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

Canadian Dollar Hits 35-week High

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

Euro Hits 3-1/2-year High

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

Swiss Franc at Over 7-Week High

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

Swedish Krona Hits 12-month High

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

Danish Krone Hits 3-1/2-year High

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

South Korean Won Hits 34-week High

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

Euro Surges Past $1.15

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

Pound Holds Near 3-Year Highs

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

Offshore Yuan Ends 2-Session Decline

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

Australian Dollar Extends Decline

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

South Korean Won Rises on Market Reforms

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

New Zealand Dollar Extend Losses

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

Japanese Yen Rises on Renewed Tariff Concerns

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

Dollar Weakens on Trump's Tariff Pledge

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

Dollar Index Hits 7-week Low

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

Mexican Peso Near 10-Month Highs

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

South African Rand Hovers Around 6-Month High

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

Brazilian Real Strengthens to 8-Month High

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

Sterling Climbs Toward 3-Year High

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

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

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

US Dollar Weakens as Inflation Misses Forecasts

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

Australian Dollar Hits 28-week High

The Indian rupee traded around 85.5 per USD, its highest level since early June, as a subdued US dollar, robust foreign inflows, and easing trade concerns lent support. The US and China agreed to a plan to ease trade tensions, with both sides agreeing to implement the consensus the two sides reached in the prior round of talks in Geneva. Meanwhile, Indian and US officials made progress in their latest round of talks in New Delhi on June 10, focusing on industrial goods, agriculture, tariff reductions and non-tariff barriers. India’s Foreign Ministry said it hopes to finalize a trade deal with the U.S. before the 90-day tariff truce expires on July 9. On the monetary policy front, the Reserve Bank of India (RBI) delivered a larger-than-expected 50 basis point cut to the repo rate and slashed the reserve ratio for banks by 100 bps in a bid to stimulate economic growth.

Indian Rupee at Over 1-Week High

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

Russian Ruble Hits 24-month High

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

Yen Holds Losses Amid US–China Trade Optimism

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

Offshore Yuan Steady After US-China Framework Deal

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

South Korean Won Slips for Second Session

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

New Zealand Dollar Weakens

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

Aussie Dollar Slips on Dovish RBA Bets

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

Dollar Steady Ahead of Key Inflation Data

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

Brazilian Real Appreciates to 8-Month High

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

Dollar Pares Most Gains, US-China Talks Awaited

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

Euro Hovers at $1.14

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

British Pound Depreciates After Labour Data

The South Korean won depreciated toward 1,360 per dollar on Tuesday, pulling back from near eight-month highs as the dollar strengthened amid signs of easing US-China trade tensions. Improved US-China relations boosted demand for the greenback, weakening emerging market currencies like the won, as recent high-level talks on tariff cuts and strategic cooperation aim to restore trade flows and resolve disputes over technology, IP, and market access. Additionally, President Lee Jae-myung and President Donald Trump have agreed to hold direct talks soon, with both leaders expressing a commitment to reaching a swift and mutually beneficial agreement on trade tariffs. Working-level negotiations are expected to begin ahead of the planned summit.

Korean Won Pulls Back on Dollar Strength

The Australian dollar held its gains around $0.651 on Tuesday, remaining buoyed by optimism over progress in high-level trade talks between the US and China. Treasury Secretary Scott Bessent led the US delegation in talks with Chinese Vice Premier He Lifeng and his team in London, focusing on rare earth exports and the potential easing of trade restrictions. The discussions, set to continue through Tuesday, were announced last week following a long-anticipated call between US President Donald Trump and Chinese President Xi Jinping, as well as last month’s trade deal in Switzerland. In Australia, consumer sentiment rose for the fourth time this year, with the Westpac-Melbourne Institute Consumer Sentiment Index increasing by 0.5% month-over-month to 92.6 in June. Meanwhile, business confidence improved, with the NAB Business Confidence Index rising to 2 in May from -1 in the previous month—turning positive for the first time since January and reaching its highest level in four months.

Australian Dollar Holds Gains

The Japanese yen weakened to around 145 per dollar on Tuesday, reaching a near two-week low as optimism surrounding US-China trade talks dampened demand for safe-haven assets. Officials from both nations met in London on Monday to discuss rare earth shipments and the potential easing of export restrictions, with further negotiations expected to continue on Tuesday. On the domestic front, revised data showed Japan’s economy was flat in the first quarter, improving from an initial estimate of a 0.2% contraction. Still, the result marks a notable slowdown from the 0.6% expansion recorded in the previous quarter. Meanwhile, Bank of Japan Governor Kazuo Ueda last week reiterated the central bank’s readiness to raise interest rates if economic and inflation projections are met, reinforcing expectations of a gradual shift away from ultra-loose monetary policy.

Japanese Yen Weakens as Haven Demand Eases

The offshore yuan remained steady to around 7.18 per dollar on Tuesday, as investors awaited further progress over the US-China trade negotiations. Senior officials from both countries wrapped up their first day of talks in London, which both sides described as “productive.” The discussions, focused on easing tensions over shipments of technology and rare earth elements, are set to continue on Tuesday morning. The talks come at a critical juncture, with China facing mounting economic pressures, including persistent deflation and worsening trade conditions. Data released this week showed consumer prices fell for a fourth straight month, while producer deflation hit its worst level in two years. This aligned with recent trade figures showing imports declined amid weak demand, while export growth slowed to a three-month low in May due to the impact of US tariffs. The yuan is expected to remain largely unchanged as markets stay cautious ahead of any concrete outcomes from the negotiations.

Offshore Yuan Holds Ground as Trade Talks Advance

The New Zealand dollar fell to around $0.603 on Tuesday, giving back gains from the previous session as the US dollar regained strength on optimism over US-China trade talks. Investors remain hopeful despite no major breakthroughs on the first day. President Trump said the talks “should go very well,” while US officials proposed easing tech export restrictions in exchange for China loosening rare earth shipment limits, crucial for energy, defense, and technology industries. Still, the antipodean currency remained close to an eight-month high reached last week amid growing bets that the Reserve Bank of New Zealand will slow the pace of rate cuts despite downgraded economic forecasts. The May policy decision signaled that the easing cycle could be nearing its end, with markets now expecting the RBNZ to hold rates steady in July and possibly deliver a final cut in August.

New Zealand Dollar Declines

The US dollar index rose above 99.2 on Tuesday, reversing losses from the previous session as investors focused on ongoing US-China trade negotiations in London. Treasury Secretary Scott Bessent and other senior officials met with their Chinese counterparts on Monday to discuss rare earth shipments and a possible easing of export restrictions, with further talks expected Tuesday. Hopes for a tariff truce between the world’s two largest economies buoyed the dollar, which has faced pressure this year amid President Donald Trump’s trade policies that dampened investor confidence in US assets. Markets are also closely watching upcoming CPI and PPI reports later this week, which are expected to provide further insights into inflation dynamics and the economic fallout from the prolonged trade dispute. The greenback advanced broadly, with the largest gains seen against the Japanese yen, euro, and British pound.

Dollar Strengthens as US-China Trade Talks Fuel Optimism

The Mexican peso rallied past 19.10 per USD, its strongest level in more than nine months, driven by hawkish expectations for the Bank of Mexico and a softer US dollar. In May, headline inflation climbed to 4.42%, its highest in six months, while core inflation accelerated to 4.06%, an eleven-year peak that constrains any near-term rate cuts. At the same time, Mexico’s merchandise exports beat forecasts by rising 1.2% in April despite US steel and aluminum tariffs, highlighting resilient external demand. Record remittance inflows of USD 5.8 billion in April further bolstered foreign-exchange reserves and underpinned the currency. Finally, diplomatic efforts, anchored by Economy Minister Marcelo Ebrard’s mission to secure tariff exemptions in Washington, have eased trade-war anxiety, allowing investors to embrace Mexico’s attractive yield differential as the US dollar languishes near multi-year lows amid concerns over President Trump’s trade and fiscal policies.

Mexican Peso at Over 9-Month High

The US dollar index pared earlier losses to trade largely flat around the 99.1 level on Monday, as traders closely monitored US-China talks taking place in London. The meeting follows a phone call last week between President Trump and President Xi, reviving hopes that trade tensions might begin to ease. Investors are also awaiting key economic data, with CPI and PPI reports due later this week expected to shed light on inflationary pressures and the broader impact of the ongoing trade war. Despite Monday's stabilization, the dollar remains near its April lows—the weakest levels since 2022—amid growing concerns over the economic effects of President Trump's trade and fiscal policies, which have led to a shift away from US assets. On the day, the greenback was mostly weaker against the yen and the Australian dollar.

Dollar Pares Losses

The euro rebounded above the $1.14 level, edging closer to the six-week high of $1.149 reached on June 5, as investors tracked progress in US-China trade talks and looked ahead to key speeches from European Central Bank officials for insight into the ECB’s policy outlook. Top US and Chinese negotiators are set to meet in London today, aiming to build on last month’s preliminary agreement in Geneva, with discussions likely to focus on rare-earth minerals and advanced technology. On the monetary front, the ECB cut interest rates by 25 basis points last week—bringing borrowing costs to their lowest since November 2022—and cut its inflation projections for 2025 and 2026. However, the bank also signaled it may be nearing the end of its current easing cycle, contrary to earlier expectations.

Euro Rises Above $1.14 Amid Trade Talks, ECB Signals Shift

The South Korean won strengthened toward 1,350 per dollar on Monday, nearing an almost eight-month high as investor sentiment improved after US President Trump and South Korean President Lee Jae-myung agreed to initiate talks on a revised tariff framework aimed at ensuring fair and balanced trade. The agreement is expected to ease tensions from previous disputes and stabilize key export sectors such as steel, automobiles, and semiconductors. Additionally, President Trump has invited President Lee to a summit in the US, with a potential meeting planned for the G7 in mid-June. Progress had been delayed by South Korea’s recent political transition after an earlier proposal to eliminate tariffs under a “July package” before the end of Trump’s 90-day tariff freeze.

Korean Won Strengthens on Trade Deal Hopes

The Japanese yen appreciated past 144.5 per US dollar on Monday, rebounding after two consecutive days of losses, as revised data showed the country’s first-quarter GDP was flat—an improvement from the previously estimated 0.2% contraction. Despite the upward revision, the result still reflects a sharp deceleration from the 0.6% growth recorded in the prior quarter. Separately, Japan’s current account surplus narrowed in April and fell short of market expectations, adding a mixed note to the economic outlook. Last week, Bank of Japan Governor Kazuo Ueda reaffirmed the central bank’s readiness to raise interest rates if economic and inflation forecasts are met, reinforcing the view of a gradual but steady tightening path. Externally, market participants also turned their attention to upcoming US-China trade talks, with officials from both sides scheduled to meet in London later today.

Yen Strengthens Following Upward GDP Revision

The Australian dollar rose to around $0.651 on Monday, extending gains from the previous week amid renewed optimism over US-China trade talks. US President Donald Trump announced that officials from both countries would convene in London later today, with Treasury Secretary Scott Bessent leading the US delegation and China’s Vice Premier He Lifeng expected to head the Chinese side. The talks come at a critical time for both economies, as China battles deflationary pressures, while persistent trade uncertainty continues to dampen business and consumer confidence in the US. In Australia, a leading economist has called on the central bank to deliver a bold 35 bps interest rate cut at its July meeting—surpassing the standard 25 bps reductions made in February and May. The recommendation comes amid sluggish economic growth and subdued consumer spending, both of which are holding back a more robust recovery in the private sector.

Aussie Dollar Gains on Trade Talk Optimism

The New Zealand dollar rose to around $0.604 on Monday, climbing back toward the eight-month high reached last week, supported by optimism over easing global trade tensions. President Donald Trump said Treasury Secretary Scott Bessent and two other officials will meet with Chinese counterparts in London on Monday for renewed trade talks. Meanwhile, fresh Chinese data revealed persistent deflationary pressures, with consumer prices falling for a fourth consecutive month and producer prices recording their steepest decline in nearly two years. This placed some downward pressure on the antipodean currency, given China’s role as a key trading partner. On the domestic front, the Reserve Bank recently cut rates by 25 basis points to 3.25%. However, the May decision suggests the easing cycle may be nearing its end. Markets now expect the RBNZ to hold rates steady in July, while pricing in the likelihood of a final cut in August.

NZ Dollar Approaches 8-Month Highs

The offshore yuan strengthened to around 7.18 per dollar, ending a two-consecutive session of losses, supported by potential easing of US-China trade tensions despite deepening deflationary concerns. Market sentiment improved as trade tensions appeared to ease between the US and China, following reports that Beijing granted temporary approvals for rare earth exports, while Boeing resumed commercial jet deliveries to China. Additionally, Chinese Vice Premier He Lifeng is set to meet US Treasury Secretary Scott Bessent and his trade team in London this week for renewed talks. Meanwhile, the yuan came under pressure as consumer prices fell for a fourth straight month and producer prices saw their steepest drop in nearly two years, underscoring persistent deflationary pressures and Beijing’s limited success in reviving domestic demand. The data raised concerns over China’s economic recovery and strengthened the case for further monetary easing amid tariff uncertainties.

Offshore Yuan Snaps 2-Day Losing Streak

The US dollar index edged lower to around 99 on Monday, trimming gains from the previous session as investors braced for a busy week of key economic data and trade developments. Sentiment was influenced by renewed hopes for progress in US-China trade relations as President Donald Trump announced that officials from both countries would meet in London later today, following a recent phone call with Chinese President Xi Jinping. On the data front, markets are awaiting several major economic releases. The Consumer Price Index is due Wednesday, followed by the Producer Price Index and the University of Michigan’s consumer sentiment report on Friday. These figures could offer fresh insight into how tariffs are influencing inflation and broader economic conditions. The dollar had strengthened on Friday after the May jobs report showed slightly stronger-than-expected employment growth, although private employment, jobless claims and services data pointed to some weakness in the economy.

Dollar Slips as Markets Eye Trade Talks, Key Data

The South African rand dipped slightly to around 17.8 per USD, pressured by a stronger dollar and falling prices of precious metals, particularly gold. The currency had earlier climbed to a five-month peak of 17.75 per USD on June 4 after lawmakers endorsed the National Treasury’s fiscal plan, clearing the way for approval in a June 11 vote in the lower house of parliament. This followed two prior rejections by coalition members amid disputes over a proposed VAT hike. Finance Minister Enoch Godongwana’s third budget version, presented in May, dropped the VAT increase while introducing spending cuts and higher fuel levies. Meanwhile, South Africa’s economy narrowly avoided a contraction in Q1 2025, growing by just 0.1%, down from 0.4% in Q4 2024 but surpassing market forecasts of stagnation.

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