FOREX: Heavy APAC Equity Close Weighs on Risk, But Floor Under USD For Now

MEF buys back E5bln of the following bonds:

• E1.025bln of the 3.50% Jan-26 BTP (ISIN: IT0005514473) at price 100.425
• E695mln of the 4.50% Mar-26 BTP (ISIN: IT0004644735) at price 101.076
• E845mln of the 0% Apr-26 BTP (ISIN: IT0005437147) at price 98.921
• E835mln of the 0.50% Apr-26 CCTeu (ISIN: IT0005428617) at price 100.336
• E1bln of the 1.60% Jun-26 BTP (ISIN: IT0005170839) at price 99.705
• E600mln of the 0% Aug-26 BTP (ISIN: IT0005454241) at price 98.317

• Ahead of the keenly awaited September Fed decision, the US dollar trades on a more stable footing, with the dollar index 0.11% higher on the session. However, more broadly the DXY is consolidating its steep losses this week and resides just 35 pips away from the year’s lows, printed on July 01.
• Moderate weakness for equities has prompted some further underperformance for the likes of AUD and NZD, although both are only down around 0.2% on the day at typing. No great surprises within the UK CPI data to alter BOE expectations has kept GBPUSD unchanged on the day.
• Cable trades in a narrow 29 pip range but continues to consolidate its firm break above 1.3595. With both the Fed and Bank of England over the next two sessions, traders will be keeping a close yee on whether topside momentum can continue for the pair. Immediate resistance at 1.3681, the July 4 high, has capped the advance so far. Above here, 1.3789 remains the key resistance for the pair, the July 1 high.
• Overall, EURUSD has also consolidated its impressive move higher to fresh cycle highs on Tuesday, oscillating either side of 1.1850 throughout the morning. Yesterday’s highs of 1.1878 will be the immediate level to watch as we approach the Fed, before more meaningful targets at 1.1923 and 1.2000.
• USDJPY had a significant low print overnight, matching a key support level to the pip at 146.21, the Aug 14 low and a bear trigger. A break of this level would highlight a stronger bearish threat and highlight a range breakout. While spot did subsequently bounce to 146.70, the pair is tracking back below 146.40 as we approach the NY crossover.
• Both the Bank of Canada and FOMC rate decisions highlight the economic calendar on Wednesday, with both expected to cut rates by 25bps. US building permits and housing starts data will cross, with New Zealand GDP kicking off Thursday’s APAC schedule.