European leaders remain cautiously hopeful after a White House summit, but note Russia’s lack of clear commitment to peace in Ukraine. Analysts see a full peace deal as unlikely, as Trump’s push for a comprehensive settlement aligns more with Russia, creating tension with Ukraine and Europe, while security guarantees could face Russian resistance. A potential Trump-Putin-Zelensky meeting could pave the way for a peace framework if common ground is found. Meanwhile, markets are cautious ahead of Fed Chair Powell’s Jackson Hole speech, with focus on today’s U.S. PMI data and FOMC minutes for insights into growth, inflation, and potential rate cuts.

Japan’s July CPI, due August 21, is expected to stay high at 3.1%-3.3%, with core measures above the Bank of Japan’s 2% target, driven by rising food and household costs. The BOJ’s upward revision of inflation forecasts and discussions of potential rate hikes bolster expectations for an October rate increase, as the upcoming Outlook Report could justify policy shifts. Recent data shows Japan’s exports fell sharply by 2.6% year-on-year in July, with a trade deficit of ¥117.5 billion, raising concerns about economic growth amid U.S. tariffs, despite strong domestic investment indicated by robust machine orders.

High-beta G10 currencies, including the Australian dollar, weakened against the U.S. dollar after a Nasdaq selloff dampened risk appetite, though traders are likely to avoid bold moves before Fed Chair Powell’s Jackson Hole speech. Australia’s Westpac Consumer Confidence Index hit a three-and-a-half-year high of 98.5 in August, driven by the Reserve Bank’s third rate cut of 2025 and optimism about lower mortgage rates, with broad-based gains in family finances, economic outlook, and reduced unemployment fears. Despite this, AUDUSD remained subdued as markets await U.S. PMI data and FOMC minutes for clues on Federal Reserve rate cut plans, which could significantly influence the currency’s direction.