**You can analyze and download data from the U.S. Inflation Dashboard here June’s CPI report marked a notable step down in headline inflation, largely thanks to falling gasoline prices, while core inflation showed signs of stabilization at a lower level. It was a generally favorable print for those hoping for a gradual return to price stability, though persistent shelter costs and other sticky components mean the path back to the Fed’s 2% goal is likely to remain gradual. Mon

Hedge funds scale on JPY buying as real money selling moderates, says Deutsche Yen flows less negative on repatriation policy talk and systematic fast money demand Hedge funds trim USD buying; real money sellers' less aggressive stance more balanced Real money favours AUD, NOK; cuts support for GBP, EUR, SEK Hedge funds increased JPY demand and scaled back bearish bets across G10FX USD sentiment firms vs EM; real money cuts exposure, adds MXN selling. Hedge funds

Period context: Brent started ~$62, rocketed >100% into late March (geopolitical spike), then crashed ~40% into July. This was a classic event-driven oil regime, not a “normal” commodity cycle. Betas: All G10 currencies (including classic oil proxies AUD/NZD/CAD) showed negative betas to Brent (−0.006 to −0.055). DXY Broad had a positive beta (+0.028). Strength of relationship: Modest but statistically significant for most (R² 7–15%, |t| > 3 except CAD). NZD was the most oil-

**As seen in Risk In The Week report 07/05/26, get full access now! This week: US Svcs ISM PMI RBNZ OCR Decision FOMC Meeting Minutes China CPI & PPI

The decline in US 5-year breakeven inflation rates is a meaningful reduction in market-implied inflation expectations over the medium term, driven largely by the sharp drop in oil prices and softer incoming data expected to pull headline CPI lower in the coming months. Strategists are growing more confident that inflationary pressures are cooling enough to allow the Federal Reserve to shift its focus to supporting growth and the labor market as energy costs ease and forward-l

Recent dynamics between the US dollar (DXY) and crude oil benchmarks (WTI/Brent) show a clear decoupling from the traditional relationship, driven by shifting dominance between geopolitical/supply factors and macro data/Fed expectations. Oil prices had been in a steep decline through June and early July 2026, erasing much of the war premium built during the Iran-related conflict earlier in the year. Brent and WTI fell sharply back toward or below pre-conflict levels (around $

Fed market pricing and gold spot prices exhibit a strong inverse relationship, driven primarily by real interest rates and the opportunity cost of holding a non-yielding asset. When markets price in more dovish Fed policy—via lower probabilities of rate hikes or higher odds of cuts in tools like CME FedWatch futures—expected real yields typically decline, reducing the cost of holding gold and supporting higher spot prices. Conversely, hawkish repricing (e.g., markets shifting

**As seen in Online Tools > Non Farm Payrolls Dashboard Today’s softer-than-expected June jobs report triggered a meaningful dovish repricing in Fed rate expectations, particularly at the front end of the curve. The weak headline payrolls print and downward revisions to prior months significantly reduced the probability of a near-term rate hike, pushing back the odds of any tightening in July or September while increasing the market’s conviction in a more gradual or delayed e

The Nikkei 225 and USD/JPY have historically exhibited a positive correlation, driven primarily by the heavy weighting of export-oriented companies in the Japanese equity index. A weaker yen (higher USD/JPY) improves the competitiveness and yen-denominated earnings of major Nikkei constituents such as automakers, electronics firms, and machinery exporters, which typically supports equity prices. Conversely, yen strength tends to weigh on both the currency pair and the index.

Historically, July has been mildly constructive for the Mexican Peso over the past decade. On a 10-year average (2016-2025) USDMXN has returned an average of around -1.15% in July, with the pair closing down in around 60% of those years. This seasonal pattern is generally attributed to a combination of factors, including strong inflows from the carry trade into MXN, relatively lower volatility during the summer months in the Northern Hemisphere, and supportive flows related t

The US 2-year Treasury yield has climbed sharply to multi-month highs, hitting levels last seen in February 2025 after the Federal Reserve’s June FOMC meeting. On June 17, the yield spiked more than 16 basis points in a single session — the largest one-day jump on an FOMC announcement day since March 2008 — closing around 4.20–4.22%. It has since consolidated near those elevated levels into Monday’s close. Markets have responded aggressively. Rate futures now fully price in a

As of mid-June 2026, the 10-year US Treasury yield is around 4.46% and the 10-year German Bund yield hovers around 2.96%, resulting in a transatlantic spread of approximately 150 basis points. This spread remains one of the key medium-term drivers for EUR/USD. EUR/USD usually declines when the US 10Y-Bund spread widens (US yields exceed Bund yields) because USD assets look more appealing and the outlook for a stricter US monetary policy becomes more pronounced. Conversely, a

The market-implied Fed pricing curve has moved significantly hawkish over the past month. Following the June 17 FOMC meeting (Chair Kevin Warsh’s first), the CME FedWatch probabilities moved from a baseline already biased toward fewer cuts to one now pricing two 25 bp rate hikes in 2026. The odds of at least one hike by year-end have surged into the 85-89% range, with the biggest jumps concentrated around the September and December meetings. While the July meeting still has a

The jobs market recovery looks less impressive when you exclude private health/social care and hospitality. Those sectors account for only a quarter of jobs, but two thirds of jobs growth so far this year. Yes, hiring has improved elsewhere, but not nearly as rapidly as the headline figures imply. And crucially, there’s very little sign that this improvement is feeding into broader wage pressure. That’s one reason why inflation fears should start to recede as the year goes on

The deal between the US and Iran is set to reopen the Strait of Hormuz for oil shipments. While it will take months to ramp up production and exports closer to normal capacity again, it greatly eases the supply constraint that has pressured the market since the beginning of March, when the war started. The path for world oil supply over the coming months also depends on how long the US and others will continue to sell strategic reserves. There is less need for the emergency s

Over the last six months, the relationship between G10 FX and the CBOE VIX Index has been largely textbook in nature, with the US dollar acting as a safe haven asset in times of rising volatility. In this regard, beta quantifies how sensitive G10 currency pairs or baskets are to the VIX. A positive beta for the dollar means that it tends to strengthen when fear in equity markets increases, whereas risk-sensitive currencies like the Australian and New Zealand dollars tend to h

Since 2010, central banks have been net purchasers of gold every year, but the pace accelerated sharply following 2022. Average annual purchases over the last four years have been around 1,000 tonnes – roughly double the average over the previous decade. This official sector demand has been one of the major structural supports for the price of gold. Central banks remain structurally bullish on gold. Even after several years of very strong buying and much higher gold prices, a

We expect the BoJ to stick to a gradual pace of monetary tightening and deliver another rate hike later this year. The weak yen is one factor which could encourage the BoJ to speed up the pace of rate hikes but there was no strong indication over the timing of the next hike at today’s policy meeting. The yen’s failure to strengthen on the back of today’s BoJ rate hike will keep pressure on Japan to intervene again to provide support. As we highlighted in yesterday’s FX Daily

The likelihood of another rate hike by the Reserve Bank of Australia would rise, especially in a potentially rocky summer for energy markets. The Bank might have a slightly higher bar to tighten again, but it has shown little hesitation to act if data heats up. The positive impact on AUD/USD from another RBA hike would, however, be more than offset by potential Fed tightening, which tends to have a deeper impact on high-beta currencies than domestic stories. Beyond a potentia

Another rate hike expected, likely in September. At this stage, forward-looking price indicators (European Commission surveys and PMIs) confirm a gradual transmission of the energy shock to other sectors. However, the transmission remains less significant than what was observed in 2022 and still only marginally affects finished goods. The emergence of a price-wage spiral appears, for now, unlikely, as wage pressures should remain contained in 2026. The ECB anticipates a slowd