DXY Steady at 100.75 as Treasury Yields Firm Into CPI Week

The US Dollar Index opened Monday at 100.75, unchanged on the session as Sydney trading got underway. That flatness masks a mixed picture beneath: the euro enters the week on a soft note after Friday's intraday rebound to 1.14585 faded into a lower 1.1411 close, sterling is riding a three-session winning streak to one-year highs near 1.3409, and the yen firmed after Friday's reversal on comments from Japan's finance ministry. Treasury yields rose modestly across the curve in the last completed session, with the 5-year up 3.9bp and the 10-year up 3.0bp. The live policy question, given the Fed funds target of 3.50-3.75%, remains whether the Fed hikes further, not whether it cuts.

Yields firmed modestly in the last completed session: the 5-year rose 3.9bp to 4.308%, the 10-year rose 3.0bp to 4.569%, the 30-year added 1.8bp to 5.071%, and the 3-month edged up 1.3bp to 3.695%. These are broad-based moves, not large policy-odds repricings. The Fed funds target sits at 3.50-3.75%, and the live question in current positioning is whether the Fed hikes further, not whether it cuts. A Fed report to Congress reportedly flagged 'stepped up' inflation in the spring. Fed officials Bowman and Waller are both due to speak today, and Fed Chair Kevin Warsh testifies this week, alongside Tuesday's June US CPI print.

EUR/USD trades at 1.1415, little changed after Friday's close at 1.1411 (-0.14%); an intraday rally to a one-week high of 1.14585 on growing ECB hike bets faded into the close, and a bearish technical flag keeps the pair on the back foot. GBP/USD is at 1.3401, just under Friday's 1.3409 close, the pair's third straight up session and best level in a year, supported by BoE hold/hawkish-tilt positioning. USD/JPY sits at 161.69, matching Friday's 161.615-161.692 close after reversing most of the week's losses. USD/CAD trades at 1.4155, just above Friday's move to a three-week Canadian-dollar high near 1.4125, the loonie's first weekly gain in six weeks.

USD/JPY is at 161.69 Monday, holding the range it settled into Friday (161.615-161.692) after a volatile week that saw a high of 162.67 on July 8 and a low of 161.305 on July 5. Friday's reversal followed Finance Minister Satsuki Katayama's remark that the government would encourage the ¥293.6tn Government Pension Investment Fund to 'substantially' increase its domestic-asset holdings — the pair dropped about 0.6% intraday to 161.285 before settling near 161.67. No new intervention has been confirmed, though Vice Finance Minister Atsushi Mimura said on July 1 that April-May intervention 'clearly had meaning.' The BoJ holds at 1.00%, with its next meeting and Outlook Report not until July 30-31, so no BoJ speakers are scheduled before then. Today's data — Japan's final May Industrial Production and Machinery Orders, due 08:50 JST — are the next scheduled inputs, alongside Fed speakers Bowman and Waller.

Asia-Pacific: China's M2 money supply (forecast 8.5%, prior 8.6%) and New Loans (forecast 1950B, prior 520B) at 18:03, then China's trade balance (forecast 820B, prior 724B) and USD-denominated trade balance (forecast $121.4B, prior $105.4B) around midday. Japan's final May Industrial Production and Machinery Orders print at 08:50 JST. Australia gets Westpac Consumer Sentiment (prior -2.9%) and NAB Business Confidence (prior -14); New Zealand gets NZIER Business Confidence (prior -4) and Visitor Arrivals (prior +2.3%). In the UK, the BRC Retail Sales Monitor y/y (forecast 2.9%, prior 3.4%) lands alongside remarks from MPC member Pill. Stateside, the Federal Budget Balance is due (forecast -$132.8B, prior -$292.6B), with Fed's Bowman and Waller both speaking.