US FX WRAP: Antipodeans outperform and Yen lags as Dollar sees two-way trade

The Dollar Index was mixed against G10 FX peers, in what was pretty light newsflow with little heard from the US meeting with mediators in Qatar but more discussions are expected on Wednesday. Meanwhile, attention turns to June's payrolls report on Thursday, brought forward a day on account of Independence Day on Friday. Back to Tuesday, US job openings were broadly unchanged, remaining above expectations, while Consumer Confidence disappointed. Ahead of that aforementioned data, US Treasury Secretary Bessent said he wouldn't be surprised if June jobs are 'very strong', but caveated that he hasn't seen the June figures. Elsewhere, usual hawk Hammack said the Fed may need to consider rate hikes

As mentioned, G10 FX performance was mixed as the Antipodeans were the clear outperformers, while the Yen lagged. For the latter, overnight, the pair jumped above the 162.00 mark, amid commentary from Chief Cabinet Secretary Kihara, as he initially suggested that he would not comment on FX, which saw the pair breach 162.00, but soon after he stated that they are always ready to take necessary action on FX. After that, Finance Minister Katayama warned that they will respond appropriately to currency moves at any time as needed, while action could include decisive action as agreed in the joint statement with the US. In addition, during the US session USD/JPY sharply dropped from 162.50 to 162.00, before paring, albeit on no headline newsflow. 

AUD and NZD saw little headline newsflow, ahead of Aussie S&P Global PMI data overnight, but were the G10 beneficiaries as equities rose. As a reminder, latest RBA Minutes from the June meeting stated that policy needed to remain restrictive and will do what is needed to achieve price stability including raising rates if necessary.

CAD, GBP, and EUR were all little changed vs. the Greenback For the single-currency Euro, there was a bit of central bank speak and source reports. Firstly, ECB sources say rapid oil price retreat eases pressure on ECB to hike in July and September is seen as more likely, although a June inflation surprise could reignite talk of a July hike; added rate hike is not off agenda even though it may be delayed. Later, Chief Economist Lane highlighted that the oil price curve remains elevated, and that could suggest higher costs for the economy. All in all, policymakers have broadly reiterated data dependency and avoided any pre-commitment to July/September.