure, with the rupiah weakening beyond 18,000 per dollar, and the benchmark stock index ranking among the world’s worst performers this year."

"Bank of Korea data show that South Korea’s April 2026 balance of payments remained in strong surplus."

"The current account posted a $28.29bn surplus (vs. $37.93bn in March 2026 or $4.51bn in April 2025), supported by a goods surplus of $33.88bn as exports rose 54.5% y/y to $90.59bn and imports increased 16.1% y/y to $56.70bn."

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

• GBP/USD weakens to 1.3376, poised to end the week in the red.
• US Nonfarm Payrolls double forecasts, reinforcing full-employment Fed narrative.
• The US Dollar jumps as markets price December Fed hike odds.
• UK leadership risks threaten Sterling despite BoE tightening bets.

The Pound Sterling (GBP) falls below the 1.3400 figure on Friday, registering losses of 0.37% against the US Dollar (USD) after the latest Nonfarm Payrolls report in the US crushed estimates, backing the narrative that the economy may be close to full employment. Meanwhile, Iran backed Hezbollah’s decision about the ceasefire proposal by the US regarding Israel and Lebanon, which could stall negotiations between Tehran and Washington.

US Dollar underpinned by stellar NFP

US Nonfarm Payrolls for May crushed estimates, rising by 172K, doubling and a tick more than the expected 85K increase, which has reinforced the thesis that the Federal Reserve’s (Fed) focus should be on tackling inflation, due to the solidity of the labor market. Further data showed that the Unemployment Rate remained at 4.3%, providing strong justification for Fed officials to raise interest rates.

Consequently, the Greenback rose on prospects of higher US interest rates. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.38% at 99.80, after bouncing off daily lows near 99.15.

Investors expect a Fed rate hike by the end of 2026

Beth Hammack of the Cleveland Fed was utterly hawkish, saying that it is “reasonable to keep rates steady for now, but if recent trades continue, it may soon be appropriate to act against high inflation.”

Money markets have priced in a 67% chance of a Federal Reserve rate hike at the December meeting, according to Prime Terminal data. For June, traders expect the US central bank to keep rates unchanged.

GBP/USD capped by UK politics

In the UK, the docket was absent, yet Cable has been supported by speculation that the Bank of England (BoE) will raise rates sooner than the Fed, with the swaps market implying 45 basis points of tightening towards the end of the year. Nevertheless, political turmoil could weigh on Sterling after Labour mayor Andy Burnham hinted that he would challenge Prime Minister Keir Starmer's leadership, saying that if he wins the election this month, he would like to see Starmer removed.

Recently, newswires reported that Burnham is considering retaining Chancellor Rachel Reeves if he becomes PM, citing iPaper sources.

What’s in the schedule for next week

The US docket will feature inflation data on the consumer and producer sides, as well as jobless claims. In the UK, the calendar will feature retail sales for May, as well as Gross Domestic Product (GDP) and Industrial Production data.

GBP/USD Technical Levels

In the daily chart, GBP/USD trades at 1.3375, keeping a bearish near-term tone as spot holds under a dense cluster of the 50-, 100- and 200-day Simple Moving Averages (SMAs) around 1.3454. Price is oscillating near a prior confluence of downtrend resistance and uptrend support, suggesting an ongoing battle around a pivotal area, while the Relative Strength Index (14) at about 42 leans slightly to the downside without entering oversold territory.

On the topside, initial resistance is defined by that grouped SMA band near 1.3454, and a daily close above it would be needed to ease the current downside pressure and open the way to a more constructive recovery. On the downside, the lack of clearly defined sub-market structural levels on this dataset leaves the pair vulnerable to further slippage should sellers extend control from current levels, with the broader technical picture favoring sellers as long as GBP/USD remains capped beneath the multi-period SMA cluster.

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

Societe Generale analysts Kunal Kundu and Galvin Chia note that the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) kept the repo rate at 5.25% with a neutral stance, while cutting FY27 Gross Domestic Product (GDP) growth to 6.6% and raising FY27 Consumer Price Index (CPI) inflation to 5.1%. They stress that the macro backdrop has worsened due to external shocks, but policy rates are not yet being used as the primary defence.

RBI holds rates as risks rise

"The RBI MPC unanimously voted to keep the repo rate unchanged at 5.25% and retained the neutral stance, even as it cut FY27 GDP growth to 6.6% from 6.9% and raised FY27 CPI inflation to 5.1% from 4.6%."

"The policy statement highlighted the prolonged West Asia conflict, elevated crude prices, supply-chain disruptions, tighter global financial conditions, and weather/monsoon risks as key threats to both growth and inflation, suggesting that the macro backdrop has worsened materially since April."

"While warning about upside inflation risks and possible second-round effects, the RBI opted to wait for greater clarity before tightening, implying that it is trying to avoid an immediate growth shock while preserving room for action later in FY27."

"Alongside the pause, the RBI and the government unveiled measures to attract foreign capital, support the rupee, and ease external financing pressures, including steps to encourage overseas inflows into government securities, indicating a preference for targeted BoP support."

"The combination of a policy pause, a neutral stance, downgraded growth, higher inflation projections, and capital-inflow measures suggests that the RBI is preserving optionality, protecting near-term growth, and tolerating somewhat higher inflation for now, while keeping the door open to tightening later in FY27 if inflation proves more persistent."

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

• Gold drops below $4,400 after stronger-than-expected US employment data.
• Elevated Oil prices and Middle East tensions continue to shape the outlook for bullion.
• Technically, XAU/USD remains bearish, with the RSI below 50 and the MACD in negative territory.

Gold (XAU/USD) edges lower on Friday after the US Nonfarm Payrolls (NFP) report beat expectations, boosting the US Dollar (USD) and reinforcing expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. At the time of writing, XAU/USD is trading around $4,370, its lowest since March.

The US economy added 172K jobs in May, well above expectations of 85K. Meanwhile, April's payroll figures were revised higher to 179K from 115K, while the Unemployment Rate held steady at 4.3%.

Following the data, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, climbs to around 99.81 from an intraday low of 99.16, marking its highest level since April 7. US Treasury yields also move higher, with the benchmark 10-year yield rising 8 basis points (bps) to 4.53%.

The stronger-than-expected NFP report supports the case for the Fed to keep rates unchanged – or even hike them – as officials assess the inflationary impact of higher energy prices.

This remains a major headwind for Gold, which tends to perform better in a lower interest-rate environment. According to the CME FedWatch Tool, traders expect the US central bank to keep interest rates in the 3.50%-3.75% range over the coming months, while pricing in a 42% chance of a 25-basis-point (bps) rate hike by the December meeting.

Cleveland Fed President Beth Hammack said on Friday that the latest jobs report "affirms the labor market is roughly in balance." Hammack also said, "It's reasonable to keep rates steady for now, but if recent trends continue, it may soon be appropriate to act against high inflation."

Besides rate expectations, traders continue to monitor developments in the Middle East.

Gold has behaved more like a risk-sensitive asset since the US-Iran war began in late February, falling whenever geopolitical tensions escalate and rebounding whenever hopes of a peace deal gain traction.

Hopes for an imminent US-Iran peace deal appear to be fading after Iran-backed Hezbollah rejected the ceasefire between Israel and Lebanon, with both sides resuming exchanges of fire. Tehran has repeatedly stressed that any agreement with Washington must include a lasting ceasefire in Lebanon.

The metal is still down about 18% from pre-war levels. The drop in Gold has been accompanied by a sharp rise in Oil prices, which has fueled inflation concerns and prompted traders to price out Fed rate cuts this year.

Technical Analysis: XAU/USD breaks below 200-day SMA as bears tighten grip

On the daily chart, XAU/USD extends its bearish phase as spot slips beneath the 200-day Simple Moving Average (SMA) at $4,432 and remains well below the shorter-term 50-day and 100-day SMAs at $4,628 and $4,795, respectively.

The alignment of these major SMAs above price reinforces a downside bias, while the Relative Strength Index (14) near 35 hovers just above oversold territory and the Moving Average Convergence Divergence (MACD) remains in negative territory, both suggesting persistent but stretched bearish momentum.

On the topside, initial resistance is seen at the 200-day SMA around $4,432.A daily close above this area would ease immediate pressure but would still leave the 50-day SMA near $4,628 and the 100-day SMA at $4,795 as subsequent caps.

On the downside, the next notable cushion sits at the horizontal support zone near $4,100, where a break would open the way to deeper losses, while any stabilization above that floor would likely precede a corrective rebound rather than a sustained trend change as long as price trades under the key moving averages.

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

Federal Reserve Bank of Cleveland President Beth Hammack said on Friday that it remains reasonable to keep interest rates steady for now, but she warned that if recent economic trends continue, policymakers may soon need to take action to address persistently high inflation.

Speaking in a post published on LinkedIn following the release of the latest US employment report, Hammack noted that current labor market conditions continue to support the Federal Reserve’s (Fed) wait-and-see approach, while emphasizing that inflation risks remain a key concern.

Her hawkish remarks further boosted demand for the US Dollar, earlier supported by a better-than-anticipated Nonfarm Payrolls (NFP) report.

• Silver falls sharply on Friday after US employment figures come in well above expectations.
• A stronger US Dollar and rising expectations of tighter monetary policy weigh on precious metals.
• Middle East tensions and higher energy prices continue to fuel inflation concerns.

Silver (XAG/USD) falls on Friday and trades around $68.90 at the time of writing, down 6.74% on the day. The white metal is under heavy selling pressure after a stronger-than-expected US employment report boosted the US Dollar and reinforced expectations of a more restrictive Federal Reserve (Fed).

The Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 172K in May, following an upward revision of April’s figure to 179K. Market expectations were for only 85K new jobs. Meanwhile, the Unemployment Rate remained unchanged at 4.3%, while annual wage growth, as measured by Average Hourly Earnings, slowed to 3.4% from 3.6% previously.

This combination of a resilient labor market and moderating wage pressures supports the US Dollar (USD), as investors adjusted their expectations for monetary policy. According to the CME FedWatch tool, markets now see roughly a 32% chance of a 25-basis-point rate hike by the September meeting, up from only 23% a day earlier, while at least one rate hike by December is now the favorite scenario with a chance of 43%.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, advances after the data release and climbs back toward the 99.80 area. A stronger US Dollar typically reduces the appeal of USD-denominated precious metals for international investors.

Meanwhile, traders continue to monitor geopolitical developments in the Middle East. This environment continues to support some hedging demand for precious metals, although the immediate impact of the employment report is currently dominating market sentiment.

Silver’s correction also comes after a period of strong gains that pushed the metal close to multi-year highs. Profit-taking accelerated following the rebound in the US Dollar, amplifying volatility across the market heading into the end of the week.

Rabobank argues that closer EU–UK ties under Prime Minister Starmer will proceed through targeted, technical agreements that only marginally improve the United Kingdom’s growth outlook. The bank estimates Brexit has already cut UK output by about 4%, and says incremental alignment on trade, labor mobility and regulation will not quickly lift living standards or materially change the macro trajectory.

Incremental reset, limited growth payoff

"Ahead of the next EU–UK summit, expected in July, we anticipate progress in four areas: youth mobility, agri‑food, energy, and defense. We discuss these below. As negotiations will proceed in parallel, trade‑offs across these areas will shape the overall outcome. The gains are likely to be incremental rather than transformative, useful as a signal of competence, but not a game‑changer. They are also unlikely to shift the balance in Starmer’s favor on their own, should a leadership challenge take hold."

"This suggests that any gains from closer EU ties will also emerge slowly. Reducing frictions with the EU makes clear economic sense, but it will not deliver rapid improvements in living standards. With the UK maintaining its current red lines and the EU continuing to link access to concessions, progress is likely to remain incremental and technical, limiting its political impact ahead of the next (leadership) election."

"As we explained last year, we prefer to look at a benchmark which places greater weight on geographically and economically comparable Northern European economies. It may give you slightly lower explanatory power in a world that pre-dates Brexit (and all the subsequent crises), but does intuitively make much more sense. Using this approach, and updating our analysis through to 2025Q4, the UK’s post-Brexit underperformance appears less severe than in many other synthetic control estimates, but is still meaningful. Taking 2016Q2 as the starting point, we estimate a cumulative shortfall of around 4.2%. This is broadly unchanged from a year ago, but still equates to roughly GBP 1,750 per person per year, a gap that would have eased current cost‑of‑living pressures."

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

Nomura analysts expects the European Central Bank's (ECB) June macroeconomic projections to incorporate higher market rate assumptions and exclude May Harmonised Indices of Consumer Prices (HICP) data. They foresee HICP and core HICP forecasts revised between previous baseline and adverse paths, with 2026 and 2027 GDP growth nudged lower on weaker Q1 data and mechanical effects, while inflation is still seen around target in Q4 2028.

Inflation near target but softer growth

"At its June meeting, the ECB will update its macroeconomic projections."

"We expect the cutoff date for the technical assumptions (i.e., for natural gas and crude oil prices, as well as market pricing for rates and the exchange rate) to be 19-20 May."

"We expect the finalisation of the real economy projections to take place on 26-27 May."

"This means the ECB’s new forecasts will assume 65bp of hikes by December 2026, rather than the 43bp previously assumed, and May HICP inflation data will not feed into the ECB’s projections."

"We expect HICP inflation and core HICP inflation forecasts to be revised to a level between that of the ECB’s baseline and adverse scenario forecasts from March."

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

Commerzbank’s Norman Liebke and Carsten Fritsch highlight that Brent and European gas have risen on renewed US–Iran tensions, but price reactions are more muted as inventories and rerouted flows ease tightness. Upcoming EIA, OPEC and IEA reports, plus Chinese trade data, will guide the oil outlook, with weaker Chinese crude imports seen as a potential drag on prices.

Tight stocks versus softening demand signals

"As hopes for an agreement between the US and Iran were dashed once again, the price of Brent crude and European natural gas rose slightly this week. However, it was notable that the price of Brent crude reacted much more modest than it did to similar developments a few weeks ago. This can likely be explained by the fact that oil inventories are lasting longer than expected, even though inventories of some oil products have already fallen significantly."

"Furthermore, the gap between supply and demand resulting from the closure of the Strait of Hormuz has been closed not only by drawing down inventories, but also, to a considerable extent, by rerouting oil exports, lower demand, and the release of oil reserves."

"In the oil market, Chinese foreign trade data — and in particular imports of crude oil and exports of petroleum products — are also likely to draw attention. These have recently fallen significantly, which, according to Kpler, is one of the main reasons why the price differentials between crude oil grades and petroleum products have narrowed considerably recently."

"Next week, the US Energy Information Administration (EIA) will release its monthly report, publishing forecasts for both oil supply and demand through the end of 2027 in its Short-Term Energy Outlook (STEO). Most recently, it reported a decline in daily global oil production of approximately 10.5 million barrels per day for March and April."

"At the same time, it is questionable whether the EIA will raise its forecasts for US crude oil production, even though drilling activity in the US has increased noticeably in recent weeks due to higher oil price level. The STEO report also discusses US LNG export capacity."

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