EUROPEAN FX UPDATE: Uneventful trade across G10 FX with DXY in a tight range ahead of more trade headlines

USD: DXY U/C; 97.41

• Holding a mild upward bias in a narrow 97.271-97.469 range at the time of writing. Thus far, macro newsflow relatively quiet ahead of the US entrance, with macro newsflow likely to be dictated by more tariff headlines.


• FOMC minutes yesterday were a non-event, and stated that most saw some reduction in the Fed funds rate this year as appropriate, and a couple said they would be open to considering a cut as soon as July if data evolved as they expected. However, some saw the most likely appropriate path would involve no rate cuts in 2025, while those participants cited recent elevated inflation readings, elevated business and consumer inflation expectations, and ongoing economic resilience. Furthermore, several said the current Fed funds rate may not be far above its neutral rate, and all participants viewed it as appropriate to maintain the Fed funds rate at the current target range.


• Analysts at ING suggest, "Things can change a lot in the next three weeks, and our baseline call remains that the dollar will show significantly reduced interest in tariff noise. Data remains a bigger driver, and the potential FX impact of next week’s CPI figures still looks much bigger than trade news."


• Aside from that, very little in terms of fresh updates for the Buck. Ahead and in terms of scheduled events, traders will be eyeing the weekly Jobless Claims, which the desk at ING previews "Initial claims have come in lower than expected in the previous two weeks, but the whole of June saw upward surprises in continuing claims – a measure of the difficulty to re-enter the workforce."


• On the speaker's slate, Fed's Waller (Voter, Dove) to speak on the balance sheet; Fed's Musalem (2025 voter) will speak on the economy and monetary policy; Fed's Daly (2027 voter) will give remarks on the outlook.


• DXY resides in a USD 97.271-97.469 range vs Tuesday's 97.176-97.837 band.

EUR: EUR/USD +0.1%: 1.1733

• Relatively uneventful and moving at the whim of the Buck in the absence of macro catalysts.


• On the trade front, the EU is discussing car import quotas and export credits with the US in trade talks, according to sources cited by Reuters. Meanwhile, European Commission President von der Leyen said they are working non-stop to find a US agreement, to keep tariffs as low as possible.


• In terms of data, German June final CPI and HICP were unrevised, with both at 2.0% Y/Y, with the docket ahead also light.


• EUR/USD trades in a 1.1713-49 range, within Tuesday's 1.1682-1.1765.

JPY, CHF: USD/JPY U/C; 146.30; USD/CHF U/C 0.7939

• Flat trade across the traditional havens amid a lack of pertinent drivers this morning as traders await further updates on the US trade front.


• Overnight, USD/JPY initially continued its recent pullback and briefly fell to sub-146.00 territory before paring the moves, while there was a lack of surprises from the latest Japanese PPI data, which matched estimates on a M/M and Y/Y basis.


• USD/JPY resides in a USD 145.73-146.46 range after briefly dipping under its 100 DMA (145.82), USD/CHF trades in a narrow 0.7920-0.7950 range.

GBP: GBP/USD +0.2%; 1.3604

• Gaining despite a lack of newsflow for the UK, possibly as Britain is somewhat out of the US tariff firing line amid the deal inked earlier in the year, whilst EUR/GBP also found resistance near yesterday's peak.


• Domestically, UK homebuyer demand rebounded to a six-month high in June, with the RICS index rising to +3 (prev. -22 in May); it marks the first positive reading since December, signalling a stabilisation in the housing market.


• Ahead, BoE's Breeden is due to speak, although remarks may be non-incremental, with the speech dubbed ‘Weathering the storm: stability in a changing climate’.


• GBP/USD trades in a 1.3587-1.3619 range at the time of writing, matching Wednesday's high before pulling back a touch.

Antipodeans: AUD/USD 0.3%; 0.6550. NZD/USD +0.2%; 0.6012

• Both slightly firmer, with the Aussie also propped up by a surge in iron ore and copper prices, whilst amid speculation, a high-level meeting will be held next week to help revive the property sector, according to Bloomberg.


• AUD/USD resides in a 0.6532-0.6562 range, whilst NZD/USD trades in a 0.5998-0.6020 range.

BRL, CNH

• BRL on a weaker footing after US President Trump later announced a 50% tariff for Brazil and initiated a Section 301 investigation on Brazil due to its "continued attacks on the Digital Trade activities of American Companies". USD/BRL was catapulted from 5.4448 to 5.6047 yesterday.


• CNH saw modest strength as the gauge of Chinese property shares posted the largest gain in nine months amid speculation that a high-level meeting will be held next week to help revive the property sector, according to Bloomberg.


• The CNH then saw modest weakness amid reports that Vietnam is said to be preparing new rules and penalties to crack down on trade fraud and illegal transhipments, with focused inspections on Chinese products, which face high tariffs in the US. As a reminder, the US imposed 20% on all trade and 40% on transhipments to Vietnam.

10 Jul 2025 - 10:05- ForexData- Source: Newsquawk