FX and Commodities Monthly Insights - June 2026

• USD rose around 1 per cent in May on firmer inflation (lifting hike risk) and still ongoing Middle East tensions that kept safe-haven demand supported, weighing on most G10. CHF was broadly flat vs USD (but stronger vs EUR and GBP), while NZD outperformed late-month on renewed hike expectations. EM was mixed: CNY, MXN and ZAR gained, while IDR, KRW, BRL and TRY fell, reflecting shifting risk appetite and uneven central-bank messaging alongside broad USD strength
• We keep our view unchanged in G10: USD neutral and our preference still goes to AUD. We still expect the US dollar to remain broadly stable, with near-term safe-haven and cyclical support offset by ongoing USD-specific risks and a potential structural shift towards global diversification, leaving us mostly neutral across G10 currencies. Meanwhile, we still see AUD supported by higher commodity prices, relatively attractive G10 yields and a strong fiscal backdrop, though elevated inflation and tight monetary policy could still weigh on domestic growth
• We are neutral on EUR, GBP, CHF, JPY, CAD and NZD

- EUR is supported by diversification demand and a slightly more hawkish rates outlook, but weak cyclical momentum, sticky inflation, and low confidence limit upside

- GBP benefits from higher yields and risk-on periods, yet remains volatile and exposed to energy shocks, weak growth, fiscal strain, and political risk

- CHF retains hedge appeal and a benign inflation backdrop but can underperform if risk sentiment improves or yield gaps widen

- JPY may gain if inflation lifts BoJ tightening expectations, though soft growth and improving sentiment can reduce haven demand

- CAD is supported by relatively low inflation, scope for BoC hikes, resilient growth, and oil, but tariff/USMCA uncertainty and risk swings cap gains

- NZD has policy/fiscal flexibility and resilient growth, but weaker carry and oil-import dependence remain headwinds

• In EM, we prefer selective exposure where carry and fundamentals are stronger, such as CNY and MXN, while oil import sensitivity and policy constraints remain headwinds for currencies such as INR, IDR and TRY. We downgraded IDR to bearish on weaker domestic confidence and oil-import sensitivity and upgraded KRW to bullish given its leverage to the tech cycle
  
  Commodity Space: 

- Bullish on Gold: Gold fell around 1.75 per cent in May, pressured by USD strength and high US yields despite supportive risk sentiment. We stay bullish medium term as a core diversifier, with upside from a durable ceasefire and/or rising inflation or growth risks, while US elections, fiscal concerns and policy uncertainty should remain supportive; the key risk is renewed USD strength on a more hawkish Fed

- Neutral on Oil: We remain neutral on oil after prices fell around 19 per cent in May on ceasefire hopes (and a potential gradual reopening of the Strait of Hormuz), a mild demand contraction following April’s around USD 120/bbl levels and added supply concerns after the UAE left OPEC+. From here, risks are two-sided: any escalation or prolonged Hormuz disruption could drive a rebound and keep volatility elevated, but a US–Iran deal, reopening of Hormuz and further demand softening would renew downside pressure