USD

The US Dollar is tumbling this morning after the latest US consumer inflation and jobless claims data.

The US annual inflation rate increased to 3.2% in July, ending 12 consecutive months of decline as energy costs fell at a slower pace than in June, while some sectors like apparel and transportation services saw prices rise. Meanwhile, annual core inflation eased slightly to 4.7% from 4.8% in June, slightly better than market expectations.

On the jobs front, initial jobless claims rose to 248K last week, the highest in a month and above forecasts, hinting at a possible softening in the job market. However, continuing claims dropped by 26K, much better than the expected 18K increase.

EUR

The Euro is in the green heading into the North American session as markets assess the newest US and Italian CPI numbers.

Italy's annual inflation rate decreased to 5.9% in July from 6.4% in the previous month, better than the preliminary read of 6%, primarily due to lower costs in transportation, non-regulated energy, and processed food. Additionally, core CPI dropped to 5.2% from 5.6% in June, while monthly inflation flatlined.

Looking ahead to tomorrow, France and Spain are set to release their final inflation numbers for July, while Italian trade and French unemployment figures are also on the docket.

GBP

The Pound is higher on the day following this morning's US CPI print as cable traders begin to shift their focus to tomorrow's busy calendar, headlined by the UK GDP and US PPI releases.

Market expectations are for the UK'S economy to have expanded 0.2% month-on-month in June after contracting 0.1% in May. From a quarterly perspective, market forecasts indicate the economy stagnated in Q2 after posting two consecutive quarters of modest growth. However, on an annual basis, Q2 GDP is projected to have grown by 0.2%.

Meanwhile, the UK's housing market witnessed its lowest RICS house price balance since 2009, as rising mortgage rates dampened demand. In addition, property sales in July saw their sharpest monthly decline since the onset of the pandemic.

JPY

The Loonie is inching higher today as traders contemplate the implications of this morning's US CPI and jobless claims data. The Loonie has been under pressure for most of the month due to a mix of soft Canadian data and a renewed Dollar strength as of late.  

With the Canadian calendar empty until next Tuesday's critical CPI report, the Loonie will take cues from the US Dollar, oil prices, and overall market risk sentiment. 

On the oil front, WTI futures soared to a nine-month high yesterday and pacing for a seventh-consecutive weekly gain, helping support the commodity-linked Loonie.

CAD

After dropping as much as 1% yesterday morning, the Loonie staged a mid-day comeback versus the Dollar and managed to close just over 0.3% lower for the day. However, the momentum has not carried into today’s session as the Loonie heads into the Wall Street open in the red once again.

Earlier this morning, Canadian building permits rose 6.1% month-on-month in June, defying market expectations of a 3.5% increase. However, much of this increase can be attributed to a 67.2% surge in institutional permits thanks to two new hospital permits. Meanwhile, residential permits fell slightly despite the growing need for increased housing.

MXN

After securing its first winning day of the week, the Mexican Peso is up over 0.5% this morning, and 0.6% for the week, as MXN traders jockey for position ahead of this afternoon's Banxico decision.

The Bank of Mexico is expected to hold rates at 11.25% today despite Mexico's latest CPI print showing inflation slowed for the sixth consecutive month in July. Given that inflation still remains above Banxico's target band, it is unlikely that the Central Bank will make a sudden shift to its wait-and-see approach for today's interest rate decision. However, traders will be keen to hear comments from Banxico officials to see how recent data may have changed its future outlook.

BRL

The Brazilian Real is rallying this morning, up over 0.7% following today's US inflation and jobless claims data. With today's move, the Real has erased nearly all its weekly losses as it looks to avoid its first back-to-back losing weeks since March.

With no Brazilian data on the docket today, BRL traders will shift their attention to tomorrow's eagerly awaited inflation report out of Brazil. Markets anticipate consumer inflation to tick slightly higher in July after surprisingly seeing deflation in June – the first monthly price decrease since September 2022.  

Meanwhile, from an annual perspective, CPI is projected to rise to 3.93% in July after coming in at 3.16% in June.

CNY

The Yuan is slightly higher on the day and looking to build on yesterday's modest gain against the Greenback amidst broad Dollar-weakness this morning. The Yuan also received a significant boost from another aggressive onshore fix by the PBoC overnight, continuing the trend that began earlier in the summer.

On the geopolitical front, US President Joe Biden signed an executive order to restrict some US tech investments in China as tensions between the world's two biggest economies continue. The order focuses on preventing investment in sensitive sectors such as semiconductors and microelectronics and may elicit a counter-response from Chinese authorities.