|

Asia FX: Oil shock keeps tone cautious – OCBC

OCBC’s Christopher Wong expects Asia ex-Japan (AxJ) currencies to start the week on a selectively cautious footing after renewed US–Iran tensions lifted Brent above US$96. Elevated Oil and US Treasury yields are seen as headwinds for net energy importers, even as softer Dollar follow-through and domestic buffers support differentiation. A light regional data calendar centres on China trade, inflation and credit releases.

Energy risks and light China data calendar

"AXJ FX is likely start the week on a cautious footing following renewed US-Iran escalation over the weekend, including strikes involving oil tankers near key Iranian export routes. Brent ended last week above US$96/bbl and any further disruption to shipping through the Strait of Hormuz could put renewed upward pressure on crude."

"This risks an unfavourable backdrop for much of AXJ given the region’s dependence on energy imports and may restrain the extent of FX appreciation even if the broader USD stays contained."

"We would therefore expect a more cautious and differentiated start to the week, with oil-sensitive AXJs, including PHP, THB potentially lagging while markets continue to assess the extent and duration of the supply disruption."

"Week’s AXJ data calendar is relatively light and centred on China trade, inflation and credit data. China August trade (8 Sep) will be watched for whether export momentum is holding up, while imports should provide a read on whether tech-linked demand remains firm."

"China CPI/PPI (9 Sep) and credit data due between 9–15 Sep will matter more for the domestic-demand story, particularly whether pricing power and credit appetite remain soft."

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

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY declines toward 154.00 on aggressive hawkish BoJ repricing

USD/JPY accelerates its decline and trades at its lowest level since late February below 155.00 on Monday as an aggressively hawkish BoJ repricing continues to drive the Japanese Yen higher. Meanwhile, the US Dollar faces headwinds from US debt worries and uncertainty about the Fed's policy outlook ahead of Friday's US CPI data release.

Gold recovers intraday losses to sub-$4,400 as USD slumps despite Fed rate hike bets

Gold shows some resilience below the $4,400 mark, and recovers intraday losses during the first half of the European session. Any meaningful upside, however, seems limited as traders might opt to wait on the sidelines ahead of the latest US inflation figures, due later this week.

Bittensor: TAO eyes $300 amid launch on Raydium, parody meme coin, ChatGPT-6 Astra release

Bittensor is trading in the green on Monday, continuing a steady upward trend over the last five days, with a 25% gain. Social chatter surrounding Bittensor is increasing amid a similarly named meme coin launched on Solana and the release of ChatGPT-6 Astra. The technical outlook for TAO is bullish as momentum strengthens and buyers target the $300 breakout.

Strong US jobs, Middle East tensions and key inflation data ahead
Good morning all, hope you enjoyed your weekend. Markets are starting the week after Friday’s stronger-than-expected US jobs report, which increased expectations that the Fed could raise rates at its September meeting. However, US markets are closed today for the Labor Day holiday, so liquidity should be lower and we may see slower price action.
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.