EUROPEAN FX UPDATE: Tentative trade across FX while CAD eyes CPI

USD: DXY -0.1%; 98.05

• Relatively rangebound trade this morning with a slight negative bias and price action contained to either side of the 98.00 mark. Currently in a narrow 97.99-98.32 parameter vs yesterday's 97.77-98.19 range.


• The theme over the last couple of days has been geopolitics, with deliberations over the Russia-Ukraine war in Washington concluding for now. Overall, there has been no breakthrough in yesterday's discussions, although talks may advance with a possible Zelensky–Putin meeting in two weeks, their first since the war began. Despite the mild optimism, betting markets remain pessimistic, with Polymarket pointing to a 38% chance of a Russia-Ukraine ceasefire this year.


• The focus for now turns to FOMC minutes on Wednesday ahead of Chair Powell's commentary on Friday at the Jackson Hole Symposium.


• Today, dovish dissenter Bowman is due to give remarks on Bloomberg TV at 15:00 BST. Desks expect questions on whether she will vote on a 50bps rate cut.


• Analysts at ING "suspect the dollar may lose some support as we approach tomorrow’s FOMC minutes – the risk is more than two members voicing openness to cuts – and Jackson Hole."

EUR: EUR/USD +0.1%; 1.1676

• Holding a mild upward bias after finding support at its 50 DMA (1.1641) following yesterday's slide under 1.1700, with very little newsflow from the bloc aside from the comments from various European leaders following the multilateral meeting on Ukraine at the White House.


• On that note, the meetings were broadly seen as a modest "step forward" by markets, characterised by losses in defence stocks, oil, nat gas, and modest gains in EUR - albeit the magnitude of price action is modest.


• No move seen on EZ current account data this morning.


• EUR/USD resides in a current 1.1640-1.1685 range with the 50 DMA at 1.1641.

JPY: USD/JPY -0.1%; 147.63

• Modest gains in the JPY, albeit in tandem with USD weakness, with little in terms of fresh catalysts from Japan.


• USD/JPY trades in either side of 148.00 in a 147.53-148.11 parameter, vs yesterday's 147.06-147.99 range, with the 50 DMA at 146.60 and the 200 DMA at 149.22.

GBP: GBP/USD +0.1%; 1.3518

• GBP continues to struggle for direction as newsflow from the UK remains very quiet, although there were reports that UK Chancellor Reeves is considering replacing stamp duty with a new property tax.


• GBP/USD trades in a 1.3486-1.3529 range (vs yesterday's 1.3501-1.3568), with the 50 DMA at 1.3501 today.

Non-US Dollars: AUD/USD -0.1%; 0.6483. NZD/USD -0.1%; 0.5916, USD/CAD -0.1% 1.3818

• All non-US dollars modestly softer vs the USD, amid the tentative mood, lack of pertinent data and after proceeding sideways for the majority of the previous US trading session.


• That being said, CAD inflation will be released later today. Market pricing currently sees ~31% probability of a 25bps cut. Analysts at ING suggest "A rate cut is only fully priced in at the January meeting. We expect pressure on the BoC to cut coming both internally via deteriorating activity and labour market, and externally as the Fed resumes cuts in September. We think the next move by the BoC can therefore come as early as October, if not September, should data deteriorate."

19 Aug 2025 - 10:00- ForexEU Research- Source: Newsquawk