FX markets remain relatively calm despite another sharp rise in oil prices, with investors continuing to focus more heavily on interest-rate expectations and incoming economic data than geopolitical headlines. Brent crude has climbed back above $91 a barrel as prospects for a resolution to the US-Iran conflict deteriorate, but the reaction across major currencies has so far been contained.

The dollar has recovered slightly this morning after falling to a ten-week low on Monday, although the broader August trend remains one of softer US rate expectations following weaker employment, inflation and retail sales data. Sterling has been little changed following this morning’s mixed UK labour report, while the euro remains close to an important technical area around 1.1570 against the dollar. Attention now turns to tomorrow’s UK inflation figures and Federal Reserve minutes before a broad set of global PMI releases on Friday.

FX markets begin the week with the dollar on the defensive after another run of softer US data encouraged investors to scale back expectations for further Federal Reserve tightening. July inflation eased, retail sales disappointed and short-dated Treasury yields moved lower, allowing sterling and the euro to extend their recent recoveries against the greenback. Markets now see only around a 30% probability of a September Fed rate increase, a sharp reversal from expectations at the end of July.

The picture is not entirely straightforward. Longer-dated US borrowing costs remain elevated as investors continue to demand greater compensation for inflation and fiscal risks, limiting the extent to which lower near-term rate expectations translate into broad dollar weakness. This week shifts the focus towards a heavy UK calendar, Wednesday's Federal Reserve minutes and Friday's global PMI releases, with relative interest-rate expectations likely to remain the main driver across the major currency pairs.

FX markets are ending the week with a broadly constructive tone, with sterling among the better-supported major currencies after resilient UK growth data reinforced confidence in the domestic outlook. Second-quarter GDP met expectations at 0.4%, while a stronger-than-forecast June reading suggested the economy retained more momentum than many had anticipated. Beyond the UK, global equities remain firm, volatility is subdued and investors continue to favour higher-yielding currencies. The revival of the AI trade has helped lift risk appetite, while US rates are signalling softer near-term Fed expectations without pointing to a material slowdown in growth. For FX, the combination of resilient activity, firm long-end yields and supportive risk sentiment continues to favour carry, leaving sterling well placed heading into the end of the week.

Currency markets remain caught between softer US data, resilient global risk appetite and lingering inflation risks from energy. July’s US CPI release reinforced the view that price pressures are gradually cooling, while last week’s weaker employment figures have also encouraged some trimming of Federal Reserve tightening expectations. The reaction, however, has been measured rather than decisive.

FX markets are starting the session with plenty of potential catalysts but little conviction. The dollar remains softer after last week’s payrolls disappointment, EUR/USD volatility is close to historic lows, and sterling is holding firm despite renewed scrutiny of UK fiscal policy and long-dated gilt yields. Today’s US CPI release is the immediate focal point and could determine whether recent moves extend or fade. A softer inflation print would reinforce lower US yields and support risk-sensitive currencies, while an upside surprise could quickly revive dollar demand. Beyond the data, energy prices and fiscal policy remain important secondary themes, particularly for the UK, where higher oil prices, inflation concerns and government borrowing expectations risk becoming increasingly intertwined.

FX markets are starting the week with a defensive tone as higher energy prices, rising global bond yields and uncertainty over the inflation outlook pull monetary policy expectations back into focus. Renewed concerns around shipping through the Strait of Hormuz have lifted Brent crude above $88 a barrel, adding another layer of inflation risk just as softer US labour data had encouraged markets to dial back expectations for further Federal Reserve tightening. The result is a more finely balanced backdrop across G10 currencies, with rate differentials, growth resilience and sensitivity to higher borrowing costs once again driving relative performance. With today’s calendar offering little direction, positioning is likely to remain cautious ahead of Wednesday’s US CPI release.

FX markets enter the new week with rate expectations firmly back in control after a softer US labour report prompted investors to reassess the path for global monetary policy. Lower Treasury yields and reduced expectations for further Federal Reserve tightening have taken some support away from the dollar, allowing both sterling and the euro to recover, although neither move yet looks strongly driven by domestic fundamentals. The wider picture remains one of selective dollar weakness rather than a decisive shift in currency trends, with investors reluctant to extend positions before a busy run of inflation and growth data. US CPI is now the key near-term catalyst, while UK GDP and evolving rate differentials should help determine whether recent moves develop into broader FX trends or remain short-lived corrections.

FX markets are ending the week with rates back in the driving seat. Early optimism over potential progress on reopening shipping routes through the Strait of Hormuz pushed oil sharply lower, improved risk appetite and encouraged flows into higher-beta currencies. That move has since lost momentum, with US yields climbing and expectations of tighter Federal Reserve policy returning to the forefront. The result is a more two-way market, with the dollar regaining ground, sterling struggling for direction and the euro losing some of its recent momentum. Today’s US payrolls report now represents the clearest near-term catalyst for a fresh move across major currency pairs.