FOREX: Early Risk Off Fades, Despite Oil Bounce, AUD/USD Near 100-day EMA

The early tone in G10 FX was risk off, with the likes of AUD and NZD underperforming, as the market digested fresh tit for tat strikes between Israel and Iran (seemingly derailing near term peace hopes). However, we have largely reversed these losses as the session has progressed, with the BBDXY index little changed (last near 1211.55). Oil futures are holding up strongly, +4% for the benchmarks, but Brent remains under $100/bbl at this stage. Core yields have risen further, building on Friday moves from the US (after the US NFP beat). 

• Some offset is likely coming from the resilient US equity futures backdrop, which saw early downside before rebounding back into the green, despite the surge in oil prices. Nasdaq futures are up +0.30%, but this follows sharp cash losses (more than 4%) in Friday trade. Regional Asia Pac equities are all weaker, led by tech related plays, as some of the positive momentum has come out of the AI/chip backdrop.
• AUD/USD got to lows of 0.7018 in the first part of trade, but now sits back at 0.7045/50, little changed for the session. We are currently near the 100-day EMA support point. NZD/USD got to lows of 0.5780, but is now back above 0.5800, slightly above end Friday levels from NY.
• USD/JPY is little changed, holding at 160.35 currently. We had Q1 GDP revisions earlier, which weren't as weak as feared (with headline growth steady at 0.50%). The contraction from business spending wasn't as large as feared. Yen didn't react though.
• Looking ahead, the Fed’s communication blackout has begun ahead of the 17 June FOMC decision. US May NY Fed 1-yr inflation expectations and Germany’s April factory orders are released today.