US FX WRAP: AUD outperforms while Yen lags as USD/JPY moves to a whisker away from 160

The Dollar saw mixed performance vs. G10 peers, whereby the DXY traded within a pretty narrow range as ING writes that the 99.0-99.50 range remains the ‘comfort zone’ for now. Adding that it embeds lower oil prices but also reflects the broadly stronger macro backing for the dollar. In ING's view, the latter factor could be reinforced by this week’s US data calendar. In terms of broader moves, geopolitics remains front and centre for now, with the main US data event on Friday: US NFP. On the labour market, JOLTs Job Openings for April surged to 7.618mln, against the expected 6.82mln, and prior 6.866mln. Within the report, quits rate dipped to 1.9% (prev. 2.0%), and vacancy rate 4.6% (prev. 4.1%, rev. 4.2%). Regarding the Fed, hawkish 2026 voter Hammack remarked it is reasonable to keep rates steady for now given the uncertainties, and that the Fed may need to act ‘soon’ if inflation trends don’t cool.

AUD outperformed, followed by the Pound, while the Yen lagged and USD/JPY topped out at 159.99, a whisker away from the round 160 level everyone is watching for potential intervention. On that, ING quipped that the risk of new intervention does look a bit underpriced, and that markets may be assuming the BoJ will wait to see whether a 16th June hike can cap USD/JPY. But, they added that the new bar may be set well above the 160.60 level where they intervened in April, perhaps 162-163. On that front, Finance Minister Katayama was on the wires overnight, where she said that they are “closely coordinating with the US on FX”.

On the two outperformers, while newsflow was fairly sparse, the Aussie was seemingly buoyed by metals prices and an encouraging performance from China overnight. Note, RBA's Harper said persistent inflation is a genuine concern, and market measures of inflation have gone up, which is a worry. Cable traded between a tight 1.3446-82, albeit with a couple of BoE speakers. Governor Bailey said policymakers are facing a trade-off between growth and inflation, while Greene noted the case for hiking rates grows as the conflict continues, with monetary policy tightening over the next few weeks or months potentially necessary.

EUR was flat and saw limited reaction to the as-expected EZ CPI, whereby core Y/Y topped expectations alongside a jump in the Services figure. The euro was little moved by the report, given that it plays in favour of a hike in June, which was already near enough fully priced in pre-release. CHF saw marginal pressure, and within tight ranges, although SNB Chairman remarked real overvaluation of the Swiss Franc is clearly lower than the nominal overvaluation, and that the central bank has raised readiness to intervene to deal with an overvaluation pressure due to the Middle East escalation.

For the Brazilian watchers, USTR proposed to impose tariffs of 25% on all imports from Brazil, except for goods that are subject to Section 232 national security tariffs. Finally, the Polish Zloty was unmoved by the NBP keeping rates unchanged at 3.75%, as expected.