The British pound eased toward $1.35 after hitting a three-year high of $1.363, as escalating Middle East tensions drove investors toward safe-haven assets amid fears of a wider conflict. Overnight, Israel struck Iran’s nuclear sites and key personnel, calling the operation necessary to counter an existential threat. Iran responded with hundreds of drones and warned of further retaliation. Meanwhile, data showed UK GDP fell 0.3% month-over-month in April—worse than the expected 0.1% decline—partly due to a sharp drop in exports to the US following new tariffs. Signs of economic strain and softer labor demand, highlighted by Tuesday’s employment data, have increased market expectations that the Bank of England will cut interest rates more aggressively than anticipated. At the same time, the pound continues to benefit from broad dollar weakness amid renewed US tariff threats and signs of easing inflation in the US.

Pound Slides from 3-Year High as Middle East Tensions Weigh

The Swiss franc traded around 0.81 per USD, hovering near its highest levels since 2011, amid a broad flight to safety driven by escalating tensions in the Middle East. Israel has launched a wave of strikes against Iran, targeting its nuclear infrastructure and military installations, killing two senior commanders. The Israeli government has warned of further action, while Iran has vowed retaliation. In addition to geopolitical risk, several other factors have contributed to the franc’s strength which is up about 10% so far this year. These include uncertainty surrounding President Trump's trade policies and broad-based dollar weakness, triggered by cooler inflation data and growing concerns over the US economic and fiscal outlook. Domestically, the Swiss National Bank (SNB) may soon reintroduce negative interest rates. Markets widely anticipate that the SNB will cut its key rate next week with some analysts even suggesting a move back into negative territory.

Swiss Franc Close to 2011-Highs

The euro eased to $1.15 after hitting a three-and-a-half-year high of $1.163 on June 12, as global markets were unsettled by escalating Middle East tensions. Overnight, Israel struck Iran’s nuclear facilities and key personnel, prompting fears of a wider conflict. Israel says Iran’s nuclear program is an existential threat and vows to continue its operations. Iran responded by launching hundreds of drones and warned of further retaliation. On the monetary policy front, the euro has been supported by diverging signals from the European Central Bank and the US Federal Reserve. Recent ECB comments reinforced expectations of a pause in its easing cycle to assess the impact of new US tariffs. Meanwhile, the dollar weakened amid softer US inflation data and rising trade tensions, fueling speculation that the Fed could cut rates as early as September.

Euro Dips from 3½-Year High as Middle East Tensions Escalate

The South Korean won weakened to around 1,365 per dollar on Friday, retreating from  a 34-week high as the currency depreciated due to the strengthening dollar. Investors sought safe-haven assets amid escalating tensions in the Middle East have added pressure on the global market. Israel announced a nationwide state of emergency and issued alerts over potential missile and drone assaults, intensifying geopolitical tensions and weighing on investor confidence. Further weakness in the won was driven by domestic factors, including President Lee Jae-myung’s proposed corporate governance reforms. While the plans boosted market optimism, they also raised concerns over implementation hurdles and potential impacts on corporate practices.

South Korean Won Slips on Rising Middle East Tensions

The offshore yuan weakened to around 7.18 per dollar on Friday, reversing gains from the previous session, as the US dollar strengthened amid increased safe-haven demand due to rising geopolitical tensions in the Middle East. Israel launched a preemptive strike against Iran, significantly raising fears of a wider regional conflict. In response, Iran’s Armed Forces General Staff issued a warning on Friday, stating that Israel and the US would "pay a very heavy price" for their actions. Meanwhile, in China, authorities announced plans to sign a new economic agreement with the 53 African nations with which it maintains diplomatic relations. The deal aims to eliminate all tariffs and broaden market access, extending benefits not only to least developed countries (LDCs) but also to middle-income nations. Investors are now turning their attention to a batch of key economic data set to be released next week, including figures on industrial output, retail sales, and the unemployment rate.

Offshore Yuan Weakens on Safe-Haven Dollar Demand

The Japanese yen appreciated toward 143 per dollar on Friday, rising for the third consecutive session as heightened geopolitical risks fueled demand for safe-haven assets. The move followed a sharp escalation in Middle East tensions after Israel launched a preemptive strike on Iran, targeting its nuclear infrastructure. Israeli officials vowed to continue the operation until the threat is neutralized, prompting risk aversion across global markets. Trade-related concerns also persisted after US President Donald Trump threatened unilateral tariffs aimed at pressuring other countries into new trade deals, adding to broader market uncertainty. On the domestic front, Bank of Japan Governor Kazuo Ueda told parliament earlier this week that the central bank is prepared to raise interest rates again—provided there is sufficient confidence that underlying inflation is sustainably approaching the 2% target.

Yen Strengthens on Safe-Haven Flows

The Indian rupee fell to an eight-week low of 86.17 on Friday morning amid rising geopolitical tensions and trade uncertainty. The decline followed Israel’s airstrikes on Iran without U.S. backing, sparking fears of Iranian retaliation and driving oil prices up nearly 10%. Higher oil prices raised concerns about India’s trade balance, pressuring the rupee further. Adding to the external stress, President Trump said he might extend the July 8 tariff deadline but also signaled a tougher stance by planning to send letters to trade partners outlining unilateral tariff rates. However, some losses were limited by signs of progress in U.S.-India trade talks, particularly on industrial goods, agriculture, and tariffs. India’s Foreign Ministry expressed hope of finalizing a deal before the truce expires. Domestically, inflation eased to 2.82% in May, the lowest since February 2019, down from 3.16% in April and below expectations, nearing the RBI’s lower 2% tolerance band.

Rupee Drops to 8-Week Low on Middle East Tensions and Trade Jitters

The Australian dollar weakened toward $0.649 on Friday, reversing gains from the previous session as risk sentiment soured amid escalating tensions in the Middle East. Following a preemptive strike on dozens of Iranian sites, Israel declared a nationwide state of emergency and warned of imminent missile and drone attacks. The escalation, driven by concerns over Iran’s nuclear program, fueled safe-haven demand and pressured risk-sensitive currencies like the Aussie. Adding to market worries, US President Trump expanded steel tariffs starting June 23 to include steel-based household appliances, doubling duties to 50% after initially imposing 25% tariffs in March. Investors also monitored US-China trade talks, which resulted in an agreement on a framework that keeps a deal possible, though details remain unclear. Looking ahead, attention turns to Australia’s May employment data due next week, which will provide fresh insight into the country’s economic health amid ongoing global concerns.

Aussie Dips on Rising Middle East Tensions

The New Zealand dollar dropped to around $0.603 on Friday, as rising tensions in the Middle East rattled global markets, leading to a widespread risk-off approach. Israel launched airstrikes against Iran’s nuclear program and military targets, marking a major escalation in the standoff between the two countries and raised fears of a broader conflict in the region. Further weighing on the currency was disappointing domestic economic data. New Zealand’s manufacturing activity slipped back into contraction in May after four straight months of growth, weighed down by weak demand, rising costs, and waning business confidence amid global economic uncertainties. Despite Friday’s decline, the Kiwi remains on track for its second straight weekly gain.

New Zealand Dollar Slips Amid Risk-Off Sentiment

USDINR increased to an 8-week high of 86.17. Over the past 4 weeks, US Dollar Indian Rupee gained 0.66%, and in the last 12 months, it increased 2.99%.

Indian Rupee Hits 8-week Low

The US dollar index climbed above 98 on Friday, rebounding from multi-year lows as escalating geopolitical tensions in the Middle East fueled demand for safe-haven assets. The move followed Israel’s preemptive strike on Iran, targeting Tehran’s nuclear program and pledging to continue the operation until the threat is removed. US officials confirmed there was no American involvement or support in the strike. The dollar had slumped to over three-year lows on Thursday, pressured by growing uncertainty surrounding President Donald Trump’s aggressive trade stance, including renewed threats of unilateral tariffs. Additional downward pressure came from softer-than-expected consumer and producer inflation data, which reinforced expectations for further interest rate cuts by the Federal Reserve this year. Looking ahead, investors await the University of Michigan’s consumer sentiment report for June, which could offer insight into how evolving tariff policies are affecting household confidence.

Dollar Rebounds on Safe-Haven Demand

The Canadian dollar advanced to roughly 1.36 per USD in June, its strongest in eight months, primarily on broad US dollar weakness driven by softer-than-expected US inflation and a repricing of Fed policy. May’s CPI printed just 2.4% year-on-year, which sent Treasury yields lower and eroded the greenback’s carry appeal. Domestically, the Bank of Canada’s June decision to hold rates steady while dropping its tightening bias underscored a shift toward neutral, narrowing the policy differential with the Fed and lifting the loonie. April’s industrial output ticked up modestly and employment remains firm, suggesting the economy can absorb a more gradual US rate path. On the trade front, renewed US–China negotiations, culminating in pledges to revive the Geneva framework and lift rare-earth curbs, have dampened global tariff fears that once hung over Canada’s export sectors. Finally, strong oil prices have buoyed Canada’s terms of trade and further supported the currency’s advance.

Canadian Dollar Hits 8-Month High

The Indian rupee was little changed around 85.5 per USD, supported by lower oil prices and a softer dollar, though upside was capped by ongoing trade uncertainty and rising geopolitical risks. US President Trump told reporters on Wednesday that he could extend the 90-day tariff deadline, which is scheduled to expire on July 8, but signaled but indicated he would instead send letters to trading partners within two weeks outlining unilateral tariff rates. Meanwhile, the China-U.S. agreement in principle on rare earths and student visas failed to reassure investors. In New Delhi, Indian and U.S. officials made progress in talks on industrial goods, agriculture, and tariff barriers, with India’s Foreign Ministry expressing hope to finalize a trade deal before the truce ends. Domestically, India’s inflation eased to 2.82% in May, the lowest since February 2019, down from 3.16% in April and below market expectations, bringing it close to the RBI’s lower tolerance band of 2%.

Indian Rupee Sees Little Movement

USDSGD decreased to a 10-1/2-year low of 1.28. Over the past 4 weeks, US Dollar Singapore Dollar lost 1.74%, and in the last 12 months, it decreased 5.38%.

Singapore Dollar Hits 10-1/2-year High

The dollar index extended its decline on Thursday, falling below 97.8 to reach its lowest level since 2022, as renewed trade tensions and geopolitical risks weighed on sentiment. President Trump announced plans to send formal letters to major trading partners within the next one to two weeks, outlining unilateral tariff measures aimed at pressuring countries into new trade agreements. This comes as the current 90-day pause on reciprocal tariffs is set to expire next month. Adding to market unease, geopolitical tensions intensified after Iran threatened to strike US bases if nuclear talks collapse. Meanwhile, softer-than-expected US inflation data released on Wednesday added to the downward pressure on the greenback. The weaker inflation print bolstered expectations that the Federal Reserve will deliver two interest rate cuts this year. The dollar posted its steepest losses against the euro, Swiss franc, and Japanese yen.

Dollar Hits 2022-Lows

DXY decreased to a 3-year low of 97.86. Over the past 4 weeks, Dollar Index lost 3.09%, and in the last 12 months, it decreased 6.99%.

Dollar Index Hits 3-year Low

USDCAD decreased to a 35-week low of 1.36. Over the past 4 weeks, US Dollar Canadian Dollar lost 2.16%, and in the last 12 months, it decreased 0.79%.

Canadian Dollar Hits 35-week High

EURUSD increased to a 3-1/2-year high of 1.16. Over the past 4 weeks, Euro US Dollar gained 3.58%, and in the last 12 months, it increased 7.9%.

Euro Hits 3-1/2-year High

The Swiss franc appreciated nearly 1% to trade around 0.81 per USD, its highest level since April 2021, as ongoing trade uncertainties and heightened geopolitical tensions pressured the dollar and lifted demand for safe-haven assets. President Trump announced plans to send letters to key trading partners within two weeks, proposing unilateral tariffs after a fragile trade framework with China. Risk sentiment deteriorated further after he ordered preparations to evacuate Americans from the Middle East. Domestically, the combination of subdued price pressures and a weak economic outlook has raised speculation that the Swiss National Bank could reintroduce ultra-loose monetary measures, including a return to sub-zero interest rates in the near term.

Swiss Franc at Over 7-Week High

USDSEK decreased to a 12-month low of 9.47. Over the past 4 weeks, US Dollar Swedish Krona lost 2.44%, and in the last 12 months, it decreased 9.65%.

Swedish Krona Hits 12-month High

USDDKK decreased to a 3-1/2-year low of 6.45. Over the past 4 weeks, US Dollar Danish Krone lost 3.24%, and in the last 12 months, it decreased 7.12%.

Danish Krone Hits 3-1/2-year High

USDKRW decreased to a 34-week low of 1351.00. Over the past 4 weeks, US Dollar South Korean Won lost 4.46%, and in the last 12 months, it decreased 1.61%.

South Korean Won Hits 34-week High

The euro climbed above $1.15, its highest level since November 2021, as investors responded to diverging policy signals from the European Central Bank and the US Federal Reserve, and renewed trade war fears. Recent comments from ECB officials have reinforced expectations that the bank may soon pause its easing cycle, opting for a wait-and-see approach to gauge the economic fallout from new US tariffs. In May, Eurozone inflation slowed to 1.9%, while the ECB implemented its eighth consecutive rate cut, lowering the deposit facility rate to 2%. In contrast, the dollar weakened amid softer-than-expected US inflation data and escalating trade tensions, prompting speculation that the Fed could begin cutting rates as early as September. President Donald Trump added to market uncertainty on Wednesday, announcing plans to send letters to key trading partners within weeks outlining new unilateral tariff rates.

Euro Surges Past $1.15

The British pound hovered around $1.35, near its highest level in three years, supported by broad-based dollar weakness amid renewed tariff threats from President Trump and signs of cooling US inflation. In the UK, the GDP contracted by 0.3% in April, significantly more than the anticipated 0.1% decline. The downturn was driven by a combination of higher energy bills, increased National Insurance contributions, and elevated Stamp Duty Land Tax rates. Labour market indicators also pointed to a loss of momentum. Despite these headwinds, the Bank of England is widely expected to hold interest rates steady next week. Meanwhile, Chancellor Reeves unveiled a multi-year spending review, committing £2 trillion in public expenditures. The plan includes annual departmental budget increases of 2.3% in real terms, signaling continued support for key sectors. However, analysts highlighted the limited fiscal space outlined in the review, raising the likelihood of tax increases later this year.

Pound Holds Near 3-Year Highs

The offshore yuan rose to around 7.18 per dollar on Thursday, snapping a two-session losing streak, supported by a weakening US dollar. The greenback depreciated after US President Trump announced plans to send formal letters to major trading partners in the coming weeks, expected to outline unilateral tariffs aimed at pressuring countries into trade deals. Adding to the pressure on the greenback was softer-than-expected inflation data in May, fueling speculation that the Fed could begin cutting interest rates as early as September. Elsewhere, the yuan gained additional strength from the conclusion of a two-day round of US-China trade talks in London. The discussions resulted in a framework agreement focused on implementing the Geneva consensus and advancing commitments made during a recent presidential phone call. In China, market attention is shifting to a set of key economic indicators due next week, including data on industrial production, retail sales, and the unemployment rate.

Offshore Yuan Ends 2-Session Decline

The Australian dollar depreciated past $0.649 on Thursday, extending its decline from the previous session as risk sentiment soured amid fresh tariff threats from US President Donald Trump. On Wednesday, he announced plans to dispatch official letters to major trading partners within the next one to two weeks, outlining unilateral tariffs aimed at compelling countries to negotiate trade deals. Adding pressure on the Aussie dollar were rising expectations of further interest rate cuts by the Reserve Bank of Australia. Markets price in an 80% chance of a 25 bps cut to 3.60% at the July 8 meeting, with further reductions to 3.10% expected by year-end. However, Westpac Chief Economist Luci Ellis expects the RBA to hold rates in July, followed by cuts in August and November, and two additional reductions in February and May next year. Earlier rate cuts are possible if inflation and labor market conditions weaken more than expected, potentially bringing the cash rate down to 2.85%.

Australian Dollar Extends Decline

The South Korean won appreciated to around 1,360 per dollar on Thursday, breaking a two-day slide as the new president's proposed market reforms boosted demand for local assets. On June 11, President Lee Jae-myung proposed cutting taxes on dividend income and improving corporate governance to raise shareholder value and address the "Korea Discount." Investors welcomed the measures, though concerns linger over long-term impacts on corporate finances. Meanwhile, Bank of Korea Governor Rhee Chang-yong warned that excessive monetary easing could reignite property price bubbles and fuel exchange rate volatility. The central bank had recently cut its key interest rate to 2.5% on May 29 but signaled caution about further reductions. The policy mix of fiscal stimulus and a dovish monetary stance has increased investor focus on economic stability and market risks.

South Korean Won Rises on Market Reforms

The New Zealand dollar slipped to around $0.601 on Thursday, marking a second consecutive session of decline, as losses in equity markets dampened risk sentiment, holding the currency back from advancing on a broadly weaker US dollar. Contributing to the cautious mood were comments from President Trump, who said on that he will inform trading partners on tariff rates within two weeks, ahead of a July 9 deadline to reimpose higher duties on dozens of countries. However, the Kiwi’s downside may be cushioned following news that the US and China have reached a deal to restore a fragile trade truce during talks in London. This development is particularly significant for New Zealand, given that China is its largest trading partner. Domestically, the currency also found support from expectations that the Reserve Bank of New Zealand is nearing the end of its rate-cutting cycle. Markets are currently pricing in a hold at the July meeting, with a possibility of one final rate cut in August.

New Zealand Dollar Extend Losses

The Japanese yen appreciated to around 144 per dollar on Thursday, extending gains from the previous session as renewed tariff threats from US President Donald Trump boosted demand for safe-haven assets. Trump announced plans to send letters to key trading partners within the next one to two weeks, detailing unilateral tariffs aimed at pressuring countries into trade agreements. In Japan, fresh data showed a further deterioration in business sentiment during the second quarter, as uncertainty surrounding US trade policy weighed on the country’s export-driven economy. Meanwhile, Bank of Japan Governor Kazuo Ueda told parliament on Tuesday that the central bank is prepared to raise interest rates again if there is sufficient confidence that underlying inflation is approaching or stabilizing near the 2% target.

Japanese Yen Rises on Renewed Tariff Concerns

The dollar index weakened below 98.5 on Thursday, approaching its lowest levels since early 2022, following renewed tariff threats from President Donald Trump. Trump announced plans to send formal letters to key trading partners within the next one to two weeks, outlining unilateral tariffs intended to pressure countries into trade agreements. Despite the tough rhetoric, US Treasury Secretary Scott Bessent signaled a potential extension of the current 90-day pause on reciprocal tariffs for countries showing “good faith” in ongoing trade talks. The dollar has faced sustained selling pressure this year as trade policy uncertainty continues to erode investor confidence in US assets. Additional downward momentum came from a softer-than-expected CPI reading for May, which raised market expectations for a potential Federal Reserve rate cut as soon as September. All eyes are now on Thursday’s PPI release for further clues on the inflation outlook and monetary policy trajectory.

Dollar Weakens on Trump's Tariff Pledge

DXY decreased to a 7-week low of 98.35. Over the past 4 weeks, Dollar Index lost 2.62%, and in the last 12 months, it decreased 6.54%.

Dollar Index Hits 7-week Low

The Mexican peso rallied past 19.10 per USD, its strongest level in nearly ten months, amid a softer dollar, easing trade tensions and attractive domestic real yields propelled the currency higher. May’s US CPI rose just 2.4% year-on-year, below expectations, knocking US Treasury yields lower and eroding the greenback’s carry appeal. Simultaneously, reports that Washington and Mexico are close to rolling back Trump’s 50% steel tariffs, subject to volume limits, and that US–China negotiators in London have pledged to revive the Geneva framework and lift rare-earth export curbs have removed key trade uncertainties and alleviated supply-chain bottlenecks. At home, Banxico’s determination to keep policy restrictive, reinforced by headline inflation jumping to 4.42% and core inflation to 4.06%, its highest in eleven years, has preserved an attractive real rate, drawing in capital and underpinning the peso’s advance.

Mexican Peso Near 10-Month Highs

The South African rand traded around 17.3 per USD, holding near its strongest level since December, supported by a softer dollar and rising precious metal prices, particularly platinum and gold. The currency also found strength from positive fiscal developments and optimism over improved ties with the United States. South Africa’s National Assembly approved the Treasury’s fiscal framework, with backing from the two largest political parties—the African National Congress (ANC) and the Democratic Alliance (DA)—bringing the annual budget closer to adoption after extended debate over tax increases. Meanwhile, President Cyril Ramaphosa and his US counterpart Donald Trump are set to meet, for the second time, at the G7 Summit expected to be held in Canada this weekend. The meeting comes after South Africa submitted a revised framework proposal to the US, aiming to expand trade and investment relations between the two countries.

South African Rand Hovers Around 6-Month High

The Brazilian real strengthened past 5.54 per USD in June, its strongest level in eight months, driven by a softer US dollar, clearer domestic fiscal roadmaps and easing global trade strains. Cooler-than-expected US inflation, May’s CPI rose just 2.4% year-on-year, has brought forward Fed rate-cut bets and pushed US Treasury yields lower, denting the dollar’s carry advantage. At home, Finance Minister Fernando Haddad’s agreement to “recalibrate” the IOF increase, part of a wider package that also tightens tax breaks on formerly exempt investments, has lifted a potential drag on bank earnings and underscored Brazil’s commitment to fiscal discipline. Meanwhile, reports that US–China negotiators in London vowed to revive the Geneva framework and lift rare-earth export curbs have alleviated supply-chain concerns and sharpened demand forecasts for Brazil’s commodity exporters.

Brazilian Real Strengthens to 8-Month High

The British pound rose to $1.353, nearing a three-year high, as the US dollar weakened after softer-than-expected US inflation data for May. The data eased concerns that recent tariffs had significantly impacted prices, reducing pressure on the Fed to hike rates. In the UK, Chancellor Rachel Reeves delivered a multi-year spending review outlining £2 trillion in public expenditures, with annual departmental budget increases of 2.3% in real terms. While this signals support for key sectors, analysts noted the plan confirmed limited fiscal space, increasing the likelihood of tax hikes later in the year. The pound also benefited from expectations that the Bank of England will keep interest rates steady next week, despite mixed economic signals such as slowing wage growth and rising unemployment. At the same time, global risk sentiment improved as the US and China reached a preliminary trade deal in London.

Sterling Climbs Toward 3-Year High

The euro consolidated gains above the $1.14 mark, nearing the three-year highs last seen in April, as investors weighed the increasingly divergent policy outlooks of the European Central Bank and the US Federal Reserve. Recent remarks from ECB officials have strengthened expectations that the central bank may soon pause its easing cycle, adopting a wait-and-see approach to assess the economic impact of new US tariffs. In May, Eurozone inflation eased to 1.9%, while the ECB delivered its eighth consecutive rate cut, bringing the deposit facility rate down to 2%. Meanwhile, the bloc’s economy showed resilience, expanding by 0.6% in Q1, the strongest pace of growth since Q3 2022. In contrast, softer-than-expected US inflation data weighed on the dollar, fueling speculation that the Fed may begin cutting rates as early as September. However, uncertainty persists, as inflation and the labor market remain relatively resilient, while growth headwinds from tariffs continue to build.

Euro Rises as ECB Signals Pause; Fed Faces Growing Rate Cut Bets

The US Dollar Index fell to 98.7, approaching a three-year low of 98.0 last seen in April, after weaker-than-expected inflation data tempered market sentiment. US consumer prices rose 2.4% year-over-year in May, up from 2.3% in April but slightly below the market consensus of 2.5%. Energy prices declined 3.5% over the past year, while food prices increased by 2.9%. Core inflation—which excludes food and energy—held steady at 2.8%, just under forecasts of 2.9%. Despite the softer data, inflation remains above the Federal Reserve’s 2.0% target, reinforcing expectations that policymakers are unlikely to rush into rate cuts, even amid renewed pressure from President Trump. Separately, President Trump announced that a trade agreement with China has been finalized following talks in London this week, although it still awaits formal approval.

US Dollar Weakens on Soft Inflation Data

AUDUSD increased to a 28-week high of 0.65. Over the past 4 weeks, Australian Dollar US Dollar gained 2.55%, and in the last 12 months, it decreased 1.92%.

Australian Dollar Hits 28-week High

The Indian rupee traded around 85.5 per USD, its highest level since early June, as a subdued US dollar, robust foreign inflows, and easing trade concerns lent support. The US and China agreed to a plan to ease trade tensions, with both sides agreeing to implement the consensus the two sides reached in the prior round of talks in Geneva. Meanwhile, Indian and US officials made progress in their latest round of talks in New Delhi on June 10, focusing on industrial goods, agriculture, tariff reductions and non-tariff barriers. India’s Foreign Ministry said it hopes to finalize a trade deal with the U.S. before the 90-day tariff truce expires on July 9. On the monetary policy front, the Reserve Bank of India (RBI) delivered a larger-than-expected 50 basis point cut to the repo rate and lowered the reserve ratio for banks in a bid to stimulate economic growth.

Indian Rupee at Over 1-Week High

USDRUB decreased to a 24-month low of 76.90. Over the past 4 weeks, US Dollar Russian Ruble lost 3.44%, and in the last 12 months, it decreased 11%.

Russian Ruble Hits 24-month High

The Japanese yen held its recent decline to around 144.9 per dollar on Wednesday, hovering near a two-week low as optimism over US–China trade negotiations reduced demand for safe-haven assets. The two countries reportedly reached an agreement to implement the Geneva consensus, with Beijing expected to lift restrictions on rare earth exports and Washington considering easing its curbs on advanced technology sales to China. On the domestic front, Japan’s producer prices rose 3.2% year-over-year in May, the slowest pace of growth in eight months, suggesting easing input cost pressures. Meanwhile, Bank of Japan Governor Kazuo Ueda told parliament on Tuesday that the central bank is prepared to raise interest rates again if there is sufficient confidence that underlying inflation is approaching or stabilizing around the 2% target.

Yen Holds Losses Amid US–China Trade Optimism

The offshore yuan steadied around 7.18 per dollar on Wednesday, as investors assessed the outcome of two-day US-China trade talks held in London. The negotiations resulted in a framework agreement aimed at implementing the Geneva consensus and advancing commitments made during a recent presidential call. Under the framework, China is expected to ease export restrictions on rare earth minerals and magnets, while the US is considering relaxing its curbs on advanced technology exports to China. While both countries will seek final approval from their respective leaders before proceeding, the agreement has raised hopes among investors that it could help ease the ongoing trade war between the world’s leading economies. In China, investor attention is shifting to a batch of key economic data due next week, including industrial output, retail sales, and the unemployment rate.

Offshore Yuan Steady After US-China Framework Deal

The South Korean won weakened to around 1,370 per dollar on Wednesday, extending its decline for a second consecutive session as the dollar strengthened on expectations of prolonged high interest rates in the US. On the domestic front, South Korea’s trade deficit amounted to $1.7 billion as imports jumped 11.5% to $17.18 billion in the June 1-10 period. While exports also rose 5.4% to $15.47 billion over the same period, the widening gap in trade reflects continued external pressures on the economy. Adding to the uncertainty, meanwhile, the National Pension Service (NPS) recently ended a five-month strategy of offloading dollars in the foreign exchange market. The NPS had been divesting in dollar holdings as part of efforts to hedge against currency volatility and rebalance its portfolio, particularly after the won breached its internal benchmark rate of 1,450 per dollar.

South Korean Won Slips for Second Session

The New Zealand dollar edged lower to around $0.603 on Wednesday, as traders weighed the latest developments in US trade policy. Sentiment was influenced by news that US and Chinese negotiators had agreed on a framework to put their trade truce reached last month back on track and resolve China's export restrictions on rare earth minerals and magnets at the conclusion of two days of intense negotiations in London. However, market optimism was tempered by a US federal appeals court ruling that allows President Donald Trump to continue enforcing his global tariffs for now. Despite the pullback, the Kiwi remained near an eight-month peak reached last week, supported by expectations that the Reserve Bank of New Zealand is nearing the end of its rate-cutting cycle. Markets are currently pricing in a hold at the July meeting, with a possibility of one final rate cut in August.

New Zealand Dollar Weakens

The Australian dollar slipped to around $0.650 on Wednesday, ending two consecutive sessions of gains, pressured by growing expectations of further rate cuts by the Reserve Bank of Australia. Markets are now pricing in a 97% chance of a 25bps cut in July, with futures implying a total of 75bps of easing to 3.1% by the end of the year. This sentiment follows a string of soft economic data, including just 0.2% GDP growth in Q1, weak consumer spending, and falling business investment—raising concerns the RBA may have waited too long to act. Adding pressure, the US dollar firmed ahead of key US inflation data due later today, which could influence the Fed’s rate outlook. Still, the Aussie remains near its YTD peak, supported by optimism over US–China trade talks, which continue to support risk sentiment and underpin the China-proxy currency. Though details remain undisclosed, the discussions reached a preliminary deal to implement their Geneva consensus, aiming to ease trade tensions.

Aussie Dollar Slips on Dovish RBA Bets

The US dollar index held steady around 99 on Wednesday, trading in a narrow range this week as investors remained cautious ahead of the latest Consumer Price Index report, which could offer insight into the economic impact of recent tariffs. Markets are also closely watching developments in US–China trade talks. US Commerce Secretary Howard Lutnick said both countries have reached a framework to implement the Geneva consensus and follow through on commitments made during a recent presidential call. He also expressed optimism that China will lift its restrictions on rare earth exports, while the US is considering easing its curbs on advanced technology sales to China. Despite the trade optimism, the dollar remains near its lowest levels since early 2022, pressured by growing investor concerns over the broader economic impact of President Trump’s trade and fiscal policies, which have prompted a shift away from US assets.

Dollar Steady Ahead of Key Inflation Data

The Brazilian real strengthened past 5.55 per USD in June, its strongest level in nearly eight months, amid latest inflation data, high real interest rates, clearer fiscal signals, and a milder external backdrop. May’s headline inflation eased to 5.32%, surprising to the downside while still exceeding the target for a seventh consecutive month, reinforcing the Central Bank’s latest rate hike. Copom’s move to raise the Selic to 14.75%, a 17-year high, while signaling a likely pause, preserved Brazil’s substantial carry advantage, sustaining strong portfolio inflows. On the fiscal front, the administration’s agreement to “recalibrate” the IOF adjustment has dispelled much uncertainty, narrowing sovereign spreads and somewhat restoring confidence in Brazil’s fiscal trajectory. Externally, reports that US–China export-controls talks in London are progressing smoothly have eased global risk aversion and lent support to commodity-linked currencies, further underpinning the real’s advance.

Brazilian Real Appreciates to 8-Month High

The dollar index trimmed most of its earlier gains to trade flat around the 99 level on Tuesday, as traders awaited the outcome of ongoing trade negotiations between the US and China, now in their second day. While no major breakthroughs were reported after the first round of discussions, US officials expressed optimism about the negotiations. US Commerce Secretary Howard Lutnick said talks are going well and are expected to go all day Tuesday. Investors are also awaiting key economic data, with CPI and PPI reports due later this week expected to shed light on inflationary pressures and the broader impact of the ongoing trade war. The dollar remains near its April lows—the weakest levels since 2022—amid growing concerns over the economic effects of President Trump's trade and fiscal policies, which have led to a shift away from US assets. On the day, the greenback was mostly stronger against the British pound after weaker UK jobs data raised bets for the BoE's rate cuts.

Dollar Pares Most Gains, US-China Talks Awaited

The euro hovered around the $1.14 mark, near the three-year highs reached in April, as traders closely monitored developments in the ongoing US-China trade talks. At the same time, investors assessed comments from European Central Bank officials for clues about the ECB's next policy moves. Governing Council member François Villeroy de Galhau noted that the ECB could still act swiftly to adjust interest rates, even after its eighth consecutive cut, which he said had "normalized" monetary policy. Last week, the ECB lowered rates as expected, but President Christine Lagarde indicated the easing cycle may be approaching its end. The deposit facility rate now stands at 2%, while Eurozone inflation eased to 1.9% in May 2025. Meanwhile, the bloc’s economy expanded by 0.6% in Q1 2025, the fastest growth rate since Q3 2022.

Euro Hovers at $1.14

The British pound weakened to $1.35 after fresh economic data signaled a notable slowdown in the labour market, strengthening the case for a Bank of England rate cut. Wage growth came in below expectations, with private sector pay, a key metric closely monitored by the central bank, also decelerating. Meanwhile, the unemployment rate rose to its highest level since 2021, and the number of payrolled employees posted the steepest drop since 2020, suggesting early signs of the impact from higher National Insurance Contributions (NICs) and the recent increase in the National Living Wage. While the Bank of England is mostly expected to leave interest rates unchanged at its policy meeting next week, market odds for a rate cut in August have increased. Traders are also closely watching upcoming monthly GDP data and the government’s spending review, both due later this week, for further insight into the UK’s economic trajectory.

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