Brown Brothers Harriman’s (BBH) Elias Haddad expects the Federal Open Market Committee (FOMC) to deliver a 25 bps hike to 3.75%-4.00%, its first move since July 2023, justified by above-target inflation and a solid labor market.

Societe Generale economists Sam Cartwright and Michel Martinez analyze how renewed supply chain disruptions, including conflict in the Middle East, may affect Euro Area prices.

Scotiabank strategists Shaun Osborne and Eric Theoret highlight a weaker Japanese Yen (JPY), down 0.7% versus the US Dollar (USD) and underperforming G10 peers alongside New Zealand Dollar (NZD) and Swedish Krona (SEK).

Pfister and Liebke analyse 30 years of FOMC meetings to separate interest rate surprises from forward guidance shocks and their effect on the US Dollar and G10 currencies.

Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is weaker, down about 0.5% versus the US Dollar (USD), as risk aversion supports broad USD strength. Yield spreads imply a fair value near 1.1633, while data have been light ahead of Tuesday’s ZEW survey.

The US 10-year Treasury yield has breached the 5% threshold for the first time since 2023, rising by over 4 basis points as investors had almost fully priced in a 25-basis-point rate hike by the Fed on September 16. At the time of writing, the US 10-year is at 5.006%

Royal Bank of Canada (RBC) economist Abbey Xu notes that Canadian inflation stayed at 3% year-over-year in August, with Food and energy components still elevated but easing somewhat.

ING economists James Knightley, Padhraic Garvey and Chris Turner now expect a 25bp Federal Reserve rate hike in September following Chair Kevin Warsh’s Jackson Hole remarks.

Scotiabank strategists Shaun Osborne and Eric Theoret note the British Pound (GBP) is softer against the Dollar but still outperforming most G10 currencies in a risk-off environment. Markets expect a hawkish hold from the Bank of England (BoE) on Thursday, with a possible 25 bp hike in November.

Commerzbank’s FX Research team, including Charlie Lay and Dr. Henry Hao, highlight that Brent crude has surged on Strait of Hormuz hostilities but see scope for gradual de-escalation in coming months.

Nomura’s Global Markets Research team, led by Josie Anderson, George Buckley and Andrzej Szczepaniak, notes that Sweden’s 13 September election remains too close to call, with the centre-left only narrowly ahead.

Commerzbank economists note that August US CPI data were broadly in line with expectations but still too high for the Federal Reserve. They stress excessive underlying price pressure and say the Fed has already signaled readiness to hike.

Brown Brothers Harriman’s (BBH) Elias Haddad expects the Bank of England (BoE) to keep its policy rate at 3.75% with a likely 6–3 vote, as easing United Kingdom (UK) wage and services inflation allow a pause.

ING strategist Frantisek Taborsky outlines a busy Central and Eastern Europe (CEE) data calendar but stresses that the Czech National Bank (CNB) meeting is the key event. He expects rates to stay at 3.75% with dovish guidance, contrasting with still-hawkish market pricing.

Deutsche Bank’s Jim Reid and team say the Fed’s decision on Wednesday is the main market event, with their economists expecting a 25bp hike to 3.75%-4.00% and now forecasting 75bps of hikes over the next seven months.

European Central Bank (ECB) Executive Board member Isabel Schnabel said recent energy-price developments have been "quite concerning" as officials consider further interest-rate increases after last week’s move, Bloomberg reported.

According to a Reuters poll, the survey on September 9 showed that 86 of 101 economists expect the Federal Reserve (Fed) to hike interest rates by 25 basis points (bps) to 3.75%-4.00% on September 16. This is a dramatic shift from 65 of 93 economists expecting a hold in the previous poll.

Danske Bank’s Danske Research Team highlights a sharp move higher in Brent as escalating Middle East tensions threaten key supply routes. The report notes Brent’s jump above USD 107/bbl and warns that closure of Saudi Arabia’s East-West pipeline could endanger up to 4% of global Oil supply.

USD/JPY rebounds after posting modest losses the previous day, trading around 154.60 during European hours on Monday. The pair appreciates as the US Dollar (USD) gains amid rising oil prices and growing Federal Reserve (Fed) rate hike bets.

EUR/CAD depreciates further after paring its recent gains from the previous day, trading around 1.6030 during European hours on Monday.

European Central Bank (ECB) Governing Council member and Governor of the National Bank of Slovakia (NBS), Peter Kazimir, said during the European trading session on Monday that he is “increasingly concerned about gas and power prices”.

European Central Bank (ECB) Governing Council member and head of Lithuania's central bank, Gediminas Simkus, said during European trading hours on Monday that the possibility of monetary policy actions in every upcoming meeting cannot be excluded.

Societe Generale strategists note that India’s FX reserves surged by $44.9bn to a record $785.7bn in early September, largely due to Reserve Bank of India (RBI) mobilisation measures such as the FCNR(B) scheme.

Iran's Foreign Ministry Spokesperson said during the European trading session on Monday that reports about nuclear activity in Iran's Pickaxe mountain (Kolang Kouh) are baseless. The spokesperson added, “Saudi Arabia insisted for meeting between Tehran and Gulf powers in Oman not to take place.”

Brown Brothers Harriman’s (BBH) Elias Haddad notes that Canada’s August Consumer Price Index (CPI) will test the Bank of Canada’s (BoC) warning that upside inflation risks have increased. Headline CPI is expected to remain at 3.0% y/y, while core measures are seen hovering around 2%.

Canada’s August Consumer Price Index (CPI) figures will be the focus of attention when published on Monday.

NZD/USD falls after registering modest gains in the previous day, trading around 0.5780 during European hours on Monday. The pair depreciates as the US Dollar (USD) gains support amid aggressive Federal Reserve (Fed) rate-hike bets for Wednesday’s decision following hotter US inflation reports.

USD/IDR gains ground for the third successive day, trading around 17,700 during the early European hours on Monday. The pair appreciates as the US Dollar (USD) gains support amid aggressive Federal Reserve (Fed) rate-hike bets for Wednesday’s decision following hotter US inflation reports.

Commerzbank’s Michael Pfister highlights unusually strong UK growth in the first quarter and weaker outcomes later in the year, driven largely by services. He argues this seasonal distortion complicates Bank of England policy signals, limiting conclusions from July’s robust data.

Danske Research Team notes that equities advanced on Friday, leaving the broader market only about 1% lower for the week despite hotter US CPI, higher front-end yields and a sharp Oil rally. Cyclicals outperformed defensives and the VIX stayed below 16.