Forex

S&P Global has reaffirmed Indonesia’s sovereign credit rating at BBB/A-2 with a stable outlook, saying recent fiscal strains should be temporary and could be offset by higher commodity prices and spending cuts. The decision contrasts with Moody’s and Fitch, which cut their outlooks for Indonesia to negative earlier in the year, helping bolster market confidence in the country’s economic management. A Bank Indonesia official said the rupiah has significant room to strengthen after it recently touched a record low of 18,000 per dollar.

USD/JPY slid by ¥1 in minutes after Japan’s 10-year and 20-year government bond yields fell 10 basis points on the day. Japan’s producer price index unexpectedly accelerated to 7.1%, the highest in months, adding to market concerns about pressure on the Bank of Japan. A Japanese official said the government wants GPIF and other major domestic funds to shift more money back into Japanese assets, a move that could encourage capital repatriation and dampen yen depreciation momentum. The yen is hovering near 40-year lows, while investors see the BOJ’s policy options as increasingly limited.

Japan’s Finance Minister Satsuki Katayama said the government will push households and pension funds, including the Government Pension Investment Fund (GPIF), to increase investment in Japanese financial assets. The GPIF manages ¥293.6 trillion in assets. Her remarks fueled expectations of renewed allocation to yen-denominated assets, lifting the yen against the dollar from levels near multiyear lows.

The Australian dollar rose to around 0.6950 against the U.S. dollar after hawkish remarks from RBA Assistant Governor Sarah Hunter. She said the central bank could tighten policy further if an oil shock lifts inflation expectations. The RBA has raised rates three times by 25 basis points this year, taking the cash rate to 4.35%, with markets pricing a 19% chance of a move to 4.60% at the August meeting. Minutes from the Fed’s June meeting showed most officials expect rates to end the year above current levels, though the path was not specified.

Malaysia’s ringgit firmed in early trade, rising to 4.0730/0800 against the US dollar as the release of Federal Open Market Committee minutes highlighted a clear divide among officials over the interest-rate path, weighing on the greenback. The US Dollar Index (DXY) slipped in response, lifting most Asian currencies, including the ringgit. Markets are also watching Bank Negara Malaysia’s Monetary Policy Committee decision, with the Overnight Policy Rate expected to stay at 2.75%.

USD/ZAR briefly climbed above R16.50 after hawkish Federal Reserve guidance buoyed the dollar, before reversing on softer US nonfarm payrolls data. The pair fell back to around R16.23, putting the R16 level back in focus. Repeated failure to hold above the 200-day simple moving average has reinforced resistance, while South Africa’s rate advantage, lower oil prices and improved global risk appetite have supported the rand.

The dollar index DXY slid to a two-week low of 100.9, while USD/JPY stood at 161.57, close to the 40-year low set in 1986. Markets pared expectations for a Federal Reserve rate hike this year after June payrolls growth slowed sharply. At the same time, rising concern over possible action by Japanese authorities has heightened traders’ alertness to near-term dollar softness and sharp swings in the yen.

The China Foreign Exchange Trade System set the USD/CNY central parity rate at 6.8066 on July 6, up 19 points from the prior level, signaling yuan depreciation. The EUR/CNY central parity rate was set at 7.7708, up 99 points. The fixings serve as pricing anchors for both offshore and onshore FX markets and directly affect arbitrage pricing and spot trading flows in USD/CNY and related cross-currency pairs such as EURUSD.

A moderate U.S. June jobs report and downward revisions to the prior two months’ payroll figures cooled expectations of a September Federal Reserve rate hike, with the CME FedWatch tool putting the odds at 45%. The dollar index is set for its largest weekly fall in 12 weeks. The yen strengthened past 161 per dollar, while the euro rose to a near two-week high and sterling climbed to its strongest level in nearly three months. U.S. 2-year Treasury yields fell 4 basis points.

A softer U.S. nonfarm jobs report cooled market expectations for a Federal Reserve rate increase in September, with the implied probability falling from 55% to 35%. The dollar index is set for its steepest weekly decline in 12 weeks. The yen rebounded sharply and the euro rose to a near two-week high, while sterling also strengthened. Japan’s finance ministry warned it could intervene in currency markets, keeping traders focused on exchange-rate volatility risks.