US
Brent crude oil prices retreated sharply under $90 a barrel after reaching a high of $102 last week. The US-Iran paused hostilities to give Oman room to broker an agreement with Iran on transit through the Strait of Hormuz. US Ambassador to the UN Mike Waltz said President Donald Trump was “giving the talks some space” before deciding whether to resume strikes.
The decline in energy prices revived risk appetite. USD is down against most major currencies with the oil-sensitive NOK underperforming. Stock and bond markets are rallying broadly. This week, a hawkish Fed hold, and a goldilocks-like US macro backdrop can offer USD near-term support. Check-out our Drivers for the Week Ahead for the upcoming key market shaping themes.
Today, we get the final update of the Atlanta Fed GDPNow model incorporating the June durable goods orders data. Nondefense capital goods orders excluding aircraft - a key measure of business investment - is expected to rise 0.6% m/m vs. 0.1% in May underpinned by AI-related investment. That should lift the Atlanta Fed’s Q2 real GDP growth estimate from currently 1.7% SAAR.
EUROZONE
EUR/USD bounced back above 1.1400. Leading indicators point to a recovery in Eurozone economic activity. Germany’s IFO business climate index improved to 86.6 in July vs. 85.7 in June entirely driven by expectations. That echoes the increases seen in the Eurozone July PMI and ZEW index.
Bottom line: a recovery in Eurozone economic activity and above target inflation reinforces the case for the ECB to resume raising rates in September. That’s unlikely to offer EUR much upside traction as the swaps curve already price in 90% odds of a 25bps rate hike at the September 10 meeting. The next key resistance for EUR/USD is at 1.1483, the July 15 high, while support is at 1.1335, the June 24 low.
INDONESIA
IDR and the Jakarta stock price index underperformed. Bank Indonesia (BI) Governor Perry Warjiyo resigned for unspecified “personal reasons,” two years ahead of the end of his second five-year term. His resignation increases the risk of political interference in monetary policy.
BI’s independence has already come under scrutiny after its mandate was broadened to support growth, raising concerns over fiscal dominance. Broader parliamentary oversight and the appointment of President Prabowo’s nephew to the BI's board have further heightened perceptions of political influence.
Nonetheless, IDR downside is limited. Indonesia’s growth-inflation mix is supportive, the current account deficit is negligible, external debt is manageable, the fiscal backdrop is not alarming, FX reserves are ample, and IDR is significantly undervalued. See our full report on Indonesia here.
SINGAPORE
USD/SGD is consolidating around 1.2900, down from a multi-month high of almost 1.3000 on June 24. The Monetary Authority of Singapore (MAS) unexpectedly tightened policy for a second straight meeting because “external price pressures are expected to persist and pass through more broadly to domestic consumer prices in the period ahead.” Still, the extent of this tightening is smaller than at its last meeting in April.
MAS noted it will increase the slope (or rate of appreciation) of the Singapore dollar nominal effective exchange rate (S$NEER) policy band “very slightly” vs. “slightly” in April. The width and midpoint of the policy band were left unchanged.
Only four out of 18 analysts in a Bloomberg survey expected a change to the slope of the S$NEER. MAS has scope to tighten policy further this year as it projects the economy’s positive output gap to widen slightly in 2026. The next policy decision is in October.
