Currency Market Analysis

May 12, 2017 | Currency Market Analysis

Global Themes

US dollar eases after week-long winning streak; CPI tonight

The USD was weaker yesterday as it gave back some of its recent gains.

The USDSGD has been strongly higher over the last week with the pair up 1.6% as markets looked ahead to next month’s likely Federal Reserve rate hike.

The USDSGD fell 0.2% in overnight trade.

Mostly higher

In other markets, the British pound was lower after last night's Bank of England meeting.

The BoE kept rates on hold but markets were looking a potential shift in voting preferences from the BoE. However, voting remained at 7-1 in favour of holding rates.

The GBPSGD fell 0.6%.

The New Zealand dollar continued to fall over the last 24 hours as the market continued to react to yesterday's Reserve Bank of New Zealand meeting. RBNZ governor Graeme Wheeler indicated that the central bank needed to further evidence of rising inflation before hiking rates.

The NZDSGD was down 1.5%.

US inflation

Tonight's focus is on US data with inflation and retails sales numbers both due at 8.30pm.

US inflation has recently lost momentum. These numbers will be critical for determining the Fed's future path for interest rates, although a hike next month is an almost certainty.

Retail sales will also be closely watched.

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