[MARKET ANALYSIS] G10s flat against the Buck into Warsh's Jackson Hole address; EUR and GBP digest political updates

• G10s lack a bias ahead of the Warsh Jackson Hole speech with **most currencies flat vs the USD. **
• DXY ekes modest gains after surpassing the 200DMA of 99.16 ahead of Fed Chair Warsh's speech. Performance across majors is lacklustre with most currencies weaker, albeit small in magnitude.
• Into the speech, some analysts have suggested that the market could again be left disappointed; Saxo Bank says the title of the forum suggests that Warsh will deliver thoughts on the potential use of stablecoins for financial system plumbing rather than the Fed’s thoughts on interest rates - Previous Fed chairs have used the forum to signal upcoming policy actions. However, Warsh has begun his term with a bias against issuing any forward guidance, and has made the case that such guidance can shackle officials to their earlier forecasts, and his approach of little guidance will allow markets to interpret the data themselves.
• MUFG says the closest historical comparisons to today’s speech are “probably 2008 or 2016” given the level of uncertainty, which both garnered 0.7% move in EUR/USD - FX options price a 46pip move in EUR/USD today, lower than the historicals that MUFG refers to.
• While OATs saw some weakness at the open, EUR was steady throughout the French Presidential debate. Focus now shifts to Fitch’s rating on France this evening, seen unchanged, and the Socialist party which are set to unveil demands for France’s 2027 budget over the weekend. EUR/USD likely at the whim of the Buck into the highly anticipated Warsh speech, 200DMA c. 10 pips below will likely support the pair for the moment.
• GBP/USD is flat but off worst levels after finding support at 1.3580. A couple updates on the domestic political front. The FT reported UK Chancellor Healey will shelve defence spending targets when presenting the October budget, a move which could save as much as GBP 10bln/year, based on OBR forecasts. It was separately reported that there could be potential modifications to council taxes, though no GBP move was seen on this reporting.
• In EMFX, KRW continues to rally vs. the USD following the BoK meeting earlier this week which saw strong upward revisions to growth forecasts. ING writes there is “an outside risk to 1350” in USD/KRW, a level not seen since June 2025.

Jackson Hole addresses from sitting Fed officials have historically split into two categories: those used to preview policy, which have driven outsized G10 moves, and thematic speeches on plumbing or framework, which have tended to leave FX ranges intact. Pre-positioning into such events typically compresses ranges beforehand and then resolves through the dollar leg, with EUR/USD the usual cleanest expression given its liquidity and the proximity of its 200-day average as a reference. Where a chair signals a deliberate retreat from forward guidance, the practical consequence in past episodes has been higher sensitivity to each data print, since the market is left to do the forecasting work itself. Options-implied moves priced below the bank-cited historical comparables is the classic setup for either a volatility undershoot or a belated repricing, and the distinction worth drawing is between a speech on stablecoins and one on the rate path: only the latter re-prices the front end and the dollar with it. Secondary threads here are the France sovereign rating review, which in past reviews has mattered for OAT spreads more than for EUR directly unless a cut materialises, and UK fiscal reporting ahead of an autumn budget, where gilt and sterling reactions have historically awaited concrete numbers rather than press trails. KRW strength on upgraded central bank growth forecasts fits the established pattern of EM Asia high-beta outperforming when domestic policy signals turn less dovish.