EUROPEAN FX UPDATE: Contained ranges as markets brace for more trade turmoil

USD: DXY U/C; 108.29

• Trump's tariff regime remains the main focus throughout trade thus far after the President signed proclamations to reimpose a 25% tariff on steel and aluminium imports and declared there are no exceptions or exemptions, effective March 12th. Furthermore, Trump said they are looking at tariffs on cars, pharmaceuticals and chips and will hold meetings over the next four weeks, while they will do reciprocal tariffs over the next two days. US President Trump is expected to sign executive orders on Tuesday at 15:00EST/20:00GMT. Focus may temporarily shift back to the monetary sphere later with Powell's semi-annual testimony to the Senate due at 10:00EST/15:00GMT. Today's Fed speaker slate also includes, Hammack, Williams & Bowman. The data docket is light with NFIB the lone "highlight". DXY briefly took out yesterday's 108.44 peak before pulling back a touch.

EUR: EUR/USD +0.1%; 1.0312

• EUR trivially firmer vs. the USD after a session of shallow losses yesterday. In the early stages of the Trump Presidency, markets were relieved that no immediate action was taken against the EU. However, the recent imposition of steel tariffs by the US has brought this to an end. Actions have subsequently triggered a response from the bloc with European Commission President von der Leyen stating that unjustified tariffs on the EU will not go unanswered; they will trigger firm and proportionate countermeasures. It remains to be seen how hard, if at all, the EU's auto sector will be targeted. ECB thought-leader Schnabel due to speak @ 17:00GMT. EUR/USD is holding above the 1.03 mark and within yesterday's 1.0282-1.0336 range.


• EUR/USD opex: 1.0250 (695mln), 1.0275 (2.1bln) , 1.0300-05 (1.9bln), 1.0320-30 (2.5bln), 1.0375 (954mln), 1.0400 (2.5bln).

JPY: USD/JPY U/C; 151.95

• JPY saw some fleeting support vs. the USD in early European trade following as markets digested the latest ramp-up in global trade tensions (see above for details). Fresh macro drivers for Japan were lacking overnight with the nation away for holiday. As such, impetus for the pair in the near-term may be dictated more by the USD leg of the equation. USD/JPY is currently tucked within yesterday's 151.17-152.53 band.


• USD/JPY opex: 151.65-75 (530mln), 152.00 (1.2bln), 153.00 (464mln).

GBP: GBP/USD +0.1%; 1.2376

• Marginally higher vs. the USD after three sessions of losses in the wake of last week's "dovish" cut from the BoE. 50bps dissenter Mann has been on the wires overnight and throughout the morning justifying her decision to go back a larger rate reduction. Mann noted that her decision was made on the basis that she is an activist policy maker and wished to "cut through the noise" by taking bold action. Note, Mann favours continued restrictiveness in the future. If other policymakers come around to her view, there is scope to further price in three x 25bps cuts this year with just 64bps of additional loosening priced. Governor Bailey is due to speak @ 12:15GMT. Cable has been as high as 1.2377 but is yet to threaten the 1.24 mark.


• GBP/USD opex: 1.2295-1.2305 (1bln), 1.2350 (378mln), 1.2400 (282mln).

Antipodeans: AUD/USD +0.1%; 0.6282. NZD/USD +0.1%; 0.5645

• Both a touch higher vs. the USD. Focus for AUD has been on the recent imposition of steel tariffs by the US. Australian PM Albanese said President Trump agreed to consider an exemption for Australia on steel tariffs. Trump later declared no exceptions or exemptions. AUD/USD is back above its 50DMA @ 0.6275 and briefly matched yesterday's 0.6286 peak. After struggling yesterday, NZD/USD has picked itself up but is yet to threaten yesterday's 0.5664 peak.

11 Feb 2025 - 09:55- ForexEU Research- Source: Newsquawk