US FX WRAP: Dollar sees slight losses to benefit of G10 peers

The Dollar Index was on the backfoot on Monday, albeit in very thin newsflow, as currency-specific newsflow was sparse. The highlight was the ever-escalating US/Iran tensions as they exchanged strikes over the weekend, but there was no tier 1 data or Fed speak; Chair Warsh spoke next to Treasury Secretary Bessent at the G20 meeting but didn't say anything Federal Reserve relevant. In terms of the week ahead, the highlights are ISM Mfg. PMI, JOLTS (Tues), Beige Book (Wed), Waller, ISM Svcs. PMI (Thurs), and NFP (Fri). The Buck also noticed some selling amid month-end, whereby Barclays month-end rebalancing model indicates a moderate dollar selling signal against all majors by month.

G10 FX firmed against the Dollar to varying degrees, albeit all pretty contained, as headline catalysts were light, as previously mentioned. The Loonie was supported by rising oil prices despite the ongoing US/Canada trade war. While data was thin across Europe, prelim German CPI Y/Y for August was marginally cooler than anticipated, albeit still accelerating.

Overnight, there were weak Chinese PMI metrics, raising hopes of possible Chinese stimulus. Elsewhere for EMs, Brazil's VP Alckmin said Brazil must work to improve the debt-to-GDP ratio, and the key is to raise GDP while keeping spending under control, and he believes there is room to do so. Alckmin added he is well aware that interest rates need to fall further.