Makro

Gold (XAU/USD) opens the week with a bearish gap as persistent uncertainty surrounding the US-Iran war continues to fuel Oil-driven inflation fears, maintaining pressure on central banks to keep borrowing costs elevated.

ING’s Chris Turner says EUR/USD has held up thanks to a softer Dollar and strong Asian AI-related risk sentiment, but Eurozone activity data remain weak. He argues that expectations for European Central Bank (ECB) hikes this summer are preventing a drop toward 1.15.

OCBC’s FX Christopher Wong notes US Dollar Index (DXY) traded slightly softer despite a strong US jobs report, as markets focus more on geopolitics, Oil and Fed repricing.

AUD/USD trades around 0.7245 on Monday at the time of writing, virtually unchanged on the day after opening the week with a bearish gap. The pair recovers its initial daily losses, but the Australian Dollar (AUD) remains weighed down by renewed risk aversion supporting the US Dollar (USD).

Deutsche Bank’s Jim Reid and team say markets are digesting a firm US payrolls report that reinforced views of a resilient labour market and persistent inflation risks.

Bank of England (BoE) Monetary Policy Committee (MPC) member Megan Greene said during the European trading session on Monday that the central bank needs to wait to see how Middle East conflicts will flare before making any monetary policy adjustments.

UOB’s Alvin Liew expects the Federal Reserve (Fed) to keep policy on hold for an extended period in 2026, with only one 25-basis-point cut pencilled in for 4Q26. The shift from earlier expectations of two cuts reflects persistent inflation pressures and delayed labour weakness.

The US Dollar (USD) surrenders half of its early gains during the European trading session at the start of the week, with the US Dollar Index (DXY) dropping to near 98.00 from the intraday high of 98.15.

European Central Bank (ECB) Governing Council member Martin Kocher said that there’s no need to delay the interest rate hikes if energy prices don’t improve swiftly.

The AUD/JPY cross posts modest gains near 113.60 during the early European trading hours on Monday. The Australian Dollar (AUD) edges higher against the Japanese Yen (JPY) on a hawkish tone from the Reserve Bank of Australia (RBA).

The European Central Bank (ECB) outgoing Vice President Luis de Guindos said that the central bank needs to be prudent when deciding on an expected interest rate hike next month as growth was set to weaken, the Financial Times reported on Monday.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding gains after modest losses the previous day, trading around 98.10 during Asian hours on Monday.

AUD/USD gains ground after opening at a bearish gap but still remains in the negative territory, trading around 0.7240 during the Asian hours on Monday. The pair moves little despite stronger-than-expected China’s Consumer Price Index (CPI) data.