Daily Market Pulse

USD

Following yesterday’s risk-off rally, the Dollar Index is pulling back slightly this morning as market sentiment rebounds ahead of a quiet day on the economic calendar.

One of the US data points released today was the MBA Mortgage Applications read for last week, which indicated another drop in mortgage applications due to declines in both purchases and refinancing, while the 30-year mortgage rate rose to 7.09% from 6.93% in the previous read.

All eyes will be on tomorrow’s highly anticipated US consumer inflation figures, where market expectations are for an uptick in annual inflation to 3.3% from the 3% seen in June, which would be the first increase in 13 months. Meanwhile, annualized core CPI is projected to remain at 4.8% after slowing in each of the previous three months.

EUR

The Euro is rebounding this morning after dropping over 0.4% against the Greenback yesterday in the aftermath of Italy’s surprising announcement of a windfall tax on its banks. However, Italian officials have clarified that the 40% one-time tax would not exceed 0.1% of a bank’s total assets, prompting a rebound in European banking stocks this morning.

The European calendar is relatively light today, so Euro traders will look ahead to tomorrow’s CPI printout of Italy. Italy’s annualized CPI figure is expected to be confirmed at 6% for July, marking the fourth-straight month of slowing inflation in Europe’s third-largest economy.

GBP

The British Pound is on the back foot once again today after yesterday’s disappointing UK retail sales print alongside risk-off sentiment triggered a pullback in GBP/USD. The latest moves have the Pound essentially unchanged for the week but firmly negative for the month so far.

The UK calendar lacks any significant events until this Friday’s GDP print, although the July RICS House Price Balance is scheduled for release after 5:00 PM EST this evening. The index is expected to drop to -0.50%, continuing to stay at its worst levels since the global financial crisis as UK housing prices remain under pressure. 

JPY

The Japanese Yen is trading sideways this morning, heading into the Wall Street open as it looks to avoid its third-consecutive losing session versus the Dollar.  

On the data front, Japan’s machine tool orders for June showed a 19.8% year-on-year decline, slightly better than expected but still its worst read since early 2021.

Looking ahead, Japan’s latest producer price inflation read is scheduled for release at 7:50 PM EST, with market expectations pointing to a 0.2% monthly increase in July. On the other hand, annualized PPI is projected to cool to 3.5% from the 4.1% seen in June. 

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

The Mexican Peso is down around 0.5% this morning following yesterday’s impressive turnaround that saw the Peso claw its way back to just a 0.1% loss after being down as much as 1.2% earlier in the day.  

This morning, Mexico’s July inflation print showed annual inflation slowed for the sixth consecutive month in July, falling to the lowest level since March 2021. Prices most notably eased for food, beverages, and tobacco. Meanwhile, annual core inflation also cooled to a near 1.5-year low in July. However, on a monthly basis, inflation did rise to its highest level since February.

BRL

The Brazilian Real is on the upswing this morning, up over 0.2% against the Greenback as BRL looks for its first winning session of the week. The move comes despite this morning’s disappointing retail sales data out of Brazil.

On a monthly basis, retail sales stagnated in June, missing market expectations for a 0.4% increase. 

Some categories saw sales growth, including vehicles and clothing, but declines in areas such as office and IT equipment negated the increases. However, retail sales did rebound to 1.3% from an annual perspective, beating the expected 0.35% rise and improving from the 1.1% decline posted in May.

CNY

The Yuan is in the green this morning and looking for its first winning day versus the Dollar in nearly a week after sinking to a three-week low yesterday. Today’s moves come on the heels of the latest inflation reports out of China showed consumer prices entered deflation territory for the first time in more than two years.

China experienced a 0.3% year-on-year drop in CPI for July, with food costs alone falling by 1.7%, primarily due to plummeting pork prices. Non-food prices remained steady, showing slight increases in categories like clothing and housing. Meanwhile, producer prices fell by 4.4% year-on-year in July, the smallest deflation in three months but still marking the 10th consecutive month of price decreases.