Forex today: Dollar strength persists, yen rebounds on BoJ signals, gold climbs on Middle East risk

The dollar retains its strong footing amidst persistent geopolitical tensions, while the yen stages a comeback and gold extends its safe-haven rally.

Geopolitical tremors and market sentiment

• Middle East tensions continue to keep markets on edge, with reports of Houthi attacks on two Saudi oil tankers and Iran warning of an "eye for an eye" response to any US threat. These risks contribute to elevated safe-haven demand.
• Our market readiness gauge, MRS, sits at 41, indicating low readiness, while the FSI registers as Neutral at 57. The CTS is high at 80.

Major currency moves

• The US dollar is our strongest major currency today, extending its appeal amidst escalating Middle East tensions and bets on an aggressive Fed driven by high energy prices. This strength comes despite headlines noting the dollar taking a breather as oil and gold rallied.
• The Japanese yen strengthens, reversing its previous session's weakness, as the market interprets signals from the Bank of Japan as hawkish and intervention risks persist.
• The euro remains stagnant ahead of the upcoming ECB policy decision, with high energy prices increasing expectations for a hawkish Fed.
• The British pound saw a slower decline after a cooler inflation reading, but lacked momentum for a significant bounce.
• The Australian dollar is our weakest currency on an intraday basis. This comes despite expectations for Australia's unemployment rate to stabilize at 4.4% in June, a factor that might typically fuel RBA rate hike bets.
• The New Zealand dollar also experienced stagnation following higher-than-expected inflation figures.

Commodities and minor pairs

• Gold rebounded above $4,100, with buyers returning as it extended its role as a safe haven amid ongoing Middle East risks.
• The won is supported by AI-driven exports and an internationalization roadmap, though the Philippine peso faces pressure from rising oil prices.
• The USD/CHF pair recovered 0.81, with its market structure suggesting a move towards 0.82, bringing it closer to a one-year high.

Key events today

• AUD · Employment Change: SCHEDULED, forecast 16.4K vs previous 40.3K
• AUD · Unemployment Rate: SCHEDULED, forecast 4.4% vs previous 4.4%
• EUR · Main Refinancing Rate: SCHEDULED, forecast 2.40% vs previous 2.40%
• EUR · Monetary Policy Statement & ECB Press Conference: SCHEDULED, traders await details.