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• Although off its worst levels, the USD index remains lower on the session, hovering in close proximity to pre-NFP levels. Overall, this keeps the prevailing theme of a weaker greenback intact, and the DXY within range of the early June pullback low at 98.351 - a key level of support.
• Ahead of U.S.-China talks in London today, President Trump authorized Treasury Secretary Scott Bessent's team to negotiate away recent restrictions on the sale of a wide variety of technology and other products to China, according to people familiar with the matter. This is keeping risk sentiment buoyant to start the week.
• This cautious optimism is prompting AUD and NZD to outperform on Monday. NZDUSD has broken back above an important zone of resistance between 0.6025/40. Spot continues to threaten a daily close above the US election related highs, signalling scope for a more protracted recovery towards 0.6168, the 76.4% retracement of the Sep '24 - Apr '25 selloff. Initial resistance is seen at 0.6080, last week's high print.
• For AUDUSD, last Thursday’s close above 0.6500 was the highest in 6 months, and Monday’s resumption of strength keeps trend signals bullish. The pair’s recent climb signals scope for an initial climb to 0.6550, a Fibonacci retracement and the Nov 25 high.
• Elsewhere, the likes of JPY, EUR and GBP have all risen between 0.2-0.3% to start the week. USDJPY displayed its usual volatility in posting a near 100 pip range and has settled just below 144.50 as we approach the APAC crossover. EURUSD is consolidating back above 1.14 as markets continue to digest the latest ECB decision and await further US data, most notably – the May inflation release on Wednesday.
• Uk labour market data kicks off Tuesday’s calendar, while markets will remain sensitive to global trade developments.

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• The week ahead sees some important domestic events: the Spending Review, the release of labour market data, a speech by BOE ED of Markets Saporta and the release of the quarterly consumer BOE/Ipsos Inflation Attitudes Survey.
• We look at the main highlights of the Spending Review from a market perspective.
• We also look ahead to BOE ED of Markets Vicky Saporta's key speech on Wednesday.
• We preview this week's upcoming syndication and gilt auction.

Monday's Europe rates/bond options flow included:

• ERU5 98.18/12/06/00 put condor bought for 0.75 to 1 in 20.5k all day
• ERZ5 98.06/97.93 1x2 put spread bought for 1.75 in 6k
• ERZ5 98.25/98.1875/98.00/97.75 put condor, bought for 1.5 in 5k