EUROPEAN FX UPDATE: Flat trade across FX ahead of US PPI; geopolitics in focus

USD: DXY +0.1%; 97.881

• Paused overnight after strengthening yesterday in a rebound from the two-day post-NFP selling, despite the worse-than-feared BLS revisions. While the announcement that a US judge temporarily blocked US President Trump from removing Fed Governor Cook spurred little reaction as participants now await incoming inflation data including PPI data later, followed by CPI tomorrow.


• European price action has also been sideways with little in the way of fresh catalysts ahead of the US factory gate inflation metrics.


• US PPI is expected to remain unchanged at +3.3% Y/Y in August; the monthly rate is seen rising +0.3% M/M from 0.9% prior; core PPI is expected to ease to 3.5% Y/Y (prev. 3.7%), with the monthly rate also seen rising 0.3% M/M vs a prior 0.9%. US whole sales are expected to rise 0.2% M/M (prev. 0.3%). Elsewhere, weekly MBA mortgage applications data will be released. In central banks, the NBH's August meeting minutes will be published.


• DXY resides in a 97.693-97.932 range at the time of writing, with the next level to the downside the 24th July low at 97.109.

EUR: EUR/USD -0.2%; 1.1691

• Lacked firm demand and eventually dipped beneath the 1.1700 handle after it recently gave up ground to the rebound in the dollar.


• The single currency was also not helped by the geopolitical backdrop with Poland responding to the violation of its airspace by Russian drones and with US President Trump reportedly calling for the EU to impose 100% tariffs on China and India to pressure Russian President Putin.


• On this, Polish PM Tusk said Poland asked to evoke Article 4 of NATO treaty; there is no reason to claim that Poland is in a state of war. Article 4 talks are meant for consultations when “a member country feels threatened.” These consultations often precede any Article 5 decision, although without clear intent to strike Polish territory, NATO members may be reluctant to consider it an "armed attack" under Article 5.


• Elsewhere over in France, French President Macron appointed Sebastien Lecornu as new PM, according to BFM, although little EUR reaction was seen on this.


• EUR/USD trades in a 1.1683-1.1719, with the next downside level the 50 DMA at 1.1660.

JPY: USD/JPY +0.1%; 147.51

• Took a breather after its recent oscillations through the 147.00 level with headwinds for the pair stemming from hawkish BoJ sources yesterday.


• During the European morning, the pair has been uneventful and moving in tandem with the buck, whilst focus has been firmly on geopolitics.


• USD/JPY trades on either side of its 50 DMA (147.52) in a 147.27-147.59 range, with the next downside level yesterday's low at 146.31 and the next upside level Monday's peak at 148.57.

GBP: GBP/USD +0.1%; 1.3530

• Continues to struggle for direction in European hours, after similar was seen during APAC hours following yesterday's price swings, whereby early upward momentum stalled just shy of the 1.3600 territory before reversing course.


• At home, UK PM Starmer’s "Budget board" is set to meet weekly and has been tasked with coordinating pro-growth policies in the run-up to the November 26 Budget and with keeping business and City leaders engaged, according to officials cited by the FT.


• GBP/USD resides in a 1.3512-1.3543 range with yesterday's peak at 1.3591 and the 14th August high at 1.3595.

Antipodeans: AUD/USD +0.2% 0.6595; NZD/USD +0.2%; 0.5935

• Holding an upward bias and largely moving in tandem with the buck after risk waned off best levels, with gains capped after softer-than-expected and deflationary Chinese CPI data.


• AUD/USD has trades on either side of 0.6600 in a 0.6580-0.6615 intraday range with yesterday's high at 0.6620.


• NZD/USD trades on either side of its 50 DMA (0.5937) after finding resistance at its 100 DMA yesterday (at 0.5960 today).

10 Sep 2025 - 10:15- ForexData- Source: Newsquawk