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FX and Commodities Monthly Insights - July 2026
Jul 6, 2026
- In June, the Bloomberg US Dollar Index recorded its best monthly performance this year, rising by around 2.3 per cent. While the interim deal between the US and Iran improved market sentiment and weighed somewhat on the US, the rally in US Treasury yields following the hawkish FOMC supported the greenback and largely offset earlier losses. Meanwhile, most G10 peers lost ground, including high-beta currencies such as AUD and NZD: although they slightly benefited from improving risk sentiment, the stronger USD and softer global commodity prices acted as headwinds
- We upgraded our view on USD from Neutral to Bullish, as we see scope for appreciation in the coming months on the back of hawkish risks from the Fed and resilient US economic data. Consequently, we downgraded our views on EUR and GBP to Bearish and moved our view on AUD to Neutral
- In Asia, we moved our views on SGD and RMB to Neutral, reflecting our more constructive USD outlook despite some positive domestic drivers, while maintaining a Bearish view on INR and IDR
- In LatAm, we moved our view on MXN to Neutral and kept BRL at Neutral
- In the rest of EM, we maintained our Bearish stance on TRY and kept ZAR at Neutral
- In commodities, despite our more constructive USD view, we maintain a Bullish stance on gold over the medium to long term, while the near-term outlook looks more range-bound. Gold remains a diversifier in a multi-asset portfolio, and adding gold can still be an alternative to being overexposed to USD from a portfolio construction perspective. Importantly, we still expect no change from the Fed this year despite market pricing, and the US dollar has already recouped earlier losses. We expect USD’s uptrend to be slow rather than sharp, which should limit heavy selling pressure on gold. Finally, gold-market fundamentals remain supportive of a longer-term rebound, particularly demand from central banks and retail investors, and the year-to-date ~4 per cent decline provides an attractive entry point to rebuild exposure