[MARKET ANALYSIS] DXY remains afloat after gaining alongside yields and oil prices, while NZD underperforms after the RBNZ hiked rates but refrained from any hawkish surprises

DXY: +0.1% Kept afloat after gaining alongside higher oil prices and yields as Middle East tensions escalated with the US launching attacks inside Iran and with Iran retaliating, while US President Trump had warned that if Iran responded, they will be ‘totally wiped out as a country’. Elsewhere, there was little reaction to the data from the US, and to comments by Fed's Barr who stated that if inflation does not moderate soon, it will be time for an interest rate hike, but also stated that he favours steady rates if confident inflation is moderating. EUR/USD: -0.1% Marginally weakened after returning to beneath the 1.1600 level amid the dollar strength and with little reaction to the latest EU inflation data, while hawkish comments from ECB officials did little to shift the dial GBP/USD: Flat Remains lacklustre but just about holds on to the 1.3500 handle, while the currency failed to benefit from comments from BoE's Mann that it is better for interest rates to be a little bit too high and then correct if necessary. USD/JPY: +0.1% Slightly extends on advances with USD/JPY at the 160.00 level after Japan's currency was pressured amid higher oil prices and US yields, putting participants on intervention alert, while it was reported that BoJ Governor Ueda met US Treasury Secretary Bessent on the sidelines of the G20 on Sunday and discussed monetary policy. Antipodeans: AUD/USD Flat / NZD/USD -0.6% Mixed price action with AUD/USD flat after the pair was mildly supported by stronger-than-expected Australian GDP data, while NZD/USD underperforms after the RBNZ hiked the OCR by 25bps to 2.75%, which was widely expected, although the central bank refrained from any major hawkish surprises and the latest rate projections were little changed from the previous.