The RBA hiked 25bp to 4.10% on March 17 in a razor-thin 5-4 split, its second consecutive hike as Middle East energy chaos compounds domestic inflation — AUD rallied across the board and our short GBP/AUD, long AUD/NZD, and long AUD/USD positions are all deeper in the money. The Fed held at 3.50-3.75% on March 18 with the dot plot still showing one cut this year, while raising its 2026 inflation forecast to 2.7% — the USD remains structurally weak and our short USD/SGD thesis is intact. Japan's Shunto initial tally came in at 5.26% wage growth for a third straight year above 5%, keeping the BoJ firmly on track for another hike and reinforcing our bearish stance across all JPY crosses.
The RBA is the sole G10 central bank hiking — and the market still has not repriced what a third consecutive move in May means for every AUD cross.
Three themes driving G10 FX
- Central bank divergence at generational extremes — The RBA is hiking toward 4.35%, the BoJ is normalising from 0.75%, the Fed is frozen, and the BoE just went unanimous-hold into a stagflation trap, creating the widest bilateral rate differentials in a generation across 20 of the 31 pairs we cover.
- The Iran energy shock is a currency sorting mechanism — Hormuz disruption simultaneously punishes net energy importers (GBP, EUR) and rewards exporters (CAD) and structurally insulated economies (SGD), making terms-of-trade the dominant bilateral factor in oil-sensitive crosses.
- Positioning extremes create asymmetric unwind risk — AUD longs sit at the 100th CFTC percentile, GBP shorts at the 80th, and USD shorts at the 85th — any catalyst that forces liquidation from these crowded trades could produce 200-400 pip moves in hours.
Our top 3 trades
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Short GBP/AUD Rate differential has structurally reversed — AUD now yields more than GBP while UK stagflation deepens at 3.0% CPI and 0.1% GDP. Carry: −10bp (aligned) |
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Short USD/SGD The 27pp bilateral external balance gap is the widest in G10+SGD, and MAS has 47% tightening probability at April review. Carry: −283bp (use forwards to manage cost) |
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Short EUR/SGD Europe's energy vulnerability meets Singapore's semiconductor surplus — the 16pp current account differential is the largest in our coverage. Carry: +118bp (aligned) |
On our radar
| Mar 25 | UK February CPI | Affects: GBP/AUD, EUR/GBP |
| Mar 31 | Japan Fiscal Year-End | Affects: GBP/AUD (via JPY repatriation risk-off) |
| ~Apr 14 | MAS Monetary Policy Statement | Affects: USD/SGD, EUR/SGD |
| Apr 30 | BoE MPC Decision | Affects: GBP/AUD, EUR/GBP |
The MAS April statement carries the highest asymmetry — a slope tightening is not priced by consensus but our framework assigns 47% probability, which would accelerate both SGD shorts by 100-150 pips each.
Carry snapshot
Carry is broadly not working in this environment — only 5 of 31 pairs have carry-supported regimes as the Iran conflict activates safe-haven flows that overwhelm rate differentials. Our top three trades are designed around this: GBP/AUD has negligible carry cost, EUR/SGD collects 118bp of carry aligned with the directional view, and USD/SGD's negative carry is best managed through forward-settled structures rather than spot.
Full analysis with all 31 pair rankings, carry landscape, risk dashboard, and catalyst calendar available for Edge and Dossier members.
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