The South Korean won weakened to around 1,365 per dollar on Friday, extending its downward trend as it tracked broader dollar strength following a stronger-than-expected US nonfarm payrolls report which reduced expectations for Fed rate cuts. While South Korea posted a solid current account surplus of $10.14 billion in May, fundamentally supportive of the won, it was outweighed by global USD strength. On the trade front, uncertainty continues to weigh on sentiment ahead of the July 9 US tariff deadline. Trade Minister Yeo is scheduled to visit Washington this weekend in a last-minute push to secure an extension of the current three-month pause. The outcome of the talks is critical, as it could impact key exports and add further pressure on the KRW.

South Korean Won Falls on Dollar Strength

The Japanese yen traded near 145 per dollar on Friday after falling nearly 1% in the previous session, weighed down by trade-related uncertainties despite Tokyo’s efforts to secure a deal with Washington ahead of next week’s deadline. US President Donald Trump announced plans to begin sending formal letters on trade tariffs as early as today, potentially signaling new tariff rates or extensions of existing deadlines. He has previously threatened to raise tariffs on Japanese goods to as much as 35%, citing Japan’s limited imports of American rice and automobiles. Adding to the yen’s weakness, the US dollar strengthened following a stronger-than-expected June jobs report, which eased recession fears and reduced expectations of imminent rate cuts by the Federal Reserve. On the domestic front, data showed that household spending in Japan rebounded more than anticipated in May, supported by government measures to stimulate consumption.

Japanese Yen Holds Decline on Trade Concerns

The New Zealand dollar held its recent decline to around $0.606 on Friday, amid broad US dollar strength following a robust US jobs report that dampened hopes of a Federal Reserve rate cut in July. Trade uncertainty also weighed on sentiment, with a US tariff deadline approaching on July 9. President Donald Trump on Thursday announced that letters specifying tariff rates on imports to the US would begin being sent out on Friday, signaling a shift from earlier pledges to negotiate individual trade deals. Domestically, the Reserve Bank of New Zealand is widely expected to keep its cash rate steady at 3.25% next week, although investors still expect one or two additional 25bps cut later this year amid concerns over the economic impact of US tariffs. Despite recent pressure, the Kiwi has edged up 0.2% so far this week, on track for its second consecutive weekly gain.

New Zealand Dollar Holds Decline

The Australian dollar held around $0.657 on Friday, hovering near eight-month highs, despite widespread expectations that the RBA will implement its third interest rate cut of the year at its July 8 monetary policy meeting. The central bank is expected to lower rates by another 25 basis points amid cooling inflation and a weakening economic outlook. Inflation stood at 2.4% in Q1 2025, remaining at its lowest level since early 2021 and still within the RBA’s 2–3% target range. Meanwhile, GDP grew just 0.2% in Q1, down from 0.6% in Q4 2024. Economists and markets initially expected three RBA rate cuts this year but raised their forecasts to four in May, and now anticipate up to five, driven by faster-than-expected disinflation and signs of economic weakness. Still, despite growing expectations of deeper rate reductions, the Australian dollar has risen more than 6% year-to-date, buoyed by broad-based weakness in the US dollar.

Australian Dollar Holds Near 8-Month High

The US dollar index held above 97 on Friday after rising for two straight sessions, as a stronger-than-expected June jobs report eased concerns over an economic slowdown and reduced pressure on the Federal Reserve to cut interest rates. The US economy added 147,000 jobs in June, up from 144,000 in May and well above market expectations of 110,000. At the same time, the unemployment rate unexpectedly fell to 4.1%, defying forecasts of an uptick to 4.3%. On the trade front, President Donald Trump is reportedly preparing to announce new tariff rates or a possible extension of the July 9 deadline for targeted countries, providing additional support to markets. Meanwhile, the House of Representatives passed Trump’s sweeping tax cuts and spending package, which now heads to the White House for his signature. The bill is projected to widen the federal budget deficit by over $3 trillion.

Dollar Firms on Strong Jobs Report

The British pound gave back early gains to slip back toward $1.36, its weakest level since June 23, as investors rushed to the dollar following a stronger-than-expected US jobs report. Earlier in the session, sterling had been supported after Prime Minister Keir Starmer defended Chancellor Rachel Reeves amid speculation about her future, affirming she would remain chancellor “for a very long time to come.” This helped ease concerns that a potential replacement might adopt a looser fiscal stance with increased borrowing. On the monetary policy front, markets have priced in a Bank of England rate cut as soon as August, following dovish remarks from officials. Governor Bailey said it was too early to fully assess the inflationary impact of tariffs but reiterated that the trajectory of interest rates is “downwards.” Meanwhile, BoE policymaker Alan Taylor urged faster rate cuts, warning of a heightened risk of a hard landing for the UK economy.

Pound Slides as Strong US Jobs Report Boosts Dollar

The Swiss franc weakened to around 0.80 per USD, as the dollar rebounded following a stronger-than-expected US jobs report, which eased economic concerns and led investors to scale back Fed rate cut expectations, despite ongoing trade uncertainty. At home, June’s inflation report tempered expectations for further SNB easing. Consumer prices rose 0.1%, reversing May’s decline and reaching a three-month high, aligning with the SNB’s 0–2% target. After cutting rates to zero in June to curb franc inflows, policymakers are likely to hold steady in September. Most analysts expect rates to remain at 0% through 2026, with inflation set to rise on food and wage pressures. Officials have recently warned against going below zero, citing risks to savers, banks, and pension funds.

Swiss Franc Loses Ground

The euro slipped toward $1.17, retreating from a recent four-year high, as investors flocked to the dollar in response to a stronger-than-expected US jobs report. At the same time, markets digested comments from European Central Bank policymakers and the minutes from the ECB’s latest policy meeting. Speaking at the ECB Forum on Central Banking, President Christine Lagarde welcomed the June inflation print, which aligned with the central bank’s 2% target, but cautioned about “two-sided risks” linked to rising geopolitical tensions and increasing economic fragmentation. Other ECB officials signaled that interest rates are likely to be kept on hold at this month’s meeting, following eight consecutive cuts to the deposit rate since June 2024, amid persistent concerns over global trade uncertainty, instability in the Middle East, and the euro’s recent appreciation. Markets are now pricing in only one additional rate cut before year-end.

Euro Falls as Strong US Jobs Report Boosts Dollar

The dollar index climbed above 97.3 after a stronger-than-expected June jobs report helped ease concerns over the health of the US labor market, despite lingering uncertainty surrounding trade policy. The US economy added 147,000 jobs in June, up from 144,000 in May and well above market forecasts of 110,000. Meanwhile, the unemployment rate unexpectedly dipped to 4.1%, defying expectations of a rise to 4.3%. Average hourly earnings increased by 0.2%, slightly below the projected 0.3%. On the fiscal front, the House of Representatives cleared a key hurdle toward passing President Trump’s sweeping tax and spending bill, which is set for a final vote in Congress. The legislation is projected to expand the US budget deficit by over $3 trillion. Markets also remained focused on trade developments, as the Commerce Department is expected to release updates on new trade deals ahead of the July 9 deadline for the reimposition of the controversial "Liberation Day" tariffs.

Dollar Rises as Strong Jobs Report Eases Labor Market Fears

The dollar index held below 97 on Thursday, not far from three-year lows, as markets awaited key economic developments gauge on their impact in monetary and fiscal developments. Markets tempered expectations of hot jobs numbers after ADP figures unexpectedly showed a decline in private-sector jobs, potentially driving the Fed to expedite its resumption of rate cuts. In the meantime, House representatives cleared a hurdle to pass President Trump's tax and spending bill, due for Congress approval and set to widen the US budget deficit by over $3 trillion. Lastly, market also awaited updated on new trade deals by the Commerce Department ahead of July 9th's deadline for the reintroduction of Liberation Day tariffs. Tariffs on Vietnam were lowered to 20% from 46%, but reports indicated that negotiations with other major trading partners faced roadblocks. In the meantime, the DXY received support from a softer pound as uncertainty on the UK's fiscal policy pressured British markets.

DXY Holds Near 3-Year Lows Ahead of NFP, Tax Bill

The Turkish lira continued to weaken in July, trading around a fresh record low of 39.9 per US dollar, as the central bank maintained tight control over the currency while allowing a gradual depreciation. Since Simsek was appointed finance minister in 2023, he has spearheaded a shift toward more orthodox policies aimed at reducing inflation and restoring investor confidence. The central bank raised interest rates to 50% in March 2024 and maintained that level until December, when it began cutting them. The policy rate now stands at 46%. Meanwhile, inflation fell to 35.05% in June 2025, the lowest since November 2021 and the GDP expanded just 2% yoy in Q1 2025, the weakest performance since the 2020 contraction. At the same time, authorities have been working to normalize policies. The stock of FX-protected deposits, known as KKM, has declined significantly, and the finance ministry said it plans to phase out the program soon, signaling renewed trust in the Turkish lira.

Gradual Slide in Turkish Lira Persists

The Swiss franc traded around 0.79 per USD, holding close to July 2011-highs, amid a subdued dollar and waning expectations of rate cuts by the Swiss National Bank. Swiss consumer prices increased 0.1% in June, reversing May’s decline and hitting a three-month high, aligning with the SNB’s 0-2% inflation target and pointing to renewed stability. This development is likely to offer some relief to policymakers, who responded to significant franc inflows with another interest-rate cut in June to zero.

Swiss Franc Hovers Around 2011-Highs

The British pound edged higher toward $1.37, partially recovering from Wednesday’s decline, as markets reacted positively to Prime Minister Keir Starmer’s strong backing of Chancellor Rachel Reeves. Starmer defended Reeves amid speculation about her future, attributing her emotional moment to a “personal matter” and affirming she would remain chancellor “for a very long time to come.” His remarks helped ease investor concerns that a potential replacement might be less committed to fiscal discipline and more inclined toward increased borrowing. Meanwhile, traders also digested comments from Bank of England officials. Speaking at the ECB Forum on Central Banking, Governor Andrew Bailey said it was too early to assess the inflationary impact of tariffs but reiterated that the direction of interest rates is “downwards.” Separately, BoE policymaker Alan Taylor called for faster rate cuts, warning of an increased risk of a hard landing for the UK economy.

Pound Rebounds as Starmer Backs Reeves

The South Korean won weakened further to around 1,356 per dollar on Thursday, as the greenback stabilized ahead of the key US jobs report, limiting any recovery in the KRW. Despite soft US payroll data, dollar strength kept emerging market currencies under pressure. Additionally, US President Trump imposed a new 20% tariff on Vietnamese imports, adding to trade concerns that could affect Korea’s exports. Meanwhile, South Korea’s FX reserves rose to $410.2 billion, boosting intervention capacity—but not enough to offset broader macroeconomic and trade-related headwinds.

South Korean Won Weakens Amid Dollar Strength

The offshore yuan steadied around 7.16 per dollar on Thursday as investors digested the latest PMI data. The Caixin China General Composite PMI returned to expansionary territory, reaching its strongest level since March, primarily driven by a renewed increase in manufacturing activity that offset a slowdown in the services sector, which fell to a nine-month low. Earlier in the week, official PMI figures painted a slightly different picture: the manufacturing PMI remained in contraction, though it hinted at gradual improvement, while the non-manufacturing PMI rose marginally amid China’s ongoing efforts to stimulate domestic demand and bolster the sluggish economy. Investors are now turning their attention to a fresh wave of economic indicators due next week, particularly inflation figures and trade data. Meanwhile, attention is turning to this month’s Politburo meeting, where investors expect new stimulus measures amid mounting challenges such as the looming US tariffs.

Offshore Yuan Steady After PMI Data

The Japanese yen stabilized around 143.7 per dollar on Thursday after facing some pressure in the previous session, as optimism over trade developments and a softer US dollar supported sentiment. Japanese officials reaffirmed their commitment to pursuing a “win-win” trade agreement with Washington, although they provided no details on potential concessions. President Donald Trump increased pressure on Tokyo, describing the negotiations as “really hard” and threatening tariffs of up to 35% on Japanese imports, citing dissatisfaction with Japan’s limited purchases of American rice and automobiles. Adding to the positive tone, the US finalized a trade deal with Vietnam that includes a 20% tariff on imports, boosting hopes for further trade breakthroughs. The yen also benefited from broad-based dollar weakness as investors looked ahead to the June US jobs report, which could strengthen the case for a Federal Reserve rate cut as early as July.

Japanese Yen Holds Steady on Trade Optimism

The New Zealand dollar dropped to around $0.607 on Thursday, extending losses from the previous session, with investors closely monitoring global trade developments. President Donald Trump had previously said he was not planning to extend the July 9 deadline for countries to negotiate trade deals, even as talks with key partner Japan failed to make headway. On Wednesday, Trump announced a deal with Vietnam that would allow US goods to enter the country duty-free, while Vietnamese exports to the US would face a 20% tariff—lower than the 46% announced in April. Meanwhile, investors geared up for the US non-farm payrolls report, due later today, for more clues on the Federal Reserve's next steps. On the domestic front, the Reserve Bank of New Zealand is widely expected to pause its easing cycle at next week's meeting, although investors still expect one or two additional 25bps cut later this year amid concerns over the impact of US tariffs.

New Zealand Dollar Falls for 2nd Day

The Australian dollar slipped to around $0.657 on Thursday, ending a three-session winning streak, weighed down by lackluster trade figures. Australia’s May trade surplus narrowed sharply to AUD 2.24 billion, well below expectations of AUD 5.09 billion and a revised AUD 4.86 billion in April. It was the smallest surplus in nearly 5 years, with exports hitting a 3-month low due to weaker US shipments affected by tariffs. Adding pressure, services PMI data from China, Australia’s top trading partner, also fell to a 9-month low and missed forecasts. This came as markets grappled with rising US-led trade tensions, as uncertainty surrounds the new US-Vietnam trade deal and concerns grow over efforts to isolate China from key supply chains. Meanwhile, a weaker US dollar amid rising Fed rate cut bets, limited losses for the Aussie, keeping it near 8-month highs. Investors now await next week’s RBA decision, with markets nearly certain of a rate cut amid weak growth and easing inflation risks.

Aussie Dollar Dips on Lackluster Trade Data

The US dollar index held steady around 96.7 on Thursday, hovering near a more than three-year low as markets turned their focus to the upcoming June jobs report. Investors are closely watching the data for fresh signals on labor market health and the Federal Reserve’s next move on interest rates. A weaker-than-expected report could reinforce expectations for an earlier rate cut, potentially as soon as July. On Wednesday, ADP data showed a surprise decline in private payrolls, with employment falling by 33,000 in June, fueling concerns over a softening labor market. On the trade front, President Donald Trump announced on Truth Social that the US has reached a new agreement with Vietnam, which includes a 20% tariff on imports from the country. The deal raised hopes of additional bilateral trade agreements in the pipeline. Meanwhile, Trump’s proposed tax-and-spending package, estimated to add $3.3 trillion to the national debt, is facing resistance in the House of Representatives.

Dollar Stabilizes Ahead of Key Jobs Report

The Brazilian real has strengthened past 5.44 per USD in July, its strongest level in nine months, amid hawkish monetary policy signals, steady inflation control efforts, and dovish expectations for the US Fed. The central bank’s monetary policy director reaffirmed that the Selic, currently at 15%, is not only restrictive but will be held at elevated levels for a “very prolonged” period to re-anchor inflation expectations, which remain influenced by Brazil’s backward-looking price dynamics. Meanwhile, June’s surprise loss of 33,000 US private-sector jobs added pressure on the dollar and spurred markets to increase bets on Fed cuts as early as July, narrowing the US-Brazil yield spread and favoring the real. Meanwhile, ongoing legal battles over the IOF decree and political infighting have so far not undermined the Central Bank’s credibility or forward guidance, allowing the real to hold firm even amid fiscal uncertainties.

Brazilian Real Strengthens to 9-Month High

The Mexican peso stabilized at 18.76 per USD, near its August?2024 high of 18.74 seen on July?1st, as the US dollar remained subdued while investors digested stronger external receipts and a supportive domestic monetary policy backdrop. The dollar’s decline accelerated after a surprise 33,000-job loss in June’s ADP report fueled Fed rate-cut repricing. At the same time, Mexico posted a $1.03?billion trade surplus in May driven by a 1.8% rise in non-oil exports despite a 35% collapse in oil shipments, while remittance inflows hit a record $5.5?billion. Those inflows, coupled with the central bank’s June?26th decision to trim its key rate by 50?basis points to 8%, while signaling further cuts only as inflation recedes, bolstered confidence in the peso and kept an attractive real interest rate. Domestic labor metrics remain robust, with unemployment at just 2.7%, and although the manufacturing PMI eased to 46.3 in June, it still outperformed most of Latin America.

Mexican Peso Holds Strong

The Canadian dollar traded steady at 1.365 per USD, not far from its eight-month high of 1.354 on June?16th, buoyed by broad US dollar weakness following dovish Fed pricing, Fed Chair Powell’s patient stance, and mounting fiscal concerns after President Trump’s $3.3?trillion tax-and-spending bill and a surprise 33,000-job ADP decline. At the same time, renewed uncertainty over US trade policy, particularly the looming July?21st framework deadline for autos, steel and aluminum talks post-digital services tax repeal, and the threat of higher tariffs on other partners has weighed on Canada’s export outlook. Domestically, S&P Global’s June Canada Manufacturing PMI tumbled to 45.6, its weakest reading in over five years, marking a fifth consecutive month of factory contraction amid tariff-pressured export orders and steep inventory drawdowns, adding to growth anxieties.

Canadian Dollar Steady

The British pound dropped over 1% to below $1.36 amid political turmoil and growing uncertainty over UK fiscal leadership. Speculation surged after Chancellor Rachel Reeves appeared visibly emotional during Prime Minister’s Questions, and PM Keir Starmer did not explicitly back her following the government's U-turn on a controversial welfare bill. Though Downing Street denied any resignation, and the Treasury attributed Reeves' reaction to a personal matter, markets grew increasingly uneasy. The situation adds to concerns about fiscal credibility, especially given the recent budget retreat and limited fiscal headroom. Investors fear instability around Reeves’ position could derail the UK's economic plans, triggering a selloff across markets. Meanwhile, BoE policymaker Alan Taylor called for accelerated rate cuts, warning of a rising risk of a hard landing.

Sterling Slumps 1% amid Political Turmoil

The US dollar index held near 96.9 on Wednesday, near its lowest level in over three years, due to dovish Federal Reserve expectations and concerns over President Trump’s fiscal policy. Fed Chair Jerome Powell reiterated the Fed's patient stance on interest rate cuts but didn’t rule out action at the upcoming meeting, noting the Fed might have already cut rates if not for the inflationary effects of Trump’s tariffs. Meanwhile, the Senate narrowly passed Trump’s tax-and-spending bill, expected to add $3.3 trillion to the national debt, fueling investor anxiety. Market focus now shifts to Thursday’s June jobs report for further policy clues. Weakness in the labor market is already evident, with ADP data showing a surprise loss of 33,000 private-sector jobs in June, far below expectations for a 95,000 gain, raising fresh concerns about the economy’s momentum.

Dollar Hovers at Near 3½-Year Low

The South Korean won fell to around 1,362 per dollar on Wednesday, despite hotter-than-expected inflation data. June inflation came in at 2.2% year-over-year, from 1.9% in May, influencing expectations around the Bank of Korea’s policy stance. The unexpected pickup in consumer prices has prompted speculation that the Bank of Korea may delay any rate cuts, as persistent inflation could require a more cautious stance even amid slowing growth. This uncertainty has added to domestic pressures on the currency. While global trade tensions and modest dollar strength remain factors, the recent weakness in the won appears to reflect growing domestic concerns, particularly around inflation and monetary policy outlook.

South Korean Won Weakens Amid Inflation Pressures

The Australian dollar weakened to around $0.656 on Wednesday, retreating gains from the previous session, as weaker-than-expected domestic data dampened investor sentiment. The Australian Bureau of Statistics showed that retail sales rose 0.2% in May, up from a revised flat reading in April, but came in below market expectations of a 0.4% increase. In addition, building permits rose less than anticipated, adding to concerns about a weakening economic outlook. The data strengthened expectations that the Reserve Bank of Australia will cut rates by 25 basis points to 3.60%, with markets increasingly pricing in further easing in the second half of the year, potentially bringing the cash rate down to 3.10% or even 2.85%—a level viewed as stimulative. Meanwhile, the Aussie found some support as the US dollar remained subdued near multi-year lows amid rising odds of Federal Reserve rate cuts and uncertainty over President Trump’s proposed spending bill.

Aussie Dollar Slips on Disappointing Data

The New Zealand dollar traded around $0.609 on Wednesday, hovering near its highest level in more than eight months, supported by a broadly weaker US dollar. The greenback remained under pressure amid expectations of Federal Reserve rate cuts this year and concerns about the impact of President Donald Trump's big tax breaks and spending cuts bill, which narrowly passed in the US Senate. On Tuesday, Powell said he would not rule out a potential interest rate cut at this month's meeting, saying everything depends on incoming data. Meanwhile, investors are closely watching trade developments, with many nations trying to negotiate deals with the US before the July 9 deadline. Domestically, the Reserve Bank of New Zealand is expected to keep rates on hold at 3.25% next week, with market pricing indicating only a small chance of a 25bps cut.

New Zealand Dollar Steady Near 8-Month Highs

The Japanese yen weakened toward 144 per dollar on Wednesday, pulling back from over three-week highs after US President Donald Trump threatened to impose a 35% tariff on Japanese imports in a bid to pressure Tokyo into making trade concessions. Trump described negotiations with Japan as “really hard,” once again criticizing the country’s reluctance to accept cars and rice from the US. Meanwhile, domestic data released earlier this week showed a surprise uptick in business sentiment among large manufacturers in the second quarter, underscoring resilience despite mounting external headwinds. Externally, the yen gained support from growing dovish expectations for Federal Reserve policy and market concerns over the inflationary impact of President Trump’s tax-and-spending bill, which has weighed on the US dollar.

Japanese Yen Eases as Trump Threatens 35% Tariff

The US dollar index held around 96.6 on Wednesday, hovering at its lowest level in nearly three and a half years as dovish Federal Reserve expectations and concerns over President Donald Trump’s fiscal policies weighed on the currency. Fed Chair Jerome Powell reiterated on Tuesday that the central bank remains patient regarding further interest rate cuts but did not rule out a reduction at this month’s meeting, emphasizing that future moves will depend on incoming data. He also noted that the Fed would have already cut rates were it not for the inflationary impact of Trump’s tariffs. Meanwhile, the Senate narrowly approved Trump’s tax-and-spending bill, which is projected to add $3.3 trillion to the national debt, sending the measure back to the House for final approval. Investors are now awaiting ADP’s private payrolls report due Wednesday and the closely watched June jobs report on Thursday for further insights into labor market strength and potential monetary policy direction.

The dollar index trimmed earlier losses but remained below 97 on the first day of July, hovering near its lowest level since 2022. This comes after the greenback posted a near 10% decline in the first six months of the year. The Senate passed President Trump's Tax bill at a deficit of $3.3 trillion to await for the House approval, extending concerns of unsustainable debt issuance. In turn, tariffs remained uncertain as officials refrained from announcing new trade deals. On the monetary policy front, Fed Chairman Powell reaffirmed a 'wait-and-see' stance at the ECB Forum on Central Banking. Powell noted that inflation is expected to rise over the summer, but emphasized the Fed’s patience in responding. He also highlighted that a majority of Fed officials believe it will likely be appropriate to cut interest rates later this year. Markets are currently pricing in a 25 bps rate cut in September, with growing expectations for two additional cuts by year-end.

DXY Trims Sharper Losses

The British pound held steady near $1.371, close to its highest since October 2021, supported by the Bank of England’s (BoE) cautious approach compared to peers like the ECB. UK inflation remains stubbornly above the BoE’s 2% target, reaching 3.4% in May, well above the euro zone’s 2% in June. Meanwhile, economic growth remains weak, with the UK economy contracting sharply in April due to global trade tariffs and domestic tax hikes. BoE Governor Andrew Bailey noted inflation is driven by administered prices and acknowledged some economic and labor market softening. He indicated interest rates are likely to trend downward, with economists expecting a 25 basis point cut in August, lowering the base rate from 4.25% to 4%. Attention also focuses on a key welfare reform vote, as Prime Minister Keir Starmer scaled back benefit cuts amid party opposition.

Sterling Holds at Highest since October 2021

The Swiss franc continued its strong upward trend, reaching 0.79 per USD, a fresh high since July 2011, as the dollar remained pressured by expectations of rate cuts and renewed uncertainty over trade tariffs, boosting safe-haven demand. Additionally, concerns about political interference at the Fed and worries over Trump’s massive tax-and-spending proposal have further weighed on the greenback. Meanwhile, geopolitical risks eased after President Trump brokered a deal between Iran and Israel. On the domestic front, recent commentary from the Swiss National Bank suggested that both negative rates and currency interventions remain a possibility. The Swiss National Bank (SNB) cut interest rates further to 0% in June to counter easing inflationary pressures and indicated it may move into negative territory if downside risks persist.

Swiss Franc Hits New 2011-High

The dollar index trimmed earlier losses but remained lower around 96.7 on the first trading day of the second half of 2025, hovering near its lowest level since 2022. This comes after the greenback posted a nearly 10% decline in the first six months of the year. Traders are closely monitoring the monetary policy outlook, with Fed Chair Powell reaffirming a 'wait-and-see' stance at the ECB Forum on Central Banking. Powell noted that inflation is expected to rise over the summer, but emphasized the Fed’s patience in responding. He also highlighted that a majority of Fed officials believe it will likely be appropriate to cut interest rates later this year. Markets are currently pricing in a 25 bps rate cut in September, with growing expectations for two additional cuts by year-end. Meanwhile, investors are also following developments in trade negotiations with key partners, while Treasury Secretary predicted that the Senate would pass the budget legislation by Tuesday afternoon.

Dollar Starts Q3 on a Weak Note

The euro remained above the $1.18 mark, hovering near its highest level since August 2021, as investors assessed comments from European Central Bank policymakers following the eurozone’s inflation rate hitting the ECB’s 2% target. Speaking at the ECB Forum on Central Banking, President Christine Lagarde welcomed the June inflation data, which came in as projected, but warned of “two-sided risks” stemming from growing economic fragmentation and escalating geopolitical tensions. Other ECB officials indicated that interest rates will likely be held steady at this month’s meeting, following eight consecutive cuts to the deposit rate since June 2024, amid ongoing concerns over global trade tensions, instability in the Middle East, and the euro’s recent strength. The common currency has also been supported by a weaker US dollar, as markets continue to price in Federal Reserve rate cuts despite uncertainty over the impact of former President Trump’s tariffs.

Euro Holds Firm Above $1.18 Amid ECB Pause Signals

The Indian rupee strengthened to 85.5 per USD, extending the surge since touching the three-month low of 87 on June 23rd as lower energy prices limited the outlook of capital outflows from India and supported emerging market currencies. Israel and Iran have so far refrained from retaliating their latest strikes against each other and US rhetoric pointed to willing a ceasefire. Hence, the uninterrupted tanker flows through the Strait of Hormuz into the Indian Ocean throughout the conflict drove oil prices to plunge, limiting the amount of rupees that Indian refiners and distributers must sell to import energy, thus supporting the currency. On the monetary policy front, the RBI is expected to continue cutting interest rates as the latest headline inflation print dropped more than expected to a six-year low. The central bank has already delivered three consecutive rate cuts after holding the rate at the over-four-year high of 6.5% for one full year.

Indian Rupee Extends Rebound

The South African rand traded around 17.6 per USD, a level last seen in November 2024, benefiting from the dollar weakness and the rise in prices of precious metals, particularly gold. The currency also gained on signs of easing tensions between President Cyril Ramaphosa and his main coalition partner, the Democratic Alliance (DA). Ramaphosa’s June 26 dismissal of Andrew Whitfield as deputy trade minister over unauthorized travel drew sharp criticism from the DA, which demanded that Ramaphosa fire three ANC ministers accused of corruption within 48 hours or “face consequences.” The DA ultimately stayed but plans to oppose some budgets and boycott a national dialogue. Meanwhile, South African Reserve Bank Governor Lesetja Kganyago renewed his call for a lower inflation target, warning the current range weakens the rand and fuels inflation. On the trade front, tariffs of 10% to 50% announced in April are set to resume next week after a 90-day pause, unless bilateral deals are reached.

South African Rand at Near 8-Month High

The euro climbed above $1.180, its strongest level since August 2021, supported by signs that Eurozone inflation has stabilized. Eurostat reported June inflation at 2%, matching the ECB’s target and up slightly from May’s 1.9%. Core inflation remained steady at 2.3%, while services inflation ticked up to 3.3%. These figures reinforce views from ECB officials that inflation is largely under control, possibly justifying a pause in interest rate cuts after eight reductions since June 2024. Meanwhile, consumer surveys show falling inflation expectations, adding to the case for holding rates steady. The euro was also buoyed by a weaker US dollar, as markets price in Fed rate cuts and anticipate progress on US-EU trade talks ahead of a July 9 deadline.

Euro Rallies to Highest Since August 2021

The Taiwan dollar surged over 2% to 29.17 per U.S. dollar in another volatile session on Tuesday, with traders attributing the rally to expectations of upcoming Fed rate cuts, broad dollar weakness, and sustained foreign capital inflows into the island. The gain pushed the local currency’s year-to-date gain to 12%, cementing its status as Asia’s best-performing currency in 2025. Strength in the Taiwan dollar has been underpinned by resilient tech exports—particularly semiconductors—and growing foreign interest in Taiwanese equities, fueled by optimism surrounding AI-driven demand. The central bank’s hands-off approach has led to speculation that authorities may be tolerating a stronger currency to curb imported inflation. However, the rapid appreciation has begun to raise concerns among exporters, who are grappling with shrinking margins. Market participants now await signals from the central bank as the currency’s surge continues to test the limits of monetary policy patience.

Taiwan Dollar Rallies

Malaysia’s ringgit strengthened to its highest level since October 2024 on Tuesday, hovering around 4.188 per dollar, supported by strong foreign bond inflows and broad weakness in the U.S. currency. The rally comes as easing global trade tensions improve investor sentiment toward export-oriented economies like Malaysia. According to Bank Negara Malaysia, foreign investors poured $2.9 billion into Malaysian bonds in May—the largest monthly inflow since October 2013—amid rising confidence in the country’s fiscal and monetary outlook. Expectations that the Federal Reserve may begin cutting rates later this year also weighed on the dollar, further supporting the ringgit. On fresh data, Malaysia’s manufacturing PMI contracted for the 21st straight month in June but at the softest pace since February, as declines in output, new orders, and external demand all moderated, suggesting tentative signs of stabilization in the industrial sector.

Ringgit Hits Nine-Month High on Bond Inflows, Weak Dollar

The South Korean won held around 1,350 per dollar on Tuesday, hovering close to eight-month highs, supported by improving domestic fundamentals and renewed investor interest in Korean assets. June's strong export performance led to a widened trade surplus, while equity markets rallied, with the KOSPI reaching a multi-year high—potentially attracting foreign capital inflows. The manufacturing sector also showed signs of stabilization, with a slower pace of contraction in June. These developments coincided with a softer US dollar, as markets factored in growing expectations of deeper Federal Reserve rate cuts, adding to favorable conditions for the won.

South Korean Won Holds Near 8-Month Highs

The Australian dollar weakened to around $0.656 on Tuesday, after touching over seven-month highs in the previous session, as mounting expectations of a rate cut at the Reserve Bank of Australia's July 2025 meeting weighed on the currency. Markets are now pricing in a 95% probability that the central bank will lower the cash rate by 25 bps to 3.60%, even if Wednesday’s retail sales data exceed expectations. Further bolstering the case for monetary easing is the continued underperformance in consumer spending, which has consistently fallen short of the RBA’s projections. As a result, markets are increasingly forecasting additional rate cuts in the second half of the year, potentially bringing the cash rate down to 3.10% by year-end—and possibly as low as 2.85%, a level widely viewed as stimulative. On the economic front, the manufacturing PMI fell to a four-month low in June, reflecting weakening production and new orders amid subdued export demand and ongoing supply chain disruptions.

Aussie Dollar Weakens as Rate Cut Bets Strengthen

The Japanese yen appreciated toward 143.5 per US dollar on Tuesday, reaching its highest level in over two weeks, even as renewed trade tensions with the US intensified. President Donald Trump threatened fresh tariffs on Japan, criticizing the country’s reluctance to import American rice, and confirmed that the 25% tariff on Japanese auto imports would remain in place due to the persistent trade imbalance. The remarks come ahead of a key deadline, with markets closely watching whether Japan can secure a trade agreement with Washington before the 24% reciprocal tariff rate is reimposed next week. On the domestic front, Japan’s latest Tankan survey showed a surprise uptick in business sentiment among large manufacturers in the second quarter, highlighting resilience amid growing external pressures. Meanwhile, the yen gained additional support from a weakening US dollar, which slipped amid rising concerns over the US fiscal outlook and uncertainty surrounding pending trade negotiations.

Japanese Yen Strengthens Despite Tariff Worries

The offshore yuan held its recent gains to around 7.16 per dollar on Tuesday, hovering near its highest level since early November last year, supported by improved sentiment after factory activity unexpectedly returned to growth. A private survey showed the Caixin Manufacturing PMI rose to 50.4 in June from 48.3, beating expectations of 49.0.  The reading contrasted with the official PMI released Monday, which indicated a third straight month of contraction, though it showed slight improvement from prior months, signaling resilience among export-driven firms despite ongoing trade headwinds. Meanwhile, the US dollar remained under pressure amid growing bets on Fed rate cuts and trade uncertainties, providing additional support to the yuan. Looking ahead, anticipation is building around notable actions expected at key political meetings in China, particularly the upcoming July Politburo session, for potential stimulus signals, keeping markets attentive to further yuan interventions.

Offshore Yuan Holds Near 8-Month Peak

The New Zealand dollar fell to $0.608 on Tuesday, giving back some of the previous session’s gains and retreating slightly from multi-month highs. Investors turned their focus to trade uncertainty, monitoring the global impact of US tariff policies, as the 90-day tariff reprieve is set to expire next week. Limiting further losses was a weaker US dollar, pressured by concerns over the US fiscal outlook and growing bets on deeper Federal Reserve rate cuts amid dovish signals from policymakers and ongoing political pressure. Meanwhile, private data showed that China’s manufacturing sector returned to expansion, in contrast to official data indicating factory activity contracted for a third straight month. This eased some concerns about risks to New Zealand exports, given the countries’ close trade ties. Domestically, the Reserve Bank is expected to hold steady at its July 9 meeting, with swaps pricing in just a 23% chance of a 25bps cut to 3%.

Kiwi Dollar Dips from Multi-Month Highs

The US dollar index fell to around 96.7 on Tuesday, its lowest level since February 2022, as growing concerns over the US fiscal outlook and trade uncertainty weighed on sentiment. Markets are closely watching the Senate’s progress on President Trump’s sweeping tax-cut and spending package, which is expected to add $3.3 trillion to the national debt. At the same time, investors are awaiting developments on trade negotiations between the US and key partners, with Trump’s 90-day reprieve on broad reciprocal tariffs set to expire next week. Adding further pressure on the  greenback, traders increased bets on deeper Federal Reserve rate cuts amid dovish signals from policymakers and ongoing pressure from Trump to reduce borrowing costs. The dollar dropped to a nearly four-year low against the euro and a three-and-a-half-year low against the British pound. Attention now turns to Thursday’s monthly jobs report for new signals on the strength of the US labor market.

Dollar Weakens on Fiscal and Trade Worries

The Singapore dollar strengthened to around 1.27 per US dollar at the start of July, marking its highest level since October 2014, supported by steady domestic policy adjustments, improved risk appetite, and broad US dollar weakness. The Monetary Authority of Singapore recently took a calibrated approach by slightly reducing the slope of the SGD’s nominal effective exchange rate policy band to accommodate slowing economic growth. This measured stance has helped prevent the currency from overheating while reflecting underlying confidence in Singapore’s economic fundamentals. The SGD’s relative stability—especially compared to the heightened volatility in many emerging-market currencies—has further fueled investor confidence. The currency also drew support from improved global risk sentiment, despite ongoing trade uncertainties, as the benchmark STI approached new record highs. Meanwhile, the US dollar declined broadly amid growing expectations for deeper Federal Reserve rate cuts.

Singapore Dollar Climbs to Over 10-Year High

USDSGD decreased to a 10-year low of 1.27. Over the past 4 weeks, US Dollar Singapore Dollar lost 1.14%, and in the last 12 months, it decreased 6.3%.

Singapore Dollar Hits 10-year High

USDILS decreased to a 29-month low of 3.36. Over the past 4 weeks, US Dollar Israeli New Sheqel lost 4.44%, and in the last 12 months, it decreased 10.4%.

Israeli New Sheqel Hits 29-month High

USDCHF decreased to a 10-1/2-year low of 0.80. Over the past 4 weeks, US Dollar Swiss Franc lost 2.62%, and in the last 12 months, it decreased 11.87%.

Swiss Franc Hits 10-1/2-year High

The euro stabilized just above $1.17, its strongest level since September 2021, supported by broad dollar weakness amid a more dovish US Fed outlook and rising US fiscal concerns. In Europe, investors assessed a wave of inflation data from the region’s largest economies and its implications for the ECB’s policy path. Germany’s consumer price inflation unexpectedly eased to 2.0% in June from 2.1% in May, returning to the ECB’s target for the first time since October 2024 and defying forecasts of a rise to 2.2%. In contrast, inflation in France, Italy, and Spain edged up slightly, though it remained relatively subdued. Adding to the cautious sentiment, German retail sales posted a sharp decline. Despite mixed signals, money markets continue to price the ECB’s terminal rate around 1.75%–1.80%. ECB Vice President Luis de Guindos reiterated on Monday that the current policy stance is appropriate but stressed the importance of maintaining flexibility amid lingering uncertainty.

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