GBP Boosted By Inflation Beat

USD Boosted By CPI Beat

The US dollar has been a little subdued so far today following solid gains made yesterday in reaction to better than expected US inflation numbers. US CPI for July printed 1.8% on the headline reading, vs 1.7% expected. Meanwhile, the core number came in at 2.2% vs 2.1% expected. However, despite some initial buying, USD remains capped by expectations of further easing from the Fed. The market is pricing in another cut by the October meeting.

Weak German Data Caps EUR

EURUSD has been a little higher against USD so far today. However, the outlook remains bearish given the expectations of easing from the ECB projected for the September meeting. The German data released today has compounded these expectations, with German GDP contracting over Q2. This comes on the back of a raft of weak sentiment data and highlights how severe the turndown has been in the eurozone.

GBP Buoyed By Better Data

GBPUSD has been a little higher against USD today also, buoyed by better than expected data. Following on from labor market data yesterday which showed wage growth having moved to post cycle highs of 3.9%, CPI today came out better than expected for July. Core printed 1.9% vs 1.8% expected and headline printed 2.1% vs 1.9% expected.

Equities Reverse (Again!)

Risk assets have softened again today. Yesterday, equities were buoyed by the unexpected announcement that some of the goods due to be tariffed under the new 10% tariffs due for September 1^st, will now be exempt until a later date. SPX500 surged back above 2908.55 on the news though has since reversed and is now testing the level from above once again.

Safe Haven Inflows Return

Safe havens have been higher again today with both JPY and gold rising against USD in light of the pullback in equities. XAUUSD trades 1504.94 last, with price still down off recent highs following the trade tariff delay announcement. USDJPY trades 106.22 last. The rally yesterday took price right back up into the 106.77 level which has held as resistance, for now, turning price lower again.

Crude Rejected At Trend Line

Oil prices have come back under pressure today. Crude rallied strongly yesterday on the US/China trade story with price spiking back up into the bearish trend line from July highs. However, with equities having since come off and the API reporting a further build in US crude stores, price is now trading lower again at 56.19 last. Traders now wait for the headline EIA report later today to confirm the inventories build.

High Betas Under Pressure

USDCAD remains bid today with weakness in oil prices weighing on CAD. The reversal lower yesterday found support once again at the 1.3207 level which has underpinned USDCAD recently, keeping focus on further upside in the near term.

AUDUSD has come under heavy pressure today as risk aversion sweeps markets again, despite yesterday’s tariff delay announcement. For now, it seems the market is waiting on something concrete with regards to trade talks before it can buy into the story, especially in light of how volatile the situation has become. AUDUSD trades .6754 last.