US Dollar Falls Early Monday, FOMC in Focus This Week

FINWIRES Analysis

The 98.6% odds of a Fed hold shift attention to the dot plot and divergence, with the BoJ poised to hike 25bp the same week as the standout policy split. A softer dollar with USD/JPY pinned near 160 shows yen weakness persisting despite expected tightening, underscoring how wide the rate gap still is. The packed pre-holiday calendar means positioning, not surprises, likely drives FX into Friday's Juneteenth close.

Key Takeaways

Fed hold near-certain; focus shifts to guidance

BoJ expected to hike amid policy divergence

Yen weak near 160 despite tightening

The US dollar fell against its major trading partners early Monday as markets look ahead to the Federal Open Market Committee meeting on Wednesday.

The CME's FedWatch tool shows a 98.6% chance of no change to the current 3.50% to 3.75% target range for the federal funds rate.

On Monday, the Empire State manufacturing index for June is due to be released at 8:30 am ET, followed by industrial production data for May at 9:15 am ET and the NAHB's home builders index for June at 10:00 am ET.

Tuesday's highlights include housing starts and import and export price data for May and the New York Fed's services reading for June.

Retail sales and pending home sales data for May are due to be released on Wednesday before the FOMC meeting.

Thursday's highlights include weekly jobless claims and the Philadelphia Fed's manufacturing reading for May before Friday's Juneteenth holiday.

A quick summary of foreign exchange activity heading into Monday:

EUR/USD rose to 1.1612 from 1.1571 at the Friday US close and 1.1574 at the time Friday morning. The Eurozone trade balance turned to a deficit in April while Eurozone industrial production rose less than expected in the same month, according to data released earlier Friday. The next European Central Bank meeting is scheduled for July 23.

GBP/USD rose to 1.3426 from 1.3408 at the Friday US close and 1.3414 at the same time Friday morning. There are no UK data on Monday's schedule. The next Bank of England meeting is scheduled for Thursday, when no change in the policy rate is expected.

USD/JPY fell to 160.1511 from 160.2152 at the Friday US close, but was above a level of 160.1183 at the same time Friday morning. The Bank of Japan is expected to raise its policy rate by 25 basis points in its meeting announcement due to be released at 11:00 pm ET. Japanese services purchase activity declined in April, according to data released overnight.

USD/CAD fell to 1.3978 from 1.3983 at the Friday US close and 1.3982 at the same time Friday morning. Canadian housing starts data for May are due to be released at 8:15 am ET, followed by Canadian wholesale and manufacturing data for April and Canadian capacity utilization for Q1 at 8:30 am ET. The next Bank of Canada meeting is scheduled for July 15.

Australian Capital City Housing Prices Forecast to Fall in 2026, ANZ Says

Capital city housing prices in Australia are forecast to fall 2.1% this year and 3.3% in 2027, ANZ Research said in a report on Monday.The bank had previously forecast 2.8% growth in 2026 and 2.1% in 2027. It attributed the reduction in forecasts to a combination of global uncertainty, three consecutive cash rate hikes, and recent housing policy changes which have led to a sharper than expected slowdown in the housing market.Housing prices in Sydney and Melbourne are expected to fall around 8% in 2026, with prices at a nine-month low in Sydney and a 12-month low in Melbourne. A price correction in Adelaide in South Australia is seen to lead to prices falling 6.4% in 2027.Prices are expected to partly recover in 2028, rising 3.8%, supported by 50 basis points of forecast rate cuts from the Reserve Bank of Australia in late 2027.Meanwhile, investor housing credit growth is expected to decline from a likely peak of more than 10% year over year in the June quarter to negative 0.8% in the first quarter of 2028, ANZ said. Total housing credit growth is expected to ease sharply to a low of 2.9% year over year in early 2028, from 7.1% in the March quarter.Over the medium term, a structural shift is expected in the composition of housing credit, with owner-occupier credit becoming a stronger source of growth.Total private sector credit growth should moderate to 4.2% by the March 2028 quarter from 7.8% in the March quarter before moving higher over the remainder of 2028, per the report.Business credit growth is forecast to slow to 6.6% year over year by the end of 2027 before recovering in 2028. Personal credit growth is seen easing to a low of 1.4% year over year in early 2028, the report said.

ASX 200

South Korean Securities, Futures Trading Firms' Net Income Jumps 77% in Q1

The preliminary net income of securities and futures trading companies in South Korea jumped 77.1% to 4.327 trillion won in the January-March quarter from 2.443 trillion won in the same period last year, the Financial Supervisory Service said in a Sunday release.Return on equity added 1.6 percentage points to 4.3% for the first quarter from 2.7% a year earlier, according to the release.The securities companies earned a total of 6.693 trillion won in commission income in Q1, up 98.9% from 3.365 trillion won a year earlier, it said.

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South Korea's Household Loans Accelerate in May

South Korea's household loans rose by 9.3 trillion won in May, sharply higher than the 3.5 trillion won increase in April, according to a June 11 release from the Financial Services Commission.Home-backed mortgage loans grew by 4 trillion won during the month, easing from a 5.5 trillion won gain in April.At banks, mortgage lending accelerated to 3.2 trillion won from 2.7 trillion won, while growth in non-bank mortgage lending slowed sharply to 800 billion won from 2.8 trillion won.Other loans increased by 5.3 trillion won, rebounding from a 2 trillion won decline in April, driven by credit loans, which swung to a 3.4 trillion won gain from a 900 billion won drop.