• AUD/USD -0.1% in Asia; Q2 wage inflation data marginally above forecast

• AU Q2 wage price index +0.8% q/q, 3.4% y/y (poll +0.8% q/q, +3.3% y/y)

• Traders recalibrating post Tue's AUD gyrations following RBA cut & U.S. CPI

• DXY struggles below 98.26 55-DMA as AUD/USD looks to rekindle its 2025 rally

• AU Jul employment data, U.S. jobless claims & Jul manufacturing PPI due Thur

• Range early Asia 0.6517-0.65325, support 0.6420 0.6373, resistance 0.6625
AUD Daily 200-DMA & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY pushed up to 148.63 yesterday before falling back

• S&P and NASDAQ indices to fresh record highs but Fed rate cut hopes high

• Many calling for 50 bp cut in September, short US rates off

• JGB-US Treasury rate differential in shorts narrow more, 2s @295 bps

• USD/JPY push towards 148.76 daily Ichimoku kijun roundly rejected

• 147.71-87 EBS so far in Asia, back into 147.58-148.03 hourly Ichi cloud

• Spot between 147.89 descending 200-HMA and ascending 147.67 100-HMA

• No indications so far of heavy Japanese importer demand at today's Tokyo fix

• Option expiries today 146.65-147.00 total $3.3 bln, 147.39-50 $597 mln

• Also 148.00 $564 mln, 148.50 $564 mln, plenty nearby expiries tomorrow too

• Continuing Nikkei rally seen JPY supportive, to fresh record highs today

• Related comments , , ,

• And , , also

• US markets , , ,

• On US data , , , Fed
USD/JPY:


USD/JPY nearby option expiries this week:


Nikkei 225:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Steady after closing up 0.5% with the U.S. dollar off 0.45% post Core CPI

• UK hiring fell, but wage growth remains high - balancing act for the BoE

• Ukraine, sidelined in the Trump-Putin summit, fights Russian territory grab

• No first-tier UK or US data today, risk appetite, and the USD will lead GBP

• Charts - momentum studies edge higher, 5, 10, & 21-DMAs base, or rise

• 21-day Bollinger bands expand - daily chart shows a positive bias

• 1.3540, 0.618% of the Jul/Aug fall, and 1.3588 July 24 top first resistance

• 1.3406 21 DMA, then last Thursday's 1.3346 low are initial support
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Steady after closing up 0.5% with the USD off 0.45% on rising Fed cut hopes

• Ukraine, sidelined in Trump-Putin summit, fights Russian grab for territory

• Germany's Merz slips behind far right in poll after angering friends & foes

• Charts - daily momentum studies edge higher - neutral 21-day Bollinger bands

• 5, 10 & 21 DMAs coil - a close above 1.1700 would leave a positive setup

• Resistance starts at last week's 1.1699 high, then the July 1.1789 range top

• This week's 1.1590 low, then last week's 1.1528 base are the first supports

• 1.1650 1.010 BLN, 1.1700/05 1.682 BLN close Aug 13th strikes
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.8% from Tue's RBA interest rate cut induced 0.6483 low

• Moderate U.S. CPI firms Sep Fed rate cut, sends UST yields and USD lower

• U.S. Jul core CPI +0.3% m/m, +3.1% y/y (poll +0.3%, +3.0% respectively)

• RBA downgrades forecast, notes continued uncertainty & flags further easing

• DXY back below 98.26 55-DMA; AUD/USD looking to resume its 2025 rally

• AU Q2 wage price index 0130 GMT Wed, Reuters poll +0.8% q/q, +3.3% y/y

• AU Jul employment data, U.S. jobless claims & Jul manufacturing PPI due Thur

• Overnight range 0.6483-0.65405, support 0.6420 0.6373, resistance 0.6625
AUD Daily 200-DMA & DXY Daily 55 DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Synopsis:

ANZ sees gold’s outlook as increasingly constructive amid renewed tariff tensions, growing expectations for Fed rate cuts, continued central bank demand, and a potential pickup in market volatility. They believe these factors reinforce gold’s role as a safe-haven asset into year-end.

Key Points:

Trade Uncertainty Re-Emerges:
Tariff risks have resurfaced, with President Trump targeting India and threatening 100% tariffs on semiconductor imports. ANZ warns other regions could face higher tariffs despite recent trade deals, bolstering safe-haven demand for gold.

Fed Rate Cuts Back in Play:
Weaker US labor market data and comments from Fed’s Kashkari suggesting two cuts before year-end, potentially starting in September, increase gold’s appeal as lower interest rates reduce the opportunity cost of holding non-yielding assets.

Strong Central Bank Demand:
Global diversification away from USD assets continues, with China purchasing gold for a ninth consecutive month (1.8 tonnes in July), adding structural support to prices.

Macro Risks Could Fuel Volatility:
A weaker labor market coupled with tariff-driven inflation could trigger renewed financial market instability, further boosting gold demand.

Conclusion:

ANZ views the gold investment case as compelling, supported by a mix of geopolitical risk, monetary easing expectations, and ongoing official sector buying. These dynamics leave gold well positioned to benefit from heightened volatility and macro uncertainty into year-end.

• NY opened near 1.1610 then fell to 1.1599 on EBS in early trading

• July CPI was mostly in line; yields & US$ fell after the report

• US-DE 2-yr spreads tightened, gold & equities rallied, USD/CNH fell

• EUR/USD rallied above the 21-DMA and daily cloud top, traded to 1.1698

• Pair pulled back a bit as US$ selling abated, neared 1.1670 late, traded up +0.48%

• Rising daily, monthly RSIs & hold above 10-, 21- & 55-DMAs give tech a bullish lean

• Fed speakers Barkin, Goolsbee, Bostic may impact risk in NY Wednesday
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• AUD/USD added to overnight losses in early NY as US$ buying persisted, 0.6483 traded

• Buyers emerged as yields , US$ sank after US July CPI was mostly in-line

• USD/CNH fell below 7.1815, stocks & gold rallied on the session

• AUD/USD turned positive, rallied above the daily cloud, 21- & 55-DMAs, traded 0.6541

• Pair pulled back slightly, neared 0.6530 late, traded up +0.23% in NY's afternoon

• Rising RSIs, daily bullish engulfing candle are bullish tech signals

• Australia Q2 wage price index a risk in Asia; Fed's Barkin, Goolsbee, Bostic risks in NY
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• GBP/USD +0.6%, U.S. CPI and UK jobs data underpins. NY range = 1.3449-1.3523

• Mixed U.S. CPI not enough push back against Fed cut - Sept near-fully priced

• Consequently, volatility resets lower, keeping existing trends intact

• This means that USD can continue to drift lower

• Cable pressing on resistance at 1.3500 (55DMA). Break opens up 1.3585

• Support sits at 1.3400, further support at 1.3372 (100DMA)
GBPUSD daily 2


GBPUSD hourly chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)

Synopsis:

Nomura downplays the potential for Japan’s current political uncertainty—centered on the possibility of PM Ishiba stepping down—to act as a catalyst for yen weakness. They argue that market concerns over fiscal policy have eased and that leadership change expectations are misaligned with actual political dynamics.

Key Points:

LDP Leadership Decision Timeline:
The ruling LDP may decide on holding an interim leadership election in late August, following the release of its report on the Upper House election results.

Market Overestimating Dovish Risk:
While Ishiba’s resignation is possible, Nomura believes markets are overstating the likelihood that a new leader would adopt a more dovish stance. Current polling shows Ms. Takaichi—often perceived as dovish—is not the top choice among LDP supporters.

Fiscal Concerns Easing:
The JGB market’s worries over Japan’s fiscal trajectory have diminished, highlighted by a strong 30-year JGB auction this week, where the tail narrowed to the average range of the past year.

No Immediate FX Impact Expected:
Given the muted fiscal concerns and lack of clear evidence that a leadership change would alter policy direction meaningfully, Nomura does not see current political developments as a reason to sell the yen.

Conclusion:

Nomura views Japan’s political uncertainty as more noise than market-moving risk. With fiscal jitters easing and leadership succession scenarios not inherently yen-negative, they advise against overreacting to Japanese political headlines in the near term.

• USD/CAD backs off 1.38 post-CPI. NY range = 1.3754-1.3805

• Summer markets mean little catalyst break out of 1.37-1.39 range

• Mixed U.S. CPI not enough to change Fed pricing. Sept cut near-fully priced

• Consequently, bias remains for USD/CAD to retest 1.3700 (55DMA)

• Prior to 1.37 near-term support sits at 1.3720-25

• Resistance = 1.38 and 1.3879 (Aug high)
USDCAD daily chart

(Justin McQueen is a Reuters market analyst. The views expressed are his own.)

Synopsis:

Bank of America maintains its bearish USD view despite resilient US data and the Fed’s resistance to near-term easing. They see structural and cyclical factors—including stagflation risks, potential threats to Fed independence, and undervaluation of many G10 currencies—as supportive of further USD weakness against most major peers.

Key Points:

Stagflation as a Structural Headwind:
Persistent inflation alongside slowing growth could push the Fed toward faster and deeper rate cuts than currently priced, eroding USD appeal even if initial easing is delayed.

FX Hedging Theme Still in Early Stages:
Large asset managers are slowly reassessing entrenched long USD exposures. Lower rates would reduce hedging costs, encouraging further diversification away from the Dollar over time.

Fed Independence and Fiscal Risks:
Any erosion of the Fed’s autonomy or increased fiscal dominance could damage US policy credibility, leading to lower real rates, a steeper yield curve, and a weaker USD.

Global Policy and Fiscal Contrasts:
Many G10 central banks—such as the ECB—are further along in their easing cycles, while some economies have fiscal space to counter tariff-related growth shocks. This stands in contrast to US fiscal constraints, with Europe in particular having a low bar to exceed growth expectations.

Valuation Support for G10 FX:
Several G10 currencies remain undervalued against the USD, adding to the appeal of diversification away from the Dollar.

Conclusion:

BofA remains committed to a bearish USD outlook, citing stagflation risks, Fed credibility concerns, and supportive external factors. They expect structural USD headwinds to persist, with undervalued G10 currencies and policy divergence reinforcing the case for further Dollar depreciation.

• Shares of copper miners gain, tracking red metal prices

• Benchmark three-month copper on the London Metal Exchange up 0.7% at $9,800 a metric ton

• Copper prices rise as relief dominated the mood after the U.S. and China extended their tariff truce, while optimism was buoyed by a lower dollar after the release of U.S. inflation data

• U.S.-listed shares of global mining giants Rio Tinto

rise 1.4% and BHP Group up ~1%

• Copper miners Southern Copper and Freeport-Mc-MoRan rise 1.6% each

• Canadian miners: Hudbay Minerals up 2% and Teck Resources rise marginally

(Reporting by Sumit Saha in Bengaluru)

Synopsis:

Goldman Sachs maintains its short USD/JPY position with a 142 target and 152 stop, seeing the recent lack of follow-through as temporary. They expect the Yen to outperform as markets price in a more dovish Fed, rising recession risks, and ongoing governance concerns.

Key Points:

No Follow-Through Yet, But Thesis Intact:
Despite last week’s ~2.25% drop post-payrolls, USD/JPY has traded range-bound, reflecting stable rate differentials and risk sentiment over the past five sessions.

Drivers for Yen Outperformance:
Goldman sees three key factors favoring JPY strength—markets pricing in a dovish Fed, higher recession odds, and lingering governance risks in the US.

Catalyst Needed to Resume Dollar Downside:
Following recent stop-outs in USD shorts, markets may require another data-driven trigger. Today's softer US CPI is likely to revive selling interest in the Dollar.

Trade Parameters Unchanged:
Goldman keeps its short USD/JPY recommendation with a target of 142 and a stop at 152, viewing current price action as a pause rather than a reversal.

Conclusion:

Goldman Sachs remains confident in its bearish USD/JPY stance, expecting the trade to gain traction after today's softer US inflation—encouraging markets to reenter Dollar shorts. The medium-term bias remains toward Yen strength as Fed easing expectations build.

Synopsis:

CIBC sees the July CPI print as largely in line with expectations, showing modest tariff effects but no significant inflation surprise. With core CPI at 3.1% y/y and headline steady at 2.7% y/y, the data does not alter their view that the Fed will deliver a September rate cut.

Key Points:

Tariff Effects Emerging in Core Goods:
Core goods inflation held at 0.2% m/m, with tariff impacts visible in household goods and recreation commodities. Flat new vehicle prices tempered the overall pace, though CIBC expects tariff-related increases ahead as inventories turn over.

Services Inflation Ticks Higher:
Core services rose 0.4% m/m, driven by surging airfares and higher dental service costs, modestly accelerating from the prior month.

Annual Rates Edge Higher for Core CPI:
Core CPI rose to 3.1% y/y from 2.9%, while headline inflation stayed steady at 2.7% y/y, consistent with the consensus forecast.

Fed Outlook Unchanged:
CIBC views the report as balanced, with no alarming inflation signals. The data keeps the Fed comfortably on track for a September rate cut.

Conclusion:

CIBC sees the July CPI report as confirming the Fed’s easing path, with modest tariff effects emerging but no major inflation surprise. They maintain their call for a September rate cut, with inflation trends remaining consistent with the Fed’s policy objectives.

• AUD/USD rallied to 0.6525 in Asia, sellers emerged, pair turned down, hit 0.6489

• Pair bounced a bit in Europe, NY opened near 0.6490, pair down -0.38% early

• RBA rate cut & forecast of a couple more rate cuts weighed on the AUD

• US yield gains helped drive broad based US$
buying

• AUD/USD traded below the daily cloud top, 21- & 55-DMAs, neared the 10-DMA

• Falling daily RSI implies shorter-term downward momentum is in place

• US July CPI due, a downside surprise could sink US yields, U$ & rally AUD/USD
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• U.S.-listed shares of gold miners rise premarket, tracking rise in bullion prices [GOL/]

• Spot gold up 0.2% at $3,348.22/ounce, after a sharp selloff in the previous session, as investors focused on U.S. inflation data that could shape the Federal Reserve's rate-cut timeline

• Bullion slid 1.6% to a more than one-week low on Monday

• Top miner Newmont up marginally

• South African miners Gold Fields rises 1.6%, Harmony Gold gains marginally, Sibanye Stillwater

up 1.5% and AngloGold Ashanti rises marginally

• Canadian miners Agnico Eagle Mines and Kinross Gold up marginally

(Reporting by Pooja Menon in Bengaluru)

• EUR/USD gripped by a strong uptrend

• Consolidation toward peak of this year's rise is strong bullish sign

• Recent loss of momentum was result of a stretched rise - overbought

• Traders heavily long euro have begun to book profits

• Interest rate differentials weighing will matter more if it's quiet

• US core CPI expected 3% yy in July - further above Fed's 2% target

• If expectations met - chance US rate cuts should diminish

• Stocks may have more influence on FX markets

•
US CPI

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• RBA cut 25bps to 3.6% as expected, say outlook remains uncertain, AUD lower

• But AUD/USD stuck in a 0.6400-0.6500 range and lacking direction for months

• .6525-.6494 Tues. Spt/res 1 Aug .6419 low and 24 July high since Nov .6625

• FX option implied volatility trades long term lows - makes options cheap

• However, past realised volatility is even lower, justifies low implied vol

• Like many currency pairs, AUD/USD lacks catalyst amid height of summer lull

• Related comment - Are FX options mispricing US CPI risk?
AUD=D3


AUD/USD 1-month expiry implied vs 1-month realised volatility

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• UK employment falls for sixth month and vacancies drop

• But, wage growth stays strong, Underscoring BoE's caution on rate cuts

• Mild GBP volatility around the release but GBP/USD ultimately unchanged

• Tue range 1.3421-47, inside Mon's 1.3399-1.3476. 21 and 50-dma 1.3397-1.3500

• Weak USD concerns underpin. Low option implied volatility expects status-quo

• Implied volatility near long term lows and downside risk premiums are easing
GBP/USD option risk reversals


GBP=D3

(Richard Pace is a Reuters market analyst. The views expressed are his own)

• AUD/USD -0.3% Tue as RBA eases OCR 25 bps to 3.60% as widely anticipated

• RBA says inflation has continued to moderate and outlook remains uncertain

• AUD pushing lower hourly Bollinger, sell-off likely to run out of steam

• Crucial U.S. Jul core CPI due later Tue, Reuters poll: +0.3% m/m, +3.0% y/y

• NAB AU business confidence index hit a three-year high in Jul, +7 (prior +5)

• Trump's extended China 'tariff truce' pushes out trade deal negotiations

• Range Asia 0.6500-251, support 0.6420 0.6373, resistance 0.6625 0.66875
AUD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)

• Unchanged in a very tight, but busy at times 1.3430-1.3437 Asian range

• Retail spending increased by 2.5% over July 2024 - BRC, Barclays up 1.4%

• Warm weather clothes and rising food costs drove the spending rises

• Employment leads UK data, then US Core CPI, the Fed's key inflation gauge

• Charts - momentum studies edge higher, 5, 10, & 21-DMAs base, or rise

• Horizontal 21-day Bollinger bands - daily chart shows a modest positive bias

• 1.3464, 0.5% July/Aug fall capped, then 1.3540, 0.618% are first resistance

• 1.3397 21 DMA held then Thursday's 1.3346 low are initial support
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

Synopsis:

Goldman Sachs expects July CPI data to show a modest upside surprise versus consensus, with core inflation rising 0.33% m/m and headline inflation up 0.27% m/m. Gains in food prices should offset lower energy costs, while core PCE is projected to post a similar 0.31% monthly increase.

Key Points:

Core CPI Above Consensus:
Goldman forecasts a 0.33% m/m rise in core CPI, above the 0.3% consensus, pushing the y/y rate to 3.08% from 3.0%.

Headline CPI Supported by Food Prices:
Headline CPI is expected to rise 0.27% m/m, slightly above the 0.2% consensus, with a 0.3% increase in food prices partly offset by a 0.6% decline in energy prices.

Core PCE to Track Core CPI Gains:
Based on their CPI forecast, Goldman projects July core PCE inflation at +0.31% m/m, signaling similar underlying inflation momentum across measures.

Conclusion:

Goldman Sachs anticipates a slightly firmer July CPI print than markets expect, led by higher core inflation. The results would keep core PCE running close to 0.3% m/m, reinforcing the view that underlying inflation remains sticky despite recent moderation in energy prices.

• AUD/USD stabilizes Tue as traders set up for crucial market events

• RBA monetary policy meeting outcome 0430 GMT, 25 bps cut anticipated

• AUD hourly Bollinger bands closing, RBA guidance may stoke volatility

• Pivotal U.S. Jul core CPI due later Tue, Reuters poll: +0.3% m/m, +3.0% y/y

• NAB AU business confidence index improved to +7 in Jul, a three-year high

• Trump's extended China 'tariff truce' prolongs trade deal negotiations

• Range early Asia 0.65115-215, support 0.6450 0.6373, resistance 0.6625
AUD Hourly Bollinger Study

(James Connell is a Reuters market analyst. The views expressed are his own.)