Weekly FX Update
22 June 2026
The USD has regained the upper hand, but geopolitics remains the swing factor
Last week’s key development was the Federal Reserve’s firmer-than-expected outlook. The Fed left rates unchanged but signalled that a further increase later in 2026 remains possible, helping the USD recover against most major currencies. The result was pressure on AUD, EUR and GBP, while USD/JPY moved close to levels at which Japanese authorities may become more vocal about intervention.
At the same time, the Middle East remains a major source of volatility. Oil had fallen sharply as markets priced in a more stable flow through the Strait of Hormuz, but Brent moved back above US$81 early this week after negotiations between the U.S. and Iran became less certain and Iran again restricted passage through the Strait.
For FX markets, this creates two competing forces: a hawkish Fed supports the USD, while an improvement in energy supply and global risk appetite tends to support risk-sensitive currencies such as the AUD.
What’s Driving Markets This Week
- Oil prices have eased after the reopening of the Strait of Hormuz, reducing some inflation pressure.
- The US dollar remains well supported after the Federal Reserve left interest rates unchanged at 3.50–3.75% while maintaining a cautious stance on inflation.
- The RBA remains cautious, holding the cash rate at 4.35% and warning that further tightening remains possible if inflation stays elevated.
What’s Happening
Financial markets have become noticeably calmer compared with two weeks ago. Falling oil prices have reduced immediate inflation fears, helping equities recover and improving investor confidence.
The Australian dollar has also steadied after recent weakness. According to the latest Reserve Bank of Australia reference rates, AUD/USD closed last week around 0.703, remaining within its recent trading range.
The focus now turns back to economic data rather than geopolitical headlines.
Key Exchange Rates (approx.)
| Pair | Latest Level* | ||||||||||||||||
| AUD/USD | 0.7031 | ||||||||||||||||
| AUD/EUR | 0.6108 | ||||||||||||||||
| AUD/JPY | 112.95 | ||||||||||||||||
| AUD/CNH | 4.7553 | ||||||||||||||||
| AUD/GBP | ~0.521 | ||||||||||||||||
| AUD/NZD | ~1.19 |
Commodities Snapshot
|
Key Economic Events This Week (Sydney Time)
| Day | Date | Time | Event | Why It Matters |
| Tuesday | 23 Jun | Evening | US Flash Manufacturing & Services PMI | Early read on business activity |
| Wednesday | 24 Jun | Evening | US New Home Sales | Housing market health |
| Thursday | 25 Jun | Evening | US GDP (Final Q1) | Economic growth update |
| Thursday | 25 Jun | Evening | US Initial Jobless Claims | Labour market conditions |
| Thursday | 25 Jun | Evening | US Core PCE Inflation | The Fed’s preferred inflation measure |
| Friday | 26 Jun | Evening | University of Michigan Consumer Sentiment | Consumer confidence |
The highlight this week is Core PCE inflation, the Federal Reserve’s preferred measure of inflation. Markets will also closely watch US GDP and jobless claims.
AUD Outlook
The Australian dollar has stabilised after several volatile weeks.
While lower oil prices have eased inflation concerns, the combination of a cautious Federal Reserve and a hawkish Reserve Bank of Australia is likely to keep AUD/USD trading within a relatively narrow range.
Expected AUD/USD range this week:
0.695 – 0.710
Key themes to watch:
- US Core PCE inflation
- US economic growth
- Australian inflation expectations
- Any renewed geopolitical developments
Quick Take
AUD-positive scenario: Australian inflation remains firm, US core PCE softens, and oil prices remain contained.
AUD-negative scenario: Australian CPI disappoints, US inflation stays sticky, or renewed Middle East tensions lift oil and drive safe-haven demand for USD.
This week’s reminder: In FX markets, “quiet week” often means “nothing happened yet.”
✅ Markets are calmer than two weeks ago.
✅ Oil has fallen, reducing inflation fears.
✅ This week’s focus shifts back to economic data, especially US inflation.