EUROPEAN FX UPDATE: DXY bid into UoM, with price action today fairly muted

USD: DXY +0.2%; 99.85

• DXY has recovered a portion of the prior session’s losses but remains capped below the 100.00 handle, with the rebound tempered by a combination of soft US data and renewed trade-related concerns. The greenback came under pressure yesterday following a trifecta of weak labour market proxies, underscoring signs of cooling momentum in the US economy. Additionally, reports that Washington is set to block NVIDIA’s sale of scaled-back AI chips to China introduced a fresh layer of trade-related risk.


• On the policy front, Fed’s Williams this morning offered no near-tern policy comments. Yesterday Fed’s Miran reiterated his expectation for a December rate cut, noting a preference to move toward neutral in 50bps increments. In contrast, Fed’s Hammack struck a more cautious tone, remarking that it is “not obvious” the Fed should ease policy further given the still-elevated level of inflation. The divergence in rhetoric alongside the US data blackout offered little in the way of clear policy direction.


• DXY is consolidating modestly above recent lows, with the index last around the 99.85 mark and well within yesterday's hefty 99.67-100.11 range. The next downside level comes in the form of the October 31st Halloween low at 99.42.


• Ahead, on the data front, Prelim University of Michigan sentiment data for November is likely to see the headline slip to 53.2 from 53.6, conditions rise to 59.2 from 58.6, while expectations are seen unchanged at 50.3; there will be attention on the inflation metrics, where last time out, 1yr inflation expectations were at 4.6%, and 5-10yr were at 3.9%. The NY Fed will release its survey of consumer expectations as well today; last time out median inflation expectations increased at the one-year-ahead horizon to (3.4% from 3.2%), and at the five-year-ahead horizon (to 3.0% from 2.9%), while they were steady at the three-year-ahead horizon at 3.0%. On today's speakers slate, Fed's Williams (voter, text/Q&A unconfirmed), Fed's Jefferson (voter, text and Q&A are due), Fed's Miran (voter, text and Q&A are due)

EUR: EUR/USD -0.1%; 1.1536

• EUR/USD found resistance at 1.1550 but is holding above the 1.15 handle, retaining the bulk of its recent gains following the USD’s broader retracement. Germany's trade surplus this morning narrowed to EUR 15.3bln in September (exp. 16.8bln, prev. 17.2bln), with no notable move seen in the EUR.


• The pair this week found support from the softer dollar tone rather than any meaningful shift in the Eurozone macro narrative. Although, desks flag the disappointing Chinese trade data as a potential headwind for Europe: ING says the data suggests that "China might not have as easily diversified its exports away from the US as first thought – or at least the ex-US demand is insufficient to offset the loss of the US market. That will only add to fears of increasing Chinese pressure in European markets."


• EUR/USD remains well within yesterday's 1.1490-1.1552 range in a current 1.1530-1.1551 band.

JPY: USD/JPY +0.3%; 153.53

• JPY is the clear laggard across the G10 space, retracing a portion of yesterday’s haven-driven gains. Overnight price action was choppy, with USD/JPY oscillating around the 153.00 mark amid a mix of lingering safe-haven demand and softer domestic data, as Japan’s Household Spending figures disappointed expectations.


• The pair now trades toward the upper end of a relatively contained 152.81–153.54 intraday range, compared to yesterday’s broader 152.83–154.14 parameters. Overall, price action suggests consolidation rather than fresh directional impetus.

GBP: GBP/USD -0.3%; 1.3100

• GBP/USD has eased modestly after yesterday’s advance, which came despite the BoE’s dovish hold and was largely driven by broader USD weakness. The pair briefly dipped below the 1.31 handle (low at 1.3097) after touching a session high of 1.3142, marking a retracement from yesterday’s BoE-day range of 1.3042–1.3142.


• On the domestic front, Halifax data painted a firmer picture of the UK housing market, with prices rising +0.6% M/M in October (exp. +0.1%, prev. -0.3%), pushing annual growth to +1.9% Y/Y (prev. +1.3%). The building society noted that while affordability remains stretched amid elevated mortgage rates and record prices, demand has proven resilient, and the gap between income and price growth continues to narrow, suggesting incremental improvement ahead.


• Fiscal headlines also drew attention, with reports that Chancellor Reeves told the Budget watchdog she intends to raise income tax as part of efforts to repair the public finances. Further speculation points to a potential 2p income tax increase paired with a targeted 2p National Insurance cut, alongside consideration of narrowing NI relief above GBP 50,270 and a possible reduction in the annual cash ISA allowance to GBP 12,000 (previously touted GBP 10,000 and from current GBP 20,000).

Antipodeans: AUD/USD +0.1%; 0.6483 NZD/USD -0.3% 0.5618.

• Antipodeans traded mixed overnight amid subdued risk sentiment and disappointing Chinese trade data. Initial price action was largely contained, though the pairs diverged heading into the European session, with AUD finding modest support while NZD lagged.


• AUD/USD edged higher despite the weak China data, aided by firmer copper prices and cross-driven demand as AUD/NZD briefly moved above 1.1550 before easing slightly (current range 1.1486–1.1560). By contrast, NZD/USD remained pressured following recent cautious remarks from RBNZ’s Hawksby, who reiterated a data-dependent stance on policy easing.

07 Nov 2025 - 09:55- ForexEU Research- Source: Newsquawk