The USD sell-off continued yesterday with the dollar index now at the lowest level since March 2022. EURUSD traded at its highest level since December 2021 and GBPUSD hit its highest levels since February 2022.
The slump on the greenback was attributed to Trump's comments about unilateral tariffs kicking in within two weeks. PPI numbers rose less than expected and jobless claims jumped to the highest since 2021. EUR and JPY were the biggest benefactors of the dollar selling.
The pound remained weak across the day after the morning's numbers showed the biggest monthly contraction in the economy in 18 months.
*Daily move - against G10 rates at 7:00 am, 13.06.25
** Indicative rates - interbank rates at 7:00 am, 13.06.25
Overnight Israel carried out military strikes against Iran’s nuclear programme and military targets. Stocks dropped as a result and Brent crude soared above US$78 a barrel, rising as much as 13% before easing off after Iran reported there was no damage to energy facilities. Risk aversion has led to traditional safe havens like the Swiss franc and Japanese yen.The dollar has also put on some gains. Both the New Zealand and Australian dollars slid.
Iran has vowed to respond with “harsh” blows against both Israel and the US despite US Secretary of State Marco Rubio stating that the US was not involved. Risk aversion will likely be the theme in the markets going into the weekend as we wait for further developments.
The spike in oil prices will on doubt raise concerns about the implications on inflation and what central banks do with their rate cutting cycles. Should the tensions persist and oil prices keep climbing, then we could well see central bankers start to indicate rates stay on hold and potentially signal rate hikes.
Japan’s PM has signalled he will be having talks with Trump today to discuss tariffs.
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Over the last 19 years we’ve helped over a million customers and last year alone processed over £12bn. We’re tried and trusted, and we’re ready to help you.
Have a great day.
