Dollar bends but does not break

What you need to take care of on Thursday, July 14:

The American dollar marginally settled lower on Wednesday after the release of the US Consumer Price Index, which sourced by 9.1% YoY in June, much worse than the 8.8% expected. The core reading printed at 5.9%, below the previous 6%, but above the 5.8% expected, signaling price pressures are far from over.

The numbers initially spurred risk aversion, with equities diving and government bond yields soaring amid speculation the US Federal Reserve may put larger rate hikes on the table, and hence, increase the risk of a recession.

Germany also published its CPI figure, which was confirmed at 7.6% YoY, as previously estimated.

The EUR/USD pair peaked at 1.0121 but currently trades at around 1.0055, hurt by central banks’ imbalances. The US Federal Reserve has hiked rates multiple times and will likely add another 75 bps this month. The European Central Bank, on the other hand, will start with its modest tightening in July by hiking 25 bps.

Upbeat UK data supported the Pound during European trading hours, as the monthly Gross Domestic Product surged to 0.5% in May, much better than the previous -0.3%. Additionally, Industrial Production in the same month rose by 1.4% YoY, while Manufacturing Production increased by 2.3% YoY, beating expectations. The pair lost ground as the day went by, ending the day at around 1.1890.

The Bank of Canada hiked its policy rate by 100 bps to 2.5% in July, compared to the market expectation for a rate increase of 75 bps. In its policy statement, the BOC acknowledged that it had underestimated inflation since the spring of last year mainly because of global factors. USD/CAD fell to 1.2933, now trading around 1.2980 amid the weak tone of US equities.

The AUD/USD pair holds on to modest gain near 0.6760 ahead of the release of Australian employment data. The country will report June employment data in the upcoming Asian session and is expected to have added a modest 25K new jobs after gaining 60.6K in the previous month, while the Unemployment Rate is foreseen down to 3.8% from 3.9% in May. Ahead of the figures, Australia will also unveil July Consumer Inflation Expectations, with analysts expecting it at 5.9%, down from 6.7% previously.

Gold Price settled at $1,733 a troy ounce, while crude oil prices saw little action, and WTI currently trades at $95.80 a barrel.

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