[MARKET ANALYSIS] Greenback dictates price action amid light data/speaker calendar; JPY unreactive to tsunami reports, GBP weathers noisy politics

G10 FX are displaying a modest risk-off bias today, with DXY higher by a tenth and high beta underperforming after geopolitical escalation over the weekend (Please refer to the European opening news). Updates this morning from Iran have not been constructive, the Foreign Ministry saying: "No decision has been made regarding a second round of negotiations."
USD is the best performer as the preferred haven during this conflict, with energy prices also elevated, around USD 96/bbl for Brent. The domestic calendar is light, DXY is likely to be catalysed by Middle East Updates. Note, the Fed entered its blackout window on 18th April ahead of its 29th April confab.
GBP digests domestic political updates, with the Sun reporting that Manchester Mayor Burnham met with Former UK Deputy PM Rayner on Friday. This fueled speculation that the two are plotting to overthrow PM Starmer, who is on a weak footing following the Mandelson revelations (PM speaks at 15:30 BST on Mandelson’s vetting). Fortunately for UK assets, few expect any movement from the Parliamentary Labour Party (PLP, the body with power to oust the PM), according to POLITICO. MUFG writes: " So far the negative impact on the pound has been limited, but UK political developments have the potential to trigger a sharper sell-off in the month ahead." Rabo notes: "GBP net short positions have fallen slightly. Markets are downplaying the war’s impact, but persistent oil supply disruptions are set to push up inflation and weigh on growth, especially in the UK."
GBP prefers to focus on geopolitical developments with Brent +6-7% on the day. EURGBP trades 0.1% higher, while Cable is 0.1% lower. In terms of major events this week, UK Inflation for March is due on Wednesday, providing the first indication of the Middle East conflict's impact on the UK consumer.
JPY is one of the worst performers in the G10 space as USD/JPY continues to creep towards the critical 160 level. In a note on Sunday, Barclays said it shifted its BoJ hike forecast to June from April, following harsh (For the BoJ) repricing at the beginning of last week amid a lack of hawkish commentary from Ueda. This morning, NHK reported a preliminary 7.4 magnitude earthquake off the north-east coast of Japan. A three-meter-high wave warning was issued for the northern region; no impact on Japanese assets.