Forex News

DBS Group Research anticipates Vietnam’s October 2026 exports and retail sales to stay robust, while headline inflation hovers around 5%, above the 4.5% target. Strong electronics shipments, firm household spending and tourism underpin activity, but elevated transport, energy, food and material costs pose a policy challenge as authorities pursue at least 10% economic growth.

Robust demand with elevated inflation

"We expect Vietnam’s October 2026 goods exports and retail sales to remain robust at 42.0% yoy and 14.0% yoy year-to-date, respectively, while headline inflation is likely to stay elevated at around 5.0% yoy."

"Exports have continued to be supported by strong electronics and machinery shipments amid a favourable technology cycle with spillovers from robust artificial intelligence-related demand."

"Retail sales were likely bolstered by firm household spending, supported by favourable labour market conditions, and continued strength in tourism. "

"Headline inflation has remained elevated and above the central bank’s target of 4.5% for the year, driven by price pressures from transport and energy, food, as well as material costs. This poses a challenge for policymakers as they seek to balance inflation risks against ambitions of achieving at least 10% economic growth this year."

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

United Overseas Bank strategists Quek Ser Leang and Lee Sue maintain a negative stance on USD/CNH, noting that the pair has been edging lower and remains under downward pressure. Short-term projections see scope to test nearby support, while the 1–3 week and 1–3 month views both favour continued gradual declines as long as the pair stays below key resistance and cloud boundaries.

Offshore Yuan strength caps Dollar

"24-HOUR VIEW: We expected USD to “edge lower” yesterday, but we pointed out that “slowing downward momentum suggests any decline should stay within a 6.6575/6.6655 range.” USD declined more than expected to 6.6559 before settling at 6.6564 (-0.07%). The downward pressure remains intact, and today, USD could edge lower and test 6.6520. A continued decline below this level is unlikely. Resistance is at 6.6605."

"1-3 WEEKS VIEW: Following our negative USD view from the middle of the month, we highlighted two days ago (28 Oct, spot at 6.6655) that “there is a chance for USD to test 6.6550.” Yesterday, USD declined to a low of 6.6559. While oversold, the decline has not stabilised, and USD could continue to edge lower. The next level to watch is 6.6450. On the upside, a breach of 6.6640 (‘strong resistance’ level previously at 6.6700) would indicate that USD is not declining further."

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

• USD/JPY trades slightly lower as the Yen outperforms most major currencies.
• The BoJ’s hawkish hold and firmer inflation assessment support the Japanese Yen.
• A recovering US Dollar and expectations of further Fed rate hikes limit the USD/JPY’s decline.

USD/JPY holds trades on the back foot heading into the weekend as the Japanese Yen (JPY) outperforms most major currencies following the Bank of Japan’s (BoJ) hawkish hold. However, the pair has recouped some of its earlier losses as the US Dollar (USD) recovers. At the time of writing, USD/JPY trades around 157.43, off an intraday low of 156.96, and remains on track to end the month little changed.

As widely expected, the BoJ kept its policy rate unchanged at 1.25% in an 8-1 vote at its October meeting on Friday. Board member Hajime Takata dissented, favouring a 25-basis-point (bps) increase to 1.50% and arguing that conditions call for a faster move toward the neutral interest rate.

The central bank said it will continue raising interest rates as economic, price and financial conditions evolve. The timing and pace of further increases will depend on whether the economy and prices develop in line with its baseline outlook, as well as the risks surrounding it.

BoJ inflation upgrade keeps Yen rate hike odds firmly in play

Strategists at Brown Brothers Harriman underscore the significance of the Bank of Japan’s latest communication, noting that “for the first time since adopting the 2% target in 2013, the BoJ declared underlying CPI inflation ‘generally consistent’ with its goal.” In their view, that shift “strengthens the case for additional rate hikes to ensure inflation remains anchored there.”

They add that while the BoJ made only “minor growth revisions,” it “raised its inflation forecasts for 2027” and continues to see inflation risks “skewed to the upside,” with the risk to the economic outlook described as “generally balanced.” Despite the more confident inflation stance, BBH points out that “there was no material shift to BoJ rate expectations,” with the swaps curve still pricing in “80% odds of a 25bps BoJ rate hike to 1.50% at the December 18 meeting and nearly 75bps of tightening in the next twelve months.”

On the US side, the Greenback recovers after coming under pressure earlier on Friday as a technology stock sell-off drove demand for government bonds and pushed Treasury yields lower. Investors remain concerned about returns on heavy AI spending following disappointing earnings reports. The US Dollar Index (DXY), which tracks the Greenback against six major currencies, rebounds toward 102.00 after falling to 101.59.

Expectations of additional monetary policy tightening support the US Dollar. Traders price in around a 72% chance of a December rate hike, according to the CME FedWatch Tool. The latest Personal Consumption Expenditures (PCE) data showed US inflation remains above the Fed’s 2% target, while stronger-than-expected third-quarter Gross Domestic Product (GDP) growth gives the central bank more room to raise rates.

St. Louis Fed President Alberto Musalem reinforced that outlook on Friday, saying the US central bank would raise interest rates again soon and that current policy remains accommodative. He added that “gradual rate adjustments” are preferable to sudden moves.

OCBC strategists Sim Moh Siong and Christopher Wong note that USD/SGD has eased with the softer US Dollar (USD) and lower US yields, while Singapore’s import prices show strong energy-driven inflation. They retain a constructive medium-term view on the Singapore Dollar (SGD) but expect any USD/SGD pullback to stay shallow unless broader USD weakness deepens, with key support and resistance levels guiding near-term two-way trading.

Energy-driven inflation and range levels

"USD/SGD eased overnight, tracking the pullback in USD and US Treasury yields despite stronger-than-expected US GDP and still-elevated inflation. The mixed market response suggests that conviction on the next leg higher in USD remains limited, although resilient US activity and persistent price pressures may also continue to restrain USD declines."

"We retain a constructive medium-term SGD outlook, although scope for further trade-weighted outperformance may be limited with the S$NEER already trading in the upper half of the policy band. Near term, USD/SGD remains sensitive to USD, US Treasury yields and RMB developments. Any pullback in USD/SGD may remain relatively shallow in the interim unless we see a more meaningful decline in the broader USD."

"On the domestic front, Singapore’s September import prices rose 19.9% YoY, accelerating from 15.5% in August, largely driven by higher energy costs. Oil import prices surged 78.5% YoY, while non-oil import price inflation moderated slightly to 4.4% from 4.8%."

"The divergence suggests that imported price pressures remain largely energy-driven for now, although sustained increases in oil prices could eventually feed into broader inflation. Imported inflation risks remain a consideration for MAS, which maintained its appreciating S$NEER policy stance in October."

"Daily momentum is not indicating a clear bias while decline in RSI moderated. 2-way trades likely for now."

"Support at 1.2760 (50 DMA), 1.2740 (61.8% fibo retracement of 2026 low to high). Resistance at 1.2820/50 levels (100 DMA, 38.2% fibo)."

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

On Friday, the Dallas Federal Reserve President Lorie Logan said that “at least two more quarter-point rate hikes” are needed. She added that skipping a hike “doesn’t change policy destination,” and that adjusting interest rates “gradually” reduces the risks of a sharp economic deterioration.

Logan added that is “unacceptable” that inflation is getting higher and that after increasing rates 50 basis points, “a pause would make sense” to determine the path going forward.

Key highlights:

Fed needs at least two more quarter-point rate hikes

Skipping a meeting doesn't change policy destination

Adjusting policy gradually can reduce risks of sharp economic deterioration

Gradual policy adjustment helps households, businesses, investors adapt to higher rates

End goal is to make policy modestly restrictive

Making policy rate destination clear helps economy adapt, obtain benefits of a skip

'Unacceptable' that inflation is not headed back to fed's 2% target

After 50 bps of rate hikes, a pause would make sense to determine what further action is appropriate

Financial conditions are providing a tailwind to the economy

Higher market rates a message that investors believe monetary policy has work to do

Long-term rates have risen, but don't represent much of a drag on economy as might be expected

Economic growth is strong, consumer spending solid

Labor market is balanced, perhaps tightening a bit

Commerzbank’s Charlie Lay reports that the Bank of Thailand kept its policy rate at 1.00%, with the MPC maintaining a hold but signalling a less dovish stance. Authorities highlight financial stability risks from prolonged low rates and see scope for gradual hikes as growth improves, yet expect policy to stay on hold through 2026–2027. USD/THB remains near the top of its recent 32.50–34.00 range.

Policy on hold, gradual hikes only later

"The Bank of Thailand (BoT) left its benchmark one-day repurchase rate at 1.00% as expected. The Monetary Policy Committee (MPC) voted 6-0, with one member absent, marking its fourth consecutive hold since the 25bp cut in February. The policy statement suggests a subtle shift towards a less dovish stance, although an imminent rate hike is unlikely."

"BoT highlighted potential financial stability risks from keeping interest rates low for an extended period, while Assistant Governor Don Nakornthab indicated that rates could be raised gradually as the economy strengthens to rebuild policy space. However, with growth still below potential and inflation largely supply-driven, BoT is likely to remain on hold for the remainder of 2026 and potentially through much of 2027. We would need to see a sustained rise in core inflation or a broad-based economic recovery for a change in BoT’s stance."

"For THB, downside pressures persist due to Fed tightening, higher oil prices, and Thailand's relatively low interest rates. USD/THB was unchanged yesterday at around 33.73. It remains at the upper end of the 32.50-34.00 range seen over the past five months."

"BoT's projection of a USD18bn current-account surplus in 2027 could provide some medium-term support for THB, although the currency is likely to remain sensitive to USD movements and global energy prices in the near term."

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