Danske Research opened a short EUR/USD position in its recommendation portfolio.

"Yesterday, we recommended a short EUR/USD spot position (with a target of 1.1100, stop-loss 1.1550), which admittedly did not get the best possible start after the US June CPI surprised to the downside on a broad basis (core CPI 2.6% y/y, cons. and Danske 2.8%). Core goods inflation recorded its second negative m/m reading in a row, while both housing and non-housing services inflation cooled as well. Markets erased most of the pricing for a July hike, and we maintain our base case for the first hike in December," Danske notes.

"Nevertheless, EUR/USD reversed most of its initial rise later on as Kevin Warsh underscored that the reading did not signal 'mission accomplished' for the Fed during his testimony for the House financial services committee. Goolsbee echoed Warsh's sentiment later by saying that he 'never wants to overreact to one month [of data]' even if the reading was 'surprisingly benign'," Danske adds.

Bank of America Global Research examines the potential implications of portfolio rebalancing by Japan's public pension funds.

"We do not take a view on whether such rebalancing will occur, nor on its scale or direction. However, given higher JPY yields, the yen's decline to date, and recent remarks by Minister Katayama, markets have begun to contemplate the possibility of a shift from foreign assets into domestic assets, particularly in the fixed income space," BofA notes.

"Should such a rebalancing occur, additional demand from public pension funds would place downward pressure on JGB yields, especially in the 10-20yr sector. In FX markets, the impact would be yen-positive for several months, especially against EUR in case of a shift from foreign bonds to domestic bonds. Lower foreign asset holdings would reduce the absolute size of future rebalancing flows in the future, marginally weakening their volatility-suppressing effect on FX markets," BofA adds.

• AUD/USD traded 0.6972-0.6993 overnight, NY opened near 0.6985, up +0.11%

• Balanced risks helped keep the range tight & consolidation to begin

• Rally in AUD/JPY and equities helped underpin the gains

• Firm USD, US yields & drops in gold, silver, copper limited the gains

• Rising daily, monthly RSIs & AUD/USD's hold above 10- & 21-DMAs are bull signs

• The pair does remain below the down trend line off the May 13 high however

• US June PPI & July NY Fed manufacturing survey are data risks in NY's morning
audusd


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

• Implied volatility is a key parameter of an FX option price - reflecting FX realised volatility and expectations

• Implied volatility trades long term lows across the board in G10 FX- but GBP/USD stands out

• GBP/USD 3-month expiry at lows since 2020 and 1-month nears lows since 2014 at 5.0 from December

• This stands out because they are near/below historical volatility - past realised volatility over the same time frame

• Historical volatility is often used as a fair value measure and GBP/USD implied vol consequently offers value

• Related comment - Cheap FX hedges, costly assumptions
GBP/USD FXO implied volatility


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

• Cable has traded a 27.5 pip range since the London open; 1.3392-1.34195

• Those parameters are well within Tuesday's 1.3367-1.3442 NY session range

• Oil prices rise 2% as hostilities worsen in the Middle East

• U.S. PPI data due 1230 GMT; 0.0% MM, 6.2% YY f/c. Core f/c 0.4% MM, 5.2% YY

• Fed chief Warsh to address Senate Banking Committee from 1400 GMT

• BoE's Bailey says UK economy 'fairly soft'. UK May GDP data due Thursday

GBPUSD


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

• EUR/USD 1-month 25 delta option risk reversals hold 0.425 EUR puts over calls despite the broader vol collapse

• This downside skew has eased from a 0.55 peak early Tuesday, signalling reduced downside risk to spot

• However, it's still above last week's 0.35 level, showing those downside risks have not yet fully unwound

• Spot may be range bound, but options still price a meaningful EUR/USD downside tail risk

• The rest of the term structure shows risk reversals holding a 0.4 EUR-put premium out to 1-year tenors

• Suggests a structural, not just event-driven, downside bias in EUR/USD - for now
EUR/USD 25 delta risk reversals


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

• EUR/USD rally is stretched toward 1.1474 peak 20-day Bollinger bands

• Target (38.2%) for minor correction May-June drop is 1.1463

• Although traders are short, bets are small at $2.3 billion

• Price of natgas is highest since early March - start ME conflict

• Crude $85 per barrel ($15 increase since June)

• Oil rally followed the soft June CPI which triggered Tue's EUR/USD rally

• Futures remain biased toward US rate hikes (almost 50bps by June 2027)

•
EURUSD


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

• Cable rises to 1.3419 intra-day top as lower risk of July Fed hike weighs on USD

• 1.3442 was Tuesday high, after dollar fell on surprisingly soft U.S. CPI data

• Retreat from 1.3442 based 1.5 pips shy of 1.3367 (early NY low Tuesday)

• Fed chief Warsh to address Senate Banking Committee from 1400 GMT

• Burnham is set to replace Starmer as Britain's prime minister next week (July 20)

• FT-Ed Miliband trails Shabana Mahmood in race to become Burnham's chancellor

GBPUSD


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

• Shares of Anglo-Australian miner BHP rise as much as 4.4% to A$61.27, its biggest intraday pct gain since April 8

• Chile's Ministry of Mining on Tuesday summoned mining companies and unions to coordinate actions in response to the potential impact of a powerful winter storm expected to dump heavy rain across key copper-producing regions.

• BHP, whose flagship assets include the Escondida mine in Chile, the world's largest copper mine, derives over 65% of its copper output from the country, according to its third-quarter production report

• Move appears to be driven mainly by weather risks in Chile, copper accounts for roughly half of BHP's earnings, said Philip Pepe, senior equities analyst at Shaw and Partners

• Storm threat comes as Chile accounts for about quarter of global mined copper production, with copper a key component in products ranging from air conditioners to data centres

• BHP is expected to post its fourth quarter production report on July 16

• Stock has risen 33.8% this year, including session moves

(Reporting by Roshan Thomas in Bengaluru)

• Shares of Australian Gold and Copper Ltd rise as much as 4% to A$0.13, their highest level since July 10

• Company says drilling results at silver-gold-base metal deposit Achilles in New South Wales (NSW) returned high-grade mineralization

• Adds completed step-out drilling programme has confirmed Achilles mineral system remains open at depth

• Stock down 42.2% YTD, including session's moves

($1 = 1.4306 Australian dollars)

(Reporting by Subhalakshmi Dey in Bengaluru)

July 15 (Reuters) - Yen-funded summer carry trades are likely to focus on NZD/JPY and GBP/JPY this year. Given wider uncertainty around the U.S. dollar, moves into these two crosses should appeal on favourable interest rate differentials alone. NZD/JPY has been a star performer, rallying from the 91.00 area on June 24 to a high of 94.44 Tuesday. It has broken above its daily Ichimoku cloud between 93.03-90 and looks to be heading for a possible test of the May 29-June 1 double-top at 95.41-42. The two-year interest rate differential between Japanese and New Zealand government bonds is roughly 217 basis points and five-year paper is around 212 bps. These spreads could widen further with the Reserve Bank of New Zealand expected to raise rates by another 50 bps by end-2026 and the Bank of Japan seen hiking 25 bps at most in September or October , . GBP/JPY has been ratcheting higher for even longer. From a trough of 184.31 on April 9, 2025, it traded to 218.00 on July 9 on relatively wide JGB-gilt differentials and positive sentiment around likely new UK Prime Minister Andy Burnham . GBP/JPY could well test higher with the July 9 high its best since 222.73 in January 2008. The rate differential in JGB and gilt two-year maturities is around 299 bps, in five-year paper around 263 bps and in ten-year paper around 232 bps. Meanwhile, JGB-U.S. Treasury differentials are around 286 bps in two-year paper, 244 bps in fives and around 192 bps in tens. These are still attractive spreads but the market is already very long U.S. dollars, and USD/JPY remains under almost constant threat of Japanese FX intervention.

Related comment , also . For more click on [FXBUZ].

NZD/JPY daily:


GBP/JPY daily:

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

• Shares of Australia's Maronan Metals rise as much as 7.6% to A$0.425, their biggest intraday pct gain since July 3

• Silver explorer says infill drilling north of Starter Zone intersected shallow high-grade silver-lead mineralization

• Starter Zone is part of Maronan Silver-Lead-Copper-Gold Project in Queensland (QLD)

• Stock has fallen 2.4% this year, including session moves
(Reporting by Roshan Thomas in Bengaluru)

• USD/JPY upside limited yesterday on dovish US CPI data

• Data lessened chance of hike this month but Fed hawkish stance to remain?

• FOMC Chair Warsh promised appropriate policy despite any political pressure

• USD/JPY range yesterday 161.60-162.48, Asia so far today 162.13-27 EBS

• Back to stasis on or around 162.00? Japan FX intervention risk still

• US yields off post-CPI but US-Iran tensions still high

• JGB-US Treasury rate differentials ramped up yesterday to recent wides

• In 2s, rate differential to around 286 bps, in 10s to around 192 bps

• Technically, USD/JPY moving back into its 161.88-162.23 hourly Ichi cloud

• 100-HMA just below in cloud at 162.14, ascending 200-HMA 162.00

• Nearby option expiries today 161.00 $880 mln, 161.85-162.00 $1.8 bln

• Less topside, between 162.15-30 total $549 mln, 163.00-35 total $1 bln

• Related comments , , ,

• And , , also

• US markets , , ,

• On Fed , , US CPI , US-Iran

• On flows , , for more click on [FXBUZ]

USD/JPY daily:


USD/JPY hourly:

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

• AUD/USD hovers near a three-week high after closing 0.85% higher Tuesday

• Boosted by softer-than-expected U.S. June CPI, cooling Fed rate hike bets

• Strong U.S. bank earnings, recovery in chip shares lift risk, support AUD

• Upside likely limited on U.S.-Iran hostilities, higher oil prices

• Fed Chair Warsh says focused on inflation, doubles down on Fed's 2% target

• Resistance 0.6995-0.7000, 0.7020-25, support 0.6960-65, 0.6940, 0.6910-20

• China Q2 GDPand monthly activity data eyed Wed; Tue range 0.6913-0.6992
AUD:

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

Morgan Stanley Research previews the US June retail sales report due on Thursday.

"We expect total retail sales rose by 0.1% m/m in June, with control group sales up 0.5%m/m. We expect total retail sales ex autos declined by 0.2%m/m. Total sales are dragged down by gas stations (down 6.1%m/m as gas prices fell) as well as sales of building materials (down 0.5%m/m). Other components rise (autos up 1.4%m/m, and restaurants up 0.2%)," MS notes.

"Our estimate of retail control is boosted by the following factors: Prime day and other competing promotions moved to June this year instead of July, and along with the World Cup, we expect online sales were strong this month; Census seasonal factors for June 2026 and our estimate of a sharper rise in control group prices (because of food and core goods)," MS adds.

The dollar fell on Tuesday after a surprisingly soft U.S. CPI report prompted markets to sharply scale back expectations for Fed rate hikes. Headline CPI fell 0.4% in June, well below the consensus forecast for a 0.1% decline, while core CPI was unchanged against expectations for a 0.2% increase.

The inflation data saw implied odds of a July Fed hike tumble to 15% from more than 40%. The benign reading contrasted with a small-business survey showing inflation remained a top concern despite improving sentiment. In congressional testimony, Fed Chair Kevin Warsh said the soft inflation reading does not mean the Fed has achieved price stability, and he remained committed to both policy mandates and will ensure monetary policy is independent. Chicago Fed President Austan Goolsbee called June inflation "encouraging" but said one month's data is insufficient to signal a return to 2% inflation. Concerns about the ongoing Middle East conflict and Strait of Hormuz supply lifted oil though President Donald Trump dropped a proposed shipping fee in favor of more Gulf deals.

Risk sentiment was supported by strong earnings from major U.S. banks and upbeat guidance.

DXY slid with yields after CPI but held above the July low at 100.55 as dip buyers emerged ahead of Warsh's remarks.

Implied volatility softened across the curve, leaving DXY 1-month vol at 5.4% with risk reversals retaining a modest bullish bias.

Commodity currencies outperformed, aided by lower yields, higher oil prices and an upbeat risk backdrop after strong bank earnings.

The loonie posted one of its best days of the year on short covering before Wednesday's Bank of Canada policy decision. EUR/USD rallied to 1.1463 before pulling back below its 21-DMA of 1.1426, leaving support at 1.1378 vulnerable unless it tops the 1.1472 July high. GBP/USD retained a mildly bullish bias above 1.3367 post-CPI pullback low, with a close above converging moving averages near 1.34 opening the door to 1.3488. USD/JPY rebounded from Tenkan-sen support at 161.60 and reclaimed its 21-DMA at 161.80, keeping a bullish outlook toward the 162.84 YTD high intact as long as its 21-DMA holds on a closing basis. AUD/USD climbed above its 21-DMA at 0.6947 to a three-week high before easing, with a break of 0.7010 exposing the 2025 peak near 0.7055.

Treasury yields were down as much as 5 basis points as the curve steepened. The 2s-10s curve jumped about 4 basis points to +38.6bp.

The S&P 500 rose 0.44%.

WTI oil gained 1.8% on Middle East supply worries.

Gold and copper rose 1.3% as the dollar and yields fell. Heading toward the close: EUR/USD +0.38%, USD/JPY -0.14%, GBP/USD +0.22%, AUD/USD +0.80%, DXY -0.29%, EUR/JPY +0.22%, GBP/JPY +0.09%, AUD/JPY +0.69%(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.6940 after 0.6913 traded overnight, the rally then extended

• The June US CPI downside surprise sent the USD, US yields

down

• Gold, silver, copper, equities rallied while USD/CNH fell down to 6.7691

• AUD/USD rallied above the 21-DMA and probed the 0.6975-0.7010 resistance zone

• 0.6992 traded, the pair pulled slightly back during Fed Chair Warsh's testimony

• The pair sat near 0.6975 late, it traded up +0.84% in NY's afternoon

• Rising daily, monthly RSIs & AUD/USD's hold above 10- & 21-DMAs are bullish signals
audusd


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

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)