DXY Holds Near 98.8 as ECB's Two-Day Meeting Opens in Berlin

The US Dollar Index trades at 98.8190, down 0.05%, with the current session still open (roughly 14:00 New York, three hours from the close), so the figure can still move. Equities leaned softer alongside it: the S&P 500 eased 0.17% to 7697.40, the Dow fell 0.33% to 52928.80, and the Nasdaq slipped 0.17% to 26462.00, while the VIX ticked up 0.26% to 15.34. Gold fell 0.37% to 4389.97 and silver added 0.28% to 66.31. Against that backdrop the dollar's moves against individual majors were modest and all pointed the same way — a marginally softer dollar — with no single pair driving the index.

Treasury yields drifted higher across the curve on the day: the 3-month rose 2.1bp to 3.778%, the 5-year added 1.1bp to 4.561%, the 10-year gained 0.8bp to 4.792%, and the 30-year edged up 0.4bp to 5.250% — all modest moves led by the front end. The Fed funds target remains 3.50-3.75%, with the live policy debate centered on the possibility of a hike rather than cuts. Friday's stronger-than-expected August payrolls (+162k versus roughly 53-56k expected) had prompted only a brief dollar bid that largely faded, reflecting lingering uncertainty over the Fed's path. Today's US calendar brings the ADP Weekly Employment Change, last at 11.8K.

EUR/USD trades at 1.1626, up 0.03%, holding above 1.1600 as the ECB's Governing Council meeting gets underway. GBP/USD sits at 1.3542, up 0.01%, in a narrow range with the BoE decision not due until September 17. USD/JPY is at 154.22, down 0.08%, with the yen underpinned by expectations of a Bank of Japan hike at its September 17-18 meeting. USD/CAD trades at 1.3783, down 0.22%, with the Canadian dollar firmer as Brent crude adds 0.78% to 97.03, even as WTI slips 0.51% to 92.20.

EUR/USD at 1.1626 is little changed, holding the same territory above 1.1600 it occupied in the prior session. The backdrop: euro-area inflation accelerated to 3.3% in August from 2.9% in July, the highest since September 2023, driven largely by a 14.3% jump in energy inflation. Markets price a high probability of a 25bp ECB hike to a 2.50% deposit rate (from 2.25%), and that outcome is now broadly priced into the euro, capping directional conviction into the decision. The ECB's Governing Council convenes for a two-day meeting in Berlin today, hosted by the Bundesbank, with President Lagarde due to speak at an official Bundesbank dinner tonight; the rate decision itself lands Thursday, followed by US PPI the same day and CPI Friday. Today's euro-area calendar carries French industrial production (forecast 0.2%) and a German 10-year bond auction.

Japan's preliminary Machine Tool Orders y/y prints at 16:00 (previous 50.4%). French Industrial Production m/m follows at 16:45 (forecast 0.2%, previous 0.1%). Germany holds a 10-year bond auction at 19:42 (previous 3.26|1.1). The ECB's Governing Council begins its two-day meeting in Berlin today ahead of Thursday's rate decision. Late in the US session, the ADP Weekly Employment Change is due at 22:15/22:16 (previous 11.8K). Looking further out, US PPI lands Thursday alongside the ECB decision, with US CPI following Friday.