Trump said US forces are conducting large-scale strikes on Iranian targets near the Strait of Hormuz and warned any Iranian retaliation would be met with heavier strikes.

ECB policymaker Nagel said the slowdown in euro-area core inflation in August is a positive signal, noting services inflation has eased and there is no sign yet of second-round effects. He said the outlook for next week’s ECB rate decision is relatively predictable and in line with markets; markets have fully priced a 25bp hike. Earlier data showed euro-area headline inflation rose to 3.3% in August, reinforcing the case for a Sept. 10 hike, while core inflation excluding food and energy unexpectedly fell to 2.4%.

Reserve Bank of India's net US dollar short position rose to $136.8 billion in July, an increase of $33.5 billion, driven largely by growth in contracts longer than one year, which increased from $64.2 billion to $91.5 billion. The central bank absorbed $72.8 billion through foreign-exchange schemes, including a special deposit plan for overseas Indians. While these inflows bolster FX reserves, they create future dollar liabilities when three- to five-year deposits mature and must be repaid.