[MARKET ANALYSIS] USD offered as energy softens, Antipodeans boosted alongside risk sentiment

G10s mostly firmer (bar NOK) against the Buck today as energy returns to March levels on the US and Iran’s interim agreement. Antipodeans and CHF lead, while USD/JPY briefly ventured below 160.
DXY -0.3%, pressured as the risk environment is bolstered by the US-Iran interim deal (see commodities for more details). Fed tightening bets have eased overnight with markets assigning a c. 60% probability of a 25bps hike by year-end. Domestic newsflow light ahead of Warsh’s first FOMC meeting as Chair on Wednesday. DXY marked a session trough just below its 21DMA of 99.41.
EUR is firmer against both the Sterling and Buck as it reacts to the softer energy complex. Some ECB speakers this morning, none of which did much to spur a reaction in the currency, as price action remains dependent on geopolitical developments. A number of speakers are due to provide remarks throughout the week, which could provide hints as to whether further tightening is warranted, but with constructive updates this weekend the chances are slimmer.
GBP firms, but to a lesser extent than EUR (EUR/GBP +0.2%) with the Makerfield by-election potentially deciding the next UK Prime Minister, and the BoE meeting on Thursday, likely to see the MPC opt to stand pat on rates in a expected 7-2 vote split. On the former, Burnham was busy on the wires over the weekend. He said he would not touch the state pension triple lock, and there were also further reports suggesting Home Secretary Mahmood was an option for Chancellor. GBP/USD +0.1% with 1.34 vulnerable to the downside. EUR/GBP looks to test 0.8650, where the rally stalled overnight. Upside risks to the cross should UK Political uncertainty continue, and an unconvincing BoE potentially highlight vulnerable EUR-UK differentials.
CHF is the best performer after the nation voted to reject a proposal to cap its population at 10mln, avoiding issues with the EU (USD/CHF -0.5%). NOK is the worst G10 performer with the popular Middle-East conflict trade NOK/SEK continuing to be unwound (NOK/SEK -0.8%, 0.9867).