Rate cut expectations look to US inflation data

Additional optimism in the risk-on complex kept the greenback under pressure in the first half of the week as investors braced for the release of crucial US inflation figures on Wednesday. Also around inflation, UK CPI will also be in focus.

Here’s what you need to know on Wednesday, August 14:

The USD Index (DXY) retreated for the third day in a row and broke back below the 103.00 support amid lower yields. The inflation rate will take center stage on August 14, followed by weekly mortgage loan applications from the MBA.

EUR/USD climbed to multi-day highs and revised the 1.0980 area amid improved tone in riskier assets. Another estimate of Q2 GDP growth in the euro area is released on August 14, followed by industrial production and the preliminary change in employment in Q2.

GBP/USD resumed its uptrend and rose sharply, this time quickly leaving the 1.2800 barrier behind to print multi-day highs. The big event across the Channel will be the inflation rate on August 14.

USD/JPY maintained its erratic performance seen in recent days, although a convincing break above the 148.00 barrier seems elusive for now. The next significant data in Japan will be the advanced second-quarter GDP growth rate, final industrial production and weekly foreign bond investments, all expected on August 15.

On another positive day, AUD/USD broke through the key 0.6600 barrier and hit fresh three-week highs. The next note on the Australian calendar will be the Consumer Inflation Expectations and the release of the Labor Market report, all due on August 15.

WTI prices were unable to sustain a move past the key $80.00 per barrel level, eventually succumbing to renewed selling pressure and falling back below the $79.00 level.

Gold prices approached the region of $2,480 per troy ounce before pulling back and ending the session with modest losses ahead of Wednesday’s US CPI data. Silver fell significantly, despite briefly breaching the $28.00 per ounce mark earlier in the day.