First Insights: Foreign Exchange - Asia ex-Japan

Research evidence excerpt

First Insights: Foreign Exchange - Asia ex-Japan

Global Markets Research

24 June 2026First Insights

Foreign Exchange - Asia ex-Japan

Research Analysts

A few developments to keep USD/Asia supported Asia FX Strategy

Craig Chan - NSL

We made a few changes to our trades owing to near-term developments craig.chan@nomura.com

that could keep the broad USD supported. +65 6433 6106

Following the more hawkish-than-expected JuneFOMC dot plot and economic Wee Choon Teo - NSL

projections on 18 June, we highlighted that the market’s focus is shifting from US-Iran weechoon.teo@nomura.com

developments to the Fed’s reaction function. Indeed, we are now seeing some follow- +65 6433 6107

through to the market’s hawkish interpretation of the first FOMC meeting held under Chair Vicky Chen - NSL

Kevin Warsh. Compounded with the market risk-off sentiment led by the selloff in global vicky.chen1@nomura.com

semiconductors equities at the start of this week, DXY has traded higher by ~1.6% since +65 6433 6540

the June FOMC. Manthan Shingala - NSL

Over the medium term, we acknowledge the rationale behind USD weakness, including: 1) manthan.shingala1@nomura.com

our economics team’s base case for the Fed to remain onhold through 2026, as the bar +65 6433 6427

to a Fed hike might be higher until Fed Chair Warsh’s five task forces provide some

concrete policy proposals later this year; 2) our expectation for US economic

outperformance to fade towards the end of Q4; 3) the de-dollarisationtheme appears to

have scope to resume over the medium term; and 4) some downsideriskstoUSdata in

the summer from residual seasonality issues.

That said, a few events could keep broad USD supported in the near term:

1. US May core PCE release (25 June). Our economics team forecasts US core PCE to