US FX WRAP: Dollar mixed vs. peers as geopols dominates newflow

The Dollar was mixed against G10 FX peers, as geopolitical news dominated the tape, after the weekend escalations with Iran and Israel. However, as Trump got involved and seemed to intimate that Iran and Israel are looking to do an immediate ceasefire... and final negotiations on “Peace” are proceeding, although, how accurate or close they actually are is a different question. As alluded to, over the weekend Iran and Israel struck each other again, for the first time since the April ceasefire, but since resumption of trade on Monday, both sides have eased off but promised to retaliate if fighting begins again, and Iran has warned of a "severe" response if the Israel Defence Forces continues striking southern Lebanon. Elsewhere, newsflow was actually pretty sparse amid no tier 1 US data and the Fed on blackout ahead of the confab next week. In the NY Fed SCE for May: 1yr ahead expected inflation eased to 3.5% (prev. 3.6%), with 3yr unchanged at 3.1%, and 5yr unchanged at 3.0%.

As mentioned, G10 FX performance was mixed vs. the Dollar, in what was pretty sparse currency specific newsflow, but instead trading of broader sentiment. Highlighting this, and amid the turnaround in risk sentiment given the more constructive geopol rhetoric and also some AI/chip equity stories, the Kiwi outperformed. CHF and CAD were the laggards, while EUR, GBP and AUD eked out marginal gains vs. the Greenback. USD/JPY traded either side of 160 as participants continue to be wary of potential intervention, but some desks write that they are likely waiting for the BoJ rate decision next week if they are to intervene and USD/JPY remains around current levels.