Dollar Holds above JPY 160 after BOJ Hike; Aussie Firms on RBA Hold

The dollar held above JPY 160 on Wednesday after the Bank of Japan delivered a widely expected 25-basis-point rate hike that took its overnight rate to 1%. The move was accompanied by a pledge to taper bond purchases through next April, stabilising them at around JPY 2 trillion ($12.5 billion) a month. The vote was 7-1, with board member Asada, a Takaichi appointee, dissenting. Swaps markets are pricing another 21 bp increase by year-end.

The dollar has stayed inside last Thursday's range against the yen, roughly JPY 159.60–JPY 160.60. It approached and held above the 20-day moving average near JPY 159.75 both on Thursday and again yesterday. It has not settled below that level since May 14.

The Reserve Bank of Australia stood pat at 4.35%, as expected, after three hikes already this year. The Aussie rose through last week's high to touch almost $0.7090 Tuesday before the decision and recovered to around $0.7070 in European trading Wednesday after a dip to $0.7040 post-RBA. The market discounts roughly a 50% chance of another hike in the fourth quarter. The RBA kept the door open to further tightening without signalling urgency.

Euro and sterling consolidate ahead of the FOMC

The euro was marked up to around $1.1620 on Tuesday but the upside momentum stalled. It sold off to $1.1575 in Asia-Pacific trading before recovering to nearly $1.1615 in the European morning. A EUR 1.25 billion options block at $1.16 expires today. The intraday momentum indicators are stretched heading into the North American session.

Sterling recorded a Tuesday high near $1.3460 in Asia-Pacific turnover before being sold to a low near $1.3415 in the North American morning. It consolidated below $1.3445 for most of the session. Cable spent most of Tuesday above the 20-day moving average near $1.3420 but failed to settle above it. It has not closed above that level in three weeks. Sterling dipped to $1.3390 in early European trading Wednesday before snapping back to around $1.3425. About GBP 470 million in options at $1.34 expire today.

The Bank of Japan's rate hike did little to move the dollar-yen pair. The greenback held above JPY 160 and remained within the range established last Thursday and tested again Tuesday, when the dollar approached and held above the 20-day moving average near JPY 159.75.

Loonie tests year highs; peso extends rally

The Canadian dollar rose through the pre-weekend high but stayed on the defensive in North America. The U.S. dollar fell to nearly CAD 1.3950 in late Asia-Pacific trading Tuesday and recovered to almost CAD 1.3995 in North America. It reached nearly CAD 1.4020 earlier Wednesday. Last week the greenback set a new high for the year near CAD 1.4025. It is finding support near CAD 1.40 in European trading.

The risk-on mood helped the Mexican peso extend last week's 1.4% rally. The greenback reached a one-month low before the weekend near MXN 17.1770 and recorded a marginal new low Tuesday near MXN 17.1575, slightly below last month's low. It is holding above MXN 17.19 so far today. The dollar's decline is stretching into a seventh consecutive session. The April low was closer to MXN 17.1275.

Yuan consolidates at three-year high; rupee firms on oil

The offshore yuan reached a new three-year high Tuesday but is consolidating. The dollar was sold to nearly CNH 6.7555 and is trading between CNH 7.7565 and CNH 6.7635 today. The PBOC set the dollar's reference rate at CNY 6.8108, a three-year low, compared with CNY 6.8088 on Tuesday.

The Indian rupee rose by a little more than 1% over the past two sessions, boosted more by the drop in oil prices than by official measures to encourage foreign investment and limit speculation on further rupee decline. The rupee is firm today but inside yesterday's range. The dollar trades between roughly INR 94.49 and INR 94.7160, the lower end of the range over the past month.

Rates: 10-year yields slip further, peripheral benchmarks at three-month lows

Benchmark 10-year yields fell mostly 2–6 bp Tuesday among the G10. Australia and Canada were exceptions, with yields down about half a basis point. The U.S. 10-year yield briefly slipped to a new low for the month slightly below 4.42% before recovering to new session highs near 4.47% in the New York afternoon. European 10-year yields and the U.S. 10-year yield are off mostly 2–4 bp today after the 10-year JGB yield jumped nearly six basis points. Peripheral European benchmark yields, including Greece, Italy, Spain and Portugal, are at three-month lows. The 10-year U.S. Treasury yield has fallen a dozen basis points since Monday.

Gold consolidates after 6.5% three-day rally; silver tests the 20-day average

Gold rallied strongly Tuesday, reaching nearly $4,370 after testing $4,000 last week. The three-day rally of about 6.5% was the biggest three-day advance since early February. It gapped higher Tuesday and the gap, found between the pre-weekend high near $4,246.50 and Tuesday's low near $4,265.35, remains unfilled in the cash market. Gold is consolidating Wednesday between roughly $4,306 and $4,348.50.

Silver also gapped higher Tuesday. The gap is between roughly $68.35 and $68.75. The 20-day moving average near $72.25 may offer initial resistance. Silver is trading between roughly $69 and $70.65 today. The consolidation in both metals looks constructive, traders said.

WTI breaks $80, reaches two-month low on Iran truce hopes

July WTI gapped lower Tuesday. The market seemed reluctant to push it much below $80 on the day, given the uncertainty around the U.S.–Iran memorandum of understanding. The market was more confident Wednesday, pushing the July contract to almost $78.40, a new two-month low. Previous support near $80 may now offer resistance.

Softer oil prices are helping ease interest rates. August Brent is at three-month lows.

Risk-on lifts equities, consolidation is Wednesday's flavour

Falling oil and interest rates helped lift equities Tuesday. Consolidation is the flavour overnight. The MSCI Asia Pacific Index rose 3% Tuesday after a 2.75% gain before the weekend. It rose about 0.5% Wednesday, with the Nikkei 225 reaching a new record high. Australian stocks recovered from earlier losses after the RBA stood pat.

Europe's Stoxx 600 surged almost 1.9% before the weekend and edged up another 0.20% Tuesday. It is up another 0.5% Wednesday. The U.S. S&P 500 and Nasdaq gapped sharply higher Tuesday and settled firmly. The Dow Industrials did not gap higher but rose to a new record close. U.S. index futures are narrowly mixed.

Data calendar: housing starts, ZEW, and the FOMC

The U.S. reports May import and export prices, with export prices expected to be rising faster than import prices, along with housing starts and permits, which are expected to have slipped. The New York Fed's service business survey is due on the heels of the softer manufacturing survey at 13.5 versus 19.6 reported yesterday. Tomorrow's FOMC outcome is centre stage as the Warsh era begins.

Germany's June ZEW survey was mixed. The assessment of the current situation deteriorated to -81.0 from -77.8, while the expectations component improved to 10.5 from -10.2. The current assessment has deteriorated for three consecutive months and returned to the level seen at the end of last year. The expectations component, which had been improving, was dealt a setback by the Middle East war in April. It recovered in May and June.

Canada reports May existing home sales and April portfolio capital flows. Existing home sales rose 0.7% in April, the first increase since last October. In the first three months of 2026, Canada reported net portfolio inflows of C$57.75 billion. In Q1 2025, Canada experienced nearly C$6 billion in net outflows.

Chile's central bank meets late Wednesday and is expected to maintain its 4.5% overnight target rate.

AlphaScala note RBA parent RB Global Inc. carries an Alpha Score of 37/100 with a Mixed label in the Industrials sector. The score reflects the current indecision priced into the rate path. A September or October hike would shift the score, the central bank is not signalling urgency.