Week Ahead FX outlook:
Key FX views:
The weekend talks between the US and Iran in Islamabad are now a critical swing factor for Monday’s Asia open. The ceasefire announced on 7 April 2026 was reached only hours before a US deadline for Iran to reopen the Strait of Hormuz, after nearly six weeks of war that began with coordinated US-Israeli strikes on 28 February and then escalated through Iranian retaliation across the Gulf, disruption to commercial shipping, and repeated threats of further attacks on civilian and energy infrastructure. Pakistan played the central mediating role, helping secure a two-week truce that was explicitly tied to safer passage through Hormuz and intended to create room for a broader settlement. The next step is supposed to be high-level negotiations in Islamabad this weekend, with Washington saying Vice President JD Vance will lead the US side, but the talks already look fragile. One of the main fault lines in the ceasefire itself is that Pakistan initially said the arrangement applied “everywhere,” including Lebanon, whereas Washington and Israel have said it does not, leaving a major disagreement over whether Israel’s operations against Hezbollah amount to a violation of the truce.
Beyond the negotiations, Asia will also be a key macro focus in the week ahead, but the region’s data calendar now sits against a much more fragile geopolitical backdrop. China’s March trade report and first-quarter GDP/activity figures are likely to be the key regional releases, with growth expected to hold above 5% on the strength of industrial production even as retail sales and broader domestic demand remain soft, underscoring the familiar imbalance between resilient supply and weaker consumption. India’s March CPI and trade data also matter more than usual because they will show how much of the recent oil shock is already feeding into inflation and the external balance. Singapore’s policy decision will be watched for signs whether the MAS is leaning more heavily on FX-based tightening to offset imported price pressures. We have a non-consensus call for MAS to keep policy settings unchanged in the upcoming meeting and we think MAS will likely wait and watch for now. Elsewhere in Asia, South Korea’s labour market, Australia’s employment report and Malaysia’s CPI should help gauge how quickly higher energy costs and disrupted raw-material flows are filtering into the region.
Betting markets lowered probabilities of Strait of Hormuz Re-opening
