US FX WRAP: Dollar holds up amid oil slump as focus shifts to the Fed this week

USD was kept afloat in today's trade despite oil prices tumbling lower. The welcome move lower in crude prices wasn't met with a proportionate move lower in US yields and FX, likely as expectations of a hawkish Fed at this week's meeting have remained, even when taking into account the positive geopolitical developments over the weekend. For now, the US and Iran have paused direct strikes on each other, with US President Trump today noting they are having deep talks with Iran. However, risks remain that are posed from Houthis' strikes on the Saudis as well as risks to shipowners after an oil tanker blew up over the weekend after hitting a mine in the Strait of Hormuz. Given the inertia in FX amid the oil drop, risks are skewed to the upside for USD ahead of the Fed meeting.US Durable Goods missed on the headline, yet underlying orders remained solid, with the proxy for business investment, nondefense capital goods orders ex-aircraft, rising 0.9%; muted USD reaction seen in response.CHF weakened in response to reports that the SNB is expecting to keep rates at zero until the end of 2027, Bloomberg wrote, citing sources. The sources added that the view is mainly influenced by inflation forecasts, as well as the CHF's recent weakening against the euro and the rate differential between Switzerland and the currency bloc. USD/CHF made new YTD highs of 0.8192 while EUR/CHF failed to breach the YTD high of 0.93158.AUD was the only G10 FX to post strength against USD, helped by higher gold prices. Meanwhile, GBP lagged ahead of the BoE meeting this week, at which policymakers are expected to keep rates on hold. The vote split will provide a better gauge of sentiment amongst members; consensus expects a 7-2 split.