DM-Asian currencies split on asymmetric risks
DM vs. Asian currencies.
Group Research - Econs, Philip Wee28 Jul 2026
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The FX market ran different themes against Developed Market and Asia-ex Japan currencies overnight, balancing monetary policy in the former and oil price relief in the latter.

The futures market is not ruling out a surprise hike at Fed Chairman Kevin Warsh’s second FOMC meeting, which it has priced in at a 38% probability. The DXY basket of currencies will likely depreciate if and only if this happens. GBP/USD fell the most, by 0.3% overnight, as the OIS market priced in a significantly lower 3.9% chance of a Bank of England hike this Thursday. EUR/USD remains close to the 1.1365 floor set after the European Central Bank’s pause decision last Thursday, although it did flag a September hike. USD/JPY remains high near 164, exhausted by Japan’s policymakers’ talk of supporting the currency through interventions, more gradual rate hikes, and using the GPIF to purchase Japanese assets. All said, Warsh could disappoint USD bulls as well by seeking cover to deliver nothing amid the latest retreat in oil prices and by aiming to end forward guidance to keep rates on hold without signalling a September hike.

Hopes for de-escalation in Middle East tensions drove crude oil prices lower for a second session. Brent fell by 8.7% to $88.36 per barrel overnight, more than Friday’s 3.9% decline. Following a pause in US-Iran fighting, hopes for a diplomatic resolution returned. INR benefitted most from the unwinding of energy risk premiums, rallying 0.7% to 95.890 per USD, driven by reports of interventions and the Reserve Bank of India reporting strong response to its recent measures to attract capital. The retreat in oil prices below $100 was also a relief for the PHP, where the central bank had been intervening to prevent new record lows past the 61.8 per USD level. Conversely, USD/THB’s pullback is seen limited after taking out its pivotal resistance level at 33 and returning to Liberation Day levels this month. IDR depreciated 0.3% to 18,000 per USD following the unexpected resignation of Bank Indonesia Governor Perry Warijiyo, which helped negate the 100 bps of hikes he delivered in May-June to support the IDR.

Quote of the Day
“The difficulty lies not so much in developing new ideas as in escaping from old ones.”
     John Maynard Keynes

July 28 in history
World War I officially began in 1914, when Austria-Hungary declared war on Serbia, exactly one month after the assassination of Archduke Franz Ferdinand.







Philip Wee

Senior FX Strategist - G3 & Asia
philipwee@dbs.com

 

 
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