Group 1 - The Indian Rupee is expected to be one of the worst-performing currencies in Asia due to the pressure from increased tariffs imposed by the US, which is impacting India's already fragile economic recovery [1][3] - Analysts from Deutsche Bank and Barclays predict that the Rupee's exchange rate may fall to a historical low by the end of the year, driven by weak foreign capital inflows and tariff impacts [1][3] - The Indian stock market has experienced an outflow of $11 billion due to economic slowdown, and the central bank's interest rate cuts have further weakened support for the currency [1][3] Group 2 - Barclays estimates that high tariffs could reduce India's GDP growth rate by approximately 30 basis points [3] - The market is focused on the Indian central bank's policy meeting on August 6 for clues on interest rate direction and Rupee trends, following an unexpected 50 basis point rate cut last month [3] - Despite foreign exchange reserves being near historical highs, Citigroup economists believe that uncertainty around tariffs limits the central bank's motivation to aggressively support the Rupee [3] Group 3 - The Rupee has depreciated by 1.2% last week, reaching an exchange rate of 87.5275 Rupees per US dollar, marking the largest weekly decline since December 2022 [3] - Some analysts remain optimistic about a potential trade agreement between the US and India, which could improve the situation for the Rupee [3] - Weak foreign capital inflows continue to be a headwind for the Rupee, with limited prospects for significant bond market inflows due to the central bank's indication of limited rate cut space [3][4]

Market Overview - US stock index futures and European stocks rose due to progress in multiple trade negotiations, while Asian markets remained flat [1] - The Japanese stock market increased by 0.8% as Japan's chief negotiator extended their stay in the US to seek an agreement [4] - Canadian withdrawal of the digital services tax for tech companies aims to restart negotiations with the US, strengthening the Canadian dollar and boosting US tech stock futures [1] Asset Performance - Major US stock index futures rose, with Nasdaq 100 and Dow futures up approximately 0.5%, and S&P 500 futures also increasing by about 0.5% [2] - European stocks saw slight gains, with the pan-European index, UK stocks, and French stocks rising over 0.1%, while German stocks increased by over 0.2% [3] - The Nikkei 225 index closed up 0.8% following the extension of negotiations in the US [4] Currency and Commodity Movements - The US dollar index fell by approximately 0.2%, while the Japanese yen rose over 0.5% [5] - The South Korean won rose over 1% to its highest level since October last year, currently up about 0.7% [6] - Spot gold and silver increased by about 0.6% [9] - Crude oil prices declined, with US oil down about 0.4% and Brent oil down about 0.2% [10] Geopolitical and Trade Developments - Easing geopolitical risks and expectations of imminent trade agreements have added momentum to risk assets [12] - Canadian Prime Minister Mark Carney and President Trump agreed to restart negotiations aiming for an agreement by July 21 [13] - French Finance Minister Eric Lombard indicated that the EU is likely to reach some form of trade agreement with the US before the July 9 deadline to avoid significant tariffs on EU products [13] - India's trade team has also extended their stay in Washington to resolve differences before the July 9 deadline [13]

Group 1: Core Views - The US dollar index fell below 97, reaching a new low since February 2022, with a daily drop of 0.72%, while non-USD currencies strengthened significantly [1][4] - Morgan Stanley analysts predict a 40% chance of a US economic recession in the second half of 2025, primarily due to escalating tariffs leading to stagflation [2][6] - UBS Wealth Management's report indicates that the dollar index has dropped to a three-year low, with expectations of further weakening due to uncertainties in the US economic outlook and rising fiscal deficit concerns [5] Group 2: Non-USD Currency Dynamics - The Taiwanese dollar has appreciated significantly, with foreign speculative funds increasing, prompting Taiwan's central bank to request the exit of overseas investors engaging in speculative bets through ETFs [1][8] - Despite the strengthening of non-USD currencies, investors have reduced long positions in the Thai baht and increased short positions in the Indian rupee, while turning bearish on the Philippine peso for the first time since early March [1][9] - The trend of foreign investors using reverse ETFs to hedge against market risks while betting on the appreciation of the Taiwanese dollar has raised concerns about its impact on the export-oriented economy [8]

Group 1 - Investors have significantly reduced their long positions in the Thai baht [1] - There is an increasing bearish sentiment towards the Indian rupee among investors [1] - Sentiment towards the Philippine peso has turned negative, with a shift to a bearish outlook [1]

Group 1 - DBS Bank reports a significant decline in Asian demand for US dollars, with Asian countries holding substantial US assets seeing their currencies perform strongly against the dollar [1] - The return of funds to Singapore has led to a substantial decrease in short-term Singapore dollar interest rates [1] - The Bridgewater Associates notes that the slowdown in US consumer spending is affecting multiple sectors, including real estate, with signs of weakness in tourism, entertainment, and dining services [2] Group 2 - SEB Research predicts that the European Central Bank (ECB) will pause interest rate cuts in July, with two potential cuts in September and December, lowering the deposit rate from 2.00% to 1.50% [1] - Deutsche Bank strategists highlight a new stablecoin regulatory bill approved by the US Senate, which could strengthen the dollar's dominance in the global digital economy [2] - Allspring analysts indicate that the Federal Reserve is currently adopting a "wait-and-see" approach, with potential rate cuts in September if inflation continues to decline towards the 2.0% target [3]

Core Viewpoint - The Philippine peso has depreciated by 0.9% against the US dollar, reaching a low of 56.755, marking the lowest level since April 22 [1] Group 1 - The depreciation of the Philippine peso indicates potential economic challenges and currency volatility in the region [1]

Core Viewpoint - The uncertainty surrounding the US-China trade agreement has led to increased bullish bets on most Asian currencies, with the New Taiwan Dollar and South Korean Won seeing significant gains in long positions [1][2]. Group 1: Currency Trends - The bullish positions for the New Taiwan Dollar have reached their highest level since December 2020, with a 10% increase this year largely attributed to a surge last month [2]. - The South Korean Won's bullish bets have reached their strongest level in nearly two and a half years, with an over 8% increase this year following the election of liberal candidate Lee Jae-myung as President [1][2]. - The Chinese Yuan has also seen a slight increase in bullish positions, reaching a high not seen since October of the previous year [1]. Group 2: Market Sentiment - The market is focused on the US-China trade negotiations, which have resulted in a framework agreement that includes tariff arrangements and the lifting of export restrictions on rare earth minerals from China [1]. - Despite the temporary easing of tensions, there is a strong market demand for details on the implementation of the agreement [1]. - The US dollar index has fallen over 9% this year, with expectations of further weakness in the coming months, which is favorable for Asian currencies [1]. Group 3: Currency Positioning Survey - The survey analyzed current market positions for nine Asian emerging market currencies, including the Chinese Yuan, South Korean Won, Singapore Dollar, Indonesian Rupiah, New Taiwan Dollar, Indian Rupee, Philippine Peso, Malaysian Ringgit, and Thai Baht [2]. - The survey utilized a net long/short position scoring system ranging from -3 to +3, where +3 indicates a significant bullish sentiment towards the US dollar [2]. - The only currency showing a reversal in trend is the Indian Rupee, which turned slightly bearish following an unexpected 50 basis point rate cut by the Indian central bank [2].

Currency Market Overview - The Euro is trading cautiously against the US Dollar, slightly above the key level of 1.1400 [1] - The British Pound has retreated to around 1.3550 due to a rise in the US Dollar [1] - The Japanese Yen remains under selling pressure, with the USD/JPY maintaining above the 143.00 mark [1] - The Australian Dollar has lost upward momentum after falling below 0.6500, influenced by mixed trade balance data and a decline in China's Caixin Services PMI [1] - The New Zealand Dollar has extended gains for the second consecutive day, trading around 0.6030 [1] - The USD/CAD continues a bearish consolidation trend, currently trading in the 1.3670-1.3665 range [1] Key Economic Indicators - The US ADP employment figures were significantly below expectations, marking the lowest level since March 2023 [2] - US President Trump and the Director of the Federal Housing Finance Agency have called for an immediate interest rate cut by Fed Chair Powell [2] - The US Senate has confirmed Michelle Bowman as the Vice Chair for Supervision at the Federal Reserve [2] - The Federal Reserve's Kashkari noted that the bond and stock markets are sending contrasting signals [2] - The Fed's Beige Book reported slight declines in economic activity across six regions, with businesses expecting future cost increases [2] Non-US Major Currencies - Sources indicate that the Bank of Japan is considering slowing down its bond purchase reduction next year [3] - Australian household spending indicators showed only slight growth, reinforcing expectations for interest rate cuts [4] - The Bank of Canada has maintained its interest rate, with the Canadian Dollar reaching a new high for 2025, while the swap market anticipates a 46% probability of a rate cut in July [5] - The subscription ratio for Japan's 30-year government bond auction was 2.92, down from 3.07 in the previous auction [6] - The UK Office for National Statistics reported that errors in vehicle tax data led to a 10 basis point overestimation of inflation rates as of April [7] Other Economic Insights - The Bangko Sentral ng Pilipinas will continue to adopt a cautious approach in deciding on further monetary policy easing [8] - The IMF's First Deputy Managing Director stated that the impact of trade wars on emerging markets is more severe than during the pandemic [9] - Japanese media reported that the US has shown flexibility in reducing additional counterpart tariffs on Japan [10] - Sweden's core inflation has dropped to a five-month low, increasing expectations for interest rate cuts in June [11] - The National Bank of Kazakhstan plans to sell 3.3-3.6 trillion tenge by 2025 to reflect gold purchase volumes [12] Technical Analysis - The EUR/USD remains above its 200-day simple moving average (SMA) of 1.0817, indicating a sustained upward trend [13] - Key resistance levels for EUR/USD are at 1.1572, 1.1600, and 1.1692, while short-term support is at 1.1192 [13] - The GBP/USD is stable above its upward trend line, with initial resistance at 1.3550 and support levels at 1.3500, 1.3430, and 1.3380 [14] - For AUD/USD, a breakout above the 2025 high of 0.6537 could target the 2024 high of 0.6942, with initial support at 0.6356 [14] Upcoming Economic Data - The European Central Bank will announce its interest rate decision at 20:15 [14] - The US trade balance for April and initial jobless claims for the week ending May 31 will be released at 20:30 [14] - ECB President Lagarde will hold a press conference at 20:45 [14] - The US Global Supply Chain Pressure Index for May will be published at 22:00 [14] - EIA natural gas inventory data for the week ending May 30 will be available at 22:30 [14] - Federal Reserve officials will be speaking on economic outlook and banking policies in the early hours of the next day [14]

Group 1: US Dollar and Federal Reserve - The Federal Reserve's June economic forecast may be influenced by predictions of stagflation [2] - The US International Trade Court has halted Trump's "liberation day" trade policy, with the Trump administration filing an appeal [2] - The minutes from the Federal Reserve meeting indicate rising risks of increased unemployment and inflation, diminishing the benefits of a flexible average inflation targeting in a high-risk environment [2] Group 2: Non-US Major Currencies - The Central Bank of Russia's tightening monetary policy has led to a slowdown in credit to balanced levels, with signs of inflation retreat [3] - The UK is seeking to expedite the implementation of a trade agreement with the US [3] - Japan's Prime Minister emphasized the importance of investment over tariffs, noting positive economic signs following wage increases [3] - Japan's Finance Minister stated that there was no discussion of exchange rate levels in recent talks with the US Treasury Secretary [3] - Japan's Economic Revitalization Minister will continue to urge the US to reconsider tariff measures and will hold ministerial talks on trade expansion and economic security cooperation [3] Group 3: Other Central Banks and Economic Indicators - The Reserve Bank of New Zealand's Governor indicated that the official cash rate (OCR) may follow various paths, with uncertainty regarding a rate cut in July [4] - The Bank of Korea cut its benchmark rate by 25 basis points to 2.50%, aligning with market expectations [4] - The Bank of Korea forecasts inflation rates of 1.9% in 2025 and 1.8% in 2026, while lowering economic growth expectations for 2025 to 0.8% [4] - A Reuters survey indicated that 53 out of 61 economists expect the Reserve Bank of India to cut its benchmark rate by 25 basis points to 5.75% on June 6 [4] - The Bank of Korea's Governor noted that there is still room for further rate cuts due to economic downturn risks, with a low likelihood of policy rates falling below 2% [4] - The Bank of Korea's Governor mentioned that recent US court rulings will reduce the effective tariff rate on Korea from 13.3% to 9.7% [5] Group 4: Currency Trends and Investor Sentiment - Investor bullish positions on the New Taiwan Dollar and Philippine Peso have reached the highest levels since 2020, reflecting optimism towards all Asian currencies [5] - The Russian Ruble briefly strengthened against the US Dollar, reaching its highest level since June 2023 [5]

Group 1 - Investors have reached the highest level of bullish positions on the New Taiwan Dollar and the Philippine Peso since 2020 [1] - There is an overall optimistic sentiment towards all Asian currencies among investors [1]