[MARKET ANALYSIS] DXY slips alongside yields; JPY and CHF benefit from haven demand, whilst the Kiwi digests CPI

• Snapshot: G10s are mixed against the USD. JPY is the clear outperformer, joined closely by the CHF, benefiting from haven flows. On the flip side, the Antipodeans have been hampered by the risk tone, whilst the Kiwi digests cooler-than-expected CPI.
• DXY is on the back foot this morning, pressured by lower yields, which comes despite elevated energy prices. The index currently holds at the lower end of a 101.44 to 101.73 range; price action today will likely be dictated by cross-asset relationships, given that the data docket remains light today. Some of the pressure today may also be facilitated by poor results from Tesla (-4.9% pre-market).
• The JPY is the outperformer this morning, benefiting from its safe haven status. USD/JPY currently holds at the bottom end of a 156.82 to 158.25 range, a move which will no doubt be welcomed by Japanese officials. Focus for geopolitics was on an IRGC warning to US bases, that they may be a target if the US continues to allow ships to pass through the Strait of Hormuz. Aside from geopolitics, the JPY is digesting reports that Japan is considering the resumption of energy subsidies. Whilst this does reduce the inflationary implications of recent energy price rises, the overarching question is how Japan intends to finance this; of course, options include a supplementary budget, which could involve bond issuance, further fuelling fiscal woes. Elsewhere in Japan, the RENGO union is reportedly seeking a 6% wage increase for 2027, an increase from the 2026 figure of 5.01%; for reference, the union had demanded 5.94% in 2026.
• The Antipodeans are the slight laggards this morning, given the subdued risk tone. The Kiwi mildly underperforms vs the Aussie following a cooler-than-expected CPI report, but still remains at elevated levels. Therefore, money markets still expect the RBNZ to hike rates at next week’s meeting; Westpac sees rates to be hiked by 25bps.

Sessions of this shape, soft dollar alongside softer yields with JPY and CHF atop the G10 board and Antipodeans lagging, are the classic risk-off rotation into the low yielders, and the transmission here runs through rate differentials rather than growth repricing: the DXY holding the lower end of a tight intraday range on a light data docket points to positioning and cross-asset cues doing the work, not fresh information. The JPY leg is the more instructive one, since USD/JPY sitting near the bottom of its range is precisely where verbal intervention risk from Japanese officials recedes and the currency can trade on fundamentals; the offsetting threads, energy subsidies funded via supplementary issuance on one side and elevated RENGO wage demands on the other, pull JGB supply expectations and BoJ normalisation expectations in opposite directions, and which dominates has historically determined whether haven JPY strength sticks. The Kiwi case is the cleaner mechanism: a cooler CPI print that leaves the currency still at elevated levels and the market still pricing a hike next week is a print that tempers rather than derails the path, and the tell is whether pricing holds through the meeting or bleeds toward a hawkish-versus-dovish surprise split. The Hormuz headline is the tail risk beneath the whole tape; episodes of shipping-lane escalation have tended to lift energy, freight and insurance costs first and filter into the haven bid second, which is exactly the ordering visible here. Follow-ons that matter are whether lower yields persist without data to justify them, any Japanese commentary on funding the subsidy, and the RBNZ decision itself.