Forex News

Societe Generale’s Michael Haigh and Jeremy Sellem note that the commodity complex has been resilient to Middle East tensions, with Oil gains capped and forecasts for prices at $70 by year end unchanged. They introduce a cross-commodity term-structure model that builds continuous forward curves, fills contract gaps, and supports pricing, hedging, basket construction and de-seasonalised carry signals across BCOM and GSCI markets.

Cross-commodity term structure and carry

"Despite major Middle East headlines, the commodity complex barely moved. The BCOM gained 2% on the week, less than a standard weekly move this year. Prices briefly firmed midweek following the end of the ceasefire and the resumption of strikes by both sides."

"Oil was the main driver, rising about 10% from $72 to $78/bbl in three days before pulling back later in the week. The rally appears capped for now, and our forecasts published last week remain unchanged ($70 by year end)."

"Attention is gradually shifting toward agricultural markets and the widely anticipated return of El Niño later this year. Agricultural commodities are up 7% this month, with softs up 8% this week alone."

"We introduce a model for basket-level curve analysis that will ultimately make the relative value carry trade easier to apprehend. Our approach combines the economic intuition of commodity term structure theory with a practical interpolation framework."

"This framework produces consistent monthly forward prices out to two years across 27 commodity markets. It fills gaps where contracts are listed only quarterly or seasonally and extends maturities beyond the final observable contract when needed."

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

United States (US) President Donald Trump announced that the Strait of Hormuz is open and will remain accessible to international shipping “with or without Iran,” while outlining a new US-led security arrangement for the strategic waterway.

In a Truth Social post on Monday, Trump said Washington would reinstate what he called the “Iranian Blockade,” aimed at preventing Iranian vessels and Iran-linked customers from entering or leaving through the Strait. Ships belonging to other countries would continue to have what Trump described as fair and open access.

Trump also declared that the United States would be known as the “Guardian of the Hormuz Strait,” assuming responsibility for providing safety and security across the volatile maritime route.

Under the proposed arrangement, Washington would seek reimbursement “at the rate of 20% on all cargo shipped” through the Strait to cover the costs of protecting maritime traffic. Trump did not provide further details on how the charge would be calculated or implemented. “The process and formation will begin immediately,” Trump said.

Market reaction

The US Dollar Index (DXY) trades near 101.10, rising around 0.11% and moving slightly higher after surrendering earlier gains. The Greenback initially benefited from safe-haven demand as renewed US-Iran tensions pushed Oil prices higher.

Danske Research Team reports that overall consumer spending excluding energy in June was broadly unchanged on the month, with real spending up 4.3% year-on-year. Real retail spending on goods rose, particularly in larger consumer categories, while service spending generally declined. The report highlights reduced real fuel consumption as households respond to higher prices and a shift toward electric cars.

Goods strength contrasts weaker services

"Adjusting for seasonality and prices, total spending excluding energy was broadly unchanged in June, increasing 0.1% compared to May. However, compared to the same month last year, real spending was 4.3% higher. Unlike the broad-based growth seen in May, June was characterised by higher goods spending, while service spending declined across most categories."

"Real retail spending rose 0.7% m/m in June after seasonal and price adjustments, supported by higher spending across all goods categories. Real spending on smaller consumer goods continued to increase modestly, while spending in larger consumer goods categories, such as DIY stores, furniture stores and electronics and household appliance stores, rose significantly. Grocery spending was essentially unchanged in both nominal and real terms following strong growth in May."

"Nominal spending at petrol stations declined 5.0% m/m in June, partly reflecting lower fuel prices from May to June. However, fuel prices remain significantly elevated compared to February, before the conflict in the Middle East. Adjusted for prices, real spending fell 1.6% m/m in June and has declined 4.8% since February."

"Households are buying less fuel in response to higher prices, partly reflecting a declining number of petrol and diesel cars and a significant increase in the stock of electric cars."

"Service spending generally declined in June. While spending in hotels increased in nominal terms, only beauty salons and barbers saw an increase in real spending. Bars and nightclubs, restaurants and most other service categories saw lower real spending, with spending on tourist attractions and amusement parks falling particularly sharply."

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

MUFG’s Lee Hardman reports the Japanese Yen has weakened again, pushing USD/JPY back above 162.00 as higher energy prices and fading impact from last week’s verbal intervention weigh on the currency. He explains that uncertainty over any formal policy shift at the GPIF and the slow timeline for potential changes limit near-term support for domestic assets and the Yen.

Yen soft as GPIF policy remains unclear

"The yen has re-weakened at the start of this week resulting in USD/JPY rising back above 162.00."

"All of the gains recorded on Friday after verbal intervention from Finance Minister Katayama have been reversed."

"While we certainly view this as potentially meaningful, we still have only had this comment made by Finance Minister Katayama at a regular press conference and hence to what extent any formal policy is being compiled is unclear."

"So we think firstly we would need to see this cited more regularly as something being looked at from a policy perspective with the MHLW then formulating an updated objective."

"It is the GPIF’s Board of Governors that ultimately set the asset composition mix and all of this certainly points to no quick implementation of any new policy."

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

Rabobank's Senior Macro Strategist Bas van Geffen highlights a US‑centric data and policy calendar, with June CPI expected to ease to 3.8% year‑on‑year and core inflation to 2.8%. He also points to multiple Fed speakers and new Chair Warsh’s testimonies in Congress, alongside US producer prices and retail sales, as key inputs for US Dollar traders over the coming days.

Busy US data and Fed schedule

"Tuesday, the Bureau for Labor Statistics reports the June CPI print, which is expected to moderate to 3.8% y/y from 4.2%. Core inflation is seen easing marginally to 2.8%, but the Warsh-fans that prefer the trimmed-mean measure can look out for the Cleveland Fed’s estimate."

"Speaking of Warsh, the fresh Fed chair is due to testify at the House Financial Services Committee. His colleagues Barr, Goolsbee, Cook and Bowman are due to speak too."

"Wednesday’s data include Eurozone industrial production for May, and US producer price inflation. The Bank of Canada will set rates. We expect the central bank to leave the overnight rate unchanged at 2.25%. That view is widely shared by markets and our peers: only one of the 21 strategists surveyed by Bloomberg forecasts a 25bp rate hike."

"Thursday’s calendar includes UK monthly GDP estimates and US retail sales for June. Musalem, Logan, and Schmid (all Fed) deliver remarks."

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

TD Securities economists Oscar Munoz and Eli Nir highlight that the June FOMC minutes were hawkish, with most participants ready to hike if supply-driven inflation persists. They still project the Fed will keep rates on hold through 2026, as output growth moves sideways and stagflationary risks from the Iran conflict keep inflation elevated while the labor market stabilizes.

Hawkish minutes but steady policy

"The June FOMC minutes last week were hawkish, highlighting inflation risks and showing most participants would support hikes if supply-driven price pressures persist, even with a stable labor market."

"While we continue to see an indefinite hold for the Fed, higher inflation over the next few months could be enough to produce hikes, even if the labor market does not accelerate."

"We expect the Fed to remain on hold over our forecast horizon."

"Inflation should remain high for the rest of the year, and the labor market has stabilized, allowing the FOMC to shift focus to its inflation mandate."

"If the Fed were to move this year, we believe that move is more likely to be a hike than a cut."

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

Commerzbank’s Dr. Jörg Krämer describes Switzerland’s strong federalism and extensive use of financial referenda as key to its superior economic outcomes. Cantons and municipalities compete for taxpayers by setting their own tax rates and controlling spending. Citizen votes on projects and tax levels restrain government size, keeping expenditure and indebtedness lower and supporting a more dynamic economy than Germany’s.

Swiss model of competition and restraint

"Federalism in Switzerland does not only mean that decisions which affect only certain municipalities or cantons are also taken there. In addition, the cantons and many municipalities are financially much more autonomous than the corresponding jurisdictions in Germany; they can set the level of income tax and many other taxes"

"To attract taxpayers, they are forced to offer attractive infrastructure at the lowest possible cost, i.e. with low taxes. Competition for taxpayers reduces the power of the state and promotes efficient government structures."

"In these referenda, citizens vote not only on planned major investment projects, as in Germany, but also on the loans required to finance them. As a result, voters become aware not only of the benefits but also of the costs of a project."

"Furthermore, citizens are allowed to decide on tax rates within the framework of referenda – including at the federal level. It is therefore much more difficult for Swiss politicians to push through high spending and high taxes."

"This prevents that the state gets too big which would deprive citizens and companies of too many resources and weaken the economy."

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

The Swiss Franc (CHF) trades in a tight range against the Euro (EUR) as the Swiss National Bank (SNB) actively works to neutralize safe-haven capital inflows stemming from increased geopolitical woes. 

While the European Central Bank's (ECB) restrictive monetary policy and recent rate hikes have provided a steady tailwind for the Euro, the SNB has leaned heavily into direct foreign exchange interventions to prevent an excessive appreciation of the Franc. Consequently, macro analysts project a period of near-term consolidation for the cross.

ECB hawkishness shields Euro from safe-haven Swiss Franc strength

Senior FX strategy experts at Rabobank note that the persistent hawkishness of the ECB has effectively relieved the intense downward pressure that previously plagued the EUR/CHF exchange rate. Although a modest rebound in the pair from its recent lows has raised some concerns about imported inflation creeping into Switzerland during the third quarter, the Euro remains structurally supported by the contrast in central bank postures. If Eurozone policymakers extend their tightening cycle, it could eventually force the SNB to contemplate its own move toward the turn of the year.

That said, the hawkishness of the ECB will have relieved some pressure on the EUR/CHF exchange rate and thus on the SNB. We expect further consolidation around the EUR/CHF 0.92 area on a 3-month view with potential for a slight upside bias reflecting ECB hawkishness.

SNB relies on active currency intervention to curb Franc appreciation

Rabobank highlights that the SNB has been pushing back against speculative Franc buying. Official data confirms that the central bank purchased billions in foreign currency during the first quarter to actively depress the local currency's value. With domestic inflation remaining low and growth risks appearing modest, SNB President Martin Schlegel has reaffirmed that direct market intervention remains the bank’s preferred first line of defense.

For now, we expect that the SNB’s focus will remain on emphasising that FX intervention is a policy tool with the aim of dissuading speculative buying and preventing the CHF from appreciating.

Analysts anticipate a range-bound trajectory for the Euro-Swiss cross

Banks anticipate a range-bound near-term trend for the EUR/CHF pair. Rabobank projects that the currency cross will closely orbit the 0.9200 threshold over a three-month horizon, supported by a mild upside bias from the ECB's relative hawkishness. However, because any aggressive appreciation of the Swiss Franc will be met with swift, unannounced currency sales by the SNB, the pair is expected to remain firmly trapped in a well-defined lateral band for the foreseeable future.

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

Iran’s top joint military command issued a series of warnings on Monday over the Strait of Hormuz, saying any unauthorized United States (US) transit would be confronted and cautioning neighboring countries against supporting Washington.

Key takeaways:

Iran will not allow the United States to intervene in the management of the Strait of Hormuz.
Any attempt by the United States to transit through the Strait without Iran’s authorization will be strongly confronted.
To the leaders of regional countries, any cooperation with the United States will be considered war against Iran.
If the war widens, it will reach all the countries of the region. Responsibility lies with the United States and its allies.”

• Silver falls more than 2% as energy-driven inflation concerns strengthen expectations of a Fed rate hike.
• Traders await Tuesday’s US CPI data for fresh clues on the interest rate outlook.
• XAG/USD remains range-bound between $55.50 and $62.50, with the broader bias tilted lower.

Silver (XAG/USD) attracts sellers on Monday after renewed fighting between the United States (US) and Iran over the weekend revived energy-driven inflation concerns and reinforced expectations of a Federal Reserve (Fed) interest rate hike later this year.

At the time of writing, XAG/USD trades around $58.30, down more than 2% on the day.

According to the CME FedWatch Tool, traders are currently pricing in a 71% chance of a rate hike in September, up from 57% a week earlier. Higher borrowing costs tend to weigh on non-yielding assets such as Silver.

The US economic calendar is light on Monday, leaving traders focused on geopolitical headlines. Attention then turns to the US Consumer Price Index (CPI) data on Tuesday, which could shape near-term interest rate expectations and drive the next move in XAG/USD.

On the daily chart, XAG/USD remains largely range-bound between $55.50 and $62.50, a structure in place since late June. Silver holds well below the 200-day Simple Moving Average (SMA) at $70.37 and the 100-day SMA at $73.87, keeping the broader bias tilted to the downside.

Momentum remains weak, with the Relative Strength Index (RSI) near 37 staying below the neutral 50 level. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator hovers slightly in positive territory, pointing to a modest loss of selling momentum but falling short of confirming a recovery.

On the upside, initial resistance stands at the upper boundary of the range around $62.50. A clear break above this level could open the door toward the 200-day SMA at $70.37, followed by the 100-day SMA at $73.87.

On the downside, the $55.50 level remains the key support. A decisive break below this floor would end the current consolidation phase and expose Silver to another leg lower.

(The technical analysis of this story was written with the help of an AI tool. Know more.)