EUROPEAN FX UPDATE: FX markets steady as markets digest Trump's Fed personnel picks

USD: DXY +0.2%; 98.23

• The US macro narrative remains primarily focused on personnel changes at the Fed after reporting that CEA Chair Miran is to fill ex-Governor Kugler's position on the FOMC, albeit temporarily. Consensus suggests that he will join Waller and Bowman in backing rate cuts during his tenureship. We await guidance on whether he will put his weight behind a larger 50bps reduction. In terms of the top job at the Fed, reporting via Bloomberg has suggested that Waller is now the frontrunner. Waller has been a dovish outlier on the Fed but will be perceived more positively than either of the two Kevins. One question for markets is how strong his dovish credentials are and whether his recent policy view has been more of an attempt to position himself for the role or if this represents the actual direction he will try to take the Fed, should he be appointed. Today's docket is light on data, whilst the speaker slate contains 2025 Musalem, albeit the subject matter suggests it may be light on monetary policy guidance. As such, focus turns to next week's data docket, which includes US CPI, PPI and Retail sales, as well as the expiry of the US-China tariff truce - likely to be extended by 90 days. DXY is just about holding above the 98 mark and moved back above its 200DMA @ 98.18.

EUR: EUR/USD -0.2%; 1.1641

• EUR/USD is lower but contained within yesterday's 1.1610-99 range after the pair ran out of steam ahead of the 1.17 mark. It has been an exceptionally quiet week for the Eurozone, with the USD very much in the driving seat for the pair. Some traders are mindful of events surrounding Russia-Ukraine and whether this could have some positive read across for EUR. However, given the wide gaps in both sides' negotiating positions, it would likely require a material breakthrough for markets to be convinced that an end to the conflict is forthcoming. To the upside, 1.17 remains the key source of focus for the pair. To the downside, support is provided by the 200DMA @ 1.1606.

JPY: USD/JPY +0.3%; 147.55

• JPY is softer vs. the USD amidst a relatively indecisive week for the pair. In what has been a confusing few days on the trade front between Japan and the US, Japanese trade negotiator Akazawa has confirmed the non-stacking stance from the US, and there is no discrepancy between the US and Japan that there is no tariff stacking. Subsequently, the US said it will refund any extra tariffs retroactively going back to August 7th. This will help provide some greater clarity for the BoJ, but ultimately, the Bank remains in data watch mode to assess the extent of the slowdown in the Japanese economy and whether real wages will be able to revert back into positive territory. On the BoJ, the Summary of Opinions from the July meeting showed the Bank debated the chance of resuming rate hikes. USD/JPY is currently tucked within yesterday's 146.69-147.71.

GBP: GBP/USD +0.1%; 1.3430

• GBP has faltered after yesterday's BoE-induced gains vs. the USD. To recap, the BoE pulled the trigger on another 25bps rate cut. However, the decision to do so was subject to more hawkish dissent than the market was positioned for and subsequently saw traders push back their expectations for policy loosening. As it stands, the next 25bps cut is not fully priced until February, which would mark a departure from the MPC's current quarterly pace of rate loosening. Up until yesterday, it looked as if the consensus on the board had been shifting towards focusing on the loosening in the labour market. However, it now appears the case that the stubbornness of inflation could hold back the MPC from backing additional rate cuts from here. Greater clarity could be provided today by comments from Chief Economist Pill, who backed a hold yesterday. Note, next week's data docket includes monthly GDP and labour market metrics. The next upside target for Cable comes via the 1.35 mark with the 200DMA just north of this level at 1.3504.

Antipodeans: AUD/USD -0.1%; 0.6517. NZD/USD -0.1%; 0.5950

• Both are fractionally softer vs. the USD in what has been a solid showing for AUD/USD and NZD/USD this week. AUD traders will be eyeing next week's RBA policy announcement, which is widely expected to see policymakers deliver a 25bps rate cut after surprising markets with a hold last time around. AUD/USD trades above its 200DMA @ 0.6517 and towards the top end of yesterday's 0.6489-0.6541 range. NZD/USD sits at the upper end of yesterday's 0.5923-67 parameters.

08 Aug 2025 - 10:00- ForexData- Source: Newsquawk