Asia FX: War Powers deadline drives cautious consolidation – DBS

DBS Group Research’s Philip Wee highlights that currency markets are consolidating as the April 28 War Powers Resolution deadline approaches, with USD/CNY flattening after an earlier relief rally. He notes that geopolitical tensions between the US and Iran are complicating central bank decisions, with most policymakers expected to keep rates steady while monitoring stagflation risks.

FX volatility stalls into key deadline

"As the currency markets approach the April 28 deadline, volatility has shifted into a tense wait-and-see consolidation, as reflected by the recent flattening of USD/CNY."

"Markets are increasingly hesitant to commit to directional bets after the relief rally that rode the Trump off-ramp hope in the first half of this month."

"The geopolitical tensions complicate the landscape for global central banks, most of which are scheduled to meet next week."

"The consensus expects central banks to maintain steady rates as policymakers grapple with the shadow of stagflation cast by the US-Iranian stand-off."

"Asia’s most oil-dependent currencies – the INR, KRW, and PHP – should continue to fluctuate with oil prices, with authorities standing by to discourage one-way bets on depreciation."

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