What Drove The FX Market Return Of The King

The USD dominated the global FX market in June 2026, supported by a hawkish Federal Reserve and US economic exceptionalism. Concurrently, geopolitical de-escalation in the Middle East led to a sharp decline in oil prices and pressured currencies like the NOK.

Key Takeaways

• 1.The USD strengthened in June, primarily driven by a hawkish Fed message at the June FOMC meeting and US economic exceptionalism.
• 2.Brent crude prices fell significantly due to easing geopolitical tensions in the Middle East following a US-Iran MoU.
• 3.The Bank of Japan raised its policy rate by 25bps to 1.00%, though JPY weakness persisted despite this move.

Table of Contents

• Summary: King dollar reigns again
• Elsewhere: Norway – Tracking the decline in oil
• Hawkish Fed drove USD outperformance in June
• USD: Hawkish lift
• Eurozone: Trust issues
• UK: Change at No. 10
• Japan: Intervention band-aid
• Mainland China: Self-reliance
• Canada: Headwinds ahead
• Australia: Local issues
• New Zealand: Underperforming neighbour
• Norway: Tracking the decline in oil
• Sweden: Risk on tailwinds
• Switzerland: Reluctant to appreciate
• Oil: Reverting to normal
• Gold: Caught between forces
• Bonds: Diverging Paths
• Equities: Strong Q2; Europe outperformed in June

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