North American FX Open - US GDP, initial claims the focus

EUR sales were a key feature of price action overnight after all state German CPI reads revealed deflationary outcomes for August, with results varying between -0.1% m/m and -0.3% m/m across the board.

Spanish inflation also eased to its lowest level in a year, with CPI advancing 2.4% y/y vs the 2.5% estimate. Core CPI moderated to 2.7%.

In response, ECB rate-cut bets increased (68bps of easing seen by year-end) and EUR/USD sales quickly picked-up, with sizable bids within 1.1100-20 filled before leveraged names on the offer spurred losses to a 1.1072 low.

EUR/AUD also suffered a sharp selloff as yield differentials once again took the reins, with AUD/USD in turn making strong gains to highs of 0.6824. Exporter buying was cited above the figures, while AUD gains this week have otherwise coincided with a strong iron ore rally. Iron ore has jumped by about 10% in 10 days to breach $100 a ton.

Meanwhile in Sweden, Q2 GDP came in better than expected at -0.3% q/q vs the -0.8% estimate, while that for Q1 was revised up to 0.8% growth vs 0.7% originally. Annual GDP now stands at 0.5%, well above the 0.0% estimate and vs a revised up 0.9% Q1 read (was 0.7% initially). Swedish retail sales put in a decent 0.5% m/m gain in July, though endured a downside revision to the June read to -0.8% vs -0.3% originally. The Economic Tendency Survey for August was slightly softer than last at 94.7 vs 94.9 in July. Consumer confidence came in at 96.3 vs a revised lower 96.2 last, while that for manufacturing inched up to 97.1 vs 97.0 last.

Also overnight, USD/YEN gains paused after the Japanese government upgraded its monthly economic assessment for the first time in 15 months, citing signs of a recovery in consumption. Options related offers seen close to a 145 strike in USD/YEN

Kiwi otherwise lead the G-10 gains after business confidence rose to a 10-year high following the RBNZ rate cut earlier this month.

With regards to tech stocks, some deemed the Nvidia Corp earnings report a disappointment of sorts, and while revenue at $30.0bn beat the vs $28.7bn expected, traders instead focused on an underwhelming forecast and news of production snags with its much-awaited Blackwell chips.

USD bears weren't exactly inspired by Bostic, who stated overnight that it 'may be time' to cut rates but he’s still looking for additional data to support lowering interest next month. Bostic is scheduled to speak again later.

US data is also a risk later, with Q2 GDP, initial claims and pending home sales all due.

Specs also await the overall inflation read from Germany. Note, CPI reads for France, Italy and EZ as a whole are out Friday - latter forecast at 2.2% y/y vs 2.6% in July.

ECB's Nagel is also a scheduled speaker today.

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