[MARKET ANALYSIS] DXY pressured after Bessent attempted to ease US-EU tensions, GBP little moved on UK jobs data

• DXY is on a weak footing this morning, and currently trades at the bottom end of a 98.46-99.13 range. To recap, overnight, President Trump threatened a 200% tariff on French wines/champagne after French President Macron rejected his invitation to join his latest peace initiative. Thereafter, Trump said the UK is acting with “great stupidity”, following the Chagos deal.
• The largest bout of pressure for the Dollar was after Treasury Secretary Bessent called for calm and reminded markets that US-EU relations have been strained before, but eventually worked out. This seemingly poured some cooler water on the situation, and the index fell from around 98.85 to a current session low of 98.46.
• The recent pressure in the USD has helped to push G10s higher across the board; CHF tops the leaderboard, the EUR resides near highs beyond the 1.1700 mark, whilst USD/JPY has slipped below the 158.00 mark to make a trough at 157.58. Overnight, the JPY was shunned, alongside aggressive selling in JGBs, spurred by increased bets of unsustainable fiscal policy after PM Takaichi called snap elections and the fiscal commentary from parties since.
• Elsewhere, Cable also sits towards session highs and within a 1.3410-1.3491 range. Earlier, the November jobs report showed a tick higher in the unemployment rate, whilst the wage components remained elevated. A knee-jerk lower was seen in the Pound, but this pared almost immediately, given the narrative around a summer-cut has not really shifted for the BoE.

The DXY is pressured primarily due to heightened US-EU tensions following President Trump's provocative remarks, although Treasury Secretary Bessent's call for calm has provided some relief. This dynamic suggests ongoing uncertainty in the Forex market, particularly affecting the USD and lifting G10 currencies, including the EUR and CHF. Meanwhile, the UK jobs data had a muted impact on GBP, indicating that market focus remains more on geopolitical factors than domestic economic indicators.