[MARKET ANALYSIS] JPY outperforms on intervention rhetoric; USD contained despite higher oil and yields

DXY is little changed overall, with the Buck caught between higher oil prices, yields and Fed tightening bets on one side, and notable JPY strength on the other (see below for more details). Friday’s hawkish Fed rhetoric remains on traders' minds, with Hammack saying policy needs to be restrictive to bring inflation lower and that she does not currently see policy as restraining the economy. DXY trades around the 101 mark in a current 100.98-101.20 range (vs 100.87-101.31 range on Friday). Note, month- and quarter-end flows are also coming into traders' views, with rebalancing likely to become more influential as month-end approaches. EUR/USD is modestly softer with little in the way of fresh bloc-specific drivers, leaving the pair largely at the whim of broader USD action but perhaps with some more influence from the GBP today (see below). EUR/USD trades within a 1.1371-1.1391 range, with ECB's Lagarde due for a text release at 15:00 BST. GBP is modestly firmer against the USD despite some caution around the UK fiscal outlook. PM Burnham hinted at new taxes to fund social care reform and acknowledged challenging circumstances heading into the Budget, while also announcing a new help-to-buy scheme. The spending narrative is being treated cautiously, although the potential growth impulse is being taken at face value for now, with Chancellor Healey still to come at 12:00BST, speaking at the Labour conference. As such, the stable open for Gilts seemingly provided traders with some relief for now. Before that, on the BoE front, Ramsden is due for a text release on QT at 11:00BST. GBP/USD trades towards the top of a 1.3218-1.3273 range, whilst EUR/GBP fell under its 100DMA (0.8588) to trade towards the bottom of a current 0.8578-0.8604. JPY is the clear G10 outperformer, extending gains after Japan’s top FX official Mimura said authorities are not satisfied or reassured by recent Yen price action and are watching whether markets take their “clear message” at face value. Mimura also mentioned the BoJ’s shift towards rate hikes and the subsequent result of the narrowing of the US-Japan yield gap. USD/JPY fell from around 157.55 to 157.25 on the remarks and has since extended to around 156.50 (vs high 157.86) Antipodeans are mixed, with AUD modestly softer as gold and copper fall, and NZD slightly firmer against the Dollar. AUD/USD trades within a 0.7006-0.7029 range ahead of Tuesday’s widely expected RBA hike, while NZD/USD trades in a 0.5649-0.5674 range. NZD could be underpinned by the AUD/NZD cross falling beneath 1.2400 after finding resistance at Friday's high.