Forex News

OCBC’s Sim Moh Siong and Christopher Wong have lowered their end‑2026 forecasts for Gold and Silver, citing a tougher near‑term macro backdrop with higher real yields, a stronger US Dollar (USD) and slower ETF demand. However, they keep a mildly upward trajectory, arguing the medium‑term diversification role of Gold and structural deficit story in Silver remain intact, with stronger conviction contingent on a friendlier macro environment.

Lower targets yet medium-term view supported

"Gold and silver forecast levels have been lowered, but not the direction. The revision reflects a tougher near-term macro setup."

"Gold and silver forecasts have been revised lower to $4360 and $67, respectively for end-2026 (PreciousMetals Focus – Gold and Silver: Forecasts revised lower, 30 Jun 2026). The change reflects a more challenging near-term macro backdrop, rather than a full reassessment of the medium-term structural case for precious metals."

"In particular, the near-term setup has deteriorated for both metals. Real yields have repriced higher, the USD has strengthened, Fed expectations have shifted in a more hawkish direction while ETF demand has slowed."

"Turnaround in gold and silver prices require the macro environment to improve and this includes easing in real yields, a softer USD or a clearer unwind in hawkish Fed expectations."

"Without that, rallies are likely to be faded and gold, silver may spend more time consolidating below previous highs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

The Japanese Yen (JPY) continues to trade near levels last seen in 1986 against the US Dollar. Despite strong domestic economic indicators – headlined by a robust quarterly Tankan survey – the Yen remains heavily weighed down by aggressive short positioning and its role as a primary funding currency for global carry trades. 

As the market heads into a low-liquidity US holiday weekend, speculation is high regarding whether Japan's Ministry of Finance (MoF) will strike with fresh foreign exchange interventions, or if the currency will continue its slow, controlled grind lower until the Bank of Japan (BoJ) aggressively accelerates its interest rate hiking cycle.

The ghost of summer 2024 and the new 165 line in the sand

Macro strategists at Societe Generale emphasize that the current market environment features a dangerous accumulation of speculative Yen shorts, drawing striking parallels to the volatile unwind that caught investors off guard exactly two years ago in July 2024. While the technical upside for USD/JPY remains fundamentally intact, analysts suggest that the threshold for official pushback has shifted higher, though unexpected shifts in US Federal Reserve policy could easily spark an abrupt short-covering squeeze.

July carries ugly memories for Yen shorts and those investors with memories of how events turned against them in the summer of 2024 will be inclined to tread carefully against another backdrop of aggressive bearish positioning.

Why direct FX interventions are only a temporary band-aid

Rabobank argues that unilateral market interventions by the Japanese MoF will ultimately fail to reverse the Yen's deeply ingrained negative sentiment on their own. For the currency to establish a sustainable floor and dismantle the highly lucrative carry trades currently driving capital out of Japan, monetary policymakers must actively step up with more hawkish rate guidance.

In our view, the BoJ may have to signal it is prepared to accelerate the pace of rate hikes before the JPY finds decent support in order to break the market’s attachment to the JPY as a funding currency for carry trades.

Resilient Tankan data contrasts with a tolerated, slow market grind

MUFG points out that the BoJ’s latest outperforming Tankan report firmly justifies a more aggressive policy tightening schedule than what the broader market is currently pricing in. The recent softening of verbal intervention warnings from Japanese officials suggests that authorities may comfortably tolerate a steady, low-volatility climb in USD/JPY, provided the broader bond and equity markets remain stable.

The quarterly Tankan report, released from the BoJ today was stronger than expected and certainly endorses the rate hike by the BoJ in June and strengthens the case for further hikes going forward.

Banks anticipate immediate holiday volatility risks ahead of gradual recovery

The banks emphasize an imminent risk of intervention over the thinned Friday holiday conditions. While Societe Generale and MUFG note that the MoF might stay on the sidelines if the pace of Yen selling remains orderly, they warn that any sudden spike in illiquid holiday trading could prompt a sudden defensive strike. 

Looking further out on a three-month horizon, Rabobank projects a moderate recovery for the currency – targeting a move back down to 159 for the USD/JPY pair – under the structural assumption that a structurally hawkish BoJ will eventually step in to backstop the sliding currency.

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING strategists Michiel Tukker and Padhraic Garvey highlight that Sterling markets remain highly sensitive to UK inflation risks, especially around near-term fiscal spending plans. They argue that any sizeable immediate spending could lift British Pound (GBP) rates more than out‑year commitments, as markets still focus on the inflation outlook and Bank of England (BoE) policy rather than sovereign risk.

Near term spending keeps GBP rates jumpy

"Inflation remains the biggest threat to gilts, but with oil coming down, Burnham might be given more leeway from markets further out in the future. This is because the political risk in GBP rates is more about the UK’s inflation outlook than sovereign risk. If Labour manages to pull off a fiscal expansion in the near term, then the prospect of reaching the inflation target of 2% could be delayed again."

"Unfortunately for Burnham, at the moment, sterling rates are still very sensitive to any inflation-inducing shocks. This might be explained by the fact that the Bank of England has not managed to return inflation to target yet. When oil moved well above $100, markets were very quick to price in a significant tightening cycle, much more so than for the ECB."

"Important to note is that a fiscal expansion while inflation is rising is treated differently by markets than during a disinflationary environment. Markets are still pricing in a terminal Bank of England rate around 4%, even above the current bank rate of 3.75%. This should change next year, however, when we expect a more disinflationary environment."

"This means that the market impact of fiscal plans, such as the currently debated defence spending, depends on the timing of the spending. Near-term spending initiatives should push rates up more than spending further out into the future."

"Sterling markets remain sensitive to inflation risks, which means any near-term fiscal spending initiatives would have a significant upward impact on GBP rates. The impact of spending further out in the future should be more muted."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• The New Zealand Dollar weakens after Chinese manufacturing data met expectations but failed to provide support.
• Rising tensions between the US and Iran boost safe-haven demand and support the US Dollar.
• Markets are now focusing on the US jobs report after the ADP employment data missed expectations.

NZD/USD trades lower at 0.5660 on Wednesday, down 0.32%, reversing part of the previous day's rebound. The pair remains under pressure as the New Zealand Dollar (NZD) is weighed down by a more cautious market environment, while the US Dollar (USD) continues to strengthen.

The New Zealand Dollar remains under pressure after China's RatingDog Manufacturing Purchasing Managers Index (PMI) came in at 51.7 in June, down from 51.8 previously and in line with market expectations. The data failed to provide support for the Kiwi, as investors remain cautious about the outlook for the Reserve Bank of New Zealand (RBNZ). In addition, ASB Bank has dropped its call for a July rate hike and now expects the central bank to keep rates unchanged before gradually resuming policy tightening from September.

Meanwhile, the US Dollar is benefiting from renewed safe-haven demand. Geopolitical tensions remain elevated after Iran refused to hold direct talks with US envoys in Doha, reducing hopes for a swift de-escalation and supporting the Greenback.

The Greenback is also supported by expectations of a more hawkish monetary policy outlook. At its June meeting, the Federal Reserve (Fed) kept its benchmark interest rate unchanged at 3.50%-3.75% while removing previous references to future rate cuts. According to the CME FedWatch tool, markets are now pricing in a roughly 50% chance of a rate hike at the September meeting.

Investors have also digested the ADP Employment Change report, which showed that US private payrolls increased by 98K in June, below the market consensus of 113K and following a gain of 122K in May. Market attention now turns to Thursday's US Nonfarm Payrolls (NFP) report, with economists expecting 110K jobs to have been added in June and the Unemployment Rate to remain unchanged at 4.3%. The report could play a key role in shaping expectations for the Fed's next policy moves.

European Central Bank (ECB) President Christine Lagarde speaks at a policy panel at the ECB Forum on Central Banking 2026.

Key takeaways

"If I have one regret is that I was bound by forward guidance in the past."

"Risks are more broadly balanced than a few weeks ago."

"We are not in stagflation."

"We'll take necessary step to contain inflation."

Nordea’s analysts argue that softer June inflation data should significantly lower the risk of another European Central Bank (ECB) rate hike in July. However, they stress it is too early for the ECB to declare victory on inflation, as second-round effects remain uncertain and markets have already priced out much of the previously expected tightening for this year.

Softer data cuts rate hike risk

"Today’s numbers should ease inflation concerns and significantly lower the risk of another policy rate hike already at the July meeting."

"However, it is much too early for the ECB to call off its inflation concerns, partly because it is too early to assess the extent of any second-round effects and partly because doing so would open up for criticism with regards to the June rate hike."

"Markets have priced out a significant amount of tightening, leaving less than one additional full rate hike priced for this year."

"Only in the immediate aftermath of the ceasefire announcement in April have markets priced fewer rate hikes this year."

"Inflation concerns have eased among households too but mostly for the immediate future."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

While speaking at a policy panel at the European Central Bank's (ECB) Forum on Central Banking, Bank of England (BoE) Governor Andrew Bailey acknowledged that they have a softening economy and labour market.

Key takeaways

"Decision not to raise rates was based on softening economy."

"Rate cuts off the table at the moment."

"We'll return to it in July."

"We have a delayed reaction mechanism to energy prices."

Market reaction

GBP/USD extends its daily slide following these comments and was last seen trading at 1.3220, losing 0.3% on the day.

Bailey holds fire on cuts as soft data clouds the Pound outlook

FXS Speechtracker shows a 6/10 score versus Governor Bailey’s historic 4.7/10, signalling a modestly more impactful appearance. The emphasis on a softening economy and labour market, alongside the decision not to raise rates, leans mildly dovish on growth but stops short of a clear easing bias.

By stating that rate cuts are “off the table at the moment” and will be revisited in July, Bailey injects a hawkish twist that tempers expectations for near-term easing. The reference to a delayed reaction mechanism to energy prices underscores caution on inflation dynamics, reinforcing a wait-and-see stance that keeps the Pound caught between softer domestic data and a central bank unwilling to pre-commit to cuts.

DBS Group Research strategist Chang Wei Liang notes that USD/JPY has surged above the mid-162 area as markets probe Japanese authorities’ tolerance for further Japanese Yen (JPY) weakness. He highlights that the absence of fresh, forceful rhetoric from officials is encouraging shorts, while the previous restraint from implicit intervention threats is fading, leaving the JPY potentially on a softer footing despite solid Tankan survey data.

Markets test Japanese Yen tolerance

"USD/JPY has surged above mid-162 levels, with markets testing the Japanese authorities’ tolerance for JPY weakness."

"USD/JPY has accelerated higher after breaking through 162 yesterday, given no new rhetoric to deter shorts by government officials."

"Finance Minister Katayama only said that Japan will take “appropriate action at any time as necessary” yesterday, which has been interpreted by traders as the JPY being somewhat distant from the intervention threshold."

"The previous restraint on JPY weakness from implicit intervention threats is receding, and the JPY could be on a softer footing without more forceful rhetoric."

"Meanwhile, Japan’s Tankan for Q2 released today indicated a solid rise in sentiment across large manufacturing firms (22 vs Q1:17), helped by an exports boom and easing oil prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)