[MARKET ANALYSIS] DXY pressured as Fed Chair Warsh provides little guidance; GBP digests further Budget-related reporting

Snapshot: G10s are firmer against the broadly lower USD this morning. Antipodeans lead, benefiting from the risk tone, whilst the JPY holds towards the bottom of the pile. USD continues the prior day’s downside, which stemmed from AI-debt concerns and lower yields. Also fuelling the downside this morning is a speech from Fed Chair Warsh, where he ultimately provided no forward guidance ahead of the October meeting; as such, money markets pared back their bets of an October hike (now 14% vs 26% earlier). The docket for the remainder of the day remains exceptionally light aside from US Import/Export Prices and Industrial Production. GBP is a touch firmer this morning, benefiting from the softer USD a little more-so than peers. Focus remains on the looming UK Budget (Oct 28), where source reports have generally been welcomed by markets. The latest was via Bloomberg, which suggested that Chancellor Healey could raise taxes on banks. The source adds that the move will likely involve increasing the bank surcharge that it added on top of the standard corporation tax rate. It seems as if markets are taking the potential tax on banks as a reliable way to improve the fiscal situation, without having a significant impact on growth.