EUROPEAN FX UPDATE: USD firmer ahead of a slew of Fed speakers, GBP pressured on political uncertainty

DXY: +0.1%, 99.58

• DXY is flat/modestly firmer and trades in a very busy 99.44 to 99.61 range, with newsflow exceptionally quiet today. Focus in the prior session was ultimately on the dire weekly ADP prelim estimate, which led to some pressure in the USD. Docket today thins out from a data perspective, but a slew of Fed speakers will take the spotlight; Fed’s Paulson, Bostic, Williams, Barr, Waller, Miran, Collins and Treasury Secretary Bessent are all on the docket.


• Markets remain focused on government shutdown developments. To recap briefly, the US passed a funding bill to end the longest-ever shutdown in the prior day – this was then voted 8-4 by the House Rules Committee to advance it to the House Floor for consideration. Expectations are for the bill to be passed (albeit subject to dissent); overall, this will keep the US government funded till at least January 30th.


• The implications of a government reopening are the end of negative growth impacts on the US economy, as well as the return of public data releases. GS and JPM both published their expectations of a data schedule, in which they view the delayed September NFP report to be published a few days after reopening. On the growth point, White House Economic Adviser said he thinks the US will return to growth by 3-4% by Q1 2026.


• WSJ Fedwatcher Timiraos writes that Fed officials are increasingly divided over whether to proceed with a December rate cut, with some prioritising inflation risks while others focus on labour market weakness. The split, one of the sharpest under Chair Powell, has clouded the outlook for further policy easing despite improving data visibility.

EUR: -0.1%, 1.1574

• EUR is essentially flat vs the USD. Failed to breach 1.16 to the upside in overnight trade, making a peak at 1.1588, to then fall back towards session lows of 1.1571. It is worth highlighting that the EUR is mildly stronger vs the broadly weaker GBP (which is suffering from political related pressure).


• European-specific newsflow has been exceptionally light today. Featuring an unrevised German inflation report, whilst Italian Industrial Output topped the most optimistic of analyst expectations. Docket should pick up later in the day, in the form of ECB speak via Schnabel (Hawk) and de Guindos (Dove) – no text release is expected from either.


• This afternoon, the French National Assembly is to hold the first reading on the Social Security articles, with reference to the suspension of pension reform, set to occur around 14:00GMT. Politico writes that the articles should be adopted.


• Thereafter, attention turns to the remaining time to debate the broader bill as part of its first reading. Despite the 20-day initial period expiring today, there are still several key components to discuss. Politico's sources believe the most likely outcome is that not all of the amendments will clear in time and as such no formal vote will occur. This sends the bill to the Senate, including the amendments that have passed in time, an outcome seen as favourable to PM Lecornu.

USD/JPY: +0.4%, 154.86

• JPY is the worst-performing G10 currency today, given the generally positive risk environment with other haven assets generally sold (ex-gold). ING opines that one reason to keep the USD/JPY higher, is Japan’s agreement to invest directly in the US. This continued pressure in the JPY has led to continued jawboning from the Japanese officials; overnight, Finance Minister Katayama said she has seen “one-sided and sharp foreign exchange moves” recently, adding that it is being watched with a “high sense of urgency”. Whilst in the past similar jawboning has helped strengthen the JPY, the comments overnight were unable to boost the currency today.


• Now USD/JPY is back on its way to approaching the psychological 155.00 mark, a level not topped since early February. Some desks have touted the 155.00 to 160.00 range as potential intervention levels, though ING thinks it is unlikely to come before the 160.00 mark.

GBP: -0.2%, 1.3125

• GBP is pressured vs the USD today, with regional political uncertainty on the forefront of traders minds. On that, in the prior session, The Guardian reported that Downing Street was fearing that some of the PM’s closest viewed PM Starmer as “vulnerable” to leadership change in the wake of the Budget. More recently, Wes Streeting has come out to clarify his support for Starmer, adding that he has not had talks with anyone, regarding any attempts to oust his leader.


• GBP was relatively unmoved and traded with a very slight downward bias overnight, but then saw some slight selling pressure soon after the European cash open. Currently trading in a 1.3115 to 1.3158 range, with the trough today roughly 5 pips below the low from Tuesday.

Antipodeans: AUD +0.1%, NZD U/C

• Antipodeans are mixed today, with the Aussie sitting towards the top of the G10 pile whilst the Kiwi is essentially flat. Nothing really driving the modest outperformance in the Aussie today, but it is worth highlighting some massive option expiries in the Aussie; 0.6495-0.6505 (2.4bln), 0.6525-30 (1.2bln), 0.6550-60 (906mln).

12 Nov 2025 - 10:00- ForexEU Research- Source: Newsquawk