EUROPEAN FX UPDATE: DXY hits a fresh YTD low as EUR/USD reclaims 1.09 on German positivity

USD: DXY -0.4%; 103.43

• After an attempted recovery yesterday, the DXY's miserable run has extended in today's session with the index hitting a fresh YTD low @ 103.32 in early European trade. The move coincided with a bounce in the EUR (see below section for details), which also took place amidst the ongoing angst around the US. From a macro perspective, recent data has triggered concerns of a material US slowdown or even a recession with ongoing inflammatory trade rhetoric from Trump adding to the pessimism. Additionally, the potential hit to the wealth effect from the losses in US equity markets is also exacerbating the downbeat mood. For today's calendar, JOLTS is the obvious highlight given focus on the labour market. ING writes "Expectations are for job openings to have flattened in January, although greater focus may be on the layoff figures. We’ll also watch closely the quits rate, which is a good leading indicator of wage growth". Ahead of 103 for DXY is the 16th October low @ 103.17.

EUR: EUR/USD +0.7%; 1.0903

• EUR/USD was steady in early European trade before being boosted by comments from the German Green party co-leader that they are hopeful of a defence deal occurring this week. This stands in contrast to some of the more downbeat commentary yesterday from the Greens that it would oppose the existing spending plans. Despite today's optimism, the clock is still ticking until the new Bundestag sits on March 25th. Next up is the reform package debate on March 13th. Elsewhere in the Eurozone, today sees a busy ECB speaker slate, including the likes of President Lagarde, VP de Guindos, Lane, Villeroy & Escriva. Note, given the wait-and-see approach adopted by Lagarde last week, it is likely that policymakers will maintain their non-committal approach. EUR/USD has made its way onto a 1.09 handle for the first time since November last year; has nearly reversed all of the post-Trump election downside.


• EUR/USD opex: 1.0750 (971mln), 1.0800 (488mln), 1.0815 (336mln), 1.0875-85 (2.1bln).

JPY: USD/JPY +0.1%; 147.39

• A choppy session thus far for USD/JPY with the pair kicking the session off on a slightly firmer footing before a move lower in global equities triggered a FTQ into the JPY. This move proved to be shortlived with the pair thereafter returning to unchanged levels above the 147 mark. From a macro perspective, Q4 GDP data was revised a touch lower overnight but this failed to have any material sway on JPY. As it stands, the next 25bps hike is not priced until October with a total of 31bps of tightening seen by year-end.

GBP: GBP/USD +0.5%; 1.2930

• Cable kicked the session off sub-1.29 before the aforementioned bout of USD softness was able to engineer a move higher in the pair and reclaim the level. As has been the case in recent sessions incremental macro drivers from the UK have been lacking. Overnight saw a downtick in Y/Y BRC retail sales and a Y/Y slowdown in the Barclays UK February Consumer Spending report. However, these prints had no follow-through into the pound. The main UK data highlight comes on Friday with the release of monthly GDP metrics. Albeit, focus remains more on the inflation/fiscal front; Spring statement due on March 26th. As it stands, markets price a total of 59bps of loosening this year.

Antipodeans: AUD/USD +0.1%; 0.6287. NZD/USD +0.1%; 0.5709

• Antipodeans began the session off on the backfoot alongside the downbeat sentiment seen during APAC trade before reversing course as the USD lost ground. AUD/USD was unable to benefit from improved consumer confidence and mixed business surveys overnight and briefly slipped below its 50DMA @ 0.6266 before returning to levels closer to 0.63. NZD/USD fleetingly made its way onto a 0.56 handle before reclaiming the 0.57 figure. Is still some way off yesterday's best @ 0.5746.

11 Mar 2025 - 10:00- ForexData- Source: Newsquawk