The dominant force this week was the continued reverberation from new Fed Chair Warsh's hawkish FOMC debut — Bank of America changed its forecast and now predicts the Fed will raise rates three times this year to 4.25%–4.5%, after last week's FOMC meeting where half of policymakers predicted rate hikes and Warsh's surprisingly hawkish remarks. That dollar bid drove EUR/USD lower toward our tactical short and pinned cable, validating both dollar legs in our framework. Brent crude fell to around $72 a barrel on Friday, the lowest since February 27, as shipping transits through the Strait of Hormuz accelerated, recording an over 10% weekly drop — the largest in a month — the cleanest possible tailwind for our CAD-negative bucket via USD/CAD and the CAD crosses. Meanwhile, BOJ Governor Ueda reaffirmed his commitment to further rate hikes, and a day later hawkish board member Naoki Tamura advocated raising rates every few months — the hawkish chorus directly underwriting our yen-cross shorts, where the bulk of our P&L sits.
How our views are tracking
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Short NZD/JPY — thesis strengthened The clearest winner in the book: the successive hawkish BoJ communications lifted the yen while NZD lagged the broad commodity complex, driving a textbook trend lower exactly as the policy-convergence thesis intended. |
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Short EUR/USD (tactical) — thesis strengthened The hawkish-Warsh re-rating delivered the cleanest validation of our tactical-dollar view, dragging the pair into its profit zone as rate differentials moved decisively in the dollar's favour. |
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Long SGD/CHF — thesis unchanged Both pillars hold — the SNB reaffirmed its readiness to cap franc strength while the MAS appreciation slope stays intact — but a soft Singapore core CPI print left the pair grinding rather than breaking higher. |
Invalidator watch
No invalidator has triggered, and all top positions remain valid. The one to flag is our tactical EUR/USD short, now sitting close to its 1.1350 strategic-long re-entry level — but this is a paradox rather than a threat: the short profits as we approach it, so we are working into the target, not toward failure. The genuine watch items are the soft Singapore core CPI (the first faint signal of an eventual MAS-dovish tail that touches every SGD cross) and MoF intervention risk in the 160–162 zone capping our tactical USD/JPY long — neither requires action this week.
Next week
| Wed Jul 1 | USMCA joint-review trigger | Affects: USD/CAD, CAD/JPY, CAD/SGD |
| Wed Jul 1 | Euro-area flash HICP (June) | Affects: EUR/USD, EUR/SGD, EUR/JPY |
| Thu Jul 2 | US Nonfarm Payrolls (June) | Affects: EUR/USD, USD/JPY, GBP/USD, USD/CAD |
| Fri Jul 3 | Swiss CPI (June) | Affects: SGD/CHF, CHF/JPY |
| Wed Jul 8 | RBNZ OCR decision | Affects: NZD/JPY, NZD/CAD |
The standout is the Employment Situation for June, scheduled to be released on Thursday, July 2, 2026 — pulled forward by the US holiday. With Fed hawkishness now heavily priced, a strong print extends our dollar legs while a soft one is the single largest two-sided risk to every USD position before our next full analysis.
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