Forex Today: Markets await comments from leaders of major central banks
Here is what you need to know on Wednesday, July 1:
The action in financial markets quiet down midweek as investors step to the sidelines ahead of key speeches by central bank officials. The European economic calendar will feature preliminary Harmonized Index of Consumer Prices data for June. Later in the day, market participants will pay close attention the June ADP Employment Change and the Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index (PMI) data from the US.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.20% | 0.55% | 0.18% | 0.01% | -0.46% | -0.05% | |
| EUR | 0.08% | -0.17% | 0.63% | 0.22% | 0.07% | -0.45% | -0.02% | |
| GBP | 0.20% | 0.17% | 0.84% | 0.40% | 0.26% | -0.26% | 0.14% | |
| JPY | -0.55% | -0.63% | -0.84% | -0.38% | -0.55% | -0.92% | -0.64% | |
| CAD | -0.18% | -0.22% | -0.40% | 0.38% | -0.17% | -0.54% | -0.17% | |
| AUD | -0.01% | -0.07% | -0.26% | 0.55% | 0.17% | -0.51% | -0.11% | |
| NZD | 0.46% | 0.45% | 0.26% | 0.92% | 0.54% | 0.51% | 0.38% | |
| CHF | 0.05% | 0.02% | -0.14% | 0.64% | 0.17% | 0.11% | -0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Federal Reserve (Fed) President Kevin Warsh, Bank of England (BoE) Governor Andrew Bailey, European Central Bank (ECB) President Christine Lagarde and and Bank of Canada Governor Tiff Macklem will participate in a panel discussion at the European Central Bank forum on central banking 2026 in Sintra, Portugal, starting at 13:00 GMT.
Hammack flags full employment and persistent inflation, keeps rate hikes on the table
Cleveland Fed President Betch Hammack delivered a moderately hawkish tone during a CNBC interview on Tuesday, with the FXS Speechtracker score at 6.4/10, slightly softer relative to the historical average of 7/10, as comments balanced confidence in growth and the job market being “right around full employment” with concern about the impact of higher rates on the broader economy. The key remark that “inflation is still too high, Fed may need to consider rate hikes,” alongside emphasis that core and services inflation are elevated and broad-based rather than just an energy story, underscores a live risk of renewed tightening even as Hammack stressed going into meetings with an open mind and not prejudging outcomes. Overall, the speech reinforces a bias toward further restraint if inflation fails to cool, but stops short of signaling an imminent move.
The FXS Fed Sentiment Index rose by 1.22 points to 123.64, confirming a shift deeper into hawkish territory consistent with the speech’s focus on persistent inflation and the possibility of additional rate hikes. With the index well above the neutral 100 mark and the FXS Speechtracker score only marginally below the established baseline, markets are likely to interpret Hammack’s comments as supportive of a firmer Dollar path, especially if incoming data keep core inflation elevated.
The US Dollar (USD) Index gathered bullish momentum on Tuesday and snapped a three-day losing streak. However, the index erased a large portion of its daily gains in the American session as the decisive recovery seen in technology stocks reflected a risk-positive market atmosphere. Early Tuesday, the USD Index clings to modest daily gains at around 101.40, while US stock index futures lose between 0.4% and 0.6%.
Iran's foreign ministry said that Iran and Qatar will hold talks to today on the implementation of Tehran's agreement with the US and its frozen assets, while reiterating that they don't currently have any plans to meet with the American delegation for the next round of direct negotiations. At the same time, Iran’s top negotiator Mohammad Bagher Ghalibaf said that the Strait of Hormuz is Tehran’s “greatest instrument of power” and repeated that talks on a final deal with the US will not begin until provisions in the Memorandum of Understanding (MoU) are implemented.
The Japanese Yen (JPY) continued to weaken against the USD during the Asian trading hours on Wednesday, with the USD/JPY pair hitting a fresh four-decade high above 162.80. Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said that intervention to prop up the yen two months ago was successful, and some US authorities voiced support, Bloomberg reported. His comments suggested he views the move as an effective strategy as the JPY hovers at a four-decade low.
Assessing the latest developments surrounding the JPY, "in terms of immediate timing, we suspect the Bank of Japan (BoJ) might hold off ahead of possible dollar-positive event risks such as remarks tomorrow from Federal Reserve Chair Kevin Warsh and Thursday’s release of the June US jobs report. That makes Friday’s US July 4th holiday a possible window for intervention." ING’s Chris Turner said.
"A no-show from the BoJ this week would strengthen the case for holding off until 16–17 July, just ahead of Japan’s next public holiday, Marine Day on 20 July. That was the 2024 playbook. If the BoJ does wait until later in July and US data and Fedspeak remain hawkish, USD/JPY could be trading around 164–165 by then." Turner added.
EUR/USD struggles to keep its footing and trades in negative territory slightly below 1.1400 after closing marginally lower on Tuesday.
Gold comes under renewed selling pressure following Tuesday's indecisive action and declines toward $3,950, losing more than 1% on the day.
GBP/USD corrects lower and trades below 1.3250 in the European morning on Wednesday.
Bailey flags inflation risks but stresses patience on future BoE hikes
FXS Speechtracker showed BoE Governor Bailey’s latest speech at 7.2 versus a historic average of 4.7, signaling a more impactful and moderately hawkish tone. Emphasis that UK inflation could still rise to 3.2% later this year and that the inflation target would have been met by April or May 2026 absent the war underscores lingering upside risks and a readiness to act if needed for the Pound.
However, Bailey’s remarks that financial conditions have already tightened and that the Bank of England has time to judge the pass-through of higher energy prices point to a cautious, wait-and-see stance rather than an imminent rate hike. The observation that energy prices are now not much higher than before the Iran war tempers the hawkish bias, suggesting that while the balance of risks leans toward vigilance on inflation, the near-term policy signal is one of patience rather than aggressive tightening.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
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