Global Forex Market

THE US dollar pared gains over the week after President Trump’s U-turn on talks with North Korea’s leader, cancelling the upcoming Singapore summit meeting. Simultaneously, some downward pressure on the US dollar came after the release of Federal Open Market Committee (FOMC) minutes.

Though the minutes revealed a high probability of a rate hike in June, the market’s view of the overall tone is dovish as the Fed highlighted that it would tolerate inflation to overshoot, fuelling expectations that the Fed would drop the aggressive rate hike approach. Over the week, the US dollar gained 0.15% to 93.78.

Brent crude oil rose this week by 0.4% to close at US$77.79 per barrel due to the Venezuela’s presidential election and potential sanctions from the US despite the Energy Information Administration announcing that the US crude oil inventories surged by 5.8 million barrels. Investors anticipated a possible increase in Opec output that could cover the supply shortfalls from Iran and Venezuela.

The euro fell by 0.44% to 1.172 following political jitters in Italy as policies proposed by the populist parties could hurt Italy’s fiscal health. At the same time, May’s Eurozone Markit Composite PMI was reported to be lower than expected at 54.1 from 55.1 in April (consensus: 55), suggesting the European Central Bank could delay forward guidance on the tapering of its bond-purchasing programme.

The pound plunged by 0.66% to 1.338 following April’s inflation print, which slowed down by 2.4% year-onyear (y-o-y) from 2.5% y-o-y in March, fuelling expectation that a rate hike could be delayed further. Simultaneously, the pound was weighed down due to intensified Brexit noises after reports surfaced that the Scottish government is in talks for independence.

However, the currency recouped some losses after the release of April’s retail sales data, which rebounded to 1.6% month-on-month (m-o-m) in April from a decline of 1.1% m-o-m in March.

The appetite for safe haven currency returns with yen appreciating by 1.37% to 109.3 following rising geopolitical concerns. The spark initially started after both nations exchanged several provocative statements, which lead to Trump’s U-turn on the Singapore summit. Despite the pullout, North Korea still expressed the