US FX WRAP: Dollar sees slight pressure as Swissy outperforms and Aussie lags ahead of RBA

The Dollar saw slight losses amid the initial broader risk-on environment given the more constructive US/Iran Middle East updates, and following oil weakness. Currency-specific newsflow was fairly light, with ISM Manufacturing PMI the highlight; the headline topped expectations, prices paid fell more than anticipated, while new orders and employment were little changed M/M. Fed wise, neither of the Fed’s hawkish dissenters has spoken yet, while attention now turns to the midterms on Tuesday. Before then, Apple reports earnings after-hours on Monday, and focus remains on tech after last month's sell-off. ING writes that the 9% Nasdaq sell-off has driven a softening in short-dated US rates, and any further large sell-off in this sector is probably the biggest risk to long Dollar positioning.

G10 FX performance was mixed vs. the Buck, with the Swissy the clear gainer, followed by the EUR and GBP, while the Aussie was the distinct laggard, with the Yen and CAD following behind. The Swiss Franc was likely supported by the lower yield environment, and the Euro managed to shrug off the protests in Germany and also an unscheduled Fitch outlook downgrade for France. Looking at the underperformers, the Loonie was likely hit by the tumbling crude prices, and the Aussie may have weakened following disappointing Chinese PMI metrics while attention turns to the RBA overnight. For the Yen, the BoJ said overnight that rate hikes are likely to ease inflation and support consumption, adding underlying inflation has picked up to about 2% and has gradually become embedded around that level in recent years.