US FX WRAP: Dollar gains on Waller and risk-off
US President Trump reiterates Iran has no Air Force, no Navy, no military; will hit Iran very hard tonight and tomorrow
Brown Forman (BF.B) CEO planning to step down down, WSJ reports citing sources
US FX WRAP: Dollar gains on Waller and risk-off
TREASURY WRAP: T-NOTE FUTURES (U6) SETTLE 10+ TICKS LOWER 108-22+
Trump's Thursday speech is slated to address newly declassified intelligence reports that the White House asserts reveal plans by foreign nations to interfere in the 2020 election, reports MS Now
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The Dollar was firmer against all G10 peers amid the broad based risk off sentiment, and hawkish comments from Fed's Waller. For the former a few factors weighed, such as concerns ahead of SK Hynix's earnings, but the more pressing issue was the US/Iran relationship worsening once again and the Middle East threatening to break out across the whole region again, with explosions heard in numerous Saudi Arabia locations. Yemen's Houthis attacked an airport in response to Saudi bombing an airport in Yemen. On the Fed footing, and ahead of CPI & Fed Chair Warsh tomorrow, Waller stated if there is another hot reading on core inflation this week, the Fed will need to consider rate hike in near term, and that they would need to see several months of lower core inflation to feel inflation is moving in right direction. The influential Waller added that if he gets another higher reading on inflation, he will treat that as signal, not noise.
CAD was the relative G10 outperformer and was flat vs. the Buck given the rally in oil prices on aforementioned US/Iran woes. NZD was once again seeing gains, before reversing as sentiment soured, and it continued to initially benefit from RBNZ last week. Funders JPY and CHF were lower throughout the day, and lagged as US yields rose. For the Yen, it had a couple stories which sparked two-way action; initial upside for USD/JPY came as source reports suggested that Japan has no immediate plan to change target asset allocations of its state pension funds but could work within existing allowable ranges to direct more investment to domestic assets. As a reminder, Japanese Finance Minister Katayama said they are to pursue steps to promote investment in Japanese assets by GPIF and others. However, USD/JPY pared as Chief Cabinet Secretary Kihara stated GPIF to tweak its basic portfolio as needed.
Elsewhere, currency-specific newsflow was light as geopolitics once again dominated the tape, as participants await any further updates and eye turn to US CPI and Fed Chair Warsh on Tuesday.
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