US FX WRAP: Mixed performance against the Buck as US NFP awaits

The dollar was slightly weaker against most G10 peers, although the DXY traded in tight ranges as traders awaited US NFP on Friday. On Thursday, US initial jobless claims rose to 225k from 212k, above the top end of the forecast range, while Challenger layoffs rose to 97.006k from 83.387k. From the Fed, Daly (2027 voter) said policy was in a good place and the central bank was prepared to respond either way, while known hawk Schmid said the issue was whether the Fed needed to raise rates to "tamp this thing down" and meet the inflation target. Geopolitical updates were frequent but brought little fundamentally new, although Trump said the US was "in the middle of my final negotiations to end the War".

G10 FX mostly gained against the buck, albeit not sharply, with the Swissy outperforming and the Loonie lagging, likely due to weaker oil prices. The yen ended the day flat, with USD/JPY trading between 159.59-160.08, after the currency strengthened overnight on Bloomberg source reports that the BoJ was considering a June rate hike, with another possible in 2026. For the Swissy, inflation was cooler than expected, though it is unlikely to shift the dial for the SNB as the headline remains towards the lower half of the 0-2% target band and the SNB continues to make clear that inflation meets its medium-term stability objective. As such, policy is expected to remain at the ZLB for the foreseeable future.

NZD, EUR, AUD and GBP all eked out marginal gains to varying degrees, with currency-specific news flow fairly thin. That said, the Australian trade balance overnight showed a surprise surplus of 1.791bln, against an expected deficit of -1.61bln. For the pound, BoE Governor Bailey said markets had been orderly but stretched at times. He added that debt market leverage raised questions on vulnerability.

In Scandi FX, Swedish inflation was hot in May, with headline CPIF rising from the prior month on M/M and Y/Y bases and coming in above expectations, largely driven by higher energy and services prices. The core metrics reflected this, as Y/Y rose 0.5% M/M, below the 1.3% consensus. Overall, the data set is unlikely to shift the dial for the Riksbank, which at its last meeting pointed to a "wait and see" approach.