Forex Major Currencies Outlook (June 22 – June 26)
PCE and inflation data from Canada and Australia, final Q1 GDP from the US, preliminary June PMI data from Eurozone and UK as well as employment data from Australia will highlight the week ahead of us.
USD
US President Trump announced on Truth Social that deal between US and Iran has been reached. He added that US will lift the naval blockade but that Straight of Hormuz will be opened on Friday, toll free, upon the signing of the deal. Preparatory talks for the deal will be held in Doha, Qatar and Qatari will act as mediators in any negotiations. Signing ceremony was planned to be held in Switzerland on June 19, but talks have been cancelled. The details show financial incentives for Iran such as resumption of oil exports as well as economic development funds and reactivation of frozen assets. Trump has signed Memorandum Of Understanding (MOU) in Versailles, France at the G7 meeting. Key points of MOU include immediate and permanent termination of military operations between Iran, the United States, and their allies as well as commitment not to initiate military action or use force against one another. The sides agree to target of negotiating a final agreement within 60 days, with extensions possible by mutual consent. US will begin lifting the naval blockade immediately and full removal is expected within 30 days. U.S. and regional partners would develop a reconstruction and economic development plan for Iran worth at least $300 billion and all sanctions on Iran have been lifted. Iran pledges that it will not pursue or develop nuclear weapons.
Retail sales for the month of May rose 0.9% m/m beating expectations of a 0.5% m/m print. Sales at gasoline stations rose 3.4% m/m and 26.5% y/y as a result of higher gasoline prices caused by US – Iran war. Big gains were seen in nonstore retailers (1.5% m/m and 12.2% y/y) as well as misecellaneous store retailers (2.3% m/m and 9.1% y/y). Food services and drinking places, a good proxy for discretionary spending, declined 0.1% m/m while the biggest decline was in electronics stores -0.5% m/m. Control group, excluding volatile components and used for GDP calculation, rose 0.7% m/m vs 0.4% m/m as expected. Ex autos category rose 0.8% m/m while ex autos and gas category rose by 0.5% m/m.
Fed has left rate unchanged in the range of 3.50-375% as was widely expected. The decision was unanimous. This was the first meeting led by the new Fed Chairman Kevin Warsh and the message was clearly hawkish. The statement was very short and Chairman Warsh stated that this is the way it will be going forward, shorter statement and much more clear. It says that economic activity keeps expanding at a solid pace and that productivity growth and capital investments are strong. The statement acknowledges that inflation remains elevated and reiterates that Committee will deliver price stability.
Dot plot now sees rate finishing 2026 at 3.8%, up from 3.4% in March. Rate for the end of 2027 was lifted to 3.6% from 3.1% while for the end of 2028 it is seen at 3.4%, up from also 3.1%. There were 9 out of 18 members seeing rate hikes this year, Warsh did not cast his dot as he is not a fan of it given Fed’s abysmal record with it. One member saw three hikes in 2026 and five saw two rate hikes. SEP shows lower growth for 2026 than in March (2.2% vs 2.4%) but the unemployment rate is also seen lower (4.3% vs 4.4%). Surge in PCE is notable as it is now see at 3.6% for 2026, up from 2.7% seen in March and then falling to 2% in 2028. Core PCE was also revised up and is now seen at 3.3% in 2026, 2.5% in 2027 and 2.1% in 2028.
At his first press conference Chairment Warsh appeared very charismatic, he drew few sincere laughs from the crowd of journalists and seemed to have full control of the situation. He reiterated multiple times that Fed will unambiguously and unanimously deliver price stability thus putting inflation at the center of Fed’s policy and giving it precedent over full employment. There was a removal of forward guidance as Warsh thinks that financial markets make best decisions when they react directly to data and not at the way they think Fed will react to data. He added that “I can’t give you any guidance on what we’re going to do next." Warsh was adamant about Fed’s mandate and added that there is no reason to revisit the 2% inflation target. He also stated that Fed will continue with ample reserves regime indicating that Fed Funds rate will be the primary focus of monetary policy.
Warsh has announced new task forces that will act in 5 areas: 1. Communication, 2. Balance sheet policy (review ample reserves regime), 3.Data (evaluate new data sources and improve surveys for better and more actionable data), 4. Productivity and Jobs and 5. Fed inflation framework (examine drivers of inflation, first principles). He clarified that he is not against press conferences but he thinks they should be held when there is something important to say. Warsh admitted that there was a limited reaction to proposal of a rate cut. Big changes are coming which could lead to greater centralization of power in the hands of Chairman Warsh.
The yield on a 10y Treasury started the week at 4.49%, rose to 4.50% and finished the week at around 4.46. The yield on 2y Treasury started the week at 4.09%, rose to 4.20% and finished the week at around 4.19%. Spread between 2y and 10y Treasuries started the week at 40bp and finished the week at 27bp. FedWatchTool sees the probability of a no change at a July meeting at around 64% while probability of a 25bp rate hike is at around 36%. WTI prices have slumped to $80 on market open as markets were gripped by the news of US – Iran deal and continued to drop until reaching $74. Gold recovered in the first half of the week but then gave it all back making it third consecutive week of falling prices.
This week we will have final Q1 GDP print as well as Fed’s preferred inflation metric PCE. New Chairman Warsh prefers trimmed mean PCE.
Important news for USD:
Thursday:
PCE and inflation data from Canada and Australia, final Q1 GDP from the US, preliminary June PMI data from Eurozone and UK as well as employment data from Australia will highlight the week ahead of us.
USD
US President Trump announced on Truth Social that deal between US and Iran has been reached. He added that US will lift the naval blockade but that Straight of Hormuz will be opened on Friday, toll free, upon the signing of the deal. Preparatory talks for the deal will be held in Doha, Qatar and Qatari will act as mediators in any negotiations. Signing ceremony was planned to be held in Switzerland on June 19, but talks have been cancelled. The details show financial incentives for Iran such as resumption of oil exports as well as economic development funds and reactivation of frozen assets. Trump has signed Memorandum Of Understanding (MOU) in Versailles, France at the G7 meeting. Key points of MOU include immediate and permanent termination of military operations between Iran, the United States, and their allies as well as commitment not to initiate military action or use force against one another. The sides agree to target of negotiating a final agreement within 60 days, with extensions possible by mutual consent. US will begin lifting the naval blockade immediately and full removal is expected within 30 days. U.S. and regional partners would develop a reconstruction and economic development plan for Iran worth at least $300 billion and all sanctions on Iran have been lifted. Iran pledges that it will not pursue or develop nuclear weapons.
Retail sales for the month of May rose 0.9% m/m beating expectations of a 0.5% m/m print. Sales at gasoline stations rose 3.4% m/m and 26.5% y/y as a result of higher gasoline prices caused by US – Iran war. Big gains were seen in nonstore retailers (1.5% m/m and 12.2% y/y) as well as misecellaneous store retailers (2.3% m/m and 9.1% y/y). Food services and drinking places, a good proxy for discretionary spending, declined 0.1% m/m while the biggest decline was in electronics stores -0.5% m/m. Control group, excluding volatile components and used for GDP calculation, rose 0.7% m/m vs 0.4% m/m as expected. Ex autos category rose 0.8% m/m while ex autos and gas category rose by 0.5% m/m.
Fed has left rate unchanged in the range of 3.50-375% as was widely expected. The decision was unanimous. This was the first meeting led by the new Fed Chairman Kevin Warsh and the message was clearly hawkish. The statement was very short and Chairman Warsh stated that this is the way it will be going forward, shorter statement and much more clear. It says that economic activity keeps expanding at a solid pace and that productivity growth and capital investments are strong. The statement acknowledges that inflation remains elevated and reiterates that Committee will deliver price stability.
Dot plot now sees rate finishing 2026 at 3.8%, up from 3.4% in March. Rate for the end of 2027 was lifted to 3.6% from 3.1% while for the end of 2028 it is seen at 3.4%, up from also 3.1%. There were 9 out of 18 members seeing rate hikes this year, Warsh did not cast his dot as he is not a fan of it given Fed’s abysmal record with it. One member saw three hikes in 2026 and five saw two rate hikes. SEP shows lower growth for 2026 than in March (2.2% vs 2.4%) but the unemployment rate is also seen lower (4.3% vs 4.4%). Surge in PCE is notable as it is now see at 3.6% for 2026, up from 2.7% seen in March and then falling to 2% in 2028. Core PCE was also revised up and is now seen at 3.3% in 2026, 2.5% in 2027 and 2.1% in 2028.
At his first press conference Chairment Warsh appeared very charismatic, he drew few sincere laughs from the crowd of journalists and seemed to have full control of the situation. He reiterated multiple times that Fed will unambiguously and unanimously deliver price stability thus putting inflation at the center of Fed’s policy and giving it precedent over full employment. There was a removal of forward guidance as Warsh thinks that financial markets make best decisions when they react directly to data and not at the way they think Fed will react to data. He added that “I can’t give you any guidance on what we’re going to do next." Warsh was adamant about Fed’s mandate and added that there is no reason to revisit the 2% inflation target. He also stated that Fed will continue with ample reserves regime indicating that Fed Funds rate will be the primary focus of monetary policy.
Warsh has announced new task forces that will act in 5 areas: 1. Communication, 2. Balance sheet policy (review ample reserves regime), 3.Data (evaluate new data sources and improve surveys for better and more actionable data), 4. Productivity and Jobs and 5. Fed inflation framework (examine drivers of inflation, first principles). He clarified that he is not against press conferences but he thinks they should be held when there is something important to say. Warsh admitted that there was a limited reaction to proposal of a rate cut. Big changes are coming which could lead to greater centralization of power in the hands of Chairman Warsh.
The yield on a 10y Treasury started the week at 4.49%, rose to 4.50% and finished the week at around 4.46. The yield on 2y Treasury started the week at 4.09%, rose to 4.20% and finished the week at around 4.19%. Spread between 2y and 10y Treasuries started the week at 40bp and finished the week at 27bp. FedWatchTool sees the probability of a no change at a July meeting at around 64% while probability of a 25bp rate hike is at around 36%. WTI prices have slumped to $80 on market open as markets were gripped by the news of US – Iran deal and continued to drop until reaching $74. Gold recovered in the first half of the week but then gave it all back making it third consecutive week of falling prices.
This week we will have final Q1 GDP print as well as Fed’s preferred inflation metric PCE. New Chairman Warsh prefers trimmed mean PCE.
Important news for USD:
Thursday:
- GDP
- PCE
EUR
Final inflation reading for the month of May for the Euro Area saw headline unchanged at 3.2% y/y while core print was revised higher to 2.6% y/y from 2.5% y/y as preliminary reported. Services inflation rose 3.5% y/y, up from 3% in April and it nudged core inflation higher. June ZEW survey showed outlook for the German economy and Euro Area return to positive for the first time since February. ECB Chief Economist Philip Lane suggested that the new neutral rate may be 2.50%. That means that ECB has room for another 25bp rate hike to bring rate to neutral and still not move into restrictive territory.
This week we will have preliminary June PMI data expected to show further divergence between manufacturing and services.
Important news for EUR:
Tuesday:
Final inflation reading for the month of May for the Euro Area saw headline unchanged at 3.2% y/y while core print was revised higher to 2.6% y/y from 2.5% y/y as preliminary reported. Services inflation rose 3.5% y/y, up from 3% in April and it nudged core inflation higher. June ZEW survey showed outlook for the German economy and Euro Area return to positive for the first time since February. ECB Chief Economist Philip Lane suggested that the new neutral rate may be 2.50%. That means that ECB has room for another 25bp rate hike to bring rate to neutral and still not move into restrictive territory.
This week we will have preliminary June PMI data expected to show further divergence between manufacturing and services.
Important news for EUR:
Tuesday:
- Manufacturing PMI (Eurozone, Germany, France)
- Services PMI (Eurozone, Germany, France)
- Composite PMI (Eurozone, Germany, France)
GBP
May inflation report saw headline number unchanged at 2.8% y/y while markets were bracing for a 3% y/y print. Food inflation has eased to 2.2% y/y while services inflation continued to climb and printed uncomfortable 3.7% y/y. Core reading ticked up to 2.6% y/y from 2.5% y/y in April, but still lower than 2.7% y/y as expected.
Employment report showed economy add 2k jobs in the month of May after April saw 53k job losses (positive revision after 100k job losses as initially reported). April ILO unemployment rate ticked down to 4.9% while wages rose 4.4% 3m/y and 3.4% 3m/y excluding bonus. First job growth in three months and wages holding steady are positive signs for the labor market. However, we need to be mindful that private wages rose 2.9% 3m/y and that is the first sub-3% growth since 2020.
BoE has left the rate unchanged at 3.75% as was widely expected. The vote was 7-2 in favor of no change with Pill and Greene voting for a 25bp rate hike stating that they wanted to “insure against the possibility of larger second-round effects”. The statement reiterates heightened uncertainty caused by the US – Iran war and warned that although inflation has fallen it is expected to rise later in the year. The risk of material second-round effects gets larger the longer the higher energy prices persist.
Mayor of the Greater Manchester Andy Burnham won the Makerfield by-election and is now an MP. It is expected that he will soon challenge Prime Minister Starmer for the leadership position in the Labour Party. If he wins, and the odds of it are high, he will become the new Prime Minister. Betting markets are expecting that to happen by the end of the summer.
This week we will have preliminary June PMI data.
Important news for GBP:
Tuesday:
May inflation report saw headline number unchanged at 2.8% y/y while markets were bracing for a 3% y/y print. Food inflation has eased to 2.2% y/y while services inflation continued to climb and printed uncomfortable 3.7% y/y. Core reading ticked up to 2.6% y/y from 2.5% y/y in April, but still lower than 2.7% y/y as expected.
Employment report showed economy add 2k jobs in the month of May after April saw 53k job losses (positive revision after 100k job losses as initially reported). April ILO unemployment rate ticked down to 4.9% while wages rose 4.4% 3m/y and 3.4% 3m/y excluding bonus. First job growth in three months and wages holding steady are positive signs for the labor market. However, we need to be mindful that private wages rose 2.9% 3m/y and that is the first sub-3% growth since 2020.
BoE has left the rate unchanged at 3.75% as was widely expected. The vote was 7-2 in favor of no change with Pill and Greene voting for a 25bp rate hike stating that they wanted to “insure against the possibility of larger second-round effects”. The statement reiterates heightened uncertainty caused by the US – Iran war and warned that although inflation has fallen it is expected to rise later in the year. The risk of material second-round effects gets larger the longer the higher energy prices persist.
Mayor of the Greater Manchester Andy Burnham won the Makerfield by-election and is now an MP. It is expected that he will soon challenge Prime Minister Starmer for the leadership position in the Labour Party. If he wins, and the odds of it are high, he will become the new Prime Minister. Betting markets are expecting that to happen by the end of the summer.
This week we will have preliminary June PMI data.
Important news for GBP:
Tuesday:
- Manufacturing PMI
- Services PMI
- Composite PMI
AUD
RBA has left its cash rate unchanged at 4.35% as was widely expected. The decision was unanimous. The statement warns that headline and underlying inflation remain too high and will likely remain high for some time. Members emphasized uncertainties caused by US – Iran war having a big impact on economic activity and inflation outlook. The statement shows “...the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.“They remain data-dependent with particular focus on “...developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market.”
RBA Governor Bullock emphasized that inflation is too high at her press conference adding that they are prepared to hike further if need arises. She stated that there was an issue with inflation even before the war started and that conflict only exacerbated the issue. Bullock warned that people should not be surprised if they see weaker growth as their focus is on fighting inflation. From the statement and press conference we can see that RBA is planing to stay on sidelines for a while.
May saw further divergence between sectors as industrial production grew 4.5% y/y vs 4.1% y/y in April beating expectations for a 4.2% y/y increase due to strong external demand while retail sales declined 0.6% y/y for the first negative print since December of 2022. Sales of household appliances, autos and furniture saw biggest drops on the month. Gold and jewellery sales also declined hard on the month. Fixed Asset Investments plunged 4.1% y/y for the lowest level since 2020 as uncertainties caused by US – Iran war crush sentiment.
This week we will have May inflation and employment data.
Important news for AUD:
Wednesday:
RBA has left its cash rate unchanged at 4.35% as was widely expected. The decision was unanimous. The statement warns that headline and underlying inflation remain too high and will likely remain high for some time. Members emphasized uncertainties caused by US – Iran war having a big impact on economic activity and inflation outlook. The statement shows “...the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.“They remain data-dependent with particular focus on “...developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market.”
RBA Governor Bullock emphasized that inflation is too high at her press conference adding that they are prepared to hike further if need arises. She stated that there was an issue with inflation even before the war started and that conflict only exacerbated the issue. Bullock warned that people should not be surprised if they see weaker growth as their focus is on fighting inflation. From the statement and press conference we can see that RBA is planing to stay on sidelines for a while.
May saw further divergence between sectors as industrial production grew 4.5% y/y vs 4.1% y/y in April beating expectations for a 4.2% y/y increase due to strong external demand while retail sales declined 0.6% y/y for the first negative print since December of 2022. Sales of household appliances, autos and furniture saw biggest drops on the month. Gold and jewellery sales also declined hard on the month. Fixed Asset Investments plunged 4.1% y/y for the lowest level since 2020 as uncertainties caused by US – Iran war crush sentiment.
This week we will have May inflation and employment data.
Important news for AUD:
Wednesday:
- CPI
Thursday:
- Employment Change
- Unemployment Rate
NZD
Q1 GDP showed a nice growth with 0.8% q/q and 1.5% y/y with Q4 of 2025 print being revised up to 0.5% q/q and 1.5% y/y. Growth was seen in both services (0.5%) and goods-producing industries. Private consumption and gross fixed capital formation both grew 0.8%, while government spending grew by 0.4%. Exports rose 4.3% while imports rose 4.6%. Consumer confidence plunged in Q2 to 80.4 from 94.7 in the first quarter thus marking the lowest reading since Q3 of 2023.
Q1 GDP showed a nice growth with 0.8% q/q and 1.5% y/y with Q4 of 2025 print being revised up to 0.5% q/q and 1.5% y/y. Growth was seen in both services (0.5%) and goods-producing industries. Private consumption and gross fixed capital formation both grew 0.8%, while government spending grew by 0.4%. Exports rose 4.3% while imports rose 4.6%. Consumer confidence plunged in Q2 to 80.4 from 94.7 in the first quarter thus marking the lowest reading since Q3 of 2023.
CAD
Manufacturing sales for the month of April posted a 4.2% m/m increase after already growing by 3.4% m/m in February and 3% m/m in March. Wholesale trade grew by another 0.6% m/m following 1.9% m/m growth the previous month. April retail sales rose by 0.5% m/m thus marking four consecutive months of increases with preliminary May reading showing fifth increase of 1% m/m. The biggest contributor were sales at gasoline stations. Core sales though, those exclude gas stations, were down 0.7% m/m due to declines in food and beverage retailers and general merchandise retailers.
This week we will have May inflation data, expected to tick up.
Important news for CAD:
Monday:
This week we will have May inflation data, expected to tick up.
Important news for CAD:
Monday:
- CPI
JPY
BoJ delivered a widely expected 25bp rate hike thus lifting the short-term rate to 1%, highest since 1995. In addition to the hike members stated they are prepared to continue hiking if economic activity continues to improve. The vote was 7-1 with newest member dissenting as he saw risks to productivity outweighing inflation risks. Board members stated that they will pause bond tapering program starting in April 2027 and monthly JGB purchases from then will be fixed at around JPY2tln. Members stated that risks to economy have diminished when compared to the start of the year. Inflation still remains a big concern as it has been increasing faster than anticipated. Members see upside risks to inflation and project that it will be higher than 2% y/y.
Press conference was headed by Deputy Governor Uchida as Governor Ueda is in hospital. He reiterated bank’s willingness to continue with rate hikes if conditions are right for it, depending on future economic activity. Uchida added that uncertainty is still high caused by the US – Iran war and that there are upside risks to inflation. He stated that there is a positive wage-price mechanism in place.
Core machinery orders, a good proxy for CAPEX 6-9 months in the future, surged in April 8.6% m/m and 15.6% y/y after dropping 9.4 m/m and rising 5.6% y/y in March. Trade balance saw a jump in exports of 17% y/y as semiconductor exports surged 61.2% on the back of strong demand for data centres. National CPI data for the month of May saw headline number tick up to 1.5% y/y from 1.4% y/y in April while core CPI stayed unchanged at 1.4% y/y. Core-core, ex fresh food, energy CPI, ticked down to 1.8% y/y for the lowest reading since September of 2022. Government subsidies, pushing gasoline prices down 7% y/y, were the main reason inflation stayed subdued. With PPI prices rising BoJ will not change their stance on inflation just because of this tame report.
CHF
SNB has left key policy rate unchanged at 0% as was widely expected. They have revised inflation forecast for 2026 up to 0.6%, it was 0.5% in March, due to surging energy prices caused by US – Iran war. CPI for 2027 is also seen at 0.6% while for 2028 it is seen at 0.7% and it is expected to reach 0.8% in Q1 of 2029. They have reiterated their willingness to intervene in the FX market should the need arise, this time putting bigger emphasis on it as their readiness is now higher than before. SNB total sight deposits for the week ending June 12 came in at CHF468.5bn vs CHF469.6bn the previous week. In the past four weeks deposits have been oscillating in a tight one billion range.
BoJ delivered a widely expected 25bp rate hike thus lifting the short-term rate to 1%, highest since 1995. In addition to the hike members stated they are prepared to continue hiking if economic activity continues to improve. The vote was 7-1 with newest member dissenting as he saw risks to productivity outweighing inflation risks. Board members stated that they will pause bond tapering program starting in April 2027 and monthly JGB purchases from then will be fixed at around JPY2tln. Members stated that risks to economy have diminished when compared to the start of the year. Inflation still remains a big concern as it has been increasing faster than anticipated. Members see upside risks to inflation and project that it will be higher than 2% y/y.
Press conference was headed by Deputy Governor Uchida as Governor Ueda is in hospital. He reiterated bank’s willingness to continue with rate hikes if conditions are right for it, depending on future economic activity. Uchida added that uncertainty is still high caused by the US – Iran war and that there are upside risks to inflation. He stated that there is a positive wage-price mechanism in place.
Core machinery orders, a good proxy for CAPEX 6-9 months in the future, surged in April 8.6% m/m and 15.6% y/y after dropping 9.4 m/m and rising 5.6% y/y in March. Trade balance saw a jump in exports of 17% y/y as semiconductor exports surged 61.2% on the back of strong demand for data centres. National CPI data for the month of May saw headline number tick up to 1.5% y/y from 1.4% y/y in April while core CPI stayed unchanged at 1.4% y/y. Core-core, ex fresh food, energy CPI, ticked down to 1.8% y/y for the lowest reading since September of 2022. Government subsidies, pushing gasoline prices down 7% y/y, were the main reason inflation stayed subdued. With PPI prices rising BoJ will not change their stance on inflation just because of this tame report.
CHF
SNB has left key policy rate unchanged at 0% as was widely expected. They have revised inflation forecast for 2026 up to 0.6%, it was 0.5% in March, due to surging energy prices caused by US – Iran war. CPI for 2027 is also seen at 0.6% while for 2028 it is seen at 0.7% and it is expected to reach 0.8% in Q1 of 2029. They have reiterated their willingness to intervene in the FX market should the need arise, this time putting bigger emphasis on it as their readiness is now higher than before. SNB total sight deposits for the week ending June 12 came in at CHF468.5bn vs CHF469.6bn the previous week. In the past four weeks deposits have been oscillating in a tight one billion range.
