MUFG Research discusses the Composition of Foreign Exchange Reserves (COFER) data for Q1 2026 which showed USD holdings increased at the expense of EUR & JPY.

"The US dollar advanced by 1.7% in Q1 and the advance, mostly following the start of the conflict in the Middle East, was an important factor helping lift the USD composition in global reserves. After dropping to 56.4% in Q4 last year, the lowest USD composition since 1995, Q1 saw an increase to 57.1%. In nominal terms, the euro holdings in global reserves fell from 20.4% to 20.0% and yen holdings fell from 5.8% to 5.4%. The pound’s holdings were unchanged at 4.4% and the ‘other currencies’ portion was also unchanged at 10.8%. The USD holdings Q/Q increase was the first since the final quarter of 2024," MUFG notes.

"The US dollar did advance on a Q/Q basis in Q3 and Q4 of last year, but the gains were modest and buying of non-dollars by reserve managers were larger than the non-dollar negative valuation impact and hence USD reserve holdings declined. Looking at the Q1 2026 reserve changes after stripping out the FX valuation impact shows that for the euro, reserve managers were also outright sellers as the euro declined in value," MUFG adds.

• Soft CPI print decisively takes a July Fed hike off the table

• USD offered post-data, broad-based weakness as rate expectations reprice lower

• Positioning backdrop matters - elevated USD longs leave scope for a corrective washout

• Short squeeze dynamics favour currencies with crowded shorts, CAD stands out

• USD/CAD has broken cleanly through 1.4140 support, now trading sub-1.41 with momentum

• Near-term support seen at 1.4000, though stronger demand likely closer to 1.3930–1.3967 zone

• Macro and positioning alignment points to further downside - bias for a deeper USD/CAD pullback intact
usdcad daily chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

Bank of America Global Research previews the July BoC decision due on Wednesday.

"We expect the BoC to stay on hold at 2.25% on July 15 and through year-end. Activity appears to be recovering after the technical recession at the turn of the year, but underlying conditions remain soft and growth is likely to stay below potential through the rest of 2026. Some of the recent improvement may also reflect a temporary FIFA World Cup boost. With core inflation close to target and long-term inflation expectations well anchored, we see little reason for the BoC to tighten further this year," BofA notes.

"The expectation for a Bank of Canada on hold is in line with our FX view that USD-CAD should drift modestly higher over the medium-term. We recently revised upward our USD-CAD forecasts, along with our broader revisions for a relatively stronger USD in G10 near-term. We hold an expectation in H2 that USD-CAD should be in the low-to-mid 1.40's type range, with an end-year forecast of 1.43. Recent developments around Iran and oil prices have had more of a mixed impact on CAD as of late," BofA adds.

• USD/CHF falls to 0.8065 EBS low as dollar weakens on cooler U.S. CPI data

• 0.8065 is the lowest level since Friday. 0.8152 was EBS 11-month high in Asia

• Ascent to 0.8152 was influenced by hawkish guidance from Fed's Waller

• Probability of Fed hike as early as July 29 declines after U.S. CPI data

• Swiss franc is a popular currency in which to fund carry trades

• 0.9279 was EBS 24-week high for EUR/CHF in early European trade

USDCHF


(Robert Howard is a Reuters market analyst. The views expressed are his own)

Goldman Sachs Research previews the July BoC decision due on Wednesday.

"With both upside inflation risks and downside growth risks diminishing, we expect the BoC to remain firmly on hold this week. We look for a return to pre-war guidance that the policy rate is in "about the right place" but continued emphasis on the need to remain "nimble" amid still-elevated uncertainty. We expect modest downgrades to the growth and headline inflation forecasts in the MPR after incorporating lower oil futures prices, but we expect the broader economic outlook will be little changed," GS notes.

"We expect that the BoC will remain on hold in 2026 before normalizing to the middle of its neutral rate range next year. Our forecasts remain dovish relative to market pricing," GS adds.

CIBC Research reviews today's US June CPI report.

"The monthly pace of US CPI inflation declined in June on the backs of lower gasoline prices. Total CPI decreased 0.4% in June relative to May, lower than the consensus expectation of a 0.1% decline. This was the biggest monthly decline of headline CPI since April 2020. Gasoline prices declined 9.7% in June (the largest contributor to the monthly decline in headline CPI). The monthly decline led to a deceleration in the annual pace of CPI inflation from 4.2% in May to 3.5% in June. The ex. food/energy measure was flat on the month, lower than consensus (+0.2% m/m). Commodities less energy declined 0.1% in June, with widespread monthly decline observed in most components. Shelter decelerated from 0.3% in May to 0.1% in June. Core services ex. rent of shelter declined 0.2% in June, notable monthly declines include telephone services (-3.0%), MV insurance (-2.0%) and health insurance (-0.5%). The annual pace of core inflation declined from 2.9% in May to 2.6% in June," CIBC notes.

"With core inflation coming in below consensus, we believe that should bring some comfort to the hawks at the Fed for the upcoming FOMC decision. We continue to expect the Fed to hold rates in the upcoming FOMC meeting in July," CIBC adds.

• AUD/USD hit 0.6913 in Asia, buyers emerged, the pair then turned positive

• 0.6953 traded in Europe's morning, NY opened near 0.6945, pair was up +0.37%

• Australian consumer confidence & business conditions helped the pair rally

• Broad-based USD selling also contributed to the pair's gains

• Rallies in gold , silver , copper also aided AUD/USD gains

• The pair pierced the 21-DMA before pulling back but remained above the 10-DMA

• AUD/USD stuck in its recent range but rising daily, monthly RSIs give bulls comfort

• Investors await US June CPI, downside surprises could drive AUD/USD upward
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• U.S.-listed shares of copper miners rise premarket, tracking gains in prices of the red metal [MET/L]

• Benchmark copper on London Metal Exchange up 0.4% at $13,601 a ton, its highest since June 23

• Copper prices rise to touch their strongest in three weeks on signs of firmer demand and shortages in China, as well as supply worries after more attacks in the Middle East

• Shares of global mining giants Rio Tinto up 2% and BHP Group rise 1.7%

• Miners Southern Copper up 1.3% and Freeport-McMoRan adds 1.4%

• Canada's Hudbay Minerals adds 1.4%, Ero Copper gains 1.6% and Teck Resources

up marginally

(Reporting by Pooja Menon in Bengaluru)

• Iran and US stage new attacks, battle over control of Strait of Hormuz

• Oil hits four-week high at $87.38, Brent almost $18 higher in July

• Natural gas rises to $53.10 - highest since early April

• The eurozone imports energy while the U.S. exports it

• Daily EUR/USD highs sinking since Friday

• Tuesday low 1.1379, is not far from this year's low at 1.1325

•
EURUSD vs Natgas and oil


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• EUR/USD option risk reversals widen — EUR put over call volatility premium signals persistent downside FX risk

• 1-month 25-delta risk reversal increases to 0.55, from 0.45 Monday and 0.35 last week

• Volatility premium echoes prior warning: same signal preceded EUR/USD's break below 1.1400

• Implied volatility rises as EUR/USD slips on US-Iran deal setback, oil price gains

• Rising downside premium justified - risk reversals holders benefit from lower spot and higher implied vol

• However, premium yet to threaten 0.725 April/June peak; US CPI now the key swing factor

• Huge 1.1400 option expiry helps contain ahead of any US CPI surprise
EUR/USD 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• The price of natural gas has risen to its highest since April

• The eurozone is a major importer of gas, while U.S. exports

• At $56 and $61 March highs are not far off Jul's $51.5 peak

• Weak EUR/USD bounce may suggest deeper losses

• Drop below Jun low 1.1325, 100-WMA 1.1305 would be significant

•
EURUSD vs Natgas and oil


(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• FX option strikes expire at 10am New York/14:00 GMT on Tuesday July 14

• EUR/USD: 1.1300 (2.2BLN), 1.1345-50 (550M), 1.1395-1.1405 (4.3BLN), 1.1325 (345M), 1.1440 (222M)

• 1.1470-75 (437M), 1.1500 (467M)

• USD/CHF: 0.8100-10 (876M), 0.8200 (1BLN)

• GBP/USD: 1.3250 (371M), 1.3400 (400M), 1.3410-15 (206M)

• AUD/USD: 0.6900 (608M), 0.6960 (479M), 0.6975-80 (522M).

AUD/NZD: 1.2000 (331M)

• USD/CAD: 1.4000 (514M), 1.4150-60 (300M), 1.4230 (299M)

• USD/JPY: 160.50 (695M), 162.00 (819M), 162.40-50 (440M), 163.00 (860M)

• FX options wrap - Cautious calm amid Mid-East strikes and US CPI risk (Richard Pace is a Reuters market analyst. The views expressed are his own)

• Shares of Australia's Kingfisher Mining rise as much as 31.6% to A$0.1, highest level since January 27

• Stock logs biggest intraday pct gain since late July 2025

• Gold exploration co says drilling at Copper Blow project confirmed high-grade copper-gold mineralisation

• Project located in New South Wales (NSW), Australia

• About 2.5 million shares change hands vs 38.4x the 30-day average

• Stock down 13.8% YTD, including session moves

(Reporting by Shravya Marakini in Bengaluru)

• USD/JPY looks to have hit a ceiling a sorts after the good bounce yesterday

• High yesterday 162.49 EBS, ease back in Asia from 162.48 to 162.25

• Despite USD positives (US-Iran, hawkish Fed), some JPY buys on Katayama talk

• FinMin Katayama doubled down on plan for pensions to target Japan assets

• Nothing specific but likely to boost Japanese assets, yen down the road

• USD/JPY around its 162.37 hourly Ichi tenkan, 100-HMA 162.19, kijun 162.16

• Only nearby option expiries today of note 161.99-162.00 $819 mln below

• EUR/JPY 184.81-96 EBS, heavy but off lows

• Pivoting around 184.61-99 daily Ichimoku cloud

• Hourly Ichimoku cloud between 184.91-185.15 resistance?

• CHF/JPY also heavy, 199.14-58, still above ascending 200-DMA at 198.57

• GBP/JPY consolidating recent gains, 216.62-94 just off recent highs

• In 216.66-217.11 hourly Ichi cloud, 200/100-HMAs 216.52 below/217.12 above

• AUD/JPY sideways, 112.20-48, in 111.82-113.58 daily Ichimoku cloud

• Also back in 112.31-43 hourly Ichi cloud, 200-HMA 112.27, 100-HMA 112.48

• NZD/JPY well bid, 93.27 to 93.99, broke top of 93.03-87 daily Ichi cloud

• Highest since 94.09 June 5 after hawkish RBNZ Conway talk

• Related comments , , , also

• Also on GBP/JPY , NZD/JPY

• On Katayama-speak , for more click on [FXBUZ]

USD/JPY hourly:


NZD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD inches higher as risk sentiment attempts a tepid recovery in Asia

• Rise capped by sales vs Kiwi on diverging central bank rate expectations

• New Zealand's central bank warns inflation could become persistent

• Higher oil costs could lift inflation expectations- RBNZ Chief Economist

• 2-year AU-NZ swap spread drops to around +80bps from near +107bps a week ago

• AUD/NZD down 0.5% to a more than 3-month, next support 1.1932 Mar 30 low

• Decline targets 1.1820, the 200-day MA; resistance 1.2030, 1.2060

• AUD /NZD range 1.1973-1.2027; AUD support 0.6900-05, resistance 0.6945-50
AUD/NZD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Shares of diversified miner Black Cat Syndicate fall as much as 2.8% to A$0.885, their lowest level since July 2

• Co temporarily suspends operations at Lakewood gold processing plant following a mill bearing failure

• Says repairs have commenced, operations expected to be back to normal by the end of this week

• Stock down 29.8% YTD including moves in current session
(Reporting by Jasmeen Ara Shaikh in Bengaluru)

• AUD/USD soft in Asia after closing 0.5% lower Mon on broad USD strength

• Weighed down by risk aversion as U.S.-Iran hostilities escalate

• U.S. crude up 9% as Trump reinstates blockade of Iranian shipping in Gulf

• U.S. 2-year rallies 8bps to highest since Feb 2025, stocks slide

• Rising Fed rate hike bets to cap AUD rallies; U.S. CPI, Warsh testimony Tue

• Support 0.6900-05 but 200-day MA at 0.6879 key; daily close below bearish

• Resistance 0.6945-50, 0.6965-70; Asia range 0.6913-0.6920
AUD:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Seems Japan GPIF news discounted, impact trumped by other developments

• USD broadly bid on hawkish Fed talk, US-Iran war re-start, US CPI concerns

• View higher US inflation could possibly lead to Fed rate hike this month

• USD/JPY 162.40-48 EBS so far, quiet, market still nervous over FX action

• Immediate impact of any GPIF asset re-allocation to take time

• Market consensus still for now BOJ rate hike late this month

• Good hourly chart support eyed now at 162.19 ascending 100-HMA

• Nearby option expiries today skimpy, around 162.00 $819 mln, 163.00 $861 mln

• JGB-US short-long rate differentials widening again, USD supportive

• Related comments , , ,

• And , , also

• US markets , , ,

• Fed Waller-speak , on US-Iran
USD/JPY daily:


USD/JPY hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

MUFG Research discusses the USD outlook into this week's US CPI report and Fed Warsh'ssemi-annual monetary policy testimony.

"Attention will now turn to the release of the June US CPI report and semi-annual monetary policy testimony from Fed Chair Warsh. If underlying inflation pressures remain contained, it could prompt market participants to scale back expectations for Fed hikes, resulting in a reversal of the recent USD rally. It would also help to reduce pressure on Japanese policymakers to support the JPY," MUFG notes.

Finance Minister Katayama stepped up verbal intervention last week by stating that the government wants to encourage households, as well as pension funds including the Government Pension Investment Fund (GPIF), to increase their investment in Japanese financial assets. While a significant shift in asset allocation appears unlikely in the near term, the comments have helped to ease selling pressure on both JGBs and the JPY. Over the longer term, however, this policy shift could have more far-reaching implications for domestic capital flows and provide more support for Japanese financial markets," MUFG adds.

• GBP$ soft in NY afternoon trade, -0.3% at 1.3360; Monday range 1.3411-1.3358

• Mideast tensions, US reinstates blockade of Iran in Hormuz boosted USD broadly

• Despite several forays above 1.34, bulls unable to hold above; supt eyed by 10-DMA 1.3355

• Oil +6%, adds to angst over persistent global inflation; gilt yields rise ups fiscal concerns

• Tuesday events: US CPI, Warsh Hse testimony & UK FinMin Reeves mansion House speech

• GBP$ supt 1.3358/55 Mon low/10DMA, 1.3323 daily low Jul 8, 1.3296- 50% of 1.3140-1.3452

• Res 1.3409/11 daily cloud base/Mon high, 1.3452 Jul 10 daily high, 1.3498 upper 30-d Bolli

Sterling Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1435 after EUR/USD traded 1.1385-1.1446 in Asia & Europe

• The pair began falling in early NY as the USD & US yields

gained

• EUR/USD's drop then intensified as risk soured; gold, silver, equities sank

• USD/CNH's rally into positive territory and persistent USD bid weighed on EUR/USD

• Comments from Pres. Trump on the Strait of Hormuz kept risk-off in place

• EUR/USD hit 1.1383 during comments from the Fed's Waller

• The pair held near 1.1385 late, it traded down -0.21% in NY's afternoon

• Techs lean bearish; RSIs are falling, pair below 10- & 21-DMA, daily inverted hammer formed
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

ANZ Research expects Gold prices to find a floor in the near-term.

"Gold resumed its decline as renewed Middle East tensions revived inflation concerns. Any rebound in energy prices could reinforce expectations that the Fed will keep rates higher for longer, raising the opportunity cost of holding bullion. Swap markets are now pricing more than a 30% chance of a rate hike at the next Fed meeting, up from around 20% last week. Investor appetite is subdued, with gold-backed ETF holdings seeing further liquidation," ANZ notes.

"Structurally, Asia continues is emerging as the new centre for gold investment demand. Hong Kong’s trial launch of a central gold clearing and settlement system this week, alongside closer connectivity with the Shanghai Gold Exchange, should deepen regional market infrastructure and improve access for institutional investors. Together with Singapore’s growing role as a bullion hub, this reinforces the shift of gold trading and demand from West to East, providing structural support for regional gold consumption. We see gold imports in Hong Kong and China staying strong despite weak seasonal demand," ANZ adds.

(Adds chart)

• USD/CAD upside momentum stalled ahead of 1.4250, now rotating lower to test range support at 1.4140

• 1.4140 marks key near-term support, a break would signal scope for a broader corrective pullback

• Sustained downside through this level opens 1.4000, with deeper support layered at 1.3930–67

• Positioning remains stretched, with net USD/CAD longs at highs since Jan 2025 - historically a reversal signal

• USD/CAD net longs are at the highest since January 2025 and are at levels that shortly follow a reversal

• Into U.S. CPI, a softer print would heighten squeeze risk and amplify downside pressure
USDCAD positioning


USDCAD chart


Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

Bank of America Global Research summarizes the latest G10 FX flows patterns.

"USD demand vs CHF and CAD stands out post-June FOMC USD demand vs CHF and CAD has been the dominant post-June FOMC theme in G10 FX flows  Positioning risks are most evident in GBP, NZD, and CAD shorts, while JPY positioning remains short and EUR positioning light," BofA notes.

"We remain comfortable with our bullish bias on JPY, GBP and NZD. Although CHF remains our preferred funder, CHF shorts are becoming increasingly crowded. Within G4, we continue to favour tactical USD longs against the EUR," BofA adds.