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Forex Today: Markets remain cautious despite news of US and Iran making progress in talks

Here is what you need to know on Monday, June 22:

Investors cling to a cautious stance at the beginning of the week as they assess the latest headlines coming out of the Middle East. In the second half of the day, May Consumer Price Index (CPI) data from Canada will be watched closely by market participants. Additionally, several policymakers from major central banks will be delivering speeches.

US Dollar Price Last 7 Days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD1.01%1.51%0.95%1.37%0.56%1.73%1.44%
EUR-1.01%0.47%-0.04%0.35%-0.46%0.71%0.42%
GBP-1.51%-0.47%-0.68%-0.12%-0.93%0.23%-0.05%
JPY-0.95%0.04%0.68%0.40%-0.40%0.79%0.47%
CAD-1.37%-0.35%0.12%-0.40%-0.83%0.40%0.08%
AUD-0.56%0.46%0.93%0.40%0.83%1.17%0.89%
NZD-1.73%-0.71%-0.23%-0.79%-0.40%-1.17%-0.28%
CHF-1.44%-0.42%0.05%-0.47%-0.08%-0.89%0.28%

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).

Over the weekend, Iran reportedly reached a draft agreement over how the United States (US) will issue a waiver lifting sanctions on Iranian oil exports, one of the key preconditions before Iran will open talks on its nuclear file. US and Iranian officials met in the presence of Qatari mediators on Sunday and US Vice President JD Vance played down the impact of the Israeli attacks in Lebanon, saying progress had been made towards ending hostilities there. Assessing the latest round of negotiations, mediators said that sides made "encouraging progress" and that they agreed on "a roadmap for a final deal to be reached within 60 days."

Meanwhile, US President Donald Trump threatened to restart the war with Iran on Sunday, in a post on Truth Social that read: "Iran must immediately stop their highly paid PROXIES in Lebanon from causing trouble. If they don't, we'll hit Iran very hard again, just like we did last week, only harder!!!"

Iranian negotiators suspended high-stakes talks with the United States (US) in Switzerland in response to a flurry of verbal threats by Trump.

The US Dollar (USD) Index gained nearly 1% in the previous week and was last seen trading marginally higher on the day at around 100.90. Meanwhile, US stock index futures trade mixed.

EUR/USD stays in a consolidation phase above 1.1450 after closing deep in negative territory last week.

The People’s Bank of China (PBOC) announced earlier in the day that it left its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year LPRs standing at 3.00% and 3.50%, respectively. AUD/USD stays relatively quiet and fluctuates at around 0.7000 in the European morning on Monday.

GBP/USD holds steady above 1.3200 early Monday. Citing a source with knowledge of the matter, Reuters reported on Monday that the United Kingdom (UK) Prime Minister (PM) Keir Starmer was reassessing his political future on Sunday after rival Andy Burnham's decisive parliamentary election victory prompted additional ministers from the governing Labour Party to call for his resignation.

Following Friday's choppy action, USD/JPY edges higher on Monday and trades near 161.70. Japan’s Finance Minister Satsuki Katayama reiterated earlier in the day that the officials are ready to respond appropriately to the currency moves at any time as needed.

Gold (XAU/USD) registered its third consecutive daily loss on Friday. XAU/USD corrects higher early Monday and trades near $4,200, rising about 1% on the day.

Risk sentiment FAQs

In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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