Global FX markets spent July 2026 repricing the US dollar lower. The DXY closed the month at 99.80, down 1.4%, as a trio of soft US data prints — weak payrolls, cooling headline CPI and a GDP miss — collided with a commodity supply shock that rewarded resource-linked currencies and punished importers. The month’s story was two forces pulling in the same direction: a softer Fed outlook and a harder oil market.

The month in Global FX markets

The dollar weakened against every G10 counterpart in July. DXY’s 1.4% decline to 99.80 was driven by a shift in rate expectations after the Fed held at 3.50–3.75% on July 29 with three hawkish dissents — but the statement acknowledged elevated uncertainty from the Middle East conflict, and the data underneath was unambiguously soft. June non-farm payrolls printed just +57,000 (consensus: 115,000), with prior months revised down by a combined 74,000. Headline CPI fell to 3.5% year-over-year with a monthly decline of -0.4%, and the Q2 GDP advance estimate came in at 1.5% annualised versus expectations of 2.1%.

That combination — a patient Fed sitting on weakening growth data — gave the market less reason to hold dollars and more reason to chase yield and commodity exposure elsewhere.

Winners and losers

The New Zealand dollar was July’s standout. NZD/USD gained 4.0% to 0.5875 after the RBNZ delivered its first rate hike in three years, raising the OCR by 25 basis points to 2.50%. The move was backed by Q2 CPI hitting a two-year high of 4.10%, and the ANZ Business Outlook Index surging to 56.1 — the highest since February. Markets priced in at least two more hikes to 3.0% by mid-2027, giving NZD the strongest carry tailwind in the G10.

The Norwegian krone matched NZD’s 4.0% gain against the dollar (USD/NOK fell to 9.5306), fuelled by oil. Brent crude surged 23.6% to $90.12 on renewed Iran-Red Sea hostilities after an interim ceasefire collapsed in early July. Norway’s status as a major energy exporter made NOK the direct beneficiary, with a Norges Bank rate of 4.25% adding a carry floor.

AUD/USD rose 2.1% to 0.7025, supported by strong Australian job ads data, resurgent inflation readings and the copper rally (+3.9% to $6.44). GBP/USD gained 1.6% to 1.3461 before fading late in the month as Middle East uncertainty triggered brief safe-haven dollar demand. EUR/USD edged up 0.9% to 1.1524 — the ECB’s July 23 hold at 2.25% after a June hike kept rate differentials steady, but the euro’s energy-import exposure capped gains. USD/JPY fell 1.1% to 160.18, with suspected BoJ intervention on July 30 after the pair traded near 163.

What drove July 2026

Three forces converged. First, the US growth scare. The combination of a 57,000 payrolls print, rising unemployment participation concerns (labor force participation dropped to 61.5%, the lowest since March 2021), and a GDP miss shifted the market’s base case toward the Fed being done tightening — even as three FOMC members dissented in favour of a hike.

Second, the oil shock. Brent’s move from the low $70s to above $90 after Iran tensions re-escalated split the G10 into commodity winners (NOK, CAD, AUD) and energy importers under pressure (EUR, JPY). WTI rose 21.8% to $84.67 in the same window.

Third, policy divergence widened. The RBNZ hiked while the Fed, ECB and BoJ all held. The BoJ’s 8-1 vote to stay at 1.00% — with the board flagging that core inflation was likely to accelerate “clearly above” 2% — set up a September or October hike, but for July the yen remained a funding currency in a risk-on environment.

August 2026 outlook

August is a central-bank quiet month for the G10. There is no FOMC (next: September 15–16), no ECB (next: September 10), no BoE (next: September 17), no BoJ (next: September 17–18) and no RBNZ (next: September 2). The sole rate decision is the RBA on August 11 — and it carries extra weight as one of only four Statement on Monetary Policy meetings per year, with updated forecasts. With the cash rate at 4.35% and Australian inflation still running above the 2–3% target band, the decision between a hold and a fifth 2026 hike will set the tone for AUD crosses in early August.

Beyond the RBA, the month’s price action will be data-driven. US non-farm payrolls on August 7 will either confirm or reverse July’s softness. US CPI on August 12 — one day after the RBA — will be the key input for September FOMC pricing. The FOMC Minutes from the July meeting land on August 19, where the market will parse the three dissents for any signal that a September hike is back on the table. PCE inflation and the second GDP estimate close out the month on August 26.

Oil remains the wild card. Brent at $90.12 and WTI at $84.67 heading into August mean commodity-FX correlations stay elevated. Any escalation in the Strait of Hormuz or Red Sea shipping routes would extend NOK and CAD strength; any de-escalation would unwind the July commodity bid quickly.

What we’re watching

RBA August 11. A hike to 4.60% would extend AUD/USD above 0.70 and compress AUD/JPY shorts. A hold with hawkish guidance keeps the pair range-bound near 0.7025.

US NFP August 7 + CPI August 12. A second weak payrolls print would cement the “Fed is done” narrative and push DXY toward the 98 handle. A hot CPI print would complicate that view and tighten USD shorts.

FOMC Minutes August 19. Three dissents is the most hawkish split in this cycle. The minutes will reveal whether September is a live meeting for a hike or a placeholder for the first cut discussion.

Iran-Red Sea supply risk. Brent above $90 keeps NOK, CAD and AUD bid. A ceasefire revival would pull the rug from July’s commodity-FX trade and shift flows back toward EUR and JPY.