From Marc Chandler at Bannockburn Global Forex:
New hostilities in the Middle East have lifted oil prices for the first time in four sessions and is snapping the three-day decline in European and US bond yields. The US dollar is mostly narrowly mixed against the G10 currencies. Softer than expected CPI has reduced the perceived chances the Reserve Bank of Australia will hike rates again this year, after delivering three hikes in H1 26. The Australian dollar is at more than two-week lows today and is off almost 0.5%; the weakest in the G10. Among emerging market currencies, despite the continued volatility in the equity markets, the South Korean won and the Taiwanese dollar are among the strongest today. The PBOC set the dollar’s fixing at a new three-year low.
The outlook for today’s FOMC meeting is among the most uncertain it has been for some time. This may become a new feature with Chair Warsh, who eschews “forward guidance”. Most observers lean against a hike, but at the last meeting half of the “dots” implied a rate hike this year. And despite the softer June CPI and PPI, the war and tariffs continue to underpin price pressures. The Fed funds futures have almost 44 bp of tightening discounted before the end of the year....
....MUCH MORE
