EUROPEAN FX UPDATE: DXY grinds higher amid continued NZD losses and a heavy GBP

USD: DXY +0.2%; 99.08

• A fourth session of gains for the broader USD and index, this time with a lending hand from GBP weakness (more below), as well as ongoing losses in the NZD following the 50bps jumbo rate cut delivered by the RBNZ yesterday.


• The macro narrative surrounding the US remains a downbeat one as the government shutdown continues to drag on, delaying economic data releases and threatening a hit to domestic growth, with today's weekly Jobless Claims also shelved for now.


• The minutes from the FOMC's September meeting, in which it cut the FFR by 25bps (subject to dovish dissent from Miran), had both hawkish and dovish elements. Participants judged that a cautious approach to future policy was warranted, while a majority of participants emphasised upside risk to their outlook for inflation – no notable reaction was seen on the release.


• Today's US data docket is light, given the continued US government shutdown, but the speaker's slate is plentiful. On today's speakers' slate: Fed Chair Powell (remarks are pre-recorded, and a text release is expected, but no Q&A), Fed Governor Bowman (voter; text expected), Fed's Goolsbee (2025 voter; no text expected), Fed's Barr (voter; text expected), and Fed's Kashkari (2026 voter).


• DXY prints on either side of 99.00 and eclipsed yesterday's peak (99.06) before encountering some resistance. The index trades in a 98.70-99.08 parameter at the time of writing.

EUR: EUR/USD -0.2%; 1.1605

• Subdued but to a lesser extent than some peers, with some degree of certainty arising on the French political front, with news that French President Macron will name a new PM in the next 48 hours and said there is a possible path to a budget by December 31st. Polymarket odds point to a 32% chance of a French election being called by the end of the month, vs a c. 70% probability yesterday morning, according to ING.


• On the data front, Germany printed a larger trade surplus than expected, although imports and exports contracted. This follows a string of woeful German data, with German Industrial Output and Industrial Orders this week falling well short of consensus.


• Ahead, the ECB will publish the minutes of its latest meeting, though analysts do not expect the release to shift the dial very much. As expected, the ECB held the deposit rate at 2%. Attention focused on the macro projections, which saw the 2026 inflation forecast rise slightly to 1.7% from 1.6%, below the 1.9% consensus. This prompted a dovish market reaction at the time.


• EUR/USD trades towards the bottom end of a 1.1607-1.1648 range, at the time of writing, having printed on either side of its 100 DMA (1.1633) and with yesterday's low at 1.1598. If 1.1600 convincingly gives way in EUR/USD, the next target comes via the 27th August low at 1.1573.

JPY: USD/JPY +0.2%; 152.95

• USD/JPY tilts higher amid Dollar strength and following rangebound APAC trade amid a pause from the recent Takaichi-related advances, with her economic measures and PM nomination said to likely be delayed.


• The desk at ING suggests, "For USD/JPY to come lower now, we need one of three things to happen: i) broad-based dollar weakness on soft US labour market data, ii) the BoJ surprising with a rate hike in late October or iii) some sharp correction in global equity markets."


• USD/JPY has climbed as high as 153.22, with focus now on whether the pair begins to approach 155, given the velocity of the move, expectations of potential intervention will likely increase.

GBP: GBP/USD -0.4%; 1.3348

• Among the laggards, despite limited newsflow before comments from BoE's Mann.


• Initial losses were seemingly driven by technicals as GBP/EUR fell under 1.1500, with the EUR supported by French politics, whilst GBP/USD later fell under 1.3350. EUR/GBP eyes 0.8700 to the upside.


• BoE's Mann stuck to her stance, arguing that "policy needed to remain restrictive for longer, both to squeeze out inflation persistence". Little reaction was seen on the comments.


• GBP/USD eyes the 26th September low at 1.3330 before the 25th September trough at 1.3324.

Antipodeans: AUD/USD -0.3%; 0.6569. NZD/USD -0.5%; 0.5760

• Subdued with little notable influence from China's return from the National Day Golden Week holiday, whilst the Kiwi underperformed and is still feeling the hangover from the RBNZ yesterday, in which it cut the OCR by 50 basis points, emphasised prolonged spare capacity and the associated downside risk to medium-term activity and inflation.

09 Oct 2025 - 10:00- ForexEU Research- Source: Newsquawk