US FX WRAP: Dollar gains in risk-off trade

USD was firmer against peers in risk-off trade as further bond volatility sparked renewed US strength. Despite US yields managing to pare the early rise, especially after a strong US 10yr note auction, DXY kept onto its gains, as French fiscal woes continue to drag on EUR performance. FOMC Minutes sparked little reaction, given its backwards-looking nature, the recent soft jobs report, and the more apt remarks we've had since from Fed members  Regarding the JPY intervention in July, the Minutes noted that the manager said the desk, acting purely as fiscal agent for the US Treasury, intervened in the currency market using US Treasury funds; the System Open Market Account portfolio was not involved. Now DXY trades around 102.27, failing to break up Monday's 102.535 high.  EUR underperformed as French yields surged higher as markets remain unsatisfied on the fiscal path. Brief relief was found on a WSJ report that the French Finance Minister said they are considering issuing more short-term debt amid bond market turmoil. This was later met with pushback by the Finance MInistry, stating no changes have been made on bond issuance strategy.  JPY was today's best gainer, marginally firmer VS USD, helped by narrower rate differentials and the risk averse sentiment. On fiscal policy, PM Takaichi said that she would review policies and spending amidst elevated yields; meanwhile, Labour Cash Earnings decelerated but still printed firmer-than-expected. USD/JPY trades around 158.01 as hikes remain on the table by year end.