ForexLive European FX news wrap: Dollar holds steady amid more cautious mood

Headlines:

• Risk appetite picks up after a sluggish start to European morning trade
• Weekly update on interest rate expectations
• What is the distribution of forecasts for the US PPI?
• ECB’s Nagel: US tariffs could push Germany into recession this year
• ECB’s Rehn says should aim at negotiated solutions for US tariffs
• PBOC says will cut interest rates and RRR at the proper time
• Eurozone January industrial production +0.8% vs +0.6% m/m expected
• Japan’s largest industrial union says its members received average 5.37% increase in wages
• Germany’s Greens party official says no progress yet in talks on debt plans
• Germany’s Greens party official says there is no rapprochement in talks so far
• US envoy Witkoff has arrived in Moscow
• IEA trims world oil demand forecast for the year, sees oil market surplus for 2025

Markets:

• JPY leads, AUD and NZD lag on the day
• European equities mixed; S&P 500 futures down 0.3%
• US 10-year yields up 1.9 bps to 4.335%
• Gold up 0.5% to $2,946.73
• WTI crude down 0.3% to $67.49
• Bitcoin down 0.4% to $82,793

The risk mood continues to stay in a fragile spot on the week, as the attention turns towards more US data later.

Equities struggled in early European trading before a slight recovery mid-way through the session. But as we move closer to US trading now, the mood music is looking softer again as US futures dip lower following a brief jump to erase earlier losses.

S&P 500 futures were down by around 0.7% at one point earlier before paring all of that but is now back down by 0.3%. The slight bounce yesterday is not indicative of much with the index still being down by roughly 3% this week. Dip buyers definitely have their work cut out for them.

Similarly, European indices opened lower before moving up during the session. At the highs, the DAX held 0.4% gains but is now back down by 0.4% while the CAC 40 is now flat after turning earlier losses into gains of around 0.6% at one point.

In FX, the dollar is keeping steadier overall amid the more cautious sentiment in the market. USD/JPY did fall early on to 147.60 but is now back up a little to 147.95, though still down 0.2% on the day.

Meanwhile, EUR/USD is down a touch hovering around 1.0860-70 levels while the antipodes are lagging with AUD/USD seen down 0.5% to 0.6285 currently.

In other markets, gold is shining brightly amid all the mayhem as it sticks with the recent rebound to $2,946 levels now – within striking distance of fresh record highs.

It’s now over to US trading again to see how the chaos unfolds with PPI data and weekly jobless claims to add to Trump’s tariffs and more geopolitical headlines.

This article was written by Justin Low at www.forexlive.com.