Foreign Exchange Market Update

July 1, 2026

United States

U.S. manufacturing activity decreased in June. The manufacturing purchasing managers index (PMI) dipped to 53.3 in June after rising to 54.0 in May, although a reading above 50 still indicates growth. The slight pullback by the headline index came amid a slowdown in the pace of production growth, as the production index fell from 54.3 in May to 52.2 in June.

The new orders index also dropped from 56.8 in May to 56.0 in June, while the supplier deliveries index slid from 60.6 in May to 57.4 in June. The supplier deliveries index inversed, with a reading of above 50% indicating slower deliveries, which is typical as the economy improves and customer demand increases. Meanwhile, the employment index climbed from 48.6 in May to 49.7 in June, but the reading below 50 still indicates contraction. 07/01/2026 - 10:35:00 (RTTNews)

Private sector employment in the U.S. increased in June. The private sector employment climbed to 98,000 jobs in June after jumping to 122,000 jobs in May. The financial activities and information sectors were among the gainers, while the leisure and hospitality sectors delivered a sixth month of weak hiring. 07/01/2026 - 08:30:00 (RTTNews)

Eurozone

Euro traded at 1.1387 against USD at 9:00 AM PST

Euro inflation slowed to a three-month low in June as food, energy, and services prices registered slower growth, easing pressure on the European Central Bank (ECB) to hike interest rates again this month. Inflation weakened from 3.2% in May to 2.8%. This is the lowest rate since March.

Although inflation remained above the European Central Bank's 2% target, the recent decline in oil prices put downward pressure on energy inflation. Core inflation that excludes energy, food, alcohol, and tobacco softened from 2.6% to 2.4% in the prior month. With much lower oil prices and a sluggish economy, inflation risks are easing.

Last month, the ECB raised its interest rates for the first time in nearly three years in a bid to cushion the impact of rising inflation. The bank raised the deposit rate by 25 basis points to 2.25%. The ECB is set to announce its next policy decision on July 23.

Annual growth in energy prices slowed from 10.8% to 8.7% in June. Services inflation came in at 3.2%, down from 3.5%. Likewise, food, alcohol, and tobacco prices grew at a slower pace of 1.6% after rising 1.9% in May. Meanwhile, the increase in non-energy industrial goods prices remained steady at 0.9%. 07/01/2026 - 09:50:00 (RTTNews)

The euro area manufacturing activity continued to grow in June as production expanded moderately and cost pressures softened, but supply conditions remained a challenge. The final manufacturing purchasing managers index (PMI) dropped to a four-month low of 51.4 in June, down from 51.6 in the previous month. Nonetheless, manufacturing activity remained in the expansion territory for the fifth month straight in June.

Manufacturers reported another increase in production in June. New orders rose marginally after stagnating in May. The volume of raw materials and semi-finished goods purchased by manufacturers declined in June. The use of pre-purchased materials allowed manufacturers to lessen the operational impact of supply-chain disruption. Further, there was a reduction in factory payroll numbers.

Regarding price pressures, input cost inflation declined in June to the lowest since March. At the same time, output charge inflation eased to a three-month low. Business confidence improved after slumping to a 17-month low in April. However, expectations for the year ahead remained slightly below their historical trend.

Among big-four economies, Germany's manufacturing activity logged a meager growth in June. There was a modest rise in output, supported by a slight uptick in demand. The manufacturing PMI rose from 50.1 in May to 50.3 and remained above the flash score of 50.0. France's manufacturing activity recovered in June with slower declines in output and new orders. Factory PMI posted 51.2 in June, up from 49.7 in the prior month and a flash reading of 50.7.

Italy's manufacturing activity growth moderated in June but remained one of the strongest in over four years. The factory PMI slid from 52.9 a month ago to 52.2. On the other hand, Spain's manufacturing sector contracted in June as new orders fell at a marked pace and production dropped for the first time in three months. The factory PMI registered 49.7 compared to 51.2 in May. 07/01/2026 - 06:26:00 (RTTNews)

United Kingdom Manufacturing Growth Softens

British Pound traded at 1.3277 against USD at 9:00 AM PST

The upturn in the UK manufacturing softened in June amid slowing new order growth and tepid optimism. The final manufacturing purchasing managers index (PMI) declined from 53.9 in May to 52.5 in June. The initial score for June was 53.1.

Although output growth accelerated again as companies continued to stockpile to avoid supply chain disruptions, incoming new orders grew at the slowest pace since December 2025. The outlook for the manufacturing sector remained tepid in June. Employment increased for the third month straight, but the rate of job creation remained only moderate.

Input price inflation slowed to the lowest since March. Average output charges advanced for the seventh month, with the rate of increase remaining relatively close to May's near four-year high. 07/01/2026 - 06:55:00 (RTTNews)

Japan Consumer Confidence Rises Slightly in June

Japan's consumer sentiment improved somewhat in May to the highest level in four months. Consumer confidence index rose from 33.6 in May to 33.8 in June. The sub-index measuring overall livelihood strengthened by 0.8 points to 32.0 in June. Similarly, the index for the willingness to buy durable goods increased from 24.4 to 24.6. The employment index improved slightly from 38.4 to 38.3, while the income growth index remained stable at 40.3. 07/01/2026 - 08:00:00 (RTTNews)