US FX WRAP: Dollar firmer on global yields rising; Antipodes hit on risk-off mood
US banking regulators propose changes to bank rating system
TREASURY WRAP: T-NOTE FUTURES (M6) SETTLE 10 TICKS LOWER AT 108-22+
US FX WRAP: Dollar firmer on global yields rising; Antipodes hit on risk-off mood
Alphabet (GOOG) expects FY26 capex at ~USD 180-190bln (unchanged)
CRUDE WRAP: WTI (N6) SETTLES USD 0.23 LOWER AT USD 104.15/BBL; BRENT (N6) SETTLES USD 0.82 LOWER AT USD 111.28/BBL
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USD was firmer against major peers as global government bond yields continued to march higher despite crude prices settling modestly lower. The market is warming up to the notion that even if a resolution was found imminently, many hurdles remain to get Hormuz flows back to pre-war levels. Aside from the better-than-expected growth in US Pending Home Sales, focus was on geopolitical developments, which saw Trump give a 2-3 day time on Iran, or "maybe till early next week". Meanwhile, the WSJ reminded markets via sources, that Iran's position in talks with the US to end the war hasn't changed much from earlier iterations that failed to yield progress towards a deal, a prospect that counters optimism that a deal is on the horizon. DXY nears session highs of 99.43. Attention will remain on an escalation/de-escalation in the Middle East whilst Nvidia earnings on Wednesday are the main scheduled event this week.
Yen strength failed to hold following jawboning from the Finance Minister Katayama, who said ready to take decisive action on FX. USD/JPY was modestly firmer within a range of 158.65-159.25. Note, USD/JPY saw a sharp decline from 159.125 to 158.65, with no clear headline driver.
Antipodes underperformed amid the risk-averse environment and weakness in the metals space. Meanwhile, CAD saw relative outperformance despite a softer-than-expected inflation report, as resilient oil prices helped the growth outlook. USD/CAD peaked at 1.3774 before trimming to ~1.3750.
Cable was weaker on Tuesday, primarily on the stronger USD, with markets largely looking through the uptick in the UK unemployment rate to 5.0% (exp. 4.9%, prev. 4.9%), especially the HMRC -100k employment change (exp. -26k) in April, which the ONS said is "likely to be revised when more data are received next month".
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