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Dollar dips, oil holds, and all eyes on Canada's core CPI print. Plus, is Bessent's yen bet about to pay off? Your Monday brief is here: #FPMarkets #USD #oil #CPI #inflation #jpy

Dow Jones Industrial Average Chart of the Day #FPMarkets #chartoftheday #Dow #equities #stocks #technicalanalysis

US Dollar Index Chart of the Day #FPMarkets #chartoftheday #USD #DXY #technicalanalysis

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From the Research Desk: Overnight developments in the Middle East show that a breakthrough remains elusive. Both sides are still at loggerheads, and each claims control of the Strait of Hormuz, with vessel flows through the waterway limited as President Trump bets that economic sanctions and a naval blockade will force Tehran to capitulate. With no resolution in sight, that risk premium is keeping Brent crude elevated near US$90/barrel. On the macro front, yesterday’s US CPI inflation report was bang in line with estimates across the board. I am not sure I even remember the last time this happened. Disinflation came from energy and gasoline prices, though inflationary pressures were seen from airfares, used cars, and computers. Basically, we are looking at a slow disinflation trend, but this is unlikely to be good enough for the Fed hawks with inflation above the Fed’s target for five years. We did see markets pare back rate-hike bets for September’s meeting, but we have not moved away from tightening entirely. The August US CPI inflation is all the more important now, as is what Fed Chairman Kevin Warsh says (or doesn’t) at Jackson Hole later this month. Data to monitor today are the July US PPI inflation report, which is expected to ease at both headline and core levels YY. With CPI coming in benign, this release may take on extra importance and subsequently deliver a more sizable move should a large deviation occur. In the FX space, procyclicals are on the back foot this morning, with AUD and NZD both down against the USD. Elsewhere, price action is fairly lacklustre, which is surprising for the JPY, given Takaichi's government is now backing a near-term BoJ hike, likely in September or October. That said, traders in USD/JPY probably need to hear directly from the BoJ itself before it makes a real move. Of note, the curve has repriced over the last month, with tightening bets moving from around 5 bps to roughly 16 bps for September's meeting as of writing. Equities were largely bid in the US session yesterday, while the Dow Jones closed unchanged. This came on the back of solid earnings results from AI infrastructure names and the benign US CPI inflation print. Overnight in Asia, South Korea’s KOSPI is now well and truly in bull market territory, and ahead of European and US cash session opens, futures point to modest starts. In fixed-income, US Treasury yields modestly bull-steepened on the back of the in-line US inflation report. We are also seeing a similar picture this morning, with shorter-dated maturities on the back foot. Written by FP Markets Chief Market Analyst, Aaron Hill #FPMarkets #CPI #PPI #USIran #fx #jpy #stocks #bonds

Today’s calendar focusses on UK GDP growth numbers ahead of the European cash open, followed by US PPI inflation figures and weekly unemployment claims before the US cash session. #FPMarkets #GDP #PPI #inflation

Research desk: All of the key US #CPI #inflation numbers came in as expected. Seeing some whipsaw action on #USDJPY and #gold, right now. #FPMarkets

Hormuz tensions keep Brent near US$90, chip stocks powered a KOSPI bounce, and USD/JPY is back knocking on intervention levels. But the real story drops at 12:30 pm GMT today – the US July CPI, and it might just decide where the Fed goes next. Your Wednesday morning brief is here: #FPMarkets #Hormuz #stocks #USDJPY #CPI #inflation #Fed

From the Research Desk – · On the geopolitical front, Trump says the US has total control over the Strait of Hormuz, but vessel flows and Iran’s denial show that this does not fully reflect the truth – mixed messaging once again. Pakistan recently noted that the path towards peace in the Gulf remains possible, as negotiations continue. However, while positive news, these are simply words for the time being; we have to go by what we see, with oil prices still elevated. Brent crude is comfortably above both the 50-day and 200-day SMAs, recently clipping highs of US$90/barrel. · Chip stocks fuelled a rally in regional indices in Asia overnight. South Korea’s KOSPI added 3.8%, with Samsung and SK Hynix both catching a solid bid. In US markets, we saw modest losses across key benchmarks; the S&P 500 ended down 0.3%, led by real estate and communication services. · In the FX space, the JPY remains in focus, with USD/JPY on the doorstep of ¥160, despite the US and Japan recently intervening to buy yen. ¥160 appears to be the line in the sand for further yen intervention, though daily resistance between ¥160.93 and ¥160.04 is calling for attention. Ultimately, while intervention certainly got the markets talking and pushed USD/JPY down by around 600 pips, it is not enough to halt USD/JPY’s upside as long as the cost of money in Japan remains cheap, and dip-buyers are demonstrating this after recoiling from ¥155. · US Treasury yields fell modestly across the curve on Tuesday, finishing the session off best levels amid developments (or lack of) in the Middle East and ahead of today’s US inflation report. Oil prices are clearly dominating sentiment right now; if you know where oil is likely to trade, you can get a fairly good idea of where CPI inflation is headed. · It is all about the July US CPI inflation report today, landing at 12:30 pm GMT. It is also perceived as more important than the US jobs release, and is one of two reports we get before the September Fed meeting. Expectations are for the YY headline and core measures to come in slightly lower at 3.4% (from 3.5%) and 2.5% (from 2.6%), respectively. Ultimately, a downside surprise could add volatility to yields and the USD, particularly following last week’s US jobs data, and the USD being overstretched to the upside. A broad miss would also see an unwind in rate pricing; Fed hikes remain priced into the curve, with around 20 bps implied by year-end and nearly 50 bps by mid-2027. Written by FP Markets Chief Market Analyst, Aaron Hill #FPMarkets #USIran #stocks #forex #bonds #CPI #inflation

From the Research desk: US CPI inflation preview - Tomorrow will welcome the July US CPI inflation report at 12:30 pm GMT. Expectations heading into the event suggest headline and core YY inflation will ease to 3.4% and 2.5%, respectively. Ultimately, a number of desks have flagged possible downside for yields and the USD if data surprises lower. Hitting 3.2% at the YY headline level (under the estimate low) and 2.3% for YY core (also below the forecast low) would be enough to catch market participants off guard. A downside surprise would also follow weak US jobs data – which saw 23,000 jobs lost and average wage growth slow – prompting a dovish Fed rate repricing. That said, the recent flare-up between the US and Iran has pushed oil prices higher, reviving inflation expectations and pulling markets back toward pricing in a Fed rate hike by year-end, with about a 35% chance implied for September's meeting. A soft CPI print would need to unwind that hawkish repricing, aided by USD positioning that's already overstretched to the upside. A hotter-than-expected inflation print, on the other hand, could be messier, because it collides with still-soft labour data, forcing the Fed to weigh two conflicting mandates at once. It would likely fully price in a rate increase by year-end, and pull September’s meeting firmly into 50/50 territory.

Following last week’s disappointing US jobs report, today is all about the US CPI inflation print – expected to edge lower at both headline and core levels. #FPMarkets

From the Research Desk – · Geopolitical tensions between the US and Iran in the Middle East remain elevated, keeping oil benchmarks bid. Brent crude rallied nearly 7% and is fast approaching US$90/barrel. President Trump recently said the Strait of Hormuz is open, but vessel flows do not reflect that, and the current situation shows both sides hardening their demands. · Equities are treading water, with US cash equity indexes closing modestly lower on Monday, while regional indices were bid overnight in Asia (Tokyo was closed for a holiday). Investors are cautious ahead of key US inflation data tomorrow. · The RBA held the cash rate on hold at 4.35% for a second consecutive meeting. The immediate downside move in the AUD came on the back of the bank’s latest forecasts, which showed a downward revision to the cash rate to 4.4%, with the YY trimmed-mean inflation forecast also revised lower to 3.3% by year-end and to 3% by June 2027. Essentially, this signals to traders that the central bank does not see the need to hike rates to bring inflation down. However, in her press conference, RBA Governor Bullock struck a hawkish tone, noting that inflation risks remain to the upside and that a rate hike was discussed at the meeting. · The JPY has now lost half of its gains against the USD following the coordinated intervention to support the yen. Fundamental change is needed here. The BoJ's July minutes show the board leaning hawkish: several members argued that inflation risks are now skewed to the upside – driven by yen weakness, Middle East oil costs, and AI-fuelled demand – and that rate hikes may need to come faster than markets expect, with one member framing it as a shift from ‘lifting inflation to 2%’ to ‘preventing an overshoot’. Policy was held steady this meeting only to assess the impact of the prior hike, but the tone points squarely towards a September move. · US Treasuries fell amid inflation fears. Fed President Beth Hammack recently noted that it will likely take more than one rate hike to bring inflation down, comparing the approach to gradually pumping the brakes rather than slamming them, though she declined to prejudge the exact number of moves needed. This follows her dissent at the last FOMC meeting, where she favoured hiking. This also comes ahead of tomorrow’s US CPI inflation report and follows weak jobs data. Expectations are for the YY headline and core measures to come in slightly lower at 3.4% and 2.5%, respectively. #FPMarkets #Forex #stocks #bonds #oil #markets

USD/JPY Chart of the Day #FPMarkets #chartoftheday #USDJPY #USD #JPY #technicalanalysis

Weak jobs data, a dovish Fed, RBA decision tomorrow & US CPI inflation on Wednesday Your Monday morning brief is here: #FPMarkets #NFP #Fed #RBA #CPI #inflation

Nasdaq 100 Chart of the Day #FPMarkets #chartoftheday #NASDAQ100 #equities #stocks #technicalanalysis