US FX WRAP: Dollar gains to detriment of G10 peers as Aussie outperforms

The Dollar Index was firmer on Monday, to the detriment of most G10 FX peers. Currency specific newsflow was light to start the week, and there was little move to a mixed ISM Services report. NZD, EUR, and CHF were the G10 laggards, while the Aussie was the clear outperformer and managed to eke out gains against the Greenback. The Yen initially saw strength, amid constructive commentary from PM Takaichi who essentially vowed for fiscal discipline. However, the Yen saw a bout of pressure following a BBG report which noted that Japan’s GPIF did not discuss allocation at its September meeting. To remind, there was some speculation that the GPIF could adjust its JGB allocation to the upper end of its 19-31% band (current target is c. 27%). Meanwhile, EUR saw pressure amid fiscal and political woes, as French Unions called for a nationwide day of strikes on November 5th, and the Spanish PM called for a snap election. In EMFX, the Brazilian Real soared on Bolsonaro's first-round election lead, and also Brazil interest rate futures move sharply lower. Senator Flavio Bolsonaro won Brazil’s first-round presidential vote with 47.03% vs President Lula da Silva’s 45.16%. A run-off will take place on 25th October. Bolsonaro’s Liberal Party also led congressional and regional results, with its campaign centring on crime, corruption, the economy and sovereignty, with Bolsonaro favouring closer US ties, and Lula defending stronger state-led social and industrial policies.