[MARKET ANALYSIS] DXY under mild pressure; G10s broadly firmer, with outperformance in the Antipodeans

Snapshot: G10s are mostly firmer against the USD, with the exception of the JPY. The Antipodeans outperform given the risk tone, whilst the JPY lags. Energy benchmarks are in the red this morning, with attention on Trump pushing back on reports that he would strike Iran before the midterms; moreover, he mentioned that he is having “productive” discussions with Iran. Nonetheless, the situation remains tense with reports suggesting that the US military has drafted options for three days of strikes. DXY is a little lower this morning and resides within a 101.92 to 102.14 range, and well off the WTD peak of 102.53; but still remains towards the YTD high. Strength this week was facilitated by higher energy prices and yields, and as EUR faltered on French fiscal woes (more below). Attention for the USD for the remainder of the day will be any updates on the Iran situation, with Foreign Minister Araghchi said to give Iran’s response in the coming days. Domestically, UoM survey is due today and will likely see revisions higher inflation expectations. Across the northern border, Canadian jobs are to be released today. EUR is a touch firmer this morning, and back above the 1.12 mark; nonetheless, the single currency holds towards WTD lows of 1.1161. This week’s pressure has been facilitated by the French fiscal situation, with the draft budget seen as ineffective in solving the fiscal issue. RN’s Le Pen announced her own alternative budget, which spurred some mild strength in the EUR at the time, but has been described as too optimistic, resulting in renewed pressure in the single currency. Overall, the debacle in France will likely keep the EUR pressured for the foreseeable future, with the next sticking point on October 13th, when lawmakers will debate the budget. Traders will keep an eye out for any material changes to the existing draft and/or major friction points, which could result in the use of Article 49.3. GBP digests the region’s Holborn & St Pancras by-election, which saw the Labour Party win 45% of the vote. Overall, the results were not expected to spur any material market reaction, but rather provide investors with information on whether the “Burnham bounce” is still in effect. It appears that is the case, and removes one of the hurdles for the PM to call an early election. The next obstacle is the Autumn Budget (Oct 28), and if that passes without issue, the possibility of an early election will only grow.