[MARKET ANALYSIS] Mostly uneventful trade across G10s but EUR subdued post-PMI & German State CPI

The G10 forex market is experiencing muted trading, with the euro showing weakness following lower-than-expected PMIs and state CPI data from Germany, which suggests underlying economic pressures.

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Germany sells EUR 4.4547bln vs exp. EUR 6bln 2.00% 2027 Schatz: b/c 1.93x (prev. 1.7x), average yield 2.11% (prev. 2.05%), retention 24.22% (prev. 20.82%) 

[MARKET ANALYSIS] Mostly uneventful trade across G10s but EUR subdued post-PMI & German State CPI

[MARKET ANALYSIS] Bonds initially pressured before EGBs benefitting from German State CPIs ahead of the 13:00GMT mainland print

Morgan Stanley expects another period of softness for crude ahead, Brent to fall into the mid-high USD 50/bbl region for the majority of 2026. Expect the market to be in a "significant" surplus before then returning to balance in H2-2027.

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  • DXY resides in a narrow 98.161-98.425 range after recovering from worst levels on the back of some EUR softness (more below), although price action across FX thus far has been muted vs other markets (Equities, Fixed Income, Commodities). The US docket for today only consists of S&P Services and Composite Final PMIs alongside commentary from Fed's Barkin and Miran. Perhaps more importantly, US President Trump is due to give remarks later today.
  • EUR is on a softer footing, with early weakness commencing shortly after the revisions lower to the French PMIs, whilst downward revisions in German Composite and EZ PMIs further weighed on the single currency as some of the state CPI components came in cooler than implied for the mainland at 13:00GMT. EUR/USD resides towards the bottom end of a 1.1708-1.1743.
  • GBP/USD trades flat towards the bottom of a 1.3528-1.3568 range with little immediate move seen on the slight revision higher in UK Services and Composite PMIs, with EUR/GBP flat intraday in a narrow 0.8644-0.8660. USD/JPY is also flat in a 156.17-156.80 range and largely trading at the whim of the USD. Antipodeans also see little price action but AUD continues to be supported by the recent rally in copper and gold.
Context

This subdued euro impact has kept the DXY range-bound, indicating limited volatility across major currency pairs, although attention will pivot towards upcoming U.S. economic data and comments from President Trump. The overall market dynamics hint at a cautious sentiment ahead of potential developments in U.S. monetary policy.

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