Dollar Unfazed by PCE Data as Aussie and Oil Markets React

The US Dollar barely moved in response to the release of July's Personal Consumption Expenditures (PCE) inflation data, which confirmed existing Federal Reserve pricing rather than changing it. The core PCE rose 0.2% month-over-month and 3.3% year-over-year, matching consensus expectations.

In contrast, the Australian Dollar rallied as the country's July Consumer Price Index (CPI) report showed a slower pace of inflation, but with its preferred Trimmed Mean CPI measure holding steady at 3.6% year-over-year and accelerating to 0.5% month-over-month. This has reignited debate over whether the Reserve Bank of Australia will hike interest rates in September.

Brent crude oil prices fell below $86 per barrel as Iran and Oman issued a joint statement on a proposed temporary navigational corridor through the Strait of Hormuz, which is seen as a credible path to normalization despite ongoing physical disruption. US sanctions against Iran are also being held back from further escalating tensions.