[MARKET ANALYSIS] USD action mixed against G10 peers, weaker vs. cyclicals, firmer/flat vs havens

Quiet action in FX after broad based USD weakness vs all peers on the surprise Treasury announcement yesterday, an update which led to significant curve flattening with the 30yr yield falling in excess of 10bps. Although the figure announced by the Treasury was modest, it shows Bessent’s commitment to keeping yields in check when above 5% in the long segment; alongside this, FOMC minutes encouraged some dovish action in shorter dated USTs. Yields will remain in focus and we have Fed speakers Daly and Musalem set to speak on business TV later today, likely to be asked on this topic. USD action is mixed against G10 peers, weaker vs. cyclicals, firmer/flat vs havens. DXY is modestly weaker after slipping below May’s support around 98.80, it is essentially no man's land below with 98.00 the likely next support. SEK weakness after the Riksbank announcement which, in short, was broadly as expected but failed to convince some market expectations of tightening later in the year (i.e. Danske expecting two hikes, JPMorgan seeing one). While keeping the door open to tightening later in the year, some dovish leads can also be interpreted from the mood of language on the economy, where the reiterated language comes despite a rebound in domestic GDP. EUR/SEK moved higher throughout the morning to a peak just below 11.06, +0.4% on the day. Action elsewhere is quiet. AUD lags despite the constructive risk environment; underperformance a function of disappointing jobs data in which headline Employment Change contracted and the Unemployment Rate rose. AUD/NZD fell in excess of 40 pips after the data, selling which was halted just under the 1.1950 mark, AUD/USD is flat despite a kneejerk lower after the data.