NZD/USD falls to around 0.5870 on Wednesday at the time of writing, down 0.97% on the day. The pair extends its bearish move for a third consecutive day as investors favor the US Dollar (USD) amid escalating geopolitical tensions in the Middle East.
The USD/JPY pair is trading just below the 160.00 price level on Wednesday, as the US Dollar (USD) remains supported by stronger-than-expected economic data, while the Japanese Yen (JPY) struggles to attract sustained demand amid a cautious market mood.
DBS Group Research, led by Radhika Rao with contributions from Daisy Sharma, expects India’s real GDP growth to slow in early 2026 after a firm second half of FY26.
EUR/USD ticks lower on Wednesday after closing the previous day virtually unchanged. The Euro (EUR) weakens as stronger-than-expected US economic data boosts demand for the US Dollar (USD), while renewed tensions in the Middle East further support the Greenback.
The Pound Sterling (GBP) drops by 0.28% during the North American session on Wednesday as the US and Iran exchange attacks, while data in the US showed that the labor market remains solid and that business activity expanded but is slowing.
Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the British Pound (GBP) is trading fractionally lower against the Dollar, with limited fresh data beyond a slightly contractionary services PMI.
Brown Brothers Harriman’s (BBH) Elias Haddad reports that USD/JPY’s test of 160.00 has heightened intervention risks, with Japanese authorities already having spent a record amount to cap the pair near that level.
Gold has become the top reserve asset in global central banks’ vaults, surpassing US Treasuries, suggesting that the precious metal is becoming the main choice for monetary authorities seeking protection against geopolitical uncertainty.
BNY’s Bob Savage reports that the Dollar Index is firmer as higher U.S. yields and renewed geopolitical tensions underpin safe-haven demand. President Trump’s proposal for broad new tariffs raises trade and inflation risks, reinforcing USD support.
AUD/USD trades around 0.7145 on Wednesday at the time of writing, down 0.50% on the day. The pair remains under pressure after the release of several disappointing Australian economic indicators, while solid US data continues to support the US Dollar (USD).
Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) remains soft but broadly stable, with USD/CAD trading near 1.3850.
Gold (XAU/USD) trades lower on Wednesday as escalating tensions in the Middle East dampen hopes for a near-term US-Iran peace deal, while a fresh batch of upbeat US economic data reinforces expectations that interest rates could stay higher for longer.
MUFG’s Derek Halpenny notes that recent Ministry of Finance (MoF) and Bank of Japan (BoJ) intervention failed to prevent USD/JPY from returning to 160, as higher US yields and renewed Middle East tensions support the Dollar.
Federal Reserve (Fed) Bank of New York President John Williams said on Wednesday that higher energy prices are driving up costs and inflation, per Reuters.
USD/CHF extends its advance on Wednesday as ongoing tensions in the Middle East and stronger-than-expected US labor data lift the US Dollar (USD). At the time of writing, the pair is trading around 0.7900, staying on the front foot for a third straight day.
Business activity in the United States (US) service sector expanded at an accelerating pace in May, with the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) rising to 54.5 from 53.6 in April. This reading came in better than the market expectation of 53.8.
ING’s Padhraic Garvey and Michiel Tukker stress that Eurozone real rates are increasingly driven by structural forces such as fiscal expansion and record bond supply. They point to rising 10Y euro implied real rates since 2024, helped by German spending plans.
The final reading of the United States (US) S&P Global Services PMI came in at 50.7 in May, down from 50.9 previously and missing estimates of 50.9. Meanwhile, the Composite PMI was confirmed at 51.5 in the same month, slightly below the anticipated 51.7.
TD Securities’ Ryan McKay notes that Gold is struggling to recover as renewed tariffs and US-Iran tensions fuel an inflationary impulse and push expectations for a Federal Reserve (Fed) hike into early 2027.
Societe Generale’s Santosh Ejantkar and Tanmay Purohit note India’s equity market has slipped to seventh globally, overtaken by South Korea and Taiwan as their semiconductor-heavy markets benefit from the AI boom.
UOB economist Lee Sue Ann highlights that Australia’s GDP growth slowed to 0.3% q/q in 1Q26 as weak public spending, trade drag and cyclone disruptions offset strong business investment.
GBP/JPY edges lower on Wednesday as fresh intervention warnings from Tokyo lift the Japanese Yen (JPY) across the board. At the time of writing, the cross trades around 214.82, down 0.25% on the day.
West Texas Intermediate (WTI) advances toward $94.00 at the time of writing, up 2.52% on the day, supported by a fresh escalation of geopolitical tensions in the Middle East and growing concerns about global Oil supplies.
BNY’s Bob Savage highlights that USD/JPY remains close to 160.00 as markets price a high probability of a June BoJ rate hike, yet see Governor Ueda as insufficiently hawkish. Japanese authorities stress G7 agreement on limiting excessive FX volatility and pledge cooperation with the U.S.
ING economist James Smith argues that a June Bank of England (BoE) rate hike now appears unlikely as weaker United Kingdom (UK) data and lower Oil prices ease pressure on policymakers.
Standard Chartered economists Dan Pan and Steve Englander note that recent QCEW data validate softer NFP readings in late 2025, when government shutdown effects and DOGE layoffs weighed on employment.
Private sector employment in the United States grew by 122K in May, the Automatic Data Processing (ADP) reported on Wednesday. This print followed the 105K increase recorded in April and came in better than the market expectation of 117K.
Rabobank strategist Molly Schwartz notes that Canada has entered a technical recession, with Gross Domestic Product (GDP) contracting for two consecutive quarters and missing expectations.
UOB economist Lee Sue Ann notes that softer Australian Gross Domestic Product (GDP), easing inflation and a cooling labour market have reduced pressure on the Reserve Bank of Australia (RBA) to tighten further.
DBS Group Research economist Radhika Rao argues that Eurozone markets face a stagflationary shock from US-Iran tensions that will hit Europe harder than the US, pushing the European Central Bank (ECB) to tighten policy earlier.
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