The South African rand strengthened to below 18 per USD, driven by a weakening dollar after dovish signals from the Federal Reserve reinforced expectations of interest rate cuts. Gains were also driven by rising metal prices, which boosted sentiment toward commodity-linked currencies. Nonetheless, geopolitical instability in the Middle East continues to fuel inflationary concerns, which could pressure South Africa’s broader economic outlook.

South African Rand Firms Slightly

The dollar index trimmed early gains to trade slightly lower below 99 on Monday, as concerns over an imminent Iranian response to US airstrikes and a potential closure of the Strait of Hormuz began to fade. As a result, the initial surge in oil prices was erased, easing fears of renewed inflationary pressures. Meanwhile, Federal Reserve Governor Michelle Bowman indicated she could support a rate cut in July if inflation remains subdued, echoing dovish comments from Governor Christopher Waller. In response, traders increased bets on monetary easing, now pricing in approximately 55 basis points of rate cuts by the end of the year. Investors are also focused on Fed Chair Jerome Powell’s upcoming semi-annual monetary policy testimony before Congress for further insight into the Fed’s outlook. On the data front, flash PMIs beat expectations, with both manufacturing and services sectors continuing to expand, although price pressures showed signs of intensifying.

Dollar Pulls Back After Early Gains

The Brazilian real weakened past 5.5 per USD in June, retreating from its strongest level in eight months of 5.49 seen June 19th, as a fresh layer of geopolitical uncertainty from US strikes on Iranian nuclear facilities and Tehran’s vow of “lasting consequences” drove investors back into dollar-denominated safe havens, outweighing Brazil’s still-attractive 15% Selic rate. Fears that any Iranian retaliation, or a Strait of Hormuz blockade, could further squeeze global oil supplies and stoke inflation prompted a surge in USD-buying. At the same time, domestic policy risks have resurfaced: Congress is weighing an IOF-tax rollback that could trim government revenue by an estimated R$20 billion, while persistent inflation prints near the top of the central bank’s tolerance band have clouded expectations for the timing of future rate cuts.

Brazilian Real Retreats Amid Risk Aversion

The Swiss franc was little-changed around 0.82 per USD, remaining close to 2011-highs, as intensifying tensions in the Middle East drove investors toward safe-haven assets. The Israel-Iran conflict took a sharp turn over the weekend after the US intervened with military action, further heightening geopolitical risks. At the same time, the franc remains supported by broader global uncertainty, fueled by trade tensions following Donald Trump’s proposed tariffs and the Swiss National Bank’s (SNB) recent signal that it has no plans for additional rate cuts—challenging speculation of a return to negative rates this year. The SNB cut its policy rate to 0% in its sixth consecutive reduction since March 2024, responding to falling inflation and sustained upward pressure on the franc. Notably, inflation turned negative in May for the first time in four years, slipping below the SNB’s 0–2% target range.

Swiss Franc Remains Near 2011-Highs

The British pound fell to $1.339, its lowest level in over a month, as heightened geopolitical tensions drove investors toward the US dollar. The dollar outperformed all G10 currencies, particularly after the US launched strikes on Iran, fueling safe-haven demand. Domestically, UK economic data offered some support, with S&P Global’s flash composite PMI rising to 50.7 in June, slightly above expectations. Manufacturing continued to contract but less than forecast, while services matched estimates. However, the pound remained under pressure following last week’s Bank of England decision to hold rates steady. The vote was more dovish than anticipated, with three of nine MPC members supporting a rate cut, versus an expected 7–2 split. The BoE cited persistent inflation and geopolitical risks, warning of “two-sided risks” and expecting inflation to stay elevated through 2025.

Sterling Weakens to Over 4-Week Low

USDKRW increased to a 4-week high of 1387.00. Over the past 4 weeks, US Dollar South Korean Won gained 1.21%, and in the last 12 months, it increased 0.01%.

South Korean Won Hits 4-week Low

The euro traded around $1.15, hovering near the 2021 highs reached earlier in the month, as investors weighed escalating geopolitical tensions in the Middle East, inflationary risks, and the outlook for monetary policy. The conflict intensified after the United States entered the war and launched strikes on Iran, fueling fears over a possible closure of the Strait of Hormuz, a key chokepoint for global oil shipments, which would push oil prices even higher. On the economic front, flash PMI data showed a deeper-than-expected contraction in private sector activity in France. Meanwhile, analysts continue to expect a 25-basis-point rate cut by the European Central Bank in September, which would lower the key deposit rate to 1.75%.

Euro Hovers at $1.15

AUDUSD decreased to a 4-week low of 0.64. Over the past 4 weeks, Australian Dollar US Dollar lost 1.19%, and in the last 12 months, it decreased 3.69%.

Australian Dollar Hits 4-week Low

The South Korean won slipped to around 1,380 per dollar on Monday, marking a pullback from the prior session’s gains, as investor sentiment turned wary over the potential retaliation from Iran following US airstrikes on Sunday. Investors sought safe-haven assets amid geopolitical unrest heightened by the US involvement as it targeted Fordow, Natanz, and Isfahan nuclear sites. While American leaders urged Tehran to stand down, President Donald Trump further inflamed tensions by publicly suggesting the possibility of regime change in Iran. Adding to the downward pressure, the uncertainty over the second supplementary budget’s approval and implementation, submitted during the national assembly, prompted a cautious market response. The anticipated cash handouts and stimulus measures may take time to positively impact the economy.

South Korean Won Weakens on Geopolitical Risks

The offshore yuan weakened to around 7.18 per dollar on Monday, reversing gains from the previous session, as renewed safe-haven demand amid escalating geopolitical tensions lifted the US dollar. The US launched airstrikes on three Iranian nuclear sites, marking its direct entry into the Israel-Iran war despite Trump’s earlier vows to avoid new conflicts. The strikes marked a major escalation, raising fears of a broader regional confrontation and triggering a surge in oil prices. The US now calls on China to prevent Iran from closing the Strait of Hormuz in retaliation. About 20% of global oil flows through the strait, a key route for China—which sources 45% of its oil imports via the passage—making any disruption a potential trigger for inflation and downward pressure on the yuan. Meanwhile, the yuan found some support after China expanded its cross-border yuan payment system by adding six financial institutions from Africa, the Gulf, and Central Asia to boost the yuan’s global role.

Offshore Yuan Slips as Dollar Advances

The Japanese yen weakened past 146 per dollar on Monday, hitting its lowest level in over five weeks as the US dollar outperformed as a safe-haven currency following a sharp escalation in Middle East tensions. The move came after the US launched airstrikes on three Iranian nuclear sites over the weekend, joining Israel in its ongoing conflict with Tehran and raising fears of retaliation. On the domestic front, economic data showed Japan’s manufacturing sector returned to growth in June for the first time since May 2024, while services activity expanded for the third consecutive month, signaling resilience in the broader economy. Last week, the Bank of Japan held its benchmark interest rate steady at 0.5%, noting that firms continue to pass wage gains onto prices, keeping core inflation elevated. Governor Kazuo Ueda reaffirmed a data-driven policy approach, leaving the door open for further rate hikes if inflationary pressures persist.

Japanese Yen Hits 5-Week Low

The Australian dollar depreciated past $0.643 on Monday, hitting its lowest level in over three weeks, as the US dollar strengthened amid escalating geopolitical tensions. The greenback gained after US forces launched strikes on three of Iran’s main nuclear sites over the weekend, with President Donald Trump warning of further action if Tehran does not pursue peace. In Australia, economic data showed resilience despite external pressures. Preliminary figures for June indicated that private sector activity rose to 51.2, up from 50.5 in the previous month—marking the ninth consecutive month of expansion and the second-fastest pace in the past ten months. The Manufacturing PMI held steady at 51, while the Services PMI climbed to a three-month high of 51.3, from 50.6 in May. Investors are now looking ahead to the release of the monthly CPI indicator for May, due later this week, for further clues on the Reserve Bank of Australia’s policy outlook.

Australian Dollar Falls Amid Strengthening Greenback

The New Zealand dollar weakened to around $0.595 on Monday, hitting its lowest level since late May, as risk sentiment took a hit following the US attack on Iran, raising fears of further escalation in the Middle East. The US launched airstrikes on three Iranian nuclear sites early Sunday, marking its direct entry into Israel’s war with Iran. President Trump claimed Iran’s key nuclear facilities were “totally obliterated” and warned of “far greater” attacks unless Iran pursued peace. On the domestic front, data last week showed that New Zealand’s GDP grew more than expected in Q1, marking the second consecutive quarter of expansion after two quarters of contraction. This was in line with market expectations that only one more rate cut may be left in the current easing cycle, fully priced in by November. Investors now await key indicators this week, including trade balance and consumer confidence, for further insight into the economy.

New Zealand Dollar Nears 4-Week Low

The US dollar index climbed to around 99 on Monday, extending last week’s gains as safe-haven demand surged following US airstrikes on three Iranian nuclear facilities over the weekend. The move caught markets off guard after President Donald Trump said on Friday that a decision on Iran would come “within the next two weeks,” raising hopes for diplomacy. Investors are now bracing for a potential response from Tehran, including the risk of attacks on US personnel in the region or disruption of global oil flows through the Strait of Hormuz. Attention also turns to upcoming US data releases, including existing home sales and PMI figures, for fresh insights into the health of the economy. Last week, the Federal Reserve held interest rates steady and maintained a cautious, data-dependent stance amid rising geopolitical risks and economic uncertainty. Fed Chair Powell warned that inflation could accelerate in the months ahead, in part due to the inflationary effects of Trump’s tariffs.

Dollar Rises on Middle East Escalations

USDJPY increased to a 5-week high of 146.46. Over the past 4 weeks, US Dollar Japanese Yen gained 1.69%, and in the last 12 months, it decreased 8.55%.

Japanese Yen Hits 5-week Low

The Australian dollar stabilized above $0.648 on Friday, but remained under pressure as escalating Middle East tensions and the potential US involvement in the region weighed on sentiment. Global markets are now bracing for a possible US decision within two weeks, as President Trump weighs a potential direct strike on Iran. However, the China-proxy currency found some support after the People’s Bank of China left its Loan Prime Rates unchanged, helping sentiment around regional demand. At home, the recent mixed Australian jobs report did little to alter expectations, with a July RBA rate cut still priced at a 75% probability. Westpac expects the next move in August, citing the central bank’s preference for caution and the need to assess second-quarter inflation and global conditions. Investors now turn to upcoming PMI figures for a clearer read on Australia’s economic momentum.

Aussie Dollar Pressured by Middle East Conflict

The South Korean won strengthened to around 1,371 per dollar on Friday, firming within recent mid-range levels. This followed the government's approval of a ?30.5 trillion second supplementary budget on June 19, which includes ?20.2 trillion in new spending, devoted to cash handouts and public investment to boost consumption and support vulnerable sectors. Acting Finance Minister Lee Hyoung-il also pledged close oversight of FX markets, citing heightened volatility from US tariff uncertainties and Middle East tensions. Despite global pressures, the won found temporary support from proactive fiscal measures. However, currency volatility is expected to continue ahead of US–Korea tariff talks and shifting global interest rate expectations.

South Korean Won Gains on Government Budget Boost

The Japanese yen strengthened toward 145 per dollar on Friday, recovering some of its recent losses after core inflation in Japan accelerated for the third straight month to 3.7%, the highest reading since January 2023.  This reinforces expectations that the Bank of Japan may continue tightening monetary policy to combat persistent inflationary pressures. Earlier this week, the BOJ kept its benchmark interest rate steady at 0.5% but noted that companies are continuing to pass wage increases onto prices, keeping core inflation elevated. BOJ Governor Kazuo Ueda reiterated the bank’s data-dependent approach, signaling openness to further rate hikes if inflation remains persistent. Despite Friday’s rebound, the yen remains down nearly 1% for the week, pressured by a stronger US dollar amid heightened safe-haven demand driven by escalating tensions between Israel and Iran and the potential for US involvement in the region.

Japanese Yen Rises as Core Inflation Accelerates

The offshore yuan inched higher to around 7.18 per dollar on Friday as investors digested the latest policy decision from the People's Bank of China. As widely anticipated, the central bank kept its key lending rates at historic lows during the June rate-setting. The one-year loan prime rate was left unchanged at 3.0%, while the five-year LPR remained steady at 3.5%, following last month’s 10 bps rate cut and deposit rate reductions by major state-owned banks. Meanwhile, investors continue to monitor ongoing tensions in the Middle East. US President Donald Trump has reportedly given Iran a final opportunity to negotiate an end to its nuclear program, delaying a decision on possible military action for up to two weeks. Elsewhere, China swiftly condemned Israel over its attack on Iran. However, Beijing has so far refrained from offering Tehran any substantial assistance beyond maintaining regular trade ties. Over the week, the currency appears to be on track for modest gains.

Offshore Yuan Edges Higher

The New Zealand dollar hovered around $0.599 on Friday, after sliding to a two-week low in the previous session as heightened tensions in the Middle East and fears of possible US involvement weighed on sentiment. The White House said on Thursday that President Donald Trump would decide within the next two weeks whether the US would get directly involved in the escalating Israel-Iran conflict. In New Zealand, latest data showed the economy grew faster-than-expected in the March quarter, firming up the recovery from last year's recession and giving the Reserve Bank more flexibility in deciding when to cut interest rates again. Markets imply there might be only one rate cut left in the current easing cycle, which is fully priced in by November. For the week, the kiwi is down about 0.4%.

New Zealand Dollar Holds Decline

The US dollar index edged lower to around 98.6 on Friday but remained on track for a weekly gain as the ongoing conflict between Israel and Iran and the potential involvement of the US boosted safe-haven demand. Reports indicate that President Donald Trump has given Iran the last chance to negotiate an end to its nuclear program, delaying a decision on potential military strikes for up to two weeks. On the monetary policy front, the Federal Reserve kept rates unchanged earlier this week while maintaining a cautious, data-dependent approach in the face of growing economic and geopolitical uncertainty. Fed Chair Jerome Powell warned that inflation could pick up in the coming months, partly due to the inflationary effects of Trump’s tariffs. The Fed also downgraded its economic growth outlook and reaffirmed expectations for two 25 bps rate cuts in 2025. Traders now look ahead to the Philadelphia Fed's manufacturing survey and the Conference Board's leading economic indicators on Friday.

Dollar Heads for Weekly Gain Amid Middle East Tensions

The Mexican peso weakened toward 19.1 per USD, easing from its ten-month high of 18.886 seen June 12th as the US dollar regained strength compounding with anticipated Banxico easing, and renewed geopolitical risk. In Washington, the Federal Reserve’s decision to hold rates at 4.25–4.50% and Chair Powell’s warning that US tariffs could stoke inflation bolstered demand for dollars. At the same time, markets have begun to price in earlier-than-expected rate cuts from Banxico, even as Mexico’s benchmark rate remains at 8.5%, eroding the carry premium that has supported the peso. Fresh threats of US trade tariffs on key Mexican exports have further clouded the economic outlook and undermined confidence in the currency. Meanwhile, escalating Israel–Iran hostilities have driven investors into safe-haven assets, adding to dollar demand.

Mexican Peso Retreats from 10-Month Highs

The Turkish lira weakened past 39.5 per USD in June, extending its depreciating momentum as the central bank continued to tune its tools for the controlled weakening of the currency. The TCMB maintained its benchmark interest rate at 46% in its June meeting, as expected by markets, to hold the 350bps rate increase from earlier in the second quarter. The increase was a response to the selloff in the lira following the arrest of Istanbul Mayor Ekrem Imamoglu, President Erdogan’s main political rival. The incident triggered the largest protests in over a decade and fueled fears of deepening political instability. In addition to a higher policy rate, the central bank unveiled a series of measures to reduce lira liquidity and increased the reserve requirement ratio for foreign liabilities.

Turkish Lira Extends Steady Depreciation

The British pound hovered around $1.34 after the Bank of England kept interest rates unchanged, amid a complex backdrop of persistent inflation, rising geopolitical tensions, and potential trade disruptions from proposed US tariffs. The decision, however, was not unanimous: six of the nine Monetary Policy Committee members voted to hold, while three favored a 25 basis point cut, defying market expectations of a 7–2 split. The Bank warned of “two-sided risks to inflation,” noting that price growth is likely to remain broadly stable through the rest of the year before easing back toward target in 2026. Meanwhile, the US dollar gained ground, supported by safe-haven flows amid the ongoing Israel-Iran conflict and the Federal Reserve’s decision to hold rates steady. Fed Chair Jerome Powell also flagged potential inflationary pressures ahead, partly stemming from new tariffs proposed by the Trump administration.

Pound Holds at $1.34 as BoE Stands Pat

USDZMW decreased to a 15-month low of 23.42. Over the past 4 weeks, Zambia Kwacha lost 11.91%, and in the last 12 months, it decreased 5.93%.

Zambia Kwacha Hits 15-month High

The Norwegian krone weakened to 10 per USD after briefly reaching 9.86 on June 17, its strongest level since February 2022, following Norges Bank’s surprise decision to cut interest rates. At its June meeting, Norway’s central bank reduced its policy rate by 25 basis points to 4.25%—the first cut in five years—and signaled further reductions ahead due to a more benign inflation outlook. This move is viewed as a “cautious normalization” of the central bank’s policy, which has remained significantly higher than those of many other countries. Governor Ida Wolden Bache emphasized that a restrictive monetary policy remains necessary, albeit less stringent than before. She hinted at additional rate cuts, forecasting the policy rate to fall to just below 4% by the end of 2025 and around 3% by late 2028. Core inflation eased more than expected to 2.8% in May but still remains above the central bank’s 2% target.

Norwegian Krone Slides Following Norges Bank’s First Rate Cut in Five Years

The British pound slipped to $1.34, its lowest level in a month, as investors awaited the Bank of England’s policy decision and monitored rising tensions in the Middle East. Markets widely expect the BoE to leave interest rates unchanged on Thursday, amid a backdrop of heightened geopolitical risks, sluggish economic growth, persistent inflation, and the threat of trade disruptions from proposed US tariffs. With the rate decision largely priced in, investor focus will shift to the vote split, following last month’s unexpected three-way division among policymakers. Meanwhile, the US dollar gained ground after the Federal Reserve kept rates steady. Fed Chair Jerome Powell signaled potential inflationary pressure ahead, partly due to new tariffs proposed by the Trump administration.

Pound Weakens Ahead of BoE Decision

The Swiss franc was little changed at 0.82 per US dollar, hovering near its strongest level since 2011, as investors sought safe-haven assets amid mounting tensions in the Middle East and digested fresh policy decisions from the Swiss National Bank and the US Federal Reserve. Geopolitical concerns intensified as the conflict between Israel and Iran escalated, with US President Trump warning that the US could potentially support Israeli airstrikes on Tehran. On the monetary front, the SNB cut its policy rate to 0%, marking its sixth consecutive rate reduction, in response to falling inflation, upward pressure on the franc, and heightened global uncertainty fueled by proposed US tariffs. With inflation turning negative in May for the first time in four years—missing the SNB’s target range of 0–2%—the central bank is now nearing a return to negative interest rates. Meanwhile, the US Federal Reserve held rates steady and indicated that rate cuts could be on the horizon later this year.

Swiss Franc Nears 2011 High

The offshore yuan stabilized around 7.19 per dollar on Thursday, as investors digested key announcements made at the opening of the 2025 Lujiazui Forum in Shanghai. People's Bank of China Governor Pan Gongsheng unveiled eight major initiatives aimed at further opening China's financial markets and enhancing Shanghai's role as a global financial center. Among them, China will establish an “international operations center” for the digital yuan to bolster the global presence of the renminbi. On the monetary policy front, investors are focused on the PBoC's upcoming policy decision, with market expectations pointing to unchanged loan prime rates. Meanwhile, escalating tensions in the Middle East continued to weigh on market sentiment, following reports that the US is preparing to launch a strike on Iran as early as this weekend. In response, Iran’s Supreme Leader warned that any US intervention could cause “irreparable damage.”

Offshore Yuan Stabilizes After Lujiazui Forum

The Japanese yen slipped past 145 per dollar on Thursday, nearing three-week lows as a stronger US dollar exerted pressure. The greenback gained after the Federal Reserve kept interest rates unchanged and signaled a cautious approach to policy adjustments, warning that President Trump’s tariffs could reignite inflation.
The dollar also outperformed the yen as a safe-haven currency amid rising geopolitical tensions, with the Israel-Iran conflict stoking fears of deeper US involvement in the Middle East. Meanwhile, the Bank of Japan kept rates unchanged on Tuesday and signaled a slow, measured approach to reducing its balance sheet. BOJ Governor Kazuo Ueda reaffirmed that the central bank is closely monitoring domestic and global conditions, leaving the door open to future rate hikes if inflationary pressures warrant action.

Japanese Yen Pressured by Dollar Strength

The New Zealand dollar fell to around $0.598 on Thursday, hitting over two-week lows even as data showed the economy grew faster-than-expected. New Zealand’s GDP rose by 0.8% in the March quarter, beating forecasts of a 0.7% growth and following a downwardly revised 0.5% increase in the prior quarter. Annually, GDP fell by 0.7%, slightly better than the estimated 0.8% drop. The data supports expectations that the Reserve Bank will hold rates steady in July. The RBNZ has recently signaled it may be nearing the end of its easing cycle, with markets pricing in just one final rate cut later this year. Externally, the kiwi faced pressure from a rising US dollar, which gained after the Federal Reserve kept rates unchanged and signaled a slower pace of future cuts. Fed Chair Powell also struck a cautious tone, warning that inflation could rise due to President Trump’s tariffs. Geopolitical tensions also weighed, with investors weighing the risk of US intervention in the Iran-Israel conflict.

New Zealand Dollar Slips Despite Strong GDP Data

The South Korean won weakened past 1,380 per dollar on Thursday, hitting a near one-month low, pressured primarily by growing concerns over the economic impact of US tariffs imposed on some Korean exports. The Bank of Korea has indicated that these trade barriers may exert downward pressure on domestic prices and demand, fueling expectations of further policy easing. This cautious stance adds to the won’s vulnerability amid a stronger dollar environment. While discussions on tariff relief with Washington continue and may conclude by early July, investor sentiment remains fragile. Ongoing government stimulus and corporate reform initiatives provide some support; however, foreign capital inflows have been uneven, leaving the won exposed to external risks and divergent global monetary policies.

South Korean Won Weakens as US Tariff Impact Weighs on Outlook

The Australian dollar fell to around $0.648 on Thursday, reversing strong gains from the previous session, following the release of labor market indicators that strengthened the case for the Reserve Bank of Australia to ease monetary policy. Although the unemployment rate remained steady at 4.1%—unchanged for the third consecutive month and in line with market forecasts—job figures disappointed. Total employment fell by 2,500 to 14.62 million, defying expectations of a 25,000 increase and marking the first monthly drop since February. Markets are now pricing in an 80% probability that the RBA will lower its key interest rate from 3.85% to 3.6% at its July 8 meeting, with two additional cuts anticipated later in the year. Externally, the Aussie dollar is also under pressure from a strengthening greenback amid the Federal Reserve’s hawkish stance. While the Fed kept interest rates on hold, it maintained a cautious, data-driven approach.

Aussie Dollar Declines Amid Weak Labor Data

The US dollar index held steady around 98.9 on Thursday, consolidating gains from earlier in the week after the Federal Reserve left interest rates unchanged and reaffirmed a cautious, data-dependent stance. Fed Chair Jerome Powell signaled that inflation could rise in the coming months, citing the impact of President Donald Trump’s tariffs. The central bank also downgraded growth forecasts and maintained guidance for two 25 basis point rate cuts in 2025—surprising markets that had priced in only one. Moreover, the dollar found support from safe-haven flows amid escalating geopolitical tensions. Concerns mounted over potential US involvement in the Israel-Iran conflict, with reports suggesting Washington is preparing for a possible strike on Iran. Meanwhile, Iran’s Supreme Leader Ayatollah Ali Khamenei warned of “irreparable damage” to the US if it intervenes militarily.

Dollar Steady on Fed Rate Hold, MidEast Tensions

GBPUSD decreased to a 4-week low of 1.34. Over the past 4 weeks, British Pound US Dollar gained 0.08%, and in the last 12 months, it increased 5.88%.

British Pound Hits 4-week Low

The Brazilian real strengthened past 5.5 per USD in June, its strongest level in eight months, after Copom’s surprise 25?bp hike to 15% and its signal of an imminent pause bolstered Brazil’s high real-rate premium. Copom’s commitment to evaluate the lagged impact of past tightening has reassured markets of a predictable policy path, while an improving current-account deficit and robust agribusiness shipment data further underpinned the currency. Strong iron-ore and soybean prices, the country’s top export earners, widened the trade surplus and drew capital inflows. Meanwhile, the US Federal Reserve’s decision to keep rates at a four-year high capped dollar strength and compounded on yield-seeking flows into Brazil’s local bonds.

Brazilian Real Strengthens After BCB

The Canadian dollar weakened toward 1.37 per USD in June, easing from its strongest in over eight months of 1.357 seen June 16th, as expectations for monetary policy divergence with the US, softer commodity cues and geopolitical safe-haven flows have all chipped away at its recent gains. Traders now price in more aggressive Bank of Canada easing relative to the Fed, narrowing yield differentials and eroding the loonie’s carry advantage. Domestically, tepid first-quarter private-consumption data –0.4% quarter-on-quarter and recent trade-tariff threats on Canadian goods have clouded the outlook for exporters. Meanwhile, Israel–Iran tensions have further underpinned the US dollar’s appeal.

Canadian Dollar Eases from 8-Month High

The Mexican peso traded around 19.0 per USD, just shy of its ten-month trough at 18.886 per dollar as dollar softness after the Federal Reserve’s hold and weak US macro data clashes with headwinds from anticipated Banxico easing, and renewed geopolitical risk. The dollar eased slightly after the Fed left rates unchanged and scaled back its dot-plot cut projections amid rising trade and Middle East uncertainties, factors that typically buoy emerging-market currencies like the peso. However, market pricing now centers on a fourth consecutive 50?bp cut by the Bank of Mexico on June?26th—narrowing Mexico–US yield differentials and dulling the peso’s carry appeal. Meanwhile, oil has climbed to near yealr highs on intensifying Israel–Iran tensions, boosting Mexico’s oil revenues but stoking inflation risks that may constrain Banxico’s easing scope and drive safe-haven flows back into US assets.

Mexican Peso Hovers Around 19 USD

The dollar index pared early losses to trade slightly higher around 98.9 on Wednesday, after Fed Chair Jerome Powell warned of a meaningful rise in prices stemming from tariffs. As expected, the Federal Reserve held the federal funds rate steady for a fourth consecutive meeting but revised its outlook to reflect faster inflation and slower economic growth for both this year and next. Despite this, the Fed maintained its guidance for two 25-basis-point rate cuts in 2025, surprising some investors who had expected only one.

Dollar Pares Losses

The euro inched lower to below the $1.15 mark from the over three-year high of $1.163 touched on June 12th as markets assessed the Eurozone's monetary policy outlook against global aversion of dollar-denominated assets. Evidence of disinflation in the currency bloc supported current rate futures that currently price one additional rate cut by year end. ECB policymaker Joachim Nagel stressed the importance of maintaining policy flexibility, citing the complex global backdrop. Still, the signal of increased deficit spending and public investment from Eurozone members that were previously against issuing higher debt supported growth expectations among Europe's largest economies, supporting the single currency. In the meantime, the dollar held this year's losses against G10 currencies as uncertain trade policy, unsustainable deficits, and speculation that Washington is chasing devaluation drove investors to pivot out of the US.

Euro Inches Lower from Over 3-Year High

The dollar index edged slightly down to 98.6 on Wednesday, as traders assess the latest monetary policy decision from the Fed. The central bank left the fed funds rate steady for a fourth straight meeting as expected, but still pointed to two 25bps reductions this year. Some investors had anticipated just one cut. At the same time, the Fed is projecting faster inflation and slower growth for this year and next.

Dollar Depreciates After Fed

The US dollar index retreated slightly to around 98.6 on Wednesday after a sharp rise in the previous session, as investors cautiously awaited the Federal Reserve’s monetary policy decision. The central bank is widely expected to keep interest rates unchanged, but markets will be focusing on its forward guidance amid tariff uncertainties and geopolitical risks. The dollar surged nearly 1% on Tuesday, driven by safe-haven demand as conflict between Israel and Iran escalated. President Donald Trump further fueled geopolitical tensions, demanding Iran’s “unconditional surrender” and threatening a strike against Supreme Leader Khamenei in posts on Truth Social. On the economic front, US retail sales data for May came in weaker than expected, though underlying consumer spending remained resilient, supported by strong wage growth.

DXY Falls Ahead of Fed Decision

The British pound edged closer to $1.35, remaining near its highest levels since 2022, continuing to benefit from broad-based US dollar weakness and support from the latest UK inflation data, which showed that price pressures remain elevated. The annual inflation rate came in at 3.4% in May, in line with expectations and just below April’s 3.5%. Notably, the April figure would have been 3.4% as well, had it not been for a miscalculation in the Vehicle Excise Duty series. The data reinforced market expectations that the Bank of England will keep interest rates unchanged at its upcoming meeting Thursday, while still leaving the door open for a 25 basis point cut in August.

British Pound Strengthens After CPI

The South Korean won strengthened to about 1,370 per dollar on Wednesday, amid expectations of renewed momentum in trade talks with Washington aimed at finalizing tariff relief by early July. This development coincides with the broader optimism over President Lee Jae-myung’s corporate reform agenda, steady foreign capital inflows, ongoing government stimulus, and the Bank of Korea’s cautious approach to policy adjustments. While the won showed relative strength, external risks continue to weigh on sentiment. Oil prices have surged due to Middle East tensions, potentially increasing import costs, and export prices declined in May, reflecting soft global demand. Despite recent gains, the won remains exposed to geopolitical instability, trade friction, and diverging global monetary policies.

South Korean Won Rises Over Trade Dialogue Progress with US

The New Zealand dollar edged up to around $0.602 on Wednesday but remained vulnerable amid escalating tensions in the Middle East. The ongoing conflict between Israel and Iran, now in its sixth day, has heightened global risk aversion, leading investors to seek safe-haven assets and leaving risk-sensitive currencies like the kiwi on the defensive. Meanwhile, investors now await the US Federal Reserve policy announcement later today. While rates are widely expected to remain unchanged, markets are closely watching for any signals of potential cuts following a string of weak US economic data. Domestically, attention turns to New Zealand’s first-quarter GDP report, due on Thursday, with analysts expecting the economy to expand by 0.7% quarter-on-quarter, while contract by 0.8% on an annual basis. On the monetary policy front, the Reserve Bank of New Zealand has already signaled it is nearing the end of its aggressive easing campaign, with markets pricing in one final rate cut in August.

New Zealand Dollar Edges Higher

The Australian dollar strengthened to around $0.649 on Wednesday, recouping some losses from the previous session, as higher oil prices, driven by rising geopolitical tensions, supported demand for the commodity-linked currency. Market anxiety mounted as the Israel–Iran conflict entered its sixth day, with President Trump demanding Iran’s unconditional surrender and hinting at possible US intervention. In response, oil prices continued to climb, providing support for the AUD given its strong correlation with commodity markets. However, the Aussie may struggle to maintain its ground due to a risk-off mood as Israel and Iran continue to attack each other. Meanwhile, latest data showed Australia’s Leading Economic Index edged down 0.1% in May, signaling a fragile recovery amid rising domestic pressures and subdued demand. Attention now turns to Thursday’s labor market data, which could provide fresh momentum to the economy and influence expectations for the RBA’s policy outlook.

Australian Dollar Gains Ground

The offshore yuan steadied around 7.18 per dollar on Wednesday, as investors turned their attention to the Lujiazui Forum in Shanghai. The event is jointly organized by three key Chinese financial regulatory bodies—the People’s Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission—alongside the Shanghai Municipal Government. Investors are closely watching for major financial policy initiatives. At the same time, Hong Kong and Shanghai are set to sign an agreement to deepen financial collaboration at the Lujiazui Forum, as both cities seek to strengthen ties and enhance resilience amid rising geopolitical tensions. On the monetary policy front, investors are focused on the PBoC's upcoming policy decision, with market expectations pointing to unchanged loan prime rates. Meanwhile, geopolitical tensions in the Middle East continue to weigh on sentiment, as the US considers a potential strike on Iran, adding to global uncertainty.

Offshore Yuan Steady, Lujiazui Forum in Focus

The Japanese yen held around 145.2 per dollar on Wednesday after falling for three straight sessions, as a series of disappointing economic indicators weighed on sentiment. Exports declined in May for the first time in eight months under the strain of US tariffs, while imports fell more than expected. April’s core machinery orders slumped, and manufacturing sentiment deteriorated in June—highlighting mounting concerns over domestic demand. On the policy front, the Bank of Japan left interest rates unchanged on Tuesday and signaled a gradual approach to balance sheet reduction, reaffirming its cautious stance on stimulus withdrawal. Governor Kazuo Ueda reiterated that the BOJ is closely monitoring economic conditions and global trade dynamics, keeping the option open for future rate hikes if needed. Adding to the pressure on the yen, reports emerged that Prime Minister Ishiba and President Donald Trump failed to reach a tariff agreement during the G7 summit in Canada.

Japanese Yen Holds Decline Amid Weak Data

The US dollar index steadied around 98.7 on Wednesday, maintaining recent gains as investors awaited the Federal Reserve’s monetary policy decision. The central bank is widely expected to keep interest rates unchanged, but markets will be focusing on its forward guidance amid tariff uncertainties and geopolitical risks. Traders are also eyeing fresh US housing data and weekly jobless claims, due ahead of Thursday’s market holiday. The dollar surged nearly 1% on Tuesday, driven by safe-haven demand as conflict between Israel and Iran escalated. President Donald Trump further fueled geopolitical tensions, demanding Iran’s “unconditional surrender” and threatening a strike against Supreme Leader Khamenei in posts on Truth Social. On the economic front, US retail sales data for May came in weaker than expected, though underlying consumer spending remained resilient, supported by strong wage growth.

Dollar Holds Firm Ahead of Fed Decision

The Japanese yen weakened toward 145 per dollar on Tuesday, extending its losing streak to a third session after the Bank of Japan left its policy rate unchanged at 0.5%, in line with market expectations. The central bank also maintained its existing Japanese government bond tapering plan through March 2026 but signaled a readiness to adjust the program if needed. Policymakers remain cautious as they assess the inflationary impact of higher oil prices and await greater clarity on US trade policy. The yen also faced additional pressure following reports that Prime Minister Shigeru Ishiba and US President Donald Trump failed to reach a tariff agreement during the G7 summit in Canada. Meanwhile, the US dollar strengthened broadly amid rising geopolitical and inflationary risks. In the latest developments, President Trump called for the full evacuation of Tehran amid continued Israeli airstrikes, reiterating that Iran should have signed his proposed nuclear deal.

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