2026-05-06 07:04

Key takeaways USD-JPY fell sharply after briefly moving above 160. Experience from 2024 suggests USD-JPY may rebound once the initial impact fades. A more durable yen recovery will likely require stronger fundamentals, including BoJ rate hikes and lower oil prices. After USD-JPY briefly moved above 160 on the evening of 30 April (JST), the pair fell sharply. It then saw two further, smaller sudden drops on 1 May (late afternoon) and 4 May (midday), both starting near 157.25 (see the chart below). Source: Bloomberg, HSBC Japan’s Ministry of Finance (MoF) has not confirmed any FX intervention and has kept its comments deliberately unclear, which is typical (the last clear confirmation was 22 September 2022). As a result, markets often look to the Bank of Japan’s (BoJ) daily current account data, notably “Treasury funds”, to gauge potential activity, typically with a one-day delay. Estimates suggest cJPY5.4trn (cUSD34.5bn sold; Bloomberg, 1 May) may have been used on 30 April. The MoF is due to publish the total intervention amount for 28 April–27 May on 29 May, followed by a detailed daily breakdown for 2Q26 in early July. Will USD-JPY stay below 160? Experience from 2024 suggests USD-JPY can rebound soon after FX intervention unless fundamentals improve. In 2024, USD-JPY began rising only days after the 29 April (~160) and 1 May (~158) interventions. It moved above 158 on 14 June after a dovish BoJ meeting, then broke above 160 on 26 June. MoF intervened again on 11 July (~161) and 12 July (~159). USD-JPY fell below 150 after a rate hike by the BoJ and a dovish hold by the Federal Reserve (Fed) on 31 July. In our view, two factors are particularly important: (1) BoJ policy: the next decision is 16 June, with c65% chance of a 25bp rate hike expected by markets (Bloomberg, 4 May). (2) External support: in 2024, weaker US data and a dovish Fed helped; and lower oil prices may be the key driver now. Longer-term support for the JPY would likely require a more hawkish BoJ, continued fiscal discipline, and measures to improve FX flow dynamics. Our base case is that USD-JPY may not trend materially lower, but it should be capped near term by intervention risk, with lower oil prices potentially helping over time. https://www.hsbc.com.my/wealth/insights/fx-insights/jpy-fx-intervention/

2026-04-30 12:01

Key takeaways ^DXY = US Dollar Index, is an index (or measure) of the value of the USD against major global currencies, including the EUR, JPY, GBP, CAD, SEK and CHF. Source: HSBC https://www.hsbc.com.my/wealth/insights/fx-insights/not-the-time-to-chase-tactical-trends/

2026-04-30 12:01

Key takeaways At its April meeting, the Federal Reserve left the federal funds rate unchanged at 3.50%–3.75%, marking a third consecutive meeting on hold, in line with our expectations and market consensus. The Fed remains firmly on hold with no urgency to cut, as persistent inflation, geopolitical risks, and elevated uncertainty reinforce a higher-for-longer stance. While the policy decision was straightforward, the meeting stood out for the degree of divergence within the Committee, with an 8–4 vote, the highest dissent since 1992. Inflation remains the dominant policy constraint, with the Fed explicitly linking pressures to higher energy prices and geopolitical developments. We don’t expect any rate cuts in 2026 or 2027 and remain overweight on US equities supported by strong earnings growth and a resilient macro backdrop. In fixed income, we favour high-quality income through investment grade credit and balanced duration. We continue to emphasise diversification via alternatives, including hedge funds and gold, to navigate macro and geopolitical uncertainty. Please refer to the full report for details about the event and our investment view. “Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. “Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio. https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/fed-holds-firm-as-inflation-and-uncertainty-persist/

2026-04-30 12:01

Key takeaways The Fed held rates steady for a third meeting… …but three policymakers wished to modify the FOMC’s forward guidance in a hawkish direction. The USD strengthened post-FOMC; a still-patient Fed is likely to limit sustained USD trends in the near term. At the 28-29 April meeting, the Federal Open Market Committee (FOMC) kept the federal funds target range unchanged at 3.50-3.75% for the third consecutive meeting. Of the 12 voting members, 11 supported holding rates steady. Fed Governor Stephen Miran again dissented, favouring a 25bp rate cut. Three voters – Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan – backed unchanged rates but did not support including an easing bias in the statement at this time. In practical terms, they sought more hawkish forward guidance without going as far as voting for a rate increase. The USD strengthened in the aftermath. What was expected – and what moved markets In many respects, the April FOMC outcome aligned with market expectations: the policy rate was unchanged, and from the majority’s perspective, the statement was only marginally different from March. In his press conference, Chair Jerome Powell reiterated that “policy is in a very good place for us to wait and see”, a message that would not typically be a major catalyst for FX on its own. Markets instead focused on what did change: the emergence of three votes against retaining language referencing “additional adjustments”. Given the Fed’s rate cuts in 2024 and 2025, that phrasing had been interpreted as an implicit easing bias. The shift towards a more balanced (symmetric) policy signal helped the USD to rally. Powell’s messaging and leadership transition Fed Chair Powell offered a nuanced read on the significance of the vote. He emphasised that those who wanted to adjust the language still supported holding rates steady, and that the majority did not see an immediate need to change the statement. At the same time, he noted that “the centre is moving toward a more neutral place”, even if the Committee was not ready to signal that shift explicitly. He suggested that such a change could “conceivably come as soon as the next meeting”, which is scheduled for 16-17 June. He also said April would be his final meeting as Chair, with Kevin Warsh the likely successor pending full Senate confirmation, and added he expects to remain a Governor for an unspecified period while keeping “a low profile” under a Warsh-led FOMC. Overall, the USD’s move higher reflects an unexpected shift in the vote dynamics with the Fed’s language drifting towards neutral, but it is not a game-changing development for FX. We will continue to monitor how the conversation moves at the Fed, but, for now, the overall tone still points to a Fed in no rush to change policy amid elevated uncertainty. This will likely continue to prevent any sustained trend move in the USD over the near term. With the meeting now behind markets, attention is likely to rotate back towards geopolitics, risk appetite, and energy prices as key drivers of USD performance. https://www.hsbc.com.my/wealth/insights/fx-insights/usd-the-fed-delivers-a-provocative-hold/

2026-04-30 08:04

Key takeaways Since early April, ceasefire negotiations have led to a rebound in risk appetite. As it will take time for the Strait of Hormuz and oil production to normalise, we believe energy prices are likely to remain elevated. We upgrade Energy to overweight across regions following its recent sell-off, to navigate oil price volatility and generate strong cash flows, while continuing to build resilient portfolios with quality bonds, gold and multi-asset diversification. Recent headlines around the US Q1 earnings season affirm the continuation of the tech capex cycle. As previous concerns over excessive investment and AI disrupting software companies have eased, and Technology continues to be supported by improving earnings expectations and reduced valuations, we have further increased our exposure to global and US technology and upgrade European IT to overweight due to stronger earnings visibility. China’s Q1 GDP grew 5% y-o-y, supported by robust manufacturing and solid exports, along with a policy tilt towards domestic support and innovation. With a diversified energy mix, the Middle East conflict appears to have had a limited impact. Earnings growth is expected to be around 10%, with valuations broadly in line with historical averages at 11x. We continue to favour Chinese equities, balancing innovation and high-quality dividend stocks. We downgrade Japanese equities to neutral due to the country’s vulnerability to higher oil prices and less attractive valuations. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/markets-shift-towards-tech-led-structural-opportunities/

2026-04-27 12:01

Key takeaways Month-to-date, the JPY has been the weakest G10 currency, and the EUR has also underperformed. Our base case remains for USD-JPY to move lower by yearend, but we see potential upside risks over the near term. If energy-related disruptions continue and Eurozone activity weakens further, the EUR is likely to face downside risks. FX markets are likely to remain sensitive to geopolitical developments. Escalating Middle East tensions typically support the USD, while de-escalation tends to weigh on it. Within the G10, the JPY has been the weakest currency month-to-date, with the EUR not far behind (Bloomberg, 23 April). Bearish sentiment towards JPY is consistent with Japan’s macro exposure. Japan is the largest net energy importer among advanced economies (scaled by GDP) and has deep economic ties with the Gulf region. Despite these headwinds, USD-JPY has traded in an unusually narrow range recently. A cautious Bank of Japan (BoJ) and domestic fiscal challenges may delay USD-JPY’s convergence lower towards levels implied by rate differentials (Chart 1). Key fiscal watchpoints include the possibility that funding for fuel subsidies may run out in mid/late May and that a supplementary budget may be proposed. Offsetting factors include net portfolio inflows (foreign buying of Japanese equities and bonds month-to-date in April, alongside Japanese selling of foreign bonds) and firm verbal intervention from the Ministry of Finance (Katayama: “bold action”; Bloomberg, 17 April), may help cap USD-JPY. Our base case remains for USD-JPY to decline by year-end. Near-term upside risks include a more dovish BoJ, a more hawkish Federal Reserve (Fed), escalation in the Middle East conflict and renewed oil-price highs, and further fiscal slippage in Japan. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Turning to the EUR, Middle East developments have been the key driver, but cyclical factors (such as growth, inflation, and policy response) are likely to determine the magnitude of moves. Eurozone flash composite PMI disappointed in April, with the private sector returning to contraction for the first time since December 2024. Price components also point to a stagflationary impulse. If disruption around the Strait of Hormuz persists, the negative impact on Eurozone growth and inflation is likely to intensify, undermining the EUR (Chart 2). https://www.hsbc.com.my/wealth/insights/fx-insights/eur-and-jpy-underperformance-risks/