Forex

The New Zealand Dollar (NZD) traded near the 0.5790 level against the US Dollar (USD) on Monday, exhibiting limited upward momentum. This struggle for recovery occurred despite modest weakness in the US Dollar, which was influenced by recent weak US durable goods data.

The Monetary Authority of Singapore (MAS) unexpectedly tightened its monetary policy for the second straight meeting, slightly increasing the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) slope. This move, smaller than April's adjustment, signals MAS's concern over inflation and is seen by analysts as reinforcing the SGD's resilience against major currencies like the US Dollar.

The Indonesian Rupiah (IDR) weakened and Jakarta equities underperformed on Monday following the surprise resignation of Bank Indonesia Governor Perry Warjiyo, two years before his term was set to end. The USD/IDR pair hovered around 18,050, as analysts like BBH's Elias Haddad raised concerns about potential political interference impacting market sentiment.

The US Dollar experienced an initial dip on Monday, weakening against the Euro and Canadian Dollar following a temporary de-escalation of US-Iran tensions that boosted risk sentiment. However, the Greenback subsequently pared these losses, supported by persistent geopolitical risks and expectations surrounding Federal Reserve policy, as currencies like EUR/USD reversed their early gains.

Mexico's trade balance experienced a significant uplift in June, with the non-seasonally adjusted surplus rising to $4.09 billion from $2.259 billion. Concurrently, the seasonally adjusted surplus climbed substantially to $3.843 billion from $0.638 billion. These robust figures reflect strong export activity, signalling potential positive momentum for the Mexican economy and its currency.

The US Dollar has recently softened, according to MUFG's Lee Hardman, driven by a reduction in Middle East tensions and Brent Oil prices falling below $90. This decline in energy costs is dampening inflation concerns, subsequently lowering market expectations for a near-term Federal Reserve interest rate hike.

Brown Brothers Harriman (BBH) strategist Elias Haddad anticipates continued support for the US Dollar, driven by a hawkish Federal Reserve stance and a robust US economic backdrop. Conversely, Haddad suggests the Japanese Yen's macro environment favors a recovery against the greenback, even as the Bank of Japan is expected to maintain its policy rate at 1.00% following June's hike.