The week delivered fresh damage to our rate-convergence positions. The Japanese yen slipped past 159 per dollar on Friday and was on track for a second consecutive weekly decline, as softer domestic inflation eased pressure on the Bank of Japan to tighten monetary policy in the near term, with core inflation slowing to 1.4% in April from 1.8% — a clean blow to our short USD/JPY and short GBP/JPY thesis. Canada's April CPI rose to 2.8% but soft core dynamics offered no BoC hawkish offset, extending USD/CAD's grind to 1.382 and pushing the short into "at risk" territory. Hot CPI, flaming PPI, and a flip to pricing FOMC hikes have entrenched a regime change that is hostile to the entire short-USD complex. UK April CPI undershot at 2.8% YoY, but GBP rallied anyway as Starmer's leadership crisis stalemated — round-tripping our best-performing trade from +101 to −139 pips.
How our views are tracking
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Short USD/JPY — thesis weakened Softer Japanese core inflation eased pressure on the BOJ to tighten, gutting the convergence leg just as Fed pricing flipped hawkish — the trade has lost both sides of its catalyst structure. |
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Short USD/SGD — thesis weakened USD/SGD stalled in a tight 1.2778–1.2823 range as MAS slope mechanics defended the level, but with rising bets for an interest rate hike by the Fed in 2026 acting as a tailwind for the US Dollar, the underlying invalidator remains triggered. |
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Short EUR/SGD — thesis strengthened EUR/SGD broke cleanly through 1.4880 support to 1.4845, the lowest print since entry, with broad EUR weakness front-running the June ECB and SGD holding firm on MAS slope dynamics. |
Invalidator watch
Short GBP/JPY moves from clear to watch as the pair rallied 250 pips off the 211.47 low — though the secondary UK CPI invalidator at 3.6% is now confirmed clear at 2.8%. Short CAD/SGD improves from watch to clear as the pair reversed 89 pips away from the 0.935 threshold after soft Canadian core CPI undermined the CAD bid. No new invalidators triggered this week, but the four CPI-triggered invalidators on the USD complex remain a permanent overhang.
Next week
| Mon May 25 | Singapore April CPI | Affects: EUR/SGD, CAD/SGD, USD/SGD |
| Wed May 27 | RBNZ interest rate decision | Affects: NZD/USD |
| Wed May 27 | Australia April CPI | Affects: GBP/AUD, AUD crosses |
| Thu May 28 | US Core PCE & GDP (2nd est.), Tokyo CPI | Affects: USD/JPY, EUR/USD, USD/SGD |
| Fri May 29 | Canada Q1 GDP | Affects: USD/CAD, CAD/SGD |
The week's pivot is Thursday's US core PCE — the key event of the week. Any upside surprise hardens the Fed-hike repricing that has done most damage to the portfolio, while a soft print is the one realistic catalyst that could rescue short USD/JPY and long EUR/USD ahead of the June 16–17 FOMC.
Full analysis with all pair rankings, carry landscape, risk dashboard, and catalyst calendar available for Edge and Dossier members.