USD jumps to one-year highs
The global focus remains on the US – and not just because of the World Cup – as the US–Iran peace deal took effect, boosting sentiment towards US shares and the US dollar.
The US dollar index hit a one-year high, with the world’s most traded currency also supported by this week’s Federal Reserve decision, which signalled that further US rate hikes are more likely.
Across markets, the greenback’s biggest gains were in Europe. EUR/USD fell 0.4%, while GBP/USD dropped 0.6% following last night’s Bank of England decision.
AUD/USD was flat, while NZD/USD fell 0.3%.
Greenback extends post-Fed surge in Asia
The US dollar was also stronger in Asia with moves also driven by a weaker yen after this week’s Bank of Japan move to hike rates.
USD/JPY was the standout, rising 0.5% as it extended gains above the 160.00 level. The JPY was weaker in most other markets.
USD/SGD increased 0.1%.
USD/CNH was flat as yuan outperformance continued.
GBP weaker after BoE
The Bank of England left rates unchanged at 3.75% yesterday. The vote split was 7–2, with Megan Greene and Huw Pill voting for a hike, in line with expectations.
Governor Bailey described the decision as an active “hold”, noting that tighter financial conditions have helped contain inflationary pressures. The pound weakened following the decision, while markets pared back some expected tightening in the BoE outlook for the year.
The BoE had seen one of the sharpest hawkish repricings in the G10 since the conflict began in late February, leaving room for a gradual unwind as the labour market continues to show signs of cooling and inflation comes in softer than expected.
Despite maintaining a cautious tone, Governor Andrew Bailey noted that “oil prices have fallen in recent days, and that’s encouraging”. This improving geopolitical backdrop, combined with a softer inflation print this week, has helped markets build confidence that further hikes may be off the table in the near term—particularly against an ECB that has already tightened and a Fed that still sees scope for another hike this year.
Greenback higher across Asia
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 15 – 19 June
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
