Forex News

HSBC strategists highlight Singapore’s strong 1Q26 Gross Domestic Product (GDP) growth, driven by robust electronics exports, construction and services, making it one of ASEAN’s fastest-growing economies. Despite the energy shock, inflation remains contained for now. They have upgraded their growth and core inflation forecasts and expect the Monetary Authority of Singapore (MAS) to assess price pressures carefully rather than tighten aggressively.

Fast growth and measured policy stance

"Singapore, a developed market (DM) growing like an emerging market (EM), has demonstrated impressive resilience amid the Middle East conflict. In 1Q26, GDP growth of 6% has placed it as the second-fastest growing economy in ASEAN, just after Vietnam."

"In fact, based on high frequency indicators, the electronics trade remains exceptionally strong. On a three-month moving average basis in April, electronics non-oil domestic exports (NODX) accelerated to over 60% y-o-y, pushing headline NODX close to 15% y-o-y."

"Singapore’s resilience comes from its broad-based growth. For one, the construction sector saw growth of over 11% y-o-y in 1Q, reflecting Singapore’s push for large-scale public infrastructure."

"Overall, given the upside surprise in 1Q26 and the sustained AI cycle, we recently upgraded our growth forecast to 3.3% (from 2.9%) for 2026, putting it at the upper end of the government’s growth forecast range of 2-4%. We forecast 2027 growth of 2.5%."

"Outside of growth, inflation has been well-behaved, despite the energy shock. Core inflation, the Monetary Authority of Singapore (MAS) preferred inflation gauge, grew only 1.4% y-o-y on average in the first four months of 2026."

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

MUFG’s Lee Hardman notes the US Dollar is set for a second straight week of gains but has lost upward momentum as softer US GDP and PCE data, plus dovish comments from New York Fed President Williams, reverse recent hawkish repricing. MUFG expects the Fed to keep rates on hold and the Dollar to weaken later in 2026.

Fed repricing weighs on Dollar

"The US dollar is on track to strengthen for the second consecutive week although it has lost some upward momentum heading into next week. The US dollar’s upward momentum was dampened yesterday by latest US economic data releases and comments from New York Fed President Williams that have triggered a reversal of the recent hawkish repricing of Fed rate hike expectations."

"US yields and US dollar fell after the release of the latest US GDP data for Q1 which revealed that consumer spending slowed more than previously reported by only 0.5% down from 1.4%. The downward revision (-1.3ppts) was mainly driven by services consumption."

"Evidence of slowing inflation in the coming months will be required to prevent the Fed from backing up tough talk with rate hikes."

"He expects inflation to ease back to 3.5% by year-end and then continue to slow on a glide path toward 2.0% reaching the target in 2028."

"Overall, the comments are supportive of our view that the Fed will look through the energy price shock by leaving rates on hold this year, although he has consistently been at the more dovish end of the spectrum. If the Fed does not follow through with rate hikes, we expect the US dollar to re-weaken later this year."

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

Commerzbank’s commodity team, led by Barbara Lambrecht, warns that recent declines in Oil prices may prove temporary as tanker traffic through the Strait of Hormuz is only gradually recovering and US inventories sit well below seasonal norms. The bank argues that expectations for a rapid normalization of Middle East supply are excessive and could reverse if shipping and OPEC output disappoint.

Strait traffic and inventories key

"Commodity prices have fallen sharply across the board this week: in the oil market, this is due to the prospect of supply from the Gulf region normalising. Oil is now barely more expensive than before the start of the Iran war. We fear, however, that market participants are too optimistic."

"The market apparently firmly expects oil shipments from the Middle East to return to normal quickly, although data on tanker traffic through the Strait of Hormuz has not yet reflected this."

"If the number of transits does not increase more strongly next week either, scepticism in the market is likely to grow, so that the oil price is likely to rise again."

"Additional support for prices is coming from the weekly report on US inventories: US stocks – crude oil, gasoline and middle distillates combined – are now 7% lower than usual for this time of year."

"The sharp decline in oil prices has also led to a notable shift in the Brent forward curve. The time spreads, i.e., the price differences between the various contract maturities, have narrowed significantly. At the front end, e.g., between the first two forward contracts (1M/2M), the forward curve is now slightly upward-sloping, i.e., in contango."

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

• Silver steadies after US PCE inflation data eases near-term Fed rate-hike expectations.
• Markets trim September Fed rate-hike bets, but the higher-for-longer policy outlook remains intact.
• Technically, XAG/USD remains under pressure after slipping below $60.00, with prices holding well below the 100-day and 200-day SMAs.

Silver (XAG/USD) steadies on Friday as the US Dollar (USD) and Treasury yields retreat after the latest US Personal Consumption Expenditures (PCE) inflation data showed underlying inflation remained relatively contained.

At the time of writing, XAG/USD trades around $58.12, set to end the month nearly 20% lower after hitting a more than six-month low earlier this week.

Data released on Thursday showed the headline PCE rose 0.4% MoM in May, unchanged from April but below the 0.5% forecast. Core PCE held steady at 0.3%, matching expectations.

The softer monthly inflation readings helped Silver stabilize after the recent sell-off as traders scaled back expectations for a near-term Federal Reserve (Fed) rate hike.

According to the CME FedWatch Tool, markets now price in a 61% probability of a September rate hike, down from 70% a week ago.

However, the white metal lacks strong upside momentum as annual inflation remains well above the Fed's 2% target, reinforcing expectations that monetary policy will remain restrictive for longer. That view was echoed by Chair Kevin Warsh, who stressed the need to restore price stability at this month's policy meeting.

Unless markets meaningfully scale back expectations for Fed rate hikes, Silver's bearish technical outlook is likely to keep upside attempts in check.

Technical Analysis:

In the daily chart, XAG/USD remains in a bearish phase with price holding below the 100-day Simple Moving Average (SMA) at $75.97 and the 200-day SMA at $69.56.

This alignment of major SMAs above the spot suggests the broader trend remains under downside pressure, while the nearby horizontal barrier at $60.00 adds to the overhead supply.

The Relative Strength Index (RSI) sits in oversold territory near 30, hinting that selling is stretched but not yet decisively reversing, and the Average Directional Index (ADX) above 30 reinforces that the prevailing downtrend retains firmness.

On the downside, immediate support is seen at the horizontal level of $55.00, ahead of a deeper structural floor near $50.00, where buyers could attempt to stabilize the decline.

On the topside, initial resistance is located at $60.00, followed by the 200-day SMA at $69.56 and the $70.00 horizontal cap forming a broader supply zone. Further up, the 100-day SMA at $75.97 and the subsequent barriers at $80.00 and $90.00 define progressively stronger resistance layers that XAG/USD would need to reclaim to ease the current bearish bias.

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

OCBC’s FX strategists Sim Moh Siong and Christopher Wong note Gold is tentatively stabilising after a sharp selloff, with prices back above USD4,000 and some dip-buying interest emerging as Dollar and real yield pressures ease. However, they stress the broader setup remains fragile, with rallies likely to fade unless real yields fall, Fed hike expectations unwind and ETF/investor liquidation stabilises, despite nearby support and resistance levels.

Tentative base but fragile structure

"Gold is showing tentative signs of stabilisation after the sharp decline, but a durable rebound still requires a friendlier rates backdrop. The recovery back above the USD4,000 level suggests some dip-buying interest is emerging after the recent washout, helped by some easing in USD and real yield pressure while Fed tightening expectation also pared back slightly."

"But the broader setup remains fragile. The recent episode of selloff has been driven by a renewed recoupling with real yields and hawkish Fed pricing."

"As long as markets continue to price a meaningful risk of Fed tightening, rallies may remain prone to fading. For gold to regain more durable upside traction, real yields need to ease more clearly, Fed hike expectations need to unwind, and ETF/investor liquidation needs to stabilise."

"Until then, the near-term read is stabilisation, not yet a confirmed bullish reversal. Gold last seen at 4028 levels. Daily momentum remains mild bearish while decline in RSI showed some signs of slowing near oversold conditions."

"Support at 3960, 3820 levels (76.4% fibo retracement of Aug low to 2026 high). Resistance at 4100, 4160 (61.8% fibo) and 4280 (21 DMA)."

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

UOB’s Lee Sue Ann notes that Australia’s May labour data show a rebound in headline employment but softer underlying conditions, with rising underemployment and falling hours worked. She argues this mix points to moderating activity and emerging slack, supporting UOB’s base case that the Reserve Bank of Australia keeps the cash rate at 4.35% through at least 2Q27 while staying data-dependent.

Labour softness underpins steady RBA stance

"The latest employment numbers largely reflect a reversal following Apr’s weakness rather than a renewed strengthening in labour demand. While the headline rebound points to ongoing resilience, the underlying mix is consistent with a moderation in activity. This aligns with other recent data showing softer growth momentum, alongside still-elevated but gradually easing inflationary pressures."

"Labour market conditions remain a key input for the RBA, particularly as it navigates the trade-off between returning inflation to target and sustaining employment. The latest data broadly supports the RBA’s expectation of a gradual easing in labour market tightness."

"RBA forecasts continue to point to a gradual rise in unemployment over the medium term as growth slows below potential."

"Earlier this month, the RBA opted to hold the cash rate at 4.35% following three consecutive hikes, citing the need to assess the lagged impact of tightening. The May labour market report does little to challenge that stance."

"In the context of still-elevated but sticky core inflation and slowing growth, this supports our base case that the RBA will remain on hold at 4.35% while adopting a cautious, data-dependent approach. A further rise in unemployment or clearer signs of weakening labour demand in coming months would strengthen the case that policy is sufficiently restrictive and reduce the likelihood of additional tightening."

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