This article has been translated from English to Gen Z Slang.
Traders woke up on Tuesday with a "let's vibe and see" attitude before the U.S. CPI report dropped. 👀 Meanwhile, Asian stocks were living it up thanks to that extended US-China vibe check, while Europe was feeling meh 'cause of Germany's mood swings. 💁♀️
Once that inflation tea got spilled and hit expectations, the risk party was back on! 🎉 U.S. stocks reached all-new highs, and the dollar was like "see ya!" 👋
Catch up on the headlines you might've missed in the last trading sessions! 🌟
Headlines:
- U.K. BRC retail sales monitor for July: 1.8% y/y (2.5% forecast; 2.7% previous) 📉
- Australia NAB business confidence for July: 7.0 (3.0 forecast; 5.0 previous) ✨
- RBA interest rate decision for August 12: 3.6% (3.6% forecast; 3.85% previous)
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U.K. claimant count change for July: -6.2K (15.0K forecast; 25.9K previous)
- U.K. employment change for June: 238.0K (65.0K forecast; 134.0K previous) 🔥
- U.K. unemployment rate for June: 4.7% (4.7% forecast; 4.7% previous) 😂
- U.K. average earnings incl. bonus for June: 4.6% 3m/y (5.0% forecast; 5.0% previous) 💸
- Germany ZEW economic sentiment index for August: 34.7 (45.0 forecast; 52.7 previous) 😬
- Euro Area ZEW economic sentiment index for August: 25.1 (30.0 forecast; 36.1 previous)
- U.S. NFIB business optimism index for July: 100.3 (98.7 forecast; 98.6 previous) 🔝
- Canada building permits m/m for June: -9.0% (0.7% forecast; 12.0% previous) 🚧
- U.S. CPI for July: 0.2% m/m (0.2% forecast; 0.3% previous); Core inflation at 0.3% m/m (0.2% forecast; 0.2% previous)
- U.S. annual CPI for July: 2.7% y/y (2.7% forecast; 2.7% previous); Core inflation at 3.1% y/y (3.0% forecast; 2.9% previous)
- Germany current account for June: 18.6B (12.5B forecast; 9.6B previous) 💰
- FOMC member Barkin hints the Fed can adjust if needed, but strong jobs and steady spending mean rate cuts may not come soon
- FOMC member Schmid favors keeping policy modestly restrictive for now, citing persistent inflation and limited tariff effects
- U.S. API crude oil stock change for August 8: 1.5M (-4.2M previous) 🛢
- BLS commissioner nominee EJ Antoni considering suspending monthly jobs report
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets were cautiously optimistic before the big U.S. inflation deets, with Asian stocks going wild on the US-China tariff love fest, powering Japan's Nikkei to sky-high records. 🚀 European stocks were a bit of a mixed bag, digesting Germany's weak ZEW feels that plunged to 34.7 from 52.7, but the Stoxx 600 sneaked a lil' 0.21% gain while Germany’s DAX dipped 0.23%. 🤷♂️
When Uncle Sam dropped the inflation bombshell, it was a YOLO risk-on rally! ⚡ The 0.2% monthly CPI rise matched the script, locking in those September rate cut dreams. U.S. indices shot to new records with the S&P 500 jumping 1.1% to 6,445, and the Nasdaq soaring 1.4%, while small-caps left everyone in the dust as the Russell 2000 flew up by 3%. ✈️ Treasury yields took a chill pill before the 10-year settled at 4.29%, trying to make sense of the hot core CPI vibes and the Fed’s easing plans.
Gold dipped a smidge to $3,347 despite dollar weakness, while WTI crude slipped 1.4% to $63.08 ahead of the epic Trump-Putin showdown on Ukraine. 🏆 Bitcoin flexed its digital muscles, breaking past $120,000 as everyone got hyped, though it later mellowed out near $119,800 as crypto vibes synced with the broader market euphoria. 💪
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dolla' held a steady vibe in the Asian hours as traders weighed Fed policy tweaks against that chill US-China tariff truce. The RBA’s expected 25bp rate cut to 3.60% didn't really spill the tea much. 💼 During the Euro session, it found some support when Germany’s ZEW got all depressed to 34.7 from 52.7 and UK jobs data came through mixed, but with the jobless rate keeping its cool at 4.7%. 🤔
But when the US opened, and the CPI got dropped like it's hot, matching forecasts, everyone started betting big on that September rate cut. The dollar totally face-planted as traders were like “let’s up those Fed easing odds to nearly 90%!” The bearish vibes amped up when Trump’s BLS nominee EJ Antoni flirted with the idea of suspending monthly jobs reports, spooking peeps about data transparency. 😱
The greenback tried a comeback toward the London close with a lil' profit-taking, but the damage was done. By the end of the sesh, the dollar looked wobbly against most of its buddies, with the DXY index chilling around 104.00 after doing a bungee jump below that huge psychological mark. Its weakness kinda said everyone was finally convinced the Fed would be all like "let's keep jobs first over this not-so-hot core inflation." 🔮
Upcoming Potential Catalysts on the Economic Calendar
- Germany inflation rate final for July at 6:00 am GMT
- Germany wholesale prices m/m for July at 6:00 am GMT
- Japan machine tool orders y/y for July at 6:00 am GMT
- U.S. MBA mortgage applications for August 8 at 11:00 am GMT
- U.S. Fed Barkin speech at 11:30 am GMT
- U.S. EIA crude oil stocks change for August 8 at 2:30 pm GMT
- U.S. Fed Goolsbee speech at 5:00 pm GMT
- Canada BoC summary of deliberations at 5:30 pm GMT
- U.S. Fed Bostic speech at 5:30 pm GMT
- U.K. RICS house price balance for July at 11:01 pm GMT
- Australia labor market data for July 1:30 am GMT
It's kind of a chill day for FX news-fam, with Germany’s inflation and price vibes likely swaying Euro currencies during the London session. 🤑
In the US, keep your eyes on mortgage deets, oil inventory tea, plus Fed and BOC comments that will probs set the mood for policy guesses and USD and CAD moves. 🏦
And don't sleep on global trade and geopolitical goss that could totally flip market feels. Stay woke, and don’t forget to peep our Forex Correlation Calculator when making any trades! 📈
