The dollar index rose for a fourth consecutive session to 101.3 on Tuesday, its highest level since April last year, extending gains as investors continued to price in the prospect of Fed rate hikes this year. The greenback also drew support from a flight to safety triggered by a sell-off in technology stocks. A hawkish message from the Fed last week has led markets to increase bets on monetary tightening, with traders now assigning a roughly 68% probability to a rate hike in September, up from 29% a week ago. Additional support came from stronger-than-expected flash S&P Global PMI data, which pointed to resilient economic activity in June. Investors will now turn their attention to this week's PCE inflation report, the Fed's preferred measure of inflation, for further clues on the path of interest rates. Among major currencies, the dollar posted its strongest gains against the Australian dollar and the euro.

Dollar Near 14-Month High

The Swiss franc weakened to near 0.81 per US dollar, falling near its weakest level since November 2025 amid a stronger U.S. dollar and lower oil prices. The Swiss National Bank kept its policy rate unchanged at 0% for a fourth consecutive meeting, maintaining that the current stance remains consistent with price stability and economic growth. However, the SNB revised its inflation outlook higher and reiterated its willingness to intervene in foreign exchange markets if needed. Meanwhile, the Federal Reserve's hawkish tone at its latest meeting bolstered the U.S. dollar. Adding to the pressure, oil prices fell amid signs of easing geopolitical tensions and after Iran was granted a 60-day license to sell oil on international markets, improving risk sentiment.

Swiss Franc Near 7-Month Low

EURUSD decreased to 1.14, the lowest since June 2025. Over the past 4 weeks, Euro US Dollar lost 2.15%, and in the last 12 months, it decreased 1.89%.

Euro Hits 12-month Low

The Serbian Dinar touched 102.98 against the USD, the lowest since June 2025. Over the past 4 weeks, US Dollar Serbian Dinar gained 2.09%, and in the last 12 months, it increased 1.94%.

Serbian Dinar Hits 12-month Low

The British pound weakened against a firmer US dollar but remained comfortably above $1.32 as investors balanced easing political uncertainty with weaker UK economic data. Sterling gave back some of the previous session’s gains as the dollar regained ground and broader market sentiment softened. Investors welcomed signs that a prolonged Labour leadership contest was becoming less likely after Keir Starmer announced his resignation. Andy Burnham is now seen as the leading candidate to replace him, with backing from former health secretary Wes Streeting reducing the risk of a drawn-out leadership battle. On the economic front, June flash PMI data showed a weaker picture, with the composite index falling to a 14-month low of 49.4, below expectations and signalling a second consecutive month of contraction. Rising input costs and accelerating services inflation continue to complicate the Bank of England’s policy outlook.

Sterling Edges Down, Holds Firmly Above $1.32

The euro weakened to $1.14, its lowest level since June 2025, under pressure from broad US dollar strength amid expectations that the Federal Reserve will raise interest rates later this year. Meanwhile, easing tensions in the Middle East and reports that the US and Iran are working toward a potential deal weighed on oil prices. However, concerns about persistent inflationary pressures remain on investors’ minds. In the Euro Area, the ECB raised interest rates by 25 basis points this month, in line with expectations. On Monday, ECB President Christine Lagarde said the central bank does not need to respond more aggressively to developments stemming from the Middle East conflict, noting that inflation is expected to return to target over the medium term. Still, markets continue to price in at least one additional 25bps increase this year, which would take the deposit rate to 2.5%.

Euro Weakens Further

The Danish Krone touched 6.55 against the USD, the lowest since June 2025. Over the past 4 weeks, US Dollar Danish Krone gained 2.09%, and in the last 12 months, it increased 1.97%.

Danish Krone Hits 12-month Low

EURUSD decreased to 1.14, the lowest since March 2026. Over the past 4 weeks, Euro US Dollar lost 1.93%, and in the last 12 months, it decreased 1.66%.

Euro Hits 14-week Low

The Thai baht depreciated past 33 per dollar in late June, its weakest level since May 2025, as widening interest rate expectations between the US and Thailand weighed on the currency. Markets are now pricing in a potential further tightening by the Federal Reserve by October, while Thai rate expectations point to less than a 50% chance of any move over the next six months, reinforcing yield differentials that continue to pressure the baht. The Bank of Thailand is widely expected to keep its policy rate unchanged at 1% this week, maintaining an accommodative stance to support growth. At the same time, Thailand’s economic backdrop remains fragile, with elevated household debt, weak consumption, and external challenges weighing on momentum. Slower Chinese demand and increased global competition are also dampening prospects, while structural issues such as a shrinking workforce and softer tourism flows add further pressure.

Thai Baht Slides to 1-Year Low

The Indonesian rupiah inched lower toward IDR 17,870 per U.S. dollar on Tuesday, extending weakness for a third straight session as the dollar index continued to hover near a 13-month top amid expectations that the Fed could raise rates later this year. Domestically, investors remained cautious ahead of MSCI's review later this week on whether to downgrade Indonesia to frontier market status, a move that could trigger sizable capital outflows. Concerns over the rising cost of defending the rupiah also resurfaced after the country's forex reserves declined further in May. Meanwhile, local media reports that major Japanese automakers may relocate some manufacturing operations from Indonesia to Vietnam added to worries over foreign investment, employment, and the country's manufacturing outlook. Still, the rupiah's losses were capped by Bank Indonesia's total 100bps of rate hikes since May, alongside stricter foreign exchange rules taking effect on July 1 to help ease capital outflows.

Rupiah Slides as Dollar Strength Persists

The Japanese yen traded around 161.5 per dollar on Tuesday, hovering near its weakest levels since 1986 as repeated verbal intervention efforts from Tokyo failed to stem the currency’s decline. Finance Minister Satsuki Katayama said she spoke by phone with US Treasury Secretary Scott Bessent, reaffirming an agreement to coordinate action in currency markets if needed. Investors remain on high alert for another round of official intervention after the yen erased all the gains recorded on April 30, when Tokyo conducted a record-sized currency-buying operation. The yen has remained under pressure despite the Bank of Japan’s recent interest rate hike, which markets view as insufficient to significantly reduce the country's interest-rate differential with other major economies. Additional weakness came from a stronger dollar, supported by hawkish signals from the Federal Reserve.

Yen Pressured Despite Intervention Warnings

AUDUSD decreased to 0.70, the lowest since April 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 2.7%, and in the last 12 months, it increased 7.46%.

Australian Dollar Hits 10-week Low

The dollar index traded around 101 on Tuesday, hovering near its highest level since May 2025 as investors assessed signs of progress in US-Iran peace talks while continuing to gauge the outlook for Federal Reserve interest rate hikes this year. In a key development, Washington granted Tehran a 60-day license to sell oil on international markets, boosting expectations of a faster recovery in global supply. Meanwhile, markets remain positioned for Fed rate hikes following the central bank’s hawkish stance last week and upward revisions to its inflation projections. Both Deutsche Bank and BofA Global Research have updated their forecasts to include a rate increase in September. Investors are now focused on this week’s PCE report, which contains the Fed’s preferred inflation measure and could offer fresh clues on underlying price pressures.

Dollar Hovers at 13-Month High

The Australian dollar slipped further below $0.70, hitting an eleven-week low as the US dollar continued to advance, while caution built ahead of inflation and jobs data this week that could indicate whether the Reserve Bank has finished raising rates. Headline inflation is expected to pick up to 4.4% in May from 4.2% from a month earlier, while core measure likely edged up to 3.5% from 3.4%, both well above the central bank’s target. Deputy Governor Andrew Hauser is expected to speak about the inflation outlook after the CPI release. For the employment data, a rise of 25,000 net jobs for May is expected, while the unemployment rate likely fell to 4.4% after hitting a 4 1/2 -year high of 4.5% last month. Meanwhile, the greenback strengthened further as markets continue to anticipate that the Fed will raise rates this year after a hawkish tone from officials. Elsewhere, the risk-sensitive Aussie found support from signs of initial progress in ongoing US-Iran peace negotiations.

Aussie Dollar Extends Decline to 11-Week Low

The Colombian peso surged to 3,425 per USD in June, around the strongest in six years, after rightwing presidential candidate de la Espriella won the presidential elections runoff. The President-elect, seen as an outsider, won the run-off after against leftist Cepeda, who was backed by outgoing President Petro, following the surprise first round win. The surge in the peso tracked similar moves for other Colombian asset classes. Espriella had pledged to cut Colombia's growing budget deficit amid the country's increasingly tight public finances, with last year's shortfall coming at 6.4% of the GDP, a reason cited by the central bank to hold rates restrictive. At the same time, the candidate also pledged to back coal mining and oil drilling in Colombia, which face opposition from the incumbent government.

Colombian Peso Surges to 6-Year High

The dollar index rose to 101 on Monday, reaching a new high in more than a year, as investors returned from the long weekend and refocused on developments in the Middle East and the monetary policy outlook. The US and Iran agreed on a roadmap toward a final deal to end their conflict within 60 days, with Iran’s foreign minister citing “progress” in negotiations, contributing to a decline in oil prices. However, markets continue to anticipate that the Federal Reserve will raise the fed funds rate this year, following a hawkish tone from new Chair Kevin Warsh last week and upward revisions to inflation forecasts. Attention now turns to this week’s PCE report, which includes the Fed’s preferred inflation gauge and is expected to provide fresh insight into underlying price pressures. The dollar strengthened most against the Japanese yen amid rising intervention concerns, while it weakened slightly against the British pound following UK Prime Minister Keir Starmer’s resignation.

Dollar Strengthens on Monday

The British pound rebounded toward $1.33 after falling to its lowest level since March earlier in the session, as markets reacted to Prime Minister Keir Starmer's resignation, paving the way for a change in the UK's leadership. The resignation follows Greater Manchester Mayor Andy Burnham's by-election victory last week, which enabled his return to Parliament. Burnham subsequently announced his intention to seek the premiership. Prospects for a smooth leadership transition improved after Wes Streeting, previously viewed as a potential challenger, declared his support for Burnham's candidacy. Investors are now focused on the implications for the UK's fiscal outlook, seeking greater clarity on the political transition and Burnham's fiscal policy agenda, with few concrete details available so far. A key concern remains the possibility of increased gilt issuance to finance higher public spending, which could further strain the UK's already fragile public finances and elevated debt burden.

Sterling Rebounds After Starmer's Resignation

The euro weakened to $1.145, its lowest level since mid-March, despite signs of diplomatic progress between the US and Iran. Negotiators from Tehran and Washington agreed on a roadmap toward a potential final agreement, easing concerns over energy supply disruptions. Investors also monitored developments in UK politics after Prime Minister Keir Starmer announced his resignation on Monday. Oil markets reacted positively to signs of progress in Middle East discussions, even as President Donald Trump warned of possible military action if Hezbollah attacks from Lebanon against Israel continue. The US and Iran have also established a communication channel aimed at preventing incidents and supporting the safe movement of commercial vessels through the Strait of Hormuz. Meanwhile, money markets continue to price in at least one additional European Central Bank rate hike this year, following the ECB’s recent 25 bps increase that lifted the deposit rate to 2.25%, the first rate rise since 2023.

Euro Hovers at 3-Month Low

The British pound weakened to $1.32 on Monday, approaching its lowest level this year after Prime Minister Keir Starmer resigned. Starmer's departure preludes a Labour Party successor by the start of September, with long-time Manchester mayor Andy Burnham seen as favorite to take the leadership role after winning the by-election last week. Burnham is seen as a fiscal dove and called for higher government expenditure, thus pressuring the sterling and lifting gilts across the curve, driving foreign investors to pivot out of pound-denominated assets as yields were already at their highest among G7 members. On the monetary policy front, the Bank of England left interest rates unchanged at 3.75% this month and maintained a cautious stance. The central bank also revised down its forecast for peak inflation in the fourth quarter of 2026 to 3.25%, from a previous estimate of 3.6%.

Pound Approaches YTD Low After PM Resigns

The British pound weakened to $1.32, approaching levels not seen since late March, as political uncertainty in the UK weighed on investor sentiment. Speculation intensified that Prime Minister Keir Starmer could soon announce his resignation, paving the way for a new Prime Minister. Reports suggest that Starmer is expected to outline a timetable for his departure on Monday and oversee an orderly transfer of power to Andy Burnham following the Greater Manchester mayor's victory in last week's by-election. Markets are also awaiting further details on the political transition, alongside any indications regarding the government's future fiscal policy. On the monetary policy front, the Bank of England left interest rates unchanged at 3.75% this month and maintained a cautious stance. The central bank also revised down its forecast for peak inflation in the fourth quarter of 2026 to 3.25%, from a previous estimate of 3.6%.

British Pound Weakens as Traders Await Starmer

The Indonesian rupiah hovered around IDR 17,830 per U.S. dollar on Monday after briefly firming below IDR 17,700 in the prior session, as the dollar index held near a 13-month high after the Fed kept interest rates unchanged last week but maintained a hawkish policy stance. Locally, traders remained cautious ahead of MSCI's review later this week on whether to downgrade Indonesia to frontier market status. Last week, the index provider lowered Indonesia's Information Flow accessibility rating, citing concerns over transparency, free-float visibility, and price discovery. Still, losses in the rupiah were limited by Bank Indonesia's tightening measures, including a total of 100bps of rate hikes since May and stricter foreign exchange rules, effective July 1, to curb capital outflows. On the fiscal front, tax revenue grew strongly in May amid the government's efforts to improve fiscal discipline, including scaling back funding for the Free Meal Program and suspending it during holidays.

Rupiah Eases Ahead of MSCI Review

The Indian rupee hovered near 94.3 per dollar, steadying after reaching six-week highs as easing geopolitical tensions and softer crude oil prices supported sentiment. Oil prices declined after Iranian officials reported progress in negotiations with the United States, with Brent crude for August delivery falling 1.7% to $79.24 per barrel following signs of constructive talks in Switzerland. However, uncertainty persisted after US President Donald Trump warned that military action against Iran could resume, even as Vice President JD Vance met Iranian officials under an interim peace arrangement. Tehran's renewed closure of the Strait of Hormuz added to market caution. Gains were partly capped as the dollar index held just below 101 and the benchmark 10-year US Treasury yield edged higher, though it remained below recent peaks. Investors are now focused on upcoming US inflation and growth data for clues on the Federal Reserve's policy outlook.

Rupee Holds Firm on Softer Oil

The South Korean won weakened to around 1,538 per dollar, remaining under pressure as the US dollar stayed firm. Markets continued to price in the possibility of further Fed tightening, while investors awaited key US inflation data later this week for additional clues on the interest-rate path. Higher US yields continued to support dollar-denominated assets, reducing the appeal of emerging Asian currencies and contributing to broader strength in the greenback. The won also faced headwinds from renewed Middle East uncertainty, with oil prices rising amid ongoing US-Iran negotiations and concerns over potential disruptions to energy supplies through the Strait of Hormuz. Meanwhile, South Korea’s exports surged 60.4% year-on-year in the first 20 days of June, driven by robust semiconductor shipments amid strong global AI-related demand. This supported expectations of continued foreign-currency inflows from overseas sales.

South Korean Won Remains Under Pressure

The Japanese yen weakened to around 161.5 per dollar on Monday, hovering near its lowest level since 1986 as repeated verbal interventions from Tokyo failed to halt the currency’s decline. Finance Minister Satsuki Katayama said authorities stood ready to take appropriate action against excessive currency moves at any time, echoing earlier warnings. The yen has now surrendered all the gains made on April 30, when officials carried out a record-sized market intervention to support the currency. The latest drop came despite the Bank of Japan’s ongoing policy normalization, including a 25-basis-point interest rate increase to 1% last week. The currency also remained under pressure from heavy carry-trade activity, as investors continued to favor short yen positions amid the still-wide interest rate gap between Japan and the US.

Yen Slides Toward 40-Year Low

The offshore yuan edged higher to around 6.77 per dollar on Monday, trimming losses from the previous session as broader market sentiment improved on progress in US-Iran talks while investors assessed the People's Bank of China's decision to leave its key lending rates unchanged. The PBoC maintained the one-year loan prime rate (LPR) at 3.0% and the five-year LPR at 3.5% for a thirteenth consecutive month, underscoring policymakers’ cautious approach as they seek to sustain growth while safeguarding financial stability. China's economic recovery remains uneven. While resilient exports continue to provide support, domestic consumption and the property sector remain subdued. Meanwhile, the US and Iran reported constructive progress in negotiations aimed at easing regional tensions, with both sides agreeing on a roadmap toward a potential final agreement within 60 days and the establishment of a direct communication channel designed to reduce the risk of incidents and miscalculations.

Offshore Yuan Rebounds

The dollar index traded around 100.8 on Monday, remaining close to its strongest level since May 2025 as investors assessed evolving developments in US-Iran peace negotiations while awaiting a key US inflation reading. Reports suggested that Washington and Tehran had agreed on a roadmap toward a final deal within 60 days, easing concerns after both sides exchanged fresh threats linked to the conflict in Lebanon. Market participants are now focused on this week's US PCE price index release, the Federal Reserve’s preferred measure of inflation. Last week, the Fed left interest rates unchanged but struck a more hawkish tone. Nine of the 19 policymakers now anticipate at least one rate increase before the end of the year, with markets increasingly pricing in a potential hike as early as September. Elsewhere, traders continued to monitor the Japanese yen amid rising intervention concerns and the British pound against the backdrop of political uncertainty in London.

Dollar Holds Near 13-Month Peak

The New Zealand dollar traded at a more than ten-week low around $0.573, weighed down by a firm US dollar and renewed tensions in the Middle East. The greenback strengthens amid increased bets on a US rate hike following the Federal Reserve’s hawkish signals. Meanwhile, US–Iran talks began on a confusing note on Sunday after Iranian media reported that Tehran had halted discussions over President Donald Trump’s latest threat, though reports indicated that negotiations continued into the early hours of Monday. New Zealand’s GDP data released last week suggested that economic recovery was gaining momentum. However, the figures largely reflected conditions prior to the escalation in Middle East conflict. As a result, forecasts show GDP to barely grow or even contract in Q2. Markets continue to price in a 25-bps hike in July given the RBNZ’s hawkish outlook, though swap pricing imply only two increases this year rather than the three previously expected.

New Zealand Dollar at Over 10-Week Low

The Australian dollar held around $0.701, remaining near ten-week lows as renewed Middle East tensions weighed on risk sentiment, while markets grew cautious ahead of key domestic economic releases this week. Investors will likely be focused on the release of CPI and jobs data for May, which will be pivotal for the Reserve Bank's next policy move. After holding the cash rate this month, Governor Michele Bullock emphasized that inflation remains too high and reiterated that further rate hikes cannot be ruled out. Still, markets increasingly suspect that the tightening cycle is over with another hike seen as unlikely unless second-quarter inflation comes in significantly stronger than expected. Traders also await upcoming flash surveys for PMI later today. Meanwhile, uncertainty over US-Iran peace talks drove oil prices higher after President Trump threatened fresh strikes if Hezbollah continues its attacks on Israel, while Tehran announced a renewed closure of the Strait of Hormuz.

Aussie Flat to Start the Week

The Russian ruble weakened to 73 per dollar from the three-year high of 70 in late May as the deteriorating fiscal backdrop momentarily offset the impact of capital controls and elevated energy prices. The Bank of Russia projected that fiscal policy will be more accommodative than expected in the upcoming three years, as the federal government continued to increase its bond supply to finance the costly war in Ukraine and subsidies for industries that have been hampered by sanctions from the West since 2022. This trimmed gains from the surge after the war in the Middle East lifted energy prices and drove major energy consumers to turn to Russia for supply alternatives. On top of that, the series of sanctions and the slowdown in the Russian economy limited domestic demand for foreign goods, hampering the purchases of foreign currency that further strengthened the ruble. The Russian GDP contracted by 0.2% annually in the first quarter.

Russian Ruble Eases from 3-Year High

The dollar index traded around 100.8 on Friday, holding near one-year highs as prospects of higher interest rates supported the currency following a hawkish Fed Reserve signal. The Fed left rates unchanged as expected but noted growing support for tighter policy later this year. Around half of FOMC members now project at least one rate hike in 2026. New Fed Chair Kevin Warsh declined to provide guidance on the next policy move but emphasised that inflation has remained above the 2% target for several years, reaffirming the Fed’s commitment to restoring price stability. Markets are currently pricing in roughly a 50% chance of a 25bp rate hike in September. Geopolitical concerns also resurfaced after US-Iran talks scheduled for Friday in Geneva were cancelled. Reports also suggested thinner traffic through the Strait of Hormuz, contributing to firmer oil prices. The dollar gained about 1.1% over the week.

Dollar Hovers at a One-Year High

The British pound erased earlier losses to trade just above $1.32, staying near a two-month low and on track for a weekly decline of more than 1% against the US dollar, amid political uncertainty, shifting global risk appetite, and stronger-than-expected UK retail sales data. Domestic focus intensified after Greater Manchester Mayor Andy Burnham won the Makerfield by-election, strengthening his position as a potential challenger to Prime Minister Keir Starmer. Meanwhile, planned US-Iran peace talks in Switzerland were abruptly canceled, renewing doubts over the durability of the tentative Middle East ceasefire reached over the weekend. On policy, the Bank of England held rates at 3.75% and maintained a cautious tone, trimming its Q4 2026 peak inflation forecast to 3.25% from 3.6%. The Federal Reserve also kept rates unchanged, though officials signaled lingering tightening risks. Money markets now price in at least a 25bp rate hike from both the BoE and the Fed this year.

Sterling Steadies Near Two-Month Low

The Hong Kong Dollar touched 7.84 against the USD, the lowest since April 2026. Over the past 4 weeks, US Dollar Hong Kong Dollar gained 0.07%, and in the last 12 months, it decreased 0.14%.

Hong Kong Dollar Hits 11-week Low

The euro hovered around $1.145, its weakest level since mid-March, and was on track for a weekly decline of about 1% amid broad-based dollar strength. Sentiment was hit after planned US-Iran peace talks in Switzerland were abruptly canceled, renewing doubts over the durability of the tentative agreement reached over the weekend to end the Middle East conflict. The US Federal Reserve also supported the dollar after keeping interest rates unchanged but signaling a more hawkish outlook in its latest projections. In Europe, attention remained on the European Central Bank, which recently raised rates for the first time since 2023. Money markets now price in at least one additional ECB hike this year as officials maintain a firm stance on inflation. Pierre Wunsch said another increase could come as soon as next month if inflation pressures broaden beyond energy, while Philip Lane suggested the euro-area economy may be able to absorb higher borrowing costs without losing momentum.

Euro Slides to Mid-March Low

The British pound slipped below $1.32, its lowest level since late March, after Greater Manchester Mayor Andy Burnham won the Makerfield by-election with 54.8% of the vote, strengthening his position as a potential challenger to Prime Minister Keir Starmer. Investors also digested the latest decisions from the Bank of England and the US Federal Reserve. As expected, the BoE voted 7–2 to keep interest rates unchanged at 3.75%, while maintaining a cautious outlook due to uncertainty surrounding the economic impact of Middle East-related energy shocks. The BoE reiterated its readiness to respond to inflation pressures, although it lowered its forecast for peak inflation in Q4 2026 to 3.25% from 3.6%. The decision followed the Fed's move to hold rates steady, despite a growing number of policymakers signaling the possibility of further tightening this year.

Sterling Drops After Burnham Win

The Indonesian rupiah slipped to around IDR 17,850 per U.S. dollar on Friday, retreating from about IDR 17,700 in the previous session as the dollar index hovered near its highest since May 2025 on expectations of a Fed rate hike later this year. Traders also braced for MSCI’s review next week on whether to downgrade Indonesia to frontier market status, a risk that could spur fresh capital outflows. Meanwhile, fiscal concerns lingered even after the government cut funding for the flagship Free Meal Program and suspended it during school holidays. Still, the rupiah is up roughly 0.6% this week, set for a second straight gain, supported by Bank Indonesia’s hawkish stance, delivering a total of 100 bps of hikes since May. Reinforcing stability efforts, the central bank tightened forex rules, lowering the documentation threshold for outward transfers to USD 25,000 from USD 50,000 and reducing the limit for cash purchases of foreign currency to USD 10,000 from USD 25,000, effective July 1.

Rupiah Weakens, Still Poised for Second Weekly Gain

The Indian rupee hovered around 94.2 per dollar, extending gains to a six-week high as improving capital flows lifted investor sentiment. Market participants reported an improvement in foreign-exchange flows, with increased investment into Indian bonds and a slowdown in foreign equity outflows helping strengthen demand for the local currency. This marks a shift from the one-sided dollar demand that had pressured the rupee in recent weeks. The decline in crude oil prices following easing geopolitical tensions has reduced pressure on India's import bill. Interbank market sentiment has also improved, with traders becoming more willing to take positions on both sides of the market rather than consistently buying dollars on dips, reflecting increased confidence in the rupee. However, the rupee's gains remain challenged by a stronger dollar, with expectations of tighter Federal Reserve policy boosting demand for the greenback amid persistent inflation concerns.

Rupee Rises to 6-Week High

The Chinese Yuan touched 6.79 against the USD, the lowest since May 2026. Over the past 4 weeks, US Dollar Chinese Yuan lost 0.14%, and in the last 12 months, it decreased 5.4%.

Chinese Yuan Hits 4-week Low

The offshore yuan weakened to around 6.78 per dollar on Friday, putting the currency on track for a weekly loss as a resilient US dollar capitalized on intensifying rate-hike bets. While the Federal Reserve recently left interest rates unchanged as widely anticipated, roughly half of the FOMC policymakers now project at least one additional rate hike by the end of 2026. On the domestic front, traders are closely watching next week’s fixing of the one- and five-year Loan Prime Rates (LPR). The upcoming policy decision carries extra weight following a string of recent data underscoring China's uneven economic growth. Meanwhile, Hong Kong is set to debut its highly anticipated offshore yuan bond futures this August. The milestone launch represents a strategic push by Beijing to cement the city’s status as a premier global offshore yuan hub while accelerating the broader internationalization of the currency.

Offshore Yuan Heads for Weekly Loss

The Japanese yen weakened beyond 161 per dollar on Friday, falling to its lowest level since July 2024 despite renewed verbal intervention from Japanese authorities. Chief Cabinet Secretary Minoru Kihara said on Thursday that the government remains prepared to respond to excessive currency movements whenever necessary. The yen has now erased all the gains recorded on April 30, when authorities conducted a record-sized intervention to support the currency. The latest decline came despite the Bank of Japan’s gradual tightening cycle, including a 25-basis-point rate hike to 1% earlier this week aimed at addressing an energy-driven inflation shock linked to the Middle East conflict. The dollar also strengthened following the Federal Reserve’s decision to leave interest rates unchanged while signaling increasing support for additional rate hikes later this year. The widening policy divergence between Japan and the US continued to weigh on the Japanese currency.

Yen Weakens Despite Verbal Interventions

The dollar index traded around 100.8 on Friday, hovering at its highest level since May 2025 as investors piled on rate hike bets this year following hawkish signals from the Federal Reserve. On Wednesday, the Fed left rates unchanged as widely expected, but roughly half of FOMC members now anticipate at least one rate increase in 2026. The central bank also raised its inflation projections to account for the economic effects of the conflict in the Middle East. Chair Kevin Warsh declined to provide guidance on the next policy move but reaffirmed the Fed’s commitment to restoring price stability. Meanwhile, the US-Iran interim peace agreement took effect on Thursday, bringing an end to a prolonged conflict that triggered a historic disruption to global energy supplies. While the deal helped ease geopolitical risks and pushed oil prices lower, markets remained focused on the Fed’s policy outlook and the prospect of tighter monetary conditions.

Dollar Towers on Hawkish Fed Signals

The Australian dollar held below $0.705, near ten-week lows and headed for a third weekly loss as a stronger US dollar and fading bets of additional RBA rate hikes weighed on the currency. Markets increasingly suspect the Reserve Bank of Australia has finished tightening after keeping the cash rate unchanged this week, with the odds of one more hike this year reduced to about 50%. While Governor Michele Bullock maintained that further tightening remains possible if inflation persists, markets expect it would take a sharply higher second-quarter inflation reading to trigger another move. Meanwhile, the US dollar index climbed to a one-year high after the Federal Reserve's hawkish hold prompted traders to increase bets on further rate hikes. Nearly half of policymakers projected at least one increase this year amid growing inflation concerns. Elsewhere, a US-Iran interim deal and the resumption of energy flows through the Strait of Hormuz provided some support for the risk sensitive AUD.

Aussie Heads for 3rd Weekly Loss

The Canadian Dollar touched 1.41 against the USD, the lowest since April 2025. Over the past 4 weeks, US Dollar Canadian Dollar gained 2.88%, and in the last 12 months, it increased 3.22%.

Canadian Dollar Hits 14-month Low

The Brazilian real traded near 5.15 per USD in June, weakening after the latest interest rate decisions by Brazil’s central bank and the US Federal Reserve. The Monetary Policy Committee cut the Selic rate by 0.25 percentage points to 14.25% per year, while leaving its next steps open and dependent on incoming data. In the US, the Federal Open Market Committee kept its benchmark rate unchanged at 3.50%-3.75%, but signaled a hawkish outlook. The move in the currency reflected a worsening outlook for the interest rate differential between Brazil and the US, a key factor for foreign investors. Lower expected rates in Brazil and higher-for-longer rates in the US reduce the appeal of Brazilian assets, supporting the dollar against the real. Meanwhile, oil prices fell after the signing of a US-Iran agreement aimed at ending the conflict and reopening the Strait of Hormuz, easing energy-driven inflation expectations.

BRL Weakens After BCB and Fed Rate Decisions

The dollar index extended its gains for a second straight session, rising to 100.6 on Thursday and reaching its highest level since May 2025, as investors ramped up bets on Fed rate hikes later this year following a hawkish signal from the Federal Reserve. The Fed left rates unchanged as expected but signalled growing support for tighter policy later this year. Around half of FOMC members now project at least one rate increase in 2026, while the central bank also raised its inflation forecasts amid the economic impact of the conflict in the Middle East. Fed Chair Kevin Warsh declined to provide guidance on the next policy move but stressed that inflation has remained above the 2% target for several years, reaffirming the Fed’s commitment to restoring price stability. Markets are now fully pricing in a rate hike by October. The greenback strengthened broadly, with the largest gains seen against the British pound and Swiss franc after both the BoE and the SNB kept rates unchanged.

Dollar at Over One-Year High

The British pound fell toward $1.32, reaching its lowest level since April 3, after the Bank of England voted 7-2 to maintain interest rates at 3.75%, in line with expectations. Policymakers adopted a cautious stance, citing uncertainty over the economic impact of the energy shock driven by the Middle East conflict. The BoE reiterated its readiness to act on inflation, with Governor Andrew Bailey emphasizing that pressures from the Iran conflict persist despite the ceasefire and potential deal. The Monetary Policy Committee also revised its peak inflation forecast downward to 3.25% in Q4 2026, from a previous estimate of 3.6%. This decision follows the US Federal Reserve’s move to hold rates steady, though nine of its 19 policymakers now expect at least one hike this year. Meanwhile, investors await the Makerfield by-election results, which could shape Labour’s leadership and economic direction.

Pound Slides Toward $1.32 as BoE Holds Rates

DXY increased to 100.72, the highest since May 2025. Over the past 4 weeks, Dollar Index gained 1.39%, and in the last 12 months, it increased 1.83%.

Dollar Index Hits 12-month High

The euro fell below $1.15, hitting its lowest level since late March, amid broad dollar strength as traders reacted to a more hawkish stance from the US Federal Reserve, which kept interest rates steady but revealed in its latest projections that nine policymakers now anticipate a rate hike by the end of 2026. This shift came after the European Central Bank raised rates last week and the Bank of Japan followed with a similar move earlier this week. Markets are now pricing in at least one additional ECB rate increase before year-end. Adding to the market dynamics, investors responded positively to reports of a US-Iran agreement to reopen the Strait of Hormuz, which drove oil prices to three-month lows and eased inflation pressures. Still, tensions persisted, with US President Donald Trump warning of potential renewed attacks and targeted actions against Iranian officials if the agreement’s terms were not upheld.

Euro Slumps to 2-1/2-Month Low

The Japanese Yen touched 160.80 against the USD, the lowest since July 2024. Over the past 4 weeks, US Dollar Japanese Yen gained 1.07%, and in the last 12 months, it increased 10.6%.

Japanese Yen Hits 23-month Low

The Swiss franc was little changed at 0.8 per US dollar, remaining near its weakest level in over two months as investors assessed the latest policy decisions from the Swiss National Bank and the US Federal Reserve. The Swiss National Bank kept its policy rate at 0% for the fourth straight meeting, as expected, stating the current stance supports price stability and economic growth. Meanwhile, the central bank raised inflation forecasts for this year and the next, while growth projections were kept unchanged. The SNB slightly adjusted its language, saying it is more willing to intervene in the foreign exchange market “if necessary.” Elsewhere, the US Federal Reserve unsurprisingly held rates steady, but signaled the possibility of a rate hike this year.

Swiss Franc Hover Around 2-Month Lows

The Indonesian rupiah firmed to below IDR 17,800 per U.S. dollar on Thursday afternoon after Bank Indonesia raised its benchmark interest rate by 25bps to 5.75%, in line with consensus. The move came just a week after a surprise off-cycle increase, bringing cumulative tightening to 100bps across three hikes over the past four weeks, as the central bank seeks to reinforce support for the rupiah and contain inflation risks stemming from the Middle East conflict. The decision also came against the backdrop of the U.S. Federal Reserve keeping interest rates unchanged while signaling that further tightening remains possible. The rupiah has been among Asia's weakest-performing currencies this year, pressured by higher energy prices linked to geopolitical volatility and lingering concerns over domestic policymaking. Governor Perry Warjiyo said the rupiah is expected to appreciate going forward, supported by attractive yields, deeper domestic financial markets, and resilient economic growth.

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