The U.S. dollar hovered near a 13-month high on Monday and remained on track for its strongest monthly advance in nearly a year, keeping most Asian currencies under pressure as investors monitored fragile ceasefire efforts between the United States and Iran.
The US Dollar Index traded little changed at 101.29 in Asian hours after touching its highest level in more than a year last week. The index is on course for a roughly 2.5% gain in June, marking its strongest monthly performance since July 2025 as elevated Treasury yields, resilient U.S. economic data and expectations for higher-for-longer Federal Reserve interest rates continued to support the greenback.
Market sentiment remained cautious after Washington and Tehran exchanged fresh attacks over the weekend before agreeing to halt further military action and resume talks in Qatar on Tuesday. While the agreement eased immediate fears of a broader regional conflict, investors remained wary that renewed disruptions around the Strait of Hormuz could keep energy markets volatile and sustain demand for safe-haven assets.
Attention is also turning to a packed regional calendar that includes China’s manufacturing activity, South Korea’s trade and industrial output, Japan’s Tankan business survey and PMI readings, Indonesia’s inflation data, and India’s industrial production, all of which could shape expectations for monetary policy across Asia.
The NZD/USD edged up to 0.5650, but remains down nearly 5.8% in June and is still on track for its steepest monthly decline since 2024.
Markets have scaled back expectations for aggressive Reserve Bank of New Zealand tightening as easing oil prices following the tentative Middle East ceasefire reduced immediate inflation concerns. However, investors remain cautious over the longer-lasting economic effects of the earlier energy shock, while broad U.S. dollar strength has continued to pressure the kiwi.
TheAUD/USD traded at 0.6893, leaving it on track for a monthly decline of more than 4%, with investors turning their attention to Tuesday’s release of the Reserve Bank of Australia’s June meeting minutes after policymakers reiterated that unconventional monetary policy tools would be reserved for periods of severe market stress.
China, Korea data in focus
Investors are looking to China for further signs of economic stabilization. Official manufacturing PMI data due this week is expected to edge back into expansion territory, while markets will also watch industrial profits and the People’s Bank of China’s new overnight reverse repo operation for clues on the direction of monetary policy. The USD/CNH was little changed at around 6.80 per dollar on Monday after posting modest gains last week.
Elsewhere, the JPY/USD weakened to 161.85 per dollar, remaining near multi-decade lows, while the KRW/USD softened to 1,544.13.
South Korea’s export and industrial production figures are expected to reflect continued strength in semiconductor demand, with ANZ economists forecasting a sharp rebound in shipments and factory output after temporary weakness earlier in the quarter. Inflation is also expected to accelerate as higher energy costs continue to feed into consumer prices.
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