The markets are off to a slow start, with low vol summertime trading still overshadowing broader developments, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret note.

USD little changed as attentions shifts to Powell comments due Friday

"There is clearly much to digest and understand from Friday’s Trump/Putin meeting—details may become clearer with today’s gathering in Washington—but implications for markets remains opaque at this point. Instead, investors are likely to focus more on developments ahead. There are some US data reports out over the next few days but the key focus for markets will be the late week Jackson Hole event and Fed Chair Powell’s speech on Friday (10ET) to see if this year’s comments telegraph coming rate cuts in the way that his 2024 remarks did."

"With many uncertainties to be resolved for policymakers, it’s not clear that Powell will feel he is able to provide as much certainty on the policy outlook this time round, however. Note that swaps continue to shade rate cut expectations fractionally, with 20-21bps of easing priced into the September contract this morning as markets digest last week’s US inflation data."

"The USD itself is narrowly mixed on the day, leaving the DXY holding around the ranges seen late last week. We remain negative on the longer run outlook for the USD (the Fed will—eventually—ease even as inflation is likely to remain sticky, US growth momentum will slow, fiscal policy is unsustainable) but more range trading is likely in the short run."