EUROPEAN FX UPDATE: Choppy trade amidst quiet newsflow ahead of this week's risk events

USD: DXY U/C; 98.18

• Relatively flat intraday during the European morning after kicking off APAC the week, marginally softer in APAC trade with little fresh major macro catalysts from over the weekend, and as participants look ahead to US CPI data due on Tuesday. Other notable releases this week include the US NFIB survey (Tuesday), US PPI data (Thursday), and US Retail Sales (Friday).


• In terms of Fed speak, there were comments from Fed's Bowman over the weekend who warned that delayed action risks further labour market erosion and the need for a possible bigger cut, as well as noted that the latest job market data reinforces her forecast for three rate cuts this year. Several Fed speakers are scattered throughout the week after tomorrow's US CPI data.


• Aside from US data and Fed speak this week, attention will also be on the Trump-Putin summit on Friday, which has the intention of ending the war between Russia and Ukraine. That being said, it is difficult to envision a smooth solution to the Russia-Ukraine war with Moscow demanding that Ukraine give up some territory, a red line for Kyiv. " On top of that, there are still no updates on the US-China truce extension, with their deadline running out tomorrow and Chinese purchases of Russian oil a sticking point.


• Ahead of tomorrow's US CPI data, markets are currently pricing in some 58bps worth of cuts through to year-end. It's worth nothing


• DXY is currently confined to a narrow 98.03-98.27 range, still within Friday's 97.95-98.35 parameter.

EUR: EUR/USD +0.1%; 1.1654

• Mildly strengthened but with price action contained within Friday's parameters amid quiet newsflow from the bloc, albeit potentially underpinned by the Russia-US meeting on efforts to end the war in Ukraine.


• ING suggests "Should a ceasefire materialise in the coming weeks, the euro is likely to perform well, primarily against the dollar, yen, and Swiss franc"


• EZ newsflow has been quiet with geopolitics largely in focus in the absence of another macro driver.


• Option Expiries: 1.1600-10 (1.7bln), 1.1650-60 (1.3bln), 1.1675-80 (493mln) 1.1690-1.1700 (2.7bln), 1.1750 (1.3bln), 1.1790-1.1800 (3.7bln).


• EUR/USD resides in a 1.1635-1.1675 range, within Friday's 1.1628-1.1679 range.


• German ZEW is due tomorrow, with sentiment expected to deteriorate after the EU-US trade deal was received poorly.

JPY: USD/JPY -0.2%; 147.50

• Modestly firmer in choppy trade despite a relatively flat Dollar in a move that coincided with a rise in US Treasuries. This comes after JPY lacks demand overnight amid the absence of Japanese participants due to the Mountain Day holiday closure.


• Volatility today could be a function of traders weighing the probability of a ceasefire on the Russia-Ukraine front, with Russia demanding territory from Ukraine, a red line for Kyiv.


• USD/JPY resides in a 147.33-147.79 range with Friday's range between 146.71-147.90, and with the 21 DMA also at 147.90 today.

GBP: GBP/USD +0.1%; 1.3466

• Remains afloat and takes a breather around last week's best levels, albeit with trade muted alongside a quiet calendar for today, which is set to pick up on Tuesday, including with the release of the latest UK employment data.


• This week's data docket includes monthly GDP and labour market metrics. Up until last Thursday, it looked as if the consensus on the board had been shifting towards focusing on the loosening in the labour market. However, it now appears the case that the stubbornness of inflation could hold back the MPC from backing additional rate cuts from here.


• GBP/USD trades in a 1.3434-1.3476 range after topping Friday's 1.3458 peak, with the 50 DMA seen at 1.3500.

Antipodeans: AUD/USD -0.1%; 0.6520. NZD/USD -0.2%; 0.5945

• Struggled for direction in APAC trade owing to a lack of drivers overnight, and with the RBA kick-starting its 2-day policy meeting, which is unanimously expected to result in a 25bps cut.


• In European hours, the non-US dollars tilted lower, with the NZD narrowly lagging vs the AUD as the AUD/NZD cross found support at 1.0950.


• AUD/USD trades within Friday's 0.6509-0.6534 range, and NZD/USD dipped under Friday's low (0.5940) as it eyes its 100 DMA (0.5935). Meanwhile, NZD/USD also sees a hefty NZD 1.6bln of options expiring between 0.5920-0.5930.

Others

• China saw mixed inflation data overnight, which showed CPI YY topped estimates to print flat Y/Y but coincided with a deeper-than-expected deflation in factory gate prices. USD/CNH little changed in a 7.1827-7.1908 range.


• Norway saw its July CPI and core CPI metrics top expectations across the board - EUR/NOK trades towards the bottom of a 11.9400-11.9880 range.


• RBI has reportedly sold at least USD 5bln to boost FX in a bid to prop up the INR after it weakened to a record low, according to Bloomberg.

11 Aug 2025 - 10:15- ForexEU Research- Source: Newsquawk