[MARKET ANALYSIS] DXY remains afloat after gaining alongside yields and oil prices, while NZD underperforms after the RBNZ hiked rates but refrained from any hawkish surprises

DXY: +0.1%

• Kept afloat after gaining alongside higher oil prices and yields as Middle East tensions escalated with the US launching attacks inside Iran and with Iran retaliating, while US President Trump had warned that if Iran responded, they will be ‘totally wiped out as a country’. Elsewhere, there was little reaction to the data from the US, and to comments by Fed's Barr who stated that if inflation does not moderate soon, it will be time for an interest rate hike, but also stated that he favours steady rates if confident inflation is moderating.

EUR/USD: -0.1%

• Marginally weakened after returning to beneath the 1.1600 level amid the dollar strength and with little reaction to the latest EU inflation data, while hawkish comments from ECB officials did little to shift the dial

GBP/USD: Flat

• Remains lacklustre but just about holds on to the 1.3500 handle, while the currency failed to benefit from comments from BoE's Mann that it is better for interest rates to be a little bit too high and then correct if necessary.

USD/JPY: +0.1%

• Slightly extends on advances with USD/JPY at the 160.00 level after Japan's currency was pressured amid higher oil prices and US yields, putting participants on intervention alert, while it was reported that BoJ Governor Ueda met US Treasury Secretary Bessent on the sidelines of the G20 on Sunday and discussed monetary policy.

Antipodeans: AUD/USD Flat / NZD/USD -0.6%

• Mixed price action with AUD/USD flat after the pair was mildly supported by stronger-than-expected Australian GDP data, while NZD/USD underperforms after the RBNZ hiked the OCR by 25bps to 2.75%, which was widely expected, although the central bank refrained from any major hawkish surprises and the latest rate projections were little changed from the previous.

The NZD leg is a textbook sell-the-fact on a fully priced hike: when a central bank delivers the expected 25bp move but keeps its rate projections broadly unchanged, the currency typically gives back pre-meeting longs, a pattern that has repeated across RBNZ and peer decisions where the bar for hawkish surprise was not cleared. The USD/JPY side carries the heavier structural signal; episodes where the pair presses a round level widely treated as a tolerance threshold, amid higher oil and US yields compressing the rate differential against the yen, have historically drawn first verbal then actual intervention from Tokyo, and a reported Governor-Treasury meeting on G20 sidelines fits the customary choreography of laying groundwork and seeking tacit US acceptance before acting. The dollar's bid alongside yields and oil during an active US-Iran exchange is the standard safe-haven and terms-of-trade pattern, where reserve-currency demand and the US position as an energy producer have tended to outweigh risk-off pressure on the greenback itself. The distinction worth drawing across the board is between meetings that move the currency via the decision and those that move it via the projections: here the RBNZ moved neither beyond the expected, while Mann's comments left sterling flat, illustrating how lone hawkish voices rarely reprice a pair without committee-level follow-through. What is worth watching next is any escalation of Japanese official rhetoric from customary phrasing toward action language, whether Iran retaliation widens the oil bid enough to feed inflation expectations at the front of the US curve, and whether other ECB or BoE officials echo the hawkish remarks. As a session wrap rather than a single catalyst, the note describes positioning and precedent more than it signals direction.