Inflation Data Looms Large as Markets Eye US Consumer Price Index
Markets are bracing for crucial US inflation data on Wednesday, August 12. Major currency pairs have been trading in familiar ranges as investors hold off taking large positions ahead of the highly-anticipated July Consumer Price Index (CPI) data from the United States.
The US Dollar has remained resilient against its major rivals due to a cautious market mood. Analysts at OCBC argue that the bar for a meaningful shift in Federal Reserve policy outlook remains elevated, with core CPI needing to print at 0.3% MoM or higher in July to lift expectations of a September rate hike.
The situation around the Strait of Hormuz remains unresolved, with conflicting signals indicating that while negotiations are progressing, a deal capable of restoring normal shipping does not yet appear imminent. Lower energy prices in July should help ease headline inflation, but the subsequent rebound in oil prices means energy could again place upward pressure on inflation in the coming months.