US FX WRAP: Dollar supported by late risk-off trade, as Antipode watchers await RBNZ

FX WRAP: The Dollar was broadly firmer against its G10 peers on Tuesday, with the Greenback seeing its strongest gains late in the US session after Washington adopted a more aggressive stance towards Iran. The US Treasury revoked Iran's General License X, which had authorised the production, delivery and sale of Iranian energy products, while a senior US official warned Iran would face consequences for its actions in the Strait of Hormuz. The developments supported the Dollar alongside higher Treasury yields and oil prices.

Prior to the geopolitical headlines, G10 FX had traded in relatively contained ranges with mixed performance against the Greenback. Following the late move, the Swiss Franc, Euro, Sterling and the antipodean currencies were among the weakest performers, while both the Canadian Dollar and Yen ended little changed.

The Yen had initially outperformed overnight after Japan's Economy Minister Kiuchi rejected reports that the government was pressuring the Bank of Japan to lower interest rates, stating the government's policy framework remained unchanged.

Political developments also featured in Europe. In France, Marine Le Pen was found guilty of embezzlement by a Paris court, although she later reiterated her intention to run in the 2027 presidential election without an electronic bracelet. In the UK, Reform UK leader Nigel Farage announced he would resign as an MP to trigger a by-election and confirmed he intends to contest the Clacton-on-Sea seat, describing the contest as "the people versus the establishment".

Elsewhere, New York Fed President Williams said monetary policy remains well-positioned to achieve the Fed's objectives and reiterated that future policy decisions will depend on incoming data and evolving risks, although his comments generated little market reaction. Attention now turns to the RBNZ policy decision overnight ahead of the FOMC Minutes on Wednesday.

For Yuan watchers, PBoC Governor Pan said monetary policy remains supportive and announced the southbound Bond Connect quota will be increased to CNY 800bln from CNY 500bln.