Dollar’s Geopolitical Response: Asian Currencies Stay Cautious While Signaling Rebalancing

The USD Index (DXY) hovered near 100.5; USD/EUR at 1.147, USD/GBP at 1.354. Weakening dollar faces fresh upside risks from Iran-BM conflict fears. USD/KRW declined 0.4% to 1.479, USD/JPY at 162.1 yen. Chinese yuan remained subdued (USD/CNY 6.77).

Fed Inflation Data and TCMB Rate Expectations

■US consumer and producer inflation data sharply reduced rate hike expectations.

■TCMB expected to cut rates by 100-150 bps at July 23 meeting.

■Nvidia and TSMC’s record earnings on AI demand added to market volatility.

Asian Currency Complexity

■South Korea’s central bank raised policy rate by 25 bps to 2.75%.

■Japan’s Finance Minister Satsuki Katayama’s remarks threaten yen stability.

■Australian dollar USD/AUD edged higher, NZD gained 0.3% to 1.708.

Markets remain cautious, but tensions in the Middle East and China’s slowdown could introduce new pressures on global FX rates.