Asia FX Weekly

Asian markets are navigating a complex environment defined by a de-escalatory US-China summit and a significant energy shock from the Iran conflict. While geopolitical risks from trade have lowered slightly, rising oil prices are pressuring regional currencies and complicating central bank mandates.

Key Takeaways

• 1.The Trump-Xi summit in Beijing signaled a de-escalation in tensions with a new framework of 'strategic stability,' though immediate tangible outcomes were incremental.
• 2.The Iran conflict remains the primary macro risk, creating a massive energy supply shock that is driving inflation and pressuring currencies across Asia.
• 3.China's economic data reflects a 'two-speed' recovery: resilient industrial production and exports contrasted against weak domestic consumption and credit demand.

Table of Contents

• FX views
• USD/CNY: A new vision for US-China relations was laid out at the summit
• USD/INR, USD/PHP and USD/VND: Continued divergence
• USD/THB: Both external and internal factors matter
• Week in review
• Capital Flows
• Government bond yield spreads
• Central bank monitor
• The week ahead
• Forecasts
• Core indicators

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