[MARKET ANALYSIS] DXY steady despite higher energy prices, with focus on Trump mulling a strike on Iran before the midterms

The notable feature here is the dollar's non-response to an oil spike, a divergence that has tended to resolve in favour of whichever driver is backed by the rate path rather than the commodity itself. The Loonie outperforming and the yen lagging on widening differentials is the textbook pattern for an energy-led session, with oil-linked FX tracking crude while funding currencies absorb the rate spread. On the geopolitical side, episodes where a US strike on Iran has been floated have historically followed a familiar sequence: a risk premium builds into crude through freight, insurance and prompt spreads, then fades quickly if supply infrastructure is untouched, with the FX spillover limited unless the Strait of Hormuz enters the conversation. The FOMC minutes skewing hawkish without adding new information, plus a speaker in Waller flagging more hikes with flexibility on pace, leaves the next CPI print as the event that reprices the front end; the quoted market pricing of a hike at the next meeting is the benchmark that shifts on that release. On the euro side, an elevated OAT-Bund spread and an unresolved German coalition are the kind of political risk that has historically capped EUR rallies rather than driven trends, with the budget debate date the tell to note. Worth observing is whether crude's bid begins transmitting into inflation breakevens and front-end pricing, since that is the channel through which an energy shock stops being a CAD story and becomes a dollar story.