EU FINANCIALS: Monte dei Paschi & Mediobanca - Moody's Ratings Changes       

Estox 50: -0.04%, Dax: -0.21%, CAC: +0.12%, FTSE -0.10%, SMI -0.16%.

• The Dollar start the session on the front foot, this has not been seen in nearly a Week, the standout early mover is the Yen.
• USDJPY already trades in a 100 pips range, and while some overnight Desks have put it on BoJ Himino not giving any clue on the Timing in Rate moves, the main story and concerns is more political.
• Japan's ruling Party will disclose Today why it lost seats at the July Upper House Election, and if a review is finalized, lawmakers will be expected to submit request on September the 8th for a leadership Election.
• There are no set time or Date for a LDP meeting in Sept as of Yet.
• The Yen is extending broader lows against the USD, EUR, GBP, AUD as Europe comes in.
• Next immediate resistance in USDJPY comes at 148.18.
• We highlighted the USDSEK chart Yesterday, and the Scandies outperformed, as local FX Desks noted, Local demand combined with the US out, taking away some Dollar demand, saw the Scandies outperforming.
• USDSEK found support right on the noted 9.3792 level, the June low and lowest level since April 2022.
• The SEK is flat in early trade, but hovers near that June low in USDSEK.

The Euribor-implied terminal rate, currently indicated by the M6 contract, is up 2bps to 1.91%, the highest level since before the April 2 Liberation Day tariff announcement. The combination of relatively resilient economic data, a lack of downside inflation surprises and cautious ECB-speak has seen markets gradually warm to the idea of a 2% terminal rate, even as analysts still lean in favour of one more 25bp cut on net.

• The light hawkish reaction in Euribor futures to ECB Executive Board member Schnabel’s interview with Reuters has stuck, with ERH6 currently at fresh multi-month lows at 98.075.
• ECB-dated OIS price 7bps of easing through year-end, with 17.5bps of easing priced through June 2026 (up to 1.5bps more hawkish vs yesterday's close).
• Today’s regional calendar is headlined by the Eurozone-wide August HICP reading, but country-level data released over the past few days does not suggest a major surprise is imminent.