- US July CPI +8.5% y/y vs +8.7% expected
- Cleveland Fed July median CPI +0.5% m/m vs +0.7% prior
- Fed's Evans: Today's inflation report is the first positive report
- Fed's Kashkari: We're far, far away from declaring victory on inflation
- Biden: We're seeing some signs inflation may be moderating
- US sells 10-year notes at 2.755% vs 2.761% WI
- BOE Pill: Wage growth of running too fast at present
- Atlanta Fed GDPnow Q3 growth tracker up to 2.5% from 1.4% last
- US June wholesale inventories +1.8% vs +1.9% expected
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Markets:
- NZD leads, USD lags
- Gold down $3 to $1790
- US 10-year yields flat at 2.79%
- S&P 500 up 85 points, or 2.1%, to 4209
- WTI crude oil up 98-cents to $91.47
The whole week was a build up to the CPI report and it certainly delivered.
The US dollar was soft in the hours before the decision and one tipoff that traders had noticed is that the White House -- unlike recent releases -- hadn't released a statement downplaying CPI before the release. Maybe that's a coincidence but maybe it was a tell.
In any case, the data was lower than expected and the dollar cratered. The initial move lower barely bounced before a second leg of selling hit as traders scoured the data and failed to find any details that pointed to a rebound next month.
USD/JPY was a huge mover, falling to 132.90 from 134.85 immediately and then grinding lower late in Europe down to a low of 132.04. Bids at the figure finally held and it slowly made its way back to 132.90 late.
EUR/USD broke out of its three-week range like a bullet, hitting 1.0368 on the second wave of USD selling but what had looked like the euro kicking the door down later turned into a mushy break as it sagged back to 1.0300 late.
The dollar did get a broad bid late. In terms of pips it was a decent rebound but it still looks like a blip on the chart after the heavy post-CPI selling of the dollar.
The winners on the day were AUD and NZD. Last week's NFP data showed the economy is still strong and today's CPI showed that the Fed might not have to hike as much. Both of those are good news for global growth. The antipodeans both traded to the highest since mid-June, similarly to stocks and crypto.
The loonie trailed its commodity cousins but still put in a solid day in a fall to 1.2777. Early in the day oil was a problem for hte loonie but crude and natural gas turned around on the weak USD and with the help of better gasoline demand in the EIA weekly report.
