Australian Dollar's Bullish Momentum Is Building — Market Talk

0337 GMT - The Australian dollar's bullish momentum against its U.S. counterpart is "clearly building," StoneX's Matt Simpson says in commentary. This buildup in bullish momentum is occurring within the Australian dollar-the U.S. dollar pair's recent consolidation, with a prominent swing low forming on the four-hour chart, the senior market analyst says. Now that the Australian dollar is back above US$0.7000, a bullish breakout above the currency pair's June 15 high may be on the cards, Simpson says. The Australian currency's mid-June high was US$0.7088, according to LSEG data. The Australian dollar is 0.3% higher at US$0.7015. ([email protected])0315 GMT - Investors will likely be closely watching front-end U.S.-Japan rate differentials following media reports that say the BOJ is open to raising rates more quickly, DBS Group Research's Eugene Leow says in commentary. Since start of 2026, the spread between 1-year into 1-year dollar rate versus 1-year into 1-year yen rate has widened, the senior rates strategist notes. This has happened as investors shifted to pricing in Fed rate hikes from Fed rate cuts, while Japan's rates moved by much more modest pace. "Assuming Fed hawkish pricing would linger for a while more, investors will probably need to see the BOJ willing to shift to a 25bps per quarter hike pace to erode the widening rate differential to the U.S.," Leow adds. ([email protected])0256 GMT - Bitcoin falls in Asian trading. Investors are watching whether a roughly $191.0 million net inflow into bitcoin ETFs over the past two days signals the end of a 10-day outflow streak, Wintermute trader Jasper De Maere says. Still, he suggests any repair in market structure has yet to turn into a confirmed trend. Bitcoin is down 0.3% to $65,714.76. ([email protected])0236 GMT - The Singapore dollar strengthens slightly against its U.S. counterpart in the Asian session amid subdued trading, analysts say. "The FX market remains trapped in a low-volatility regime despite renewed U.S.-Iran tensions driving oil prices higher," two strategists at OCBC Group Research say in a report. However, "a sustained oil shock could quickly revive volatility and underpin a broader USD rally," the strategists add. The U.S. dollar edges 0.1% lower to 1.2896 Singapore dollars, LSEG data show. ([email protected])0234 GMT - News of stronger than expected Australian employment growth in June has seen interest rate markets increase bets that the Reserve Bank of Australia will raise interest rates in August. The market started the day pricing in a 25% chance of a hike at the August policy meeting, with an 80% chance of hikes over the remainder of 2026. Post the jobs data report, those probabilities have moved higher to 33% and 95% respectively. Tony Sycamore, market strategist at IG, says the RBA will be worried about a tightening job market at a time when inflation is already elevated. ([email protected]; X @JamesGlynnWSJ)0225 GMT - Bank Indonesia's policy priority seems to be supporting the Indonesian rupiah's stability. While the central bank kept rates unchanged on Wednesday, it broadened incentives to attract foreign inflows and support the rupiah's stability, Goldman Sachs analysts say in a report. The U.S. bank still expects Bank Indonesia to raise its policy rate by 25 bps each in 3Q and 4Q, bringing the rate to 6.25% by end-2026. ([email protected])0221 GMT - HSBC retains its "mildly bearish" view on Japanese government bonds. "Much of the focus in Japan rates has centered on the prime minister and finance minister's statements, which suggest that the government is looking for ways to encourage pension funds and retail investors to buy more JGBs," says Justin Heng, an APAC rates strategist. However, measures such as revising the Government Pension Investment Fund's "strategic asset allocation likely require some time for coordination and approvals," Heng says. These changes would probably arrive in 2027 at the earliest, the strategist says. "Our base case remains for higher yields in the near-term," Heng adds. The 10-year JGB yield is 3 bps higher at 2.765%. ([email protected])0212 GMT - South Korea's July inflation expectations data due next week and consumer price data in early August will likely be key to whether the central bank delivers a back-to-back rate hike in August, ANZ's Krystal Tan says. "If these point to stronger pass-through and rising inflation expectations, the case for an August hike will strengthen," the economist writes in a note. August appears to remain a close call, though stronger-than-expected 2Q gross domestic product growth raises the odds of a back-to-back rate hike, Tan notes. Attention now turns to whether price pressures become more persistent and broad-based, she adds. ([email protected])0143 GMT - Energy supply risks are in focus as U.S.-Iran tensions intensify, MUFG Bank's Lloyd Chan says in a research report. The senior currency analyst cites latest developments such as President Trump's warning that the U.S. would target Iranian bridges and power infrastructure if Iran attacks vessels transiting the Strait of Hormuz. "Key market risk is whether the conflict shifts from a phase of renewed escalation to one that triggers a broader global energy shock," the analyst says. Disruptions to oil shipments from the Gulf, together with rising U.S. Treasury yields, will probably weigh on Asian currencies, Chan adds. The dollar is little changed at 61.721 Philippine pesos and is flat at 33.75 baht, LSEG data show. ([email protected])0135 GMT - Bank of Japan Gov. Kazuo Ueda is expected to reiterate his stance of seeking further interest-rate hikes at his press conference next week, but that is unlikely to reverse the yen's weak momentum, says Mizuho Securities economist Yusuke Matsuo. "Markets have already largely priced in BOJ rate hikes at a pace of once every six months, making it difficult to drive the yen significantly higher through such communication alone," he says. "Given market expectations for clear guidance on the timing and pace of the next rate hike, any stance interpreted as dovish risks fueling further yen weakness in an environment where the dollar remains broadly strong." The BOJ is widely expected to keep the policy rate at 1% next week as it gauges the impact of its previous hike. ([email protected])0124 GMT - South Korea's stronger-than-expected 2Q gross domestic product could bolster the case for a faster pace of Bank of Korea rate increases, though it may not be enough to justify a back-to-back hike in August, Barclays' Bum Ki Son says. Higher 2Q gross domestic income--alongside the above-consensus GDP growth--"ticks the first box" but still "leaves the glass only half full" for an August hike, the economist writes in a note. The more important question is how much corporate earnings will spill over into household income and consumption. Historically, the spillover to household income has been limited in South Korea, he adds. ([email protected])0119 GMT - Indonesia's central bank is likely to deliver another 25 bps rate hike in 3Q, bringing its benchmark rate to 6.00% by the year-end, RHB economist Wong Xian Yong says in a note. He views July's decision to keep rates unchanged as a tactical pause rather than the end of the tightening cycle. Future policy decisions are expected to be driven primarily by rupiah stability rather than domestic macroeconomic conditions alone, he reckons. A sustained rupiah above 18,000 versus the dollar, renewed foreign portfolio outflows and higher U.S. Treasury yields could prompt further tightening, while contained inflation and moderating growth could allow the central bank to remain on hold, he adds. ([email protected])