Asia FX: Oil shock keeps tone cautious – OCBC
OCBC’s Christopher Wong expects Asia ex-Japan (AxJ) currencies to start the week on a selectively cautious footing after renewed US–Iran tensions lifted Brent above US$96.
OCBC's Christopher Wong anticipates Asia ex-Japan currencies to commence the week with a selectively cautious outlook following heightened US-Iran tensions, which pushed Brent oil above US$96 per barrel. Elevated oil prices and US Treasury yields are perceived as headwinds for net energy importers, despite softer dollar follow-through and domestic buffers providing differentiation.
The light regional data calendar focuses on China trade, inflation, and credit releases, with China's August trade, inflation and PPI data, as well as credit metrics, dominating investor interest. The week's AXJ data is expected to be relatively muted, with PHP and THB currencies potentially lagging due to their reliance on oil imports.
The market awaits further clarity on the extent and duration of the oil supply disruption, with oil-sensitive currencies likely to suffer. Gold experienced a decline but rebounded to approach $4,400 per troy ounce.
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