SWAPS: Long End German Spreads Back Towards Flat

Corrects for pre-auction midprice.

• Follows yesterday's drift into the Monday close, EUR/USD is higher early Tuesday, but the recent range is being largely respected. Near-term focus remains on the tentative progress made at the meeting between President Trump, European leaders and Ukraine's Zelenskyy in the Oval Office yesterday. The so-called 'coalition of the willing' is now due to be holding conferences later today, at which the topic of security guarantees is highly likely to be discussed. The shape and structure of these guarantees could have a material impact on the sustainability of any peace deal or ceasefire.
• Following yesterday's sharp gains for the UK yield curve, GBP still appears fragile. GBPUSD has pulled back from its latest highs but a bull cycle remains intact. Recent gains resulted in a breach of resistance at 1.3589, the Jul 24 high. Sights are on 1.3636, the 76.4% retracement of the bear leg between Jul 1 and Aug 1.
• The Canadian inflation print is set for release later today, at which markets expect core CPI to tick higher on a trimmed mean basis to 3.1% from 3.0% - a release that should again feed into the October rate decision pricing - which currently sits close to 50/50 on the potential for a 25bps cut. Ahead of the print, USD/CAD remains toward the top-end of the recent range, with the 1.3831 level the short-term bull trigger. Clearance here puts the price at the best level since early August.
• Outside of the Canadian inflation print, US housing starts and building permits are due for release. Fed's Bowman is set to speak again, with broader focus still on Powell's appearance at Jackson Hole later in the week.