Asian FX: Dollar strength caps RMB-led optimism – OCBC

FXStreet Insights Team FXStreet

OCBC's strategist Christopher Wong says Asian FX remains constrained by a firm Dollar and higher US yields, despite some optimism around US–China talks. The Renminbi (RMB) is the main outperformer on lower USD/CNY fixes and policy-tolerated appreciation, but broader Asia FX stays soft. The bank characterizes the backdrop as measured, selective optimism rather than a broad regional rally.

Selective RMB resilience versus softer Asia FX

"The FX read-through was less clear-cut."

"Better US retail sales data reinforced the resilience of the US consumer and saw markets price in around a 23% probability of a 25bp Fed hike by Dec-2026, lending support to the USD and weighing on most major and Asian FX."

"RMB was the key exception, staying resilient on US–China optimism and policy-tolerated appreciation signals."

"For now, this points to measured and selective optimism on RMB rather than a broad Asia FX rally."

"US–China tail risks have eased at the margin, but higher US yields and a firmer USD remain key constraints for Asian FX."

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

Author

FXStreet Insights Team

FXStreet

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.

AUD/USD defends 0.7000 ahead of RBA on Tuesday

AUD/USD is defending 0.7000 at the start of a new week, trading near its lowest level since August 4 amid a bullish US Dollar. US yields hold near multi-year highs amid inflation risks from higher oil prices and rising bets on an October Fed rate hike. This, along with the US-Iran standoff, continues to underpin the safe-haven buck and weigh on the pair ahead of Tuesday's RBA policy announcements.

USD/JPY climbs back toward 158.00 after BoJ minutes amid firm USD

USD/JPY finds dip-buyers and reverses part of Friday's slide driven by speculation that authorities will step in again to prop up the Japanese Yen. However, the BoJ's dovish Minutes cap the JPY. Meanwhile, the US Dollar regains traction as the US-Iran standoff supports crude oil prices, fueling inflation fears and reaffirming bets for an October Fed rate hike. This further supports the pair, driving it back toward 158.00.

Gold sheds 2.5% and approaches $4,150 on renewed US-Iran risks

Gold is falling hard at the start of a new week, approaching $4,150 for the first time in eight weeks. Firming October Fed rate-hike bets, along with oil-driven inflation risks, keep US bond yields elevated near multi-year highs, helping the US Dollar hold firm, particularly after Trump rejected Iran's truce offer. These factors weigh heavily on the bullion.

Cardano: Rally pauses as mixed metrics flag caution

Cardano shows signs of consolidation, trading below $0.260 after an 11% gain the previous week. Mixed derivatives and on-chain metrics point to caution among traders. Meanwhile, the technical outlook suggests bullish sentiment remains, but ADA’s near-term direction remains uncertain. Derivatives data shows a mixed and cautious outlook among Cardano traders.

The US treasury and the German yields sustain higher

The Dollar index has dipped after testing resistance and could dip for the next few sessions while Euro can rise from here. USDJPY has dipped below 158 and is headed towards 157/156 while EURJPY can trade within 181-178 region for the near term. USDINR has mild scope of testing 95.50 while below 96 but looks eventually bullish for a rise.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.