Global FX: EU deep dive, US roundup, back to school themes

The Euro area is experiencing a growth resurgence, with economic activity surprise indices hitting three-and-a-half-year highs. This uplift, tracking at an annualized 1.3% to 1.4%, stems from German fiscal expansion in defense and infrastructure, alongside a stabilizing consumer sector. While the European Central Bank remains poised for a September rate hike, the inflation trajectory suggests a potential return to a balanced economic scenario. In currency markets, the Euro serves as a pro-cyclical growth asset, yet valuation models and persistent energy price pressures limit its immediate upside against the dollar. Consequently, investors favor carry trades, particularly DM-funded EM strategies. Meanwhile, U.S. economic resilience and recent Jackson Hole commentary reinforce a hawkish Federal Reserve bias, sustaining the dollar's strength as markets await further labor data and CPI prints to gauge the future path of interest rates.