Risk sentiment was suppressed by Tuesday's round of hawkish Fedspeak and a report noting that Apple is abandoning plans to boost iPhone production, which weighed on the equity space. White House National Economic Council chief Deese played down potential for a new Plaza-like accord, which lent further support to the greenback.
- Gauges of U.S. dollar strength were trending higher. The BBDXY index surged to a new record high of 1,359 and the DXY index topped out at a fresh cyclical high of 114.69. Firmer U.S. Tsy yields facilitated demand for the greenback.
- White House's Deese told attendees of an event hosted by the Economic Club of Washington, DC that a currency pact to counter USD strength was unlikely. His comments seemingly underpinned renewed USD strength, even as there wasn't much prior hope/discussion of such a deal.
- Bloomberg trader sources flagged that leveraged funds were dumping the sterling in response to Deese's remarks. Cable sold off sharply, shedding ~75 pips to erase the entirety of yesterday's gains.
- The yen was the only G10 currency to trade roughly on par with the greenback, benefitting from its safe-haven status and the perception of heightened intervention risk. The Swiss franc was also resilient amid demand for safety.
- The kiwi dollar led high-beta FX bloc lower, with NZD/USD hitting its worst levels since Mar 2020 and AUD/NZD touching its highest point in nine years. A spillover from offshore yuan weakening past CNH7.2 versus the dollar may have added pressure to the Antipodeans.
- On the data front, U.S. pending home sales & flash wholesale inventories take focus from here. The central bank calendar remains busy, a long list of speeches includes comments from ECB Pres Lagarde & Fed Chair Powell.